What GOP Plan For Health Care Reform May Mean For You?

The House GOP Health Care Reform Plan provides a blueprint for eliminating important elements of the ACA and replacing them with a more market-oriented approach.

On Wednesday key Capitol Hill committees started debate on the controversial new Health Care legislation

Both President Trump and the House GOP plan contemplate using tax credits to subsidize the purchase of health insurance.

Hearings on the “American Health Care Act” (AHCA) stretched overnight at the House Ways and Means Committee and Energy and Commerce Committee. Ways and Means approved its portion of the AHCA at around 4 a.m. on Thursday, while discussion continued at Energy and Commerce

While partial details on the AHCA’s costs are available, the Congressional Budget Office hasn’t yet estimated how the AHCA would affect the uninsured rate or how much it would cost overall. CBO would not have a “score” — a report on the effects of the bill — before next week, when the measure could go to the Budget Committee.

The Plan has not yet been analyzed by the Congressional Budget Office, so it is unknown how much the plan will cost and what its impact will be on the number of people who are insured. Additionally, despite the Republican majority in the Senate, it is unclear whether all the Republican senators will support the bill.

It is far from clear, however, whether the Medicaid provisions of the House GOP plan have sufficient support to pass the Senate. Four GOP senators recently warned that they would not support any plan that does not protect the Medicaid expansion population. Moreover, in his speech last week, President Trump argued that Congress should give governors the “resources and flexibility with Medicaid to make sure no one is left out.” It is not clear what Trump meant by this statement and whether he supports the House GOP plan’s Medicaid changes could very well cause some people to lose coverage.

One way of shedding light on what a final law may look like is to look at its putative winners and losers. Although it is hard to assess the ultimate impact of health care reform until more details emerge, what’s now known suggests that particular subsectors of the industry could be winners or losers:

1. Hospitals:

To the extent health care reform results in significantly more uninsured patients, hospitals will likely bear increased costs. Because hospitals often treat patients regardless of ability to pay, more uninsured patients means increased charity care and bad debt write-offs. This burden would fall heavily on disproportionate share hospitals (DSH) — hospitals that treat a large percentage of the indigent population. The ACA had reduced government funding to DSH hospitals under the theory that they would offer less uncompensated care as the number of uninsured people drops. The House GOP plan would benefit DSH hospitals by repealing the ACA’s funding cuts.

2. Pharmaceutical Industry:

The plans contemplated by the Trump administration and House GOP will have a mixed impact on the pharmaceutical industry.

The ACA reflected a complex bargain between the Obama administration and the pharmaceutical industry. The pharmaceutical industry benefited from more insured people who could afford to purchase more drugs. It also benefited from the closing of the “doughnut hole,” the coverage gap between an initial threshold of drug costs that would be covered by Medicare Part D and a much higher catastrophic maximum after which Part D coverage would resume. In return, the branded pharmaceutical industry agreed to an annual tax of about $3 billion (allocated among branded pharmaceutical companies based on their share of the branded pharmaceutical market) and cutbacks on Medicaid reimbursements for prescription drugs.

The House GOP plan partially unwinds this bargain. The plan benefits the pharmaceutical industry by repealing the $3 billion annual tax and maintaining the closure of the doughnut hole. Additionally, repealing the “medicine cabinet tax” may boost the sale of over the counter drugs. But the pharmaceutical industry will lose to the extent that people reduce purchases of prescription drugs because they lose their health insurance or are covered by plans that provide only limited coverage for expensive drugs, even while the ACA’s cutbacks on Medicaid rebates are left intact.

3. Medical Device Manufacturers:

Health care reform will likely be a major boon to device manufacturers because there is strong GOP support for lifting the excise tax on devices. Device manufacturers may also benefit from greater flexibility in patients’ ability to use HSA money on devices that would not typically be covered by insurance. That being said, device manufacturers may suffer lost sales to the extent people lose insurance coverage or purchase only thin coverage that leads them unable to afford certain devices.

While the House GOP plan reflects the bill that the House GOP leadership would like to pass, it is likely to be just the start of a heated health care reform debate. Different health care industry subsectors may yet have a significant role in shaping whatever bill, if any, ultimately passes in Congress and is signed by the President.

Republican leaders have emphasized that the objective of the law is to lower the cost of coverage and reduce government mandates, not necessarily to increase or even maintain the number of people covered.

One thing remains clear: the changes contemplated by the Trump administration and congressional Republicans are likely to have significant implications for just about every sector of the health care industry.

Republicans hope to send the AHCA to the full House within the next month.

Martin Milita – Medicaid Fraud Control Units

Medicaid Fraud Control Units pic
Medicaid Fraud Control Units
Image: oig.hhs.gov

With experience in legislative and regulatory lobbying, business development, and law, Martin Milita serves as senior director at Duane Morris Government Strategies, LLC. In this position, Martin Milita has investigated matters related to fracking, environmental permits, and Medicaid fraud throughout the state.

Jointly funded by the U.S. Department of Health and Human Services’ Office of Inspector General and by their home states, Medicaid Fraud Control Units prosecute people who violate the Medicaid system. They investigate claims of patient abuse and neglect in healthcare facilities, violations of the Civil False Claims Act that impact Medicaid, and fraud against any part of the Medicaid system. First established in 1977, these organizations consist of lawyers, investigators, and legislators who understand the Medicaid system. Currently, 49 states and the District of Columbia all have their own Medicaid Fraud Control Unit.

Pharmaceutical manufacturers remain a key area of focus for Medicaid Fraud Control Units. Over 60% of the civil settlements and judgments they obtained throughout FY 2013 came from investigations of actions committed by these companies. The same year saw the largest criminal recovery in the program’s history following an investigation into a pharmaceutical manufacturer. Among the conglomerate’s illicit actions were illegal marketing, false statements about safety, and illegal payments made to healthcare practitioners.

Recent Trends Suggest Medicaid Fraud Control Remains Necessary

Martin Milita served as the Medicaid inspector general for the state of New Jersey for five years. In this role, Martin Milita provided a crucial service, as all states are legally obligated to operate a Medicaid Fraud Control Unit (MFCU) or provide proof of active fraud protection alternatives.

Recent trends show that MFCUs are quite necessary, especially in the areas of pharmaceutical manufacturing and distribution. According to the U.S. Department of Health and Human Services, in 2013, 62 percent of civil settlements and judgments carried out by MFCUs involved prescription drug manufacturing. Additionally, the largest MFCU monetary criminal recovery to date occurred in 2013. This record-setting recovery resulted from a manufacturer’s admission to unlawfully and falsely promoting a prescription drug for unapproved uses.

The investigated manufacturer also faced allegations of illegal marketing; false information regarding safety, efficacy, and dosing; and illegal payment given to health care professionals and pharmacies. Although pharmaceutical companies are usually not enrolled Medicaid suppliers, illegal activities are often targeted toward marketing specific prescription medications to Medicaid suppliers and beneficiaries, thus falling under the domain of Medicaid Fraud Control Units.

New Jersey: an experiment with Medicaid Accountable Care Organizations in 15

With 396,000 more recipients of NJ FamilyCare (the name of New Jersey’s Medicaid program) at the end of 2014 compared with the start of the year, the stakes for delivering effective, efficient Medicaid services have grown.

This crucial safety-net insurance program for low-income residents (as well as most who receive long-term care) is in the midst of multiple changes. Topping the list in the coming year is the rollout of Medicaid Accountable Care Organizations (ACOs). Seven coalitions of healthcare providers in geographic areas that span the state have applied to be a part of the program, which allows doctors to manage the healthcare of Medicaid recipients by hiring nurses as care coordinators and to target care quickly to those patients with the greatest, most-complex needs.

It’s likely that the ACOs will start in the first half of the year, allowing for some early results from the project to begin to be assessed by the end of the year.

The application process itself has revealed one of the challenges for the state program. The ACOs must include 75 percent of the primary-care providers in their respective ZIP codes — but provider listings on insurance websites are in many cases out of date.

Another Medicaid challenge could come in the form of fewer doctors. A two-year increase in Medicaid reimbursements that was part of the Affordable Care Act — which allowed primary-care doctors to obtain the same reimbursements from Medicaid patients as they do with Medicare patients — has expired. (Congress didn’t vote to extend it.) Thus, doctors that took on new Medicaid patients may be reluctant to do so in the future.

Sen. Joseph F. Vitale (D-Middlesex) says it will be interesting to see whether patients enrolled in the ACOs receive more of their care in primary-care offices instead of hospitals, what are the health issues that cause them to seek care, and what effect the organizations will have on the amount of charity care provided by nearby hospitals.