September 27, 2019
The Out-of-Pocket Health News Digest
Below you will find briefs about recent health policy news stories. Our hope is for students to have an information outlet at their fingertips to keep up-to-date with the most pressing news stories in health policy.
This compilation is produced by the HPSA Education Committee: Sharoni Bandyopadhyay, Matthew Dunn, Payton Watt and Courtney Zott.
Private Equity Firms Exposed for Funding Mysterious Ads Against Surprise Billing Legislation
At least two physician staffing companies backed by private equity firms are behind a new dark money PAC that is running a massive ad campaign against federal out-of-network billing legislation. The ads had been mystifying Washington until The New York Times recently found that TeamHealth and Envision Healthcare, financed by Blackstone Group and KKR respectively, are the largest funders of the $28.2 million effort.
 
This discovery supports suspicions that physician groups owned by private equity firms—a little researched but growing phenomenon in the U.S.—are exploiting out-of-network billing as a business strategy, not only to gain higher payments for services but as leverage in contract negotiations with insurers to drive up in-network rates. The physician types that private equity companies typically invest in (e.g., ED physicians, anesthesiologists) have less at stake in being out of network since patients do not usually choose them, so they can more realistically threaten not to contract unless they receive more favorable payments for providing services in network. A 2019 Kaiser study found that 18% of emergency visits in 2017 among patients insured by large employers resulted in at least one out-of-network charge.
 
Soon after the New York Times findings were announced, the House leaders launched a probe into Blackstone Group and two other private equity firms that own physician staffing companies.
 
The two staffing groups behind the PAC are specifically against Congress’ leading bill that would would set a fixed payment rate for out-of-network services, effectively eliminating the concept of networks all together. Other bills introduced in Congress would allow providers and insurers to propose rates to an independent third party to choose between. Providers generally support the latter as insurers’ desires for them to be in network gives them negotiating power, while insurers and employers generally support the former.
 
Mysterious vaping illness prompts policy interventions at the state and federal level
The CDC reports 805 cases of lung injury due to e-cigarettes and vaping, prompting the organization to caution the general population on the risks of vaping and directly warn youth and pregnant women to refrain from use. On September 24th, Kansas Governor Laura Kelly announced the second vaping-related death in her state, bringing the national total to 12 deaths.

Accordingly, several states have moved to temporarily restrict electronic cigarette use. Michigan Gov. Gretchen Whitmer issued a 6-month ban on September 4 over the sale of flavored e-cigarettes, beginning 30 days after the rule is filed. New York also announced a ban on flavored e-cigarettes, effective immediately on September 17th. Similar policies are being considered in other states. On the federal level, the FDA and Trump administration is planning to advance policies that would limit access to flavored e-cigarettes, calling it an epidemic among American youth. The FDA reports that from 2017 to 2018, e-cigarette use increased 78% and 48% in high school students and middle school students respectively, with 81% reporting that the flavors were the primary appeal.

This wave of legislation raises a vital question: how harmful is vaping? While there is little research indicating that e-cigarettes are safer than traditional cigarettes, some ingredients in tobacco cigarettes might be overall more toxic . Although individual studies vary, certain groups of toxic compounds have been repeatedly found in e-cigarette liquids . Many health professionals are most concerned with the uncertainty of unforeseen health problems . E-cigarettes have only been widely available for about a decade, so there have not been long-term cohort studies taken to completion, or extensive studies of clinical outcomes. 

Juul Labs has already spent nearly $2 million in federal lobbying during the first half of the year, marketing their product as a healthier alternative to smoking. Calls to regulate vaping will be met with opposition from e-cigarette companies. In particular, companies like Juul are working to counter criticism that they are marketing e-cigarettes to minors. In early 2018, Juul employed just a few Washington D.C. lobbyists; today they have 166. Going forward, lobbying from the vaping industry is expected to intensify as more lawmakers express concern over the health effects of vaping. 

Sources: The Hill , Modern Healthcare , WSJ  
Congresswoman Pelosi’s drug pricing plan allows for Medicare to negotiate with pharma, international price referencing, and more
On September 19th, House of Representatives Speaker, Nancy Pelosi (D-CA) introduced her long-awaited, bipartisan legislation package to reduce drug prices under Medicare Part B and D.

The legislation authorizes the Secretary of Health and Human Services (HHS) to negotiate prices for a minimum of 25 to a maximum of 250 prescription medications that do not have any competition and are most costly to Medicare. This price, which would apply to both Medicare and private insurance, would be determined through an international price index, capping the cost at no more than 120% of the average price of the following countries: Australia, Canada, France, Germany, Japan, and The U.K. The precise system, partnerships and infrastructure that the HHS would need to reference and negotiate prices is not specified. Pharmaceutical companies that fail to negotiate would be fined 65% of the revenue for the specific medication and this fine would increase by 10% each quarter, with a maximum of 95% of sales. This provides a necessary enforcement measure to ensure compliance, which both the Trump administration and Senate Finance Committee’s pharma legislation lacked.

Pharmaceutical companies will be penalized for price hikes that have outpaced inflation. Since Medicare cannot easily deny coverage for medications, pharmaceutical companies raise prices without much consequence, forcing the government to pay. This bill will require pharmaceutical companies to reimburse the government for these additional costs since 2016 through a rebate paid directly or require the drug prices to be lowered. This is intended to prevent skyrocketing drug prices.

A maximum of $2,000 in annual out-of-pocket costs would be implemented for patients covered by Part D, compared to the current $3,820 . Furthermore, insurance plans and pharma would be required to cover more of the cost of medications in the “catastrophic phase”. This would reduce out-of-pocket costs for over a million Medicare beneficiaries who are in this phase. 

Opponents are concerned that this legislation would discourage pharmaceutical innovation. However, the legislation does plan to allocate some of these savings to NIH to spurn non-profit innovation. As hearings and lobbying escalate this legislation, we can anticipate further conversation about the future of U.S. drug pricing.

Sources: Health Affairs , NPR , AP , Politico , STAT
One-Liners
  • The Trump Administration continues to attack reproductive rights and aligns with conservative countries like Saudi Arabia at upcoming UN summit to promote global policies that restrict sexual and reproductive health (Foreign Policy, The Guardian).
  • GM and Amazon-owned Whole Foods have taken away full-time and part-time employee health insurance, respectively, due to union strikes and labor organizing (The Washington Post, The Seattle Times).
  • A new study highlighted that over 3 million women (6.5% women) worldwide have reported their first sexual encounter as rape, and this number is estimated to be an under-count (JAMA Internal Medicine, NPR). 
  • Tennessee--who has not expanded Medicaid-- becomes the first state to propose Medicaid block grant financing structure, which would allow the state more flexibility on Medicaid spending and programming; advocates say this will be a good way to control Medicaid spending, while opponents are worried that the block funding will allow states to cut benefits and enrollment (Tennessean, CNN). 
  • The World Health Organization scolds Tanzania’s government for refusing to report a recent Ebola outbreak because they are worried it will hinder trade and tourism (Vox).