ACOs Failing to Deliver, Says CMS in Issuing Proposed Overhaul

Stopping just short of calling Medicare’s accountable care organizations (ACOs) a complete failure, federal officials said that instead of generating savings, the alternative payment system has been costing taxpayers money and that it’s time for doctors and hospitals to begin taking on more of the risk of caring for patients.

The Centers for Medicare & Medicaid Services (CMS) on August 9 proposed a new rule that would govern how ACOs, which serve some 10.4 million Medicare beneficiaries, will be paid.

ACOs are groups of local physicians, hospitals, and other providers that work together and take responsibility for the quality and cost of patient care. Under the new rule, ACOs — even those already in the program — will have just 2 years to participate in a risk-free, shared-savings-only payment model. Currently, they have up to 6 years to stay in that risk-free, upside-only program.

CMS Administrator Seema Verma said in a call with reporters in which the new proposal was announced that a “shocking” 82% of ACOs take zero risk for patient care, which has led to increased Medicare spending — not the savings that were envisioned when the Medicare Shared Savings Program was established under the Affordable Care Act. The losses caused federal officials to propose the overhaul, she said.

“We understand that there are those who say we haven’t had enough time to live up to the commitment to achieve value,” said Verma. “But after 6 years, we believe the time has come to put accountability into the accountable care organizations.

“We now have enough collective experience that no provider group, whether they are a current ACO or considering becoming a future ACO, has any excuse for not providing value to patients and taxpayers,” Verma said.

CMS said it estimates that if the rule goes into effect as written, some 117 ACOs will drop out of the program. By eliminating the ACOs that are losing money and by keeping the ones that are creating savings, the overhaul is expected to result in $2.24 billion in savings over 10 years, Verma said.

Halt Higher Quality?

The federal agency may be underestimating how many ACOs would drop out, said the National Association of ACOs (NAACOS). In a survey it conducted earlier this year, more than 70% of those responding said they would leave the program if they were required to assume financial risk.

“The administration’s proposed changes to the ACO program will halt transformation to a higher quality, more affordable, patient-centered health care industry, stunting efforts to improve and coordinate care for millions of Medicare beneficiaries,” said NAACOS President and CEO Clif Gaus in a statement.

Under the proposed rule, CMS would retire the current Track 1 and 2 options and replace them with a “Basic” track. That track would allow ACOs to choose a shared-savings-only payment for 2 years, with a payment of up to 25% of shared savings (half of the current payment). The track also offers three other paths of shared risk and reward, with savings and loss payments going from 30% to 50%. With increasing risk, ACOs are granted exemptions from federal laws that prohibit anticompetitive practices and from the so-called Stark laws that govern self-referrals.

ACO agreements would be extended from the current 3 years to 5 years. The organizations would also be required to notify beneficiaries that they are being cared for as part of an ACO. They have the option to go elsewhere for care if they so desire, said Verma.

The rule proposes to retain Track 3 of the current program, which would be renamed the “Enhanced” track, and will allow a 75% maximum shared savings payment and equivalent ding if there are losses. The move is designed to encourage ACOs that can take on higher levels of risk and reward to stay in the program, said the NACCOS.

CMS data show that physician-led ACOs are having the most success. When asked by Medscape Medical News why that might be the case, Verma said it wasn’t clear, and added, “we continue to look at that issue.” She said, “We’re trying to encourage their participation — that’s why you’ll see with our proposed rule we’re allowing them to participate in what we call our Basic track, which allows for a more gradual transition to taking on risk.”

The rule proposes to extend all current ACO contracts — which are due to end in January — to July to give ACOs more time to choose an appropriate track. New applications will be accepted starting in July, said Verma.

CMS is inviting comments on the proposal during the next 60 days.

https://wb.md/2vXbWIQ

FDA Clears Vaginal Ring for 1 Year of Birth Control

The US Food and Drug Administration (FDA) has approved segesterone acetate and ethinyl estradiol vaginal system (Annovera, The Population Council, Inc) — the first vaginal ring contraceptive that can be used for an entire year to prevent pregnancy.

“The FDA is committed to supporting innovation in women’s health and today’s approval builds on available birth control options,” Victor Crentsil, MD, acting deputy director of the Office of Drug Evaluation III in the FDA’s Center for Drug Evaluation and Research, said in an agency news release.

Annovera is a reusable, nonbiodegradable, flexible vaginal ring placed in the vagina for 3 weeks and then removed for 1 week during which women experience a menstrual period. The schedule is repeated every 4 weeks for 1 year, covering 13 menstrual cycles of 28 days each.

The efficacy and safety of Annovera were studied in three open-label clinical trials with healthy women ranging in age from 18 to 40 years. Based on the results, about two to four women out of 100 may get pregnant during the first year they use Annovera, the FDA said.

Annovera carries a boxed warning relating to cigarette smoking and serious cardiovascular events. Women aged over 35 years who smoke should not use Annovera. Cigarette smoking increases the risk for serious cardiovascular events from combination hormonal contraceptive use.

Annovera is contraindicated in women with a high risk for arterial or venous thrombotic diseases; current or history of breast cancer or other estrogen- or progestin-sensitive cancers; liver tumors, acute hepatitis, or decompensated cirrhosis; undiagnosed abnormal uterine bleeding; hypersensitivity to any of the components of Annovera; and use of hepatitis C drug combinations containing ombitasvir/paritaprevir/ritonavir, with or without dasabuvir.

The most common side effects in women using Annovera are similar to those of other combined hormonal contraceptive products and include headache/migraine, nausea/vomiting, yeast infections, abdominal pain, dysmenorrhea, breast tenderness, irregular bleeding, diarrhea, and genital itching.

The FDA will require postmarketing studies to evaluate the risk for venous thromboembolism and the effects of CYP3A modulating drugs and tampon use on the pharmacokinetics of Annovera.

The Population Council has entered into a license agreement with TherapeuticsMD to make Annovera available to women in the United States. As part of the license agreement, TherapeuticsMD will provide significantly reduced pricing to federally designated Title X family planning clinics serving lower-income women.

https://wb.md/2KIzKpe

U.S. appeals court orders EPA to ban pesticide

A divided federal appeals court on Thursday ordered the U.S. Environmental Protection Agency to ban a widely-used pesticide that critics say can endanger children and farmers.

The 2-1 decision by the 9th U.S. Circuit Court of Appeals in Seattle overturned former EPA administrator Scott Pruitt’s March 2017 denial of a petition by environmental groups to halt the use of chlorpyrifos on food crops such as fruits, vegetables and nuts.

“This shows that the EPA can’t just ignore the science that this pesticide damages children’s brains,” Marisa Ordonia, a lawyer for Earthjustice, which represented the petitioners, said in an interview. “The Trump administration has to follow the law, as does everyone else.”

Pruitt’s ruling, one of many by the administration to reduce federal regulatory oversight, had reversed a 2015 Obama administration recommendation to extend to food a 2000 ban on chlorpyrifos that covered most household settings.

Writing for the Seattle-based appeals court, Judge Jed Rakoff directed the EPA to ban chlorpyrifos within 60 days, saying the agency failed to counteract “scientific evidence that its residue on food causes neurodevelopmental damage to children.”

Rakoff also faulted the EPA for going against its own 2016 risk assessment for the pesticide, “largely ignoring” and then “temporizing” in its response to the petition, and wrongly declaring that the court had no business deciding the matter.

“If Congress’s statutory mandates are to mean anything, the time has come to put a stop to this patent evasion,” wrote Rakoff, who normally sits on the federal district court in Manhattan.

Wyn Hornbuckle, a U.S. Department of Justice spokesman, said that office is reviewing the decision.

Pruitt’s order was opposed by groups such as the Natural Resources Defense Council and the United Farm Workers, and the attorneys general of New York, California, Hawaii, Maryland, Massachusetts, Vermont, Washington state and Washington, D.C.

Circuit Judge Ferdinand Fernandez dissented from Thursday’s decision, saying the court lacked jurisdiction, though its discussion of the petition’s merits had “some persuasive value.”

In issuing his order, Pruitt had said the EPA needed to provide “regulatory certainty” to the thousands of American farms that use chlorpyrifos, while protecting people’s health and the environment.

“By reversing the previous administration’s steps to ban one of the most widely used pesticides in the world, we are returning to using sound science in decision making – rather than predetermined results,” Pruitt had said.

EPA spokesman Michael Abboud said on Thursday that “data underlying the court’s assumptions remains inaccessible and has hindered the agency’s ongoing process to fully evaluate the pesticide using the best available transparent science.”

The case is League of United Latin American Citizens et al v New York et al, 9th U.S. Circuit Court of Appeals, No. 17-71636.

https://reut.rs/2nrNcVd

FDA: Rhythm Method App Can Be Marketed for Contraception

Want to prevent pregnancy? There’s an FDA-approved app for that.

The rhythm method got a 21st century makeover when the FDA announced on Friday that they were permitting marketing of Natural Cycles, the first direct-to-consumer mobile medical application that can be used as “a method of contraception to prevent pregnancy” in premenopausal women ages ≥18.

Natural Cycles involves a woman inputting the reading of her waking basal body temperature, as well as her menstrual cycle information in the app, and the app then calculates days of the month where a woman is likely to be fertile, the agency said. Women who want to use the app “as a method of contraception” then avoid intercourse or use protection when “fertile day” is displayed on the app.

Clinical studies to evaluate the efficacy of Natural Cycles for “use in contraception” had 15,570 women use the app for an average of 8 months, and the agency cited a “perfect use” failure rate of 1.8%, meaning 1.8 in 100 women who used the app for 1 year would become pregnant because their protection failed on a fertile day or they had unprotected intercourse when the app “predicted they would not be fertile.” The app had a “typical use” failure rate of 6.5%, which accounted for “incorrect use,” such as having intercourse on fertile days.

Interestingly, a CDC fact sheet puts the failure rate of “fertility-based awareness” family planning methods at 24% (one assumes no data was available yet for fertility-based awareness method apps, however).

The agency said the application was approved under a de novo review pathway, and said they are establishing “special controls,” where the app meets criteria to assure “accuracy, reliability, and effectiveness” in preventing pregnancy. They added that this action also creates a new regulatory classification, with Natural Cycles serving as a so-called predicate device. That means similar apps putting the rhythm method into their own algorithms can reach market through the 510(k) process with no trials required, as long as they demonstrate “substantial equivalence” to Natural Cycles.

The FDA dutifully noted that the app does not provide protection against sexually transmitted infections.

https://bit.ly/2McuW15

Cal. jury orders Monsanto to pay $289M in weed-killer suit: CNBC

https://bit.ly/2M5H43T

Quorum eyes up to $215M from asset sales as net loss grows

• Quorum Health’s operating revenue declined 9% to $959.9 million in the first half of 2018, down from $1.1 million in the same period a year ago. The slump was primarily due to loss of revenue from seven hospitals divested or closed since the end of the prior period, according to financial results released Thursday.
• A $15.8 million infusion of funds from the California Hospital Quality Assurance Fee program partially offset the revenue drop.
• The Brentwood, Tennessee-based hospital chain ended the half with a net loss of $124.4 million, more than twice the $57.8 million it lost in the first half of 2017, and said it will focus on continuing to restructure to reduce debt and improve its financial outlook.

Like many health systems, Quorum is looking to stabilize itself among difficult financial trends and has turned to selling off hospitals in an effort to chip away at debt.

Since Quorum began unloading hospitals in 2016, it has reaped $84.8 million in net proceeds from divestitures and used $74.9 million of that to pay down debt. The company said it plans to sell another $165 million to $215 million in assets by the end of this year.

As of Wednesday, Quorum had inked a definitive agreement to sell one hospital and signed letters of intent to divest six other facilities. Combined, those transactions would net the health system about $115 million.

For the three months ending June 30, Quorum saw operating revenue drop $57 million year over year to $472.6 million. Net loss of $25.9 million, down from $30.6 million in Q2 2017, was impacted by the closure of one hospital and $4.1 million in severance related to headcount reductions, the company said.

Quorum’s six-month performance took a hit from several one-time charges, including $39.8 million in impairment charges. The company, which spun off from Community Health Systems with 38 hospitals in 2016, also cited $17.1 million in costs related to the shuttering of one hospital, plus $8.1 million in losses on the sale of two hospitals and $6 million in severance related to headcount reductions.

The company reduced its full-year guidance from a range of $1.9 billion to $2 billion to $1.9 billion. “The reduction is primarily a result of the Company’s continued efforts to execute on its divestiture strategy as well as efforts to improve its operating margins by discontinuing underperforming service lines, managed Medicaid contracts and provider relationships,” the company said.

Quorum CEO Thomas Miller stepped down in May. Robert Fish, board chairman of Kennett Square, Pennsylvania-based Genesis Healthcare, is serving as interim CEO. He most recently served as interim CEO of San Diego-based Millennium Health and CEO of Genesis Healthcare.

https://bit.ly/2P0gtTt

Cigna wins Texas underpaid claims lawsuit

• A federal judge in Texas has ruled for Cigna in a lawsuit that claimed the insurance company underpaid medical claims by at least $50 million.
• U.S. District Court Judge Keith Ellison said Cigna didn’t “abuse its discretion” by cutting payments to North Cypress Medical Center after finding out the hospital performed fee-forgiving for Cigna members that received out-of-network care.
• Payers like Cigna say that fee-forgiving, which is when a hospital charges less for out-of-network care than what is owed under the health insurance plan, isn’t legal.

These kinds of disputes between providers and payers continue to crop up. Providers reducing patient responsibility for out-of-network care through coinsurance payments is one touch point for payers and providers. Payers, of course, would prefer members get care within their networks, so providers waiving or cutting coinsurance charges for members doesn’t sit well with insurers, who say the discounts are unlawful.

The Texas issue comes because NCMC, which is not in Cigna’s network, created a “prompt pay discount program.” Under that policy, patients who paid out-of-network charges promptly could get discounts from the provider, which in turn bills Cigna for the full amount.

As a way to respond to fee-forgiving, Cigna created a policy of paying providers based on what they charged the patient for care.

Ellison said the payer’s decision to reduce payments to out-of-network providers engaging in fee-forgiving has been consistent. Cigna offered substantial evidence to support its claim about fee-forgiving, including surveys the company sent to patients who received out-of-network care at NCMC, he said.

“Enforcing coinsurance rates for out-of-network providers and not for in-network providers is consistent with the policy of encouraging patients to seek in-network care to keep health care costs lower for the employers who fund the (Administrative Services Only plans),” Ellison wrote.

Another flash point between payers and providers is that insurers are attempting different ways to squeeze more money out of the system. That often comes at the expense of health systems. One example is Anthem, which has launched a series of cost-saving moves over the past year, which brought opposition from provider groups.

As payers continue to look for ways to save money and move more contracts to risk-based, you can expect the friction only to intensify. Health systems with already tight margins bristle at the thought of sacrificing more payments through additional risk and cost-saving policies.

https://bit.ly/2MECLc9