#6Things That Happened in Health Policy This Week

6 Things That Happened in Health Policy This Week is produced by a mix of research assistants from the Healthcare Quality & Outcomes (HQO) Initiative at the Harvard T.H. Chan School of Public Health. In each edition we feature a variety of news articles, reports, and studies focused on U.S. health policy and health services research. This week’s edition includes contributions from Zoe Lyon (@zoemarklyon), Yevgeniy Feyman (@YFeyman), Rajkumar Pammal (@rspammal), and Anthony Moccia (@Anthony_Moccia).

Modern Healthcare: CMS finalizes changes to ACO cost targets

  • CMS has finalized changes to how it evaluates whether or not Medicare ACOs are saving money
  • This change comes in response to persistent complaints that the program was unfair for efficient providers because they had to compete against their own past performance, rather than being compared to other providers in the region
  • CMS’ new methodology adjusts cost benchmarks based on regional rather than national spending data
  • The changes are also intended to encourage ACO participants to transition to the program’s more aggressive tracks
    • The majority of the 434 ACOs currently earn bonuses for meeting cost and quality targets without risking penalties if they fall short
    • The new rule will give ACOs the option of extending their agreement for a year before taking on financial risk
  • The new rule also sets time limits and establishes criteria for ACOs to appeal penalties or bonuses
  • CMS will phase in the new methodology for ACOs entering contract periods beginning on or after Jan. 1, 2017
    • CMS denied a request from several provider organizations to allow ACOs that entered the program in 2013 to take advantage of the new benchmarking earlier; these ACOs will have to wait until they enter a new agreement in 2019

STAT: Vermont becomes first state to require drug makers to justify price hikes

  • Despite pharmaceutical industry opposition, Vermont’s Governor Shumlin signed into law a bill requiring some drug makers to justify price increases
    • State officials will identify 15 drugs with high expenditures and whose wholesale acquisition cost (WAC) – the list price – has increased by 50 percent or more over 5 years, or by 15 percent or more over 12 months
    • Companies will be required to submit a breakdown of factors involved in price increases, and each factor’s contribution to the increase
    • Results will be posted on a public website; violations carry a $10,000 penalty.
  • This comes on the heels of congressional inquiry into pricing practices by Valeant Pharmaceuticals and Turing Pharmaceuticals
    • Recently, a similar bill was approved by California’s state Senate
  • Governor Shumlin has said in a statement that this is “about accountability,” referencing Turing CEO Martin Shkreli’s refusal to answer any questions in a congressional hearing
  • John LaMattina, former head of R&D at Pfizer has noted that this may have the opposite effect, causing companies to set list prices even higher

New York Times: Congress Will Work on a $1.1 Billion Measure to Fight Zika, McConnell Says

  • On Wednesday, Senate Majority Leader Mitch McConnell (R-KY) said that House and Senate negotiators will work to provide $1.1 billion in funding to fight the Zika virus
  • Last month, the Senate approved a $1.1 billion package, less than the $1.9 billion sought by the administration
  • The House approved a stand-alone $622, with requirements that funding be reallocated from other programs including anti-Ebola efforts
  • Zika has been shown to cause serious birth defects, including microcephaly
  • According to the CDC, there are now 691 travel-associated cases of Zika reported in U.S. States, and 1,301 locally-acquired (and 4 travel-associated) cases reported in U.S. territories

MarketWatch: Obamacare has led to rise in involuntary part-time employment, Goldman Sachs finds

  • A study released by Goldman Sachs this week reports that the ACA’s employer mandate has led to a moderate rise in involuntary part-time employment
  • Alec Phillips, an economist at Goldman Sachs, states in a research note that “a few hundred thousand workers might be working part-time involuntarily as a result of the ACA” and these few hundred thousand will represent a large share of the “underemployment gap”
  • This comes as no surprise to the Congressional Budget Office (CBO), who in 2014 predicted an estimated reduction in full-time-equivalent workers of about 2 million with the full implementation of the ACA

Wall Street Journal: U.S. Files Antitrust Case Against North Carolina’s Largest Health System

  • On Thursday, the U.S. Justice Department and North Carolina Attorney General Roy Cooper filed a lawsuit against the largest health system in North Carolina, the Charlotte-based Carolinas HealthCare System (CHS)
  • The civil antitrust case details allegations of how the health system stifled competition by using its market power to influence commercial insurers
  • These actions by CHS may have increased health care costs for both employers and consumers
  • CHS denies that its contracts with health plans represent anticompetitive behavior
  • Still, with the lawsuit claiming that the health system has 50% market share in numerous North Carolina and South Carolina counties, CHS is accused of leveraging agreements with insurers preventing its exclusion from “narrow-network plans”
  • This is the most recent example of growing scrutiny of the lack of competition in a health care industry with increasing consolidation

Modern Healthcare: NIH funding increase still on track

  • On Thursday, an appropriations bill that increases NIH funding by $2 billion was overwhelmingly approved by the Senate Committee of Appropriations
  • The increase in funding directed at brain research comes largely in response to the current opioid epidemic in America
  • Mary Woolley, President and CEO of Research America, stated her disappointment with the appropriation bill’s reduction in funding for federal health agencies including
    • The Centers for Disease Control and Prevention
    • The Agency for Healthcare Research and Quality
  • In recent months, the Senate has disagreed on whether or not the NIH should be the recipient of “mandatory” funding, a guaranteed annual source of funding that does not have to be approved by Congress
  • Democrats contend that the appropriation bill does not satisfy mandatory funding for the NIH

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