In case you think I’m opinionated, just know that it could be so.much.worse. I often write something and then hit backspace, backspace, backspace. You’re welcome?

Off next week for the 4th of July.

Caught my Eye

Tradeoffs. Last week USC put out a paper that reviewed how many Medicare Part D beneficiaries will likely pay more out-of-pocket now that there is an out-of-pocket (OOP) cap ($2k for 2025.) Well, yes. This was anticipated. The cost shift will happen because plans are shifting from copayments to coinsurance and are increasing annual deductibles. With the changes in the Inflation Reduction Act, including the OOP cap, plans have more financial liability and are looking for ways to put costs back on beneficiaries in ways that aren’t only higher premiums. The tricky part about deductibles and coinsurance? They often are based on list price and do not reflect the discounts and rebates provided by pharmaceutical manufacturers, which can be significant depending on the drug. The problem? Pharmacy Benefit Managers (PBMs.)

Knock Me Over with a Feather. The Association for Accessible Medicines has a report that shows that only 24% of Part D plans cover generics when they are first launched compared to an average of 50%+ for commercial plans. The problem? PBMs.

Magic Wand. In one of those “if you had one day to xxx” questions, Mark Cuban pitched an out-there healthcare idea. No PBMs, no insurance companies, no employer sponsored care. Cash pay with federal reinsurance. Debt limited to $50k before reinsurance kicks in and repayment would be held at 10% of income and can’t roll over more than 15 years. One of noted problems? PBMs.

Death by a Thousand Cuts. Late last week, the Centers for Medicare & Medicaid Services (CMS) put out a final rule on the Affordable Care Act exchange plans. It strengthens the income verification process and removes Deferred Action for Childhood Arrivals (DACA) recipients from eligibility and enrollment. The rule also requires people who are automatically re-enrolled in $0 premium plans but don’t confirm pay a $5/month premium and eliminates the special enrollment period for people with incomes at or below 150% of the federal poverty level. Overall, the rule looks to implement processes that report to reduce fraud, waste and abuse but are likely to leave a lot of vulnerable people without insurance coverage. And if the enhanced subsidies aren’t extended, even more uninsured.

Reviewing the Fundamentals – Prior Authorization

Prior authorization (PA) is a process where providers must get approval from a patient’s health insurance plan before certain medical services or treatments are covered. While insurers argue PA is a necessary tool to control costs, prevent unnecessary treatments, and ensure evidence-based care, it can be seen by others as a way of delaying or denying care to save money. It also is a huge administrative burden, which leads to patients abandoning treatment and questions about who is making these decisions.

Physicians and their staff spend a significant amount of time each week (averaging 13 hours, according to an AMA survey) on PA requests. This involves extensive paperwork, phone calls, and faxes, taking time away from patient care. Many practices even have staff dedicated exclusively to PAs. While intended to save money, the administrative burden of PAs can increase overall healthcare costs. The time spent by providers and the delays in care can lead to more expensive interventions.

The stress, time commitment, and confusion associated with PAs can lead patients to just give up and not get recommended treatments.

Concerns exist about automated decision-making systems by insurers that may lead to batch denials with little human review. There’s a call for medical professionals in the same field as the treating physician to review non-approved requests. Not having OBs making decisions about oncology drugs, etc.

In response to the widespread criticism and increasing regulatory pressure, major health insurers, including Humana, Cigna, UnitedHealthcare, and Blue Cross Blue Shield, have recently announced commitments to streamline and improve the prior authorization process. These voluntary pledges, largely through their trade association AHIP, aim to address many of the pain points.

Commitments include:

• Standardizing electronic PA: Health plans are working towards implementing common, transparent electronic submission processes, using standardized data and submission requirements to accelerate turnaround times. The goal is for a new framework to be operational by 2027.
• Reducing the number of claims subject to PA.
• Faster decisions: By 2027, at least 80% of electronic PA approvals (with all necessary clinical documentation) are expected to be answered in real-time.
• Providing specific reasons for denials.
• 90-day transition of existing PAs when patients switch plans.

While these commitments are a positive step, they are voluntary and not the first time that the health insurance industry has promised to do better. Could it be the federal and state reform efforts breathing down their necks?

For example, the CMS Interoperability and Prior Authorization final rule, issued in January 2024, aims to enhance data exchange and automate aspects of PA. Legislative attempts have also emerged, such as the Advancing Electronic Prior Authorization Act in the U.S. Congress, which sought to promote electronic PA to reduce administrative burden and improve efficiency. But note that these did NOT include prescription drugs where the AHIP announcement this week does appear to.

Historically, prior authorization reform efforts have been prevalent for medical procedures and expensive imaging. The inclusion of drugs in these reform discussions indicates a recognition of the significant impact PA has on access to necessary medications and the associated administrative hurdles for both pharmacies and prescribers. Will it make a difference? I’ll stay hopeful but pinky promises don’t have a lot of weight behind them…

For the Files

If you’re trying to learn more about Medicare and don’t want to ask someone, MedPAC has a place to get you started. Here is the Part D chapter from the latest report. Read it and you’ll know more about Medicare Part D than most people. If you need help with it, let me know. Part D is kind of the best.