On July 21, the American Action Forum (AAF) released a report, examining the effect of providing drug rebates similar to those employed in Medicaid to dual eligibles and beneficiaries of the Medicare Prescription Drug Benefit Program (Part D) Low-Income Subsidy (LIS). Legislation (S. 1206) to enact such a change is currently before the Senate Finance Committee, with supportive legislators arguing that it would save $112 billion over 10 years. However, the AAF report contends that the change would result in Part D premium increases of up to 40 percent and argues that drug manufacturers may shift drug costs to the private health coverage market in response to the rebates.

From the report:

The Medicare Part D prescription drug program marked a significant change to Medicare. Part D created a competitive market for prescription drug plans, and has proven to be a dramatic success in controlling prescription drug costs. Actual Part D benefit costs have been in the vicinity of 40 percent below the Congressional Budget Office’s initial ten-year estimate. As a result, America’s seniors have benefited from lower prescription drug premiums. The voluntary outpatient drug benefit is delivered through stand-alone prescription drug plans (PDPs) and drug plans sponsored by Medicare Advantage plans (MA-PDs) that compete head-to-head in each geographic region, without a government-prescribed benchmark or price-setting mechanism. Every Part D plan participates in the annual bidding process that determines the federal subsidy to enrollees, which averages 74.5 percent of the cost of a standard benefit.

Full report: Cost Shifting Debt Reduction to America’s Seniors: Medicare Part D Rebates Would Dramatically Increase Drug Premiums (PDF | 419 KB)

American Action Forum. (2011). Cost shifting debt reduction to america’s seniors: Medicare Part D rebates would dramatically increase drug premiums. Holtz-Eakin, Douglas and Ramlet, Michael. 

On July 22, the Congressional Budget Office (CBO) released an analysis, finding that legislation (S. 1376) amending the income calculations used to determine health reform benefit eligibility will prevent fewer than one million individuals from accessing Medicaid.  Under current law, health reform does not include Social Security benefits as income when determining eligibility for Medicaid or subsidized coverage through the law’s health exchanges.  The new bills would count Social Security as income, reducing eligibility and saving an estimated $13 billion over 10 years.

From the report: 

S. 1376 would, beginning in 2014, include all Social Security and Tier 1 Railroad Retirement benefits as part of modified adjusted gross income (MAGI) for purposes of determining eligibility for certain Medicaid applicants and subsidies for health insurance purchased through the new health insurance exchanges to be established under the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148). Under PPACA, the nontaxable portion of those benefits will be excluded from MAGI for such eligibility determination.

Full report: S. 1376: A Bill to Conform Income Calculations for Purposes of Eligibility for the Refundable Credit for Coverage Under a Qualified Health Plan and for Medicaid to Existing Federal Low-Income Assistance Programs (PDF | 33 KB) 

Congressional Budget Office. (2011). S. 1376 A bill to conform income calculations for purposes of eligibility for the refundable credit for coverage under a qualified health plan and for Medicaid to existing federal low-income assistance programs. Minicozzi, Alexandra.

On August 3, the National Health Council (NHC) released an actuarial analysis estimating cost sharing requirements under the national health care reform law’s essential benefits package.  Currently under development by the U.S. Department of Health and Human Services’ (HHS) Center for Consumer Information and Insurance Oversight (CCIIO), the essential benefits package will outline the basic coverage package that insurers must offer in the law’s health exchanges.  Employing a model based on the Blue Cross Blue Shield (BCBS) Standard Option plan offered through the Federal Employee Health Benefit Program (FEHBP), the analysis suggests that even beneficiaries qualifying for subsidized coverage may have difficulty affording coverage if they have a chronic condition.  The report encourages HHS officials to ensure that the package offers a continuum of patient protections that grant beneficiaries access to affordable, quality health coverage.

From the report:

The Affordable Care Act offers limited guidance about the essential health benefits (EHB) package, the minimum standard benefit design for private health insurance coverage. As the Center for Consumer Information and Insurance Oversight (CCIIO) finalizes the federal regulations establishing EHB policy, the National Health Council (NHC) offers its perspective that the regulations should define not only a fair and balanced benefit but also strong patient protections for the millions of people with chronic diseases and disabilities and their family caregivers who will rely on EHB policies.

Full report: A United Patient Voice on Essential Health Benefits (PDF | 505 KB)

National Health Council. (2011). A united patient voice on essential health benefits.

On June 14, the Government Accountability Office (GAO) released a report outlining the criteria federal officials used in determining whether to award waivers exempting health plans from the national health care reform law’s minimum annual benefit requirements.  The GAO determined that Centers for Medicare & Medicaid Services (CMS) officials awarded waivers in cases where plans would otherwise have significantly raised health coverage premiums or limited access to care.  Examining a sample of 58 approved applications, GAO officials found that most projected a premium increase of at least 10 percent under the law’s annual benefit requirement, while nearly 75 percent of a sample of 65 denied applications projected premium increases of 6 percent or less.

From the report:

The Patient Protection and Affordable Care Act (PPACA), which became law in March, 2010, generally prohibits health insurance issuers and group health plan sponsors from imposing annual limits on the dollar value of “essential” covered health benefits beginning on January 1, 2014, but allows restricted annual limits, as defined by the Secretary of Health and Human Services (HHS), on the value of those benefits until that time. In setting these annual limits, HHS is statutorily required to ensure that individuals’ access to needed services remains available with a minimal impact on plan premiums. In June 2010, HHS set restrictions on annual limits for each plan year from September 2010 through December 2013. To mitigate a potential impact on individuals’ access or premiums for existing plans with benefit limits below these amounts, HHS established a waiver program based on the statutory requirement. Under the program, issuers or other group health plan sponsors could apply for a waiver from the annual limits set by HHS if they attested and presented evidence that meeting the annual limits would result in diminished access to benefits or a significant increase in premiums. To implement various provisions of PPACA, including those related to annual limits, HHS created what is now called the Center for Consumer Information and Insurance Oversight (CCIIO). CCIIO is now a part of the Centers for Medicare & Medicaid Services (CMS).

Full Report: Private Health Insurance: Waivers of Restrictions on Annual Limits on Health (PDF | 361 KB)

Government Accountability Office. (2011). Private health insurance: waivers of restrictions on annual limits on health.

On January 24, U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice (DOJ) officials released the Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2010, finding that federal officials recouped $4.02 billion from health care fraud cases in FY2010.  The $4 billion figure is a 54 percent increase over the $2.6 billion recouped in FY2009 and more than twice the $2 billion recouped in FY2008.  The authors found that nearly 75 percent of the recovered funds were fraudulently obtained through Medicare.  Federal officials cite increased fraud detection efforts and cooperation between government agencies for their improved results.

From the report:

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS), acting through the Inspector General, designed to coordinate Federal, state and local law enforcement activities with respect to health care fraud and abuse. In its fourteenth year of operation, the Program's continued success again confirms the soundness of a collaborative approach to identify and prosecute the most egregious instances of health care fraud, to prevent future fraud or abuse, and to protect program beneficiaries.

Full Report: Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2010 (PDF | 1.07 MB)

U.S. Department of Health and Human Services and U.S. Department of Justice. (2011). Health care fraud and abuse control program annual report for fiscal year 2010.

The U.S. Department of Health and Human Services’ (HHS) Office of the Inspector General’s (OIG) report found that over 75 percent of drug makers do not fully comply with federal average manufacturer price (AMP) reporting requirements.  The report noted that noncompliant companies did not submit any AMP information, filed their information late, or filed incomplete information. 

 

From the report:

 

The Social Security Act sets forth price reporting obligations for certain manufacturers, including the obligation to report AMP data to CMS. During 2008, AMP was generally defined by statute to be the average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to the retail pharmacy class of trade. Manufacturers must provide CMS with the AMP for each of their covered outpatient drugs within 30 days after the end of each month and each quarter.

Full Report: Drug Manufacturers’ Noncompliance with Average Manufacturer Price Reporting Requirements (PDF | 398 KB)   

Department of Health and Human Services Office of the Inspector General. (2010). Drug manufacturers’ non compliance with average manufacturer price reporting requirements. Levinson, D.