We’re charging doctors for their role in the opioid crisis. What about employers?

The opioid crisis roller coaster continues. And if all the events leading up to this point were just us slowly progressing bit by bit up the steepest incline, we might have just reached the tipping point.

This week, 60 medical professionals and pharmacists were charged for their role in pushing excessive opioid prescriptions—more than 350,000 scripts and 32 million pills—and committing healthcare fraud. Assistant Attorney General Brian Benczkowski, head of the Department of Justice’s Criminal Division whose Appalachian Regional Prescription Opioid Strike Forceconducted the investigation, said, “You can rest assured, when medical professionals behave like drug dealers, the Department of Justice is going to treat them like drug dealers.”

But if these actions were outright criminal, how do we think about those who have been merely negligent, like the employers from whom millions of Americans get their health insurance and who ignored all the warning signs from some of these very physicians, nurses and pharmacists?

The majority of employers have been unknowingly contributing to the opioid crisis. They spend nearly $20,000 for family healthcare coverage per employee, and instead of taking a closer look at what exactly they’re paying for, most just accept whatever their insurance carriers put forward. As a result, employers keep forking over billions of dollars for the expensive, low-quality care that floods our system with deadly, addictive opioids—130 Americans die each day—and face a growing legal risk from wrongful death lawsuits by surviving family members who have lost a loved one to an overdose.

Here’s how this poor-quality care happens. Most employer plans cover care that utilizes a fee-for-service payment model in which there’s no connection between costs and outcomes. Patients are billed for every service/procedure/scan a physician orders, even if they’re unnecessary and inefficient, and physicians are incentivized to find quick, easy answers. This system is extremely expensive for both employers and patients, it’s rarely thorough and it frequently forces patients to make follow-up and referral appointments because their condition didn’t improve the first time.

Perhaps the greatest example of how this low-quality care directly contributes to the opioid crisis is the treatment of lower back pain, which 80% of adults will experience at some point in their life. Lower back pain is the second most common reason people visit the doctor, and it’s one of the top drivers of opioid prescriptions even though they aren’t effective in treating the root cause of someone’s pain, just masking its symptoms. Nevertheless, physicians hoping to satisfy patients rarely think twice about sending them to the pharmacist for relief.

So how do we fix it? By changing the behavior of those same employers.

It starts with paying for value, not volume. Employers should work with non-conflicted benefits advisers to identify value-based care centers in which physicians are rewarded not for how many tests they order, but for how positive their patient outcomes are. Physicians operating under this model can spend more time with patients and are more likely to offer alternative treatment options to problems like lower back pain.

Instead of prescribing painkillers, they might recommend physical therapy or help the patient identify what lifestyle factors (lifting, sitting, etc.) could be causing that pain. Great side benefits of employees receiving proper care include far better health outcomes and a greatly decreased risk of addiction, and employers such as Rosen Hotels & Resorts are spending 55% less than the average employer on health benefits.

Once employers have this new plan in place, they can encourage their employees to use it by waiving co-pays for their visits to the value-based physicians they’ve identified. They can make smart healthcare decisions free or nearly free and make decisions that will likely lead to low-quality care and perhaps opioid addiction cost a pretty penny.

Some employers worry that this will put them in the healthcare business, to which I respond, “You already are.”

Healthcare is the second-largest cost item in many companies. It’s easy enough to outsource claims processing to an independent third-party administrator, and stop-loss insurance—coverage that kicks in after a set amount—provides a backstop against truly catastrophic claims.

Right now, we’re in a pivotal position. The federal government is going after the criminal actors, but much more will be needed to fix the rest of this broken system. Can we really prosecute and punish our way out of this problem? Or, do we go about slaying this healthcare beast once and for all by changing the very way healthcare is procured, produced and received? I choose the latter.

https://www.fiercehealthcare.com/payer/industry-voices-so-we-re-charging-doctors-for-their-role-opioid-crisis-what-about-employers

1st drug distribution firm, former execs, criminally charged in opioid crisis

In a national first in the fight against the opioid crisis, a major drug distribution company, its former CEO and another top executive have been criminally charged in New York.

Rochester Drug Co-Operative, one of the top 10 largest drug distributors in the United States, was charged Tuesday with conspiracy to violate narcotics laws, conspiracy to defraud the U.S., and willfully failing to file suspicious order reports.

Laurence Doud III, the company’s former CEO, and William Pietruszewski, the company’s former chief compliance officer, are individually charged with conspiracy to distribute controlled substances and conspiracy to defraud the U.S. Pietruszewski is also charged with willfully failing to file suspicious order reports with the Drug Enforcement Administration.

Both Doud, 75, and Pietruszewski, 53, face life in prison. Doud will appear in court Tuesday, and Pietruszewski pleaded guilty last Friday, Geoffrey S. Berman, U.S. attorney for the Southern District of New York, said.

The U.S. attorney’s office also filed a lawsuit against Rochester Drug Co-Operative on Tuesday seeking “penalties and injunctive relief.”

“This prosecution is the first of its kind: Executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country,” Berman said. “Our office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.”

Between 2012 and 2016, Rochester Drug Co-Operative is accused of distributing tens of millions of doses of oxycodone, fentanyl and other opioids to pharmacies that its own compliance department found had no legitimate need for them.

Prosecutors said Rochester Drug Co-Operative went against the DEA and its own policies and distributed drugs to pharmacies that were “filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice, under investigation by law enforcement, or on RDC’s ‘watch list.'”

Rochester Drug Co-Operative “distributed controlled substances to those pharmacies even after identifying ‘red flags,'” a statement from the U.S. attorney said. And at Doud’s direction, the company took on pharmacies that had been terminated by other distributors.

Rochester Drug Co-Operative’s own employees “described some of the company’s customers as ‘very suspicious,’ and even characterized particular pharmacies as a ‘DEA investigation in the making’ or ‘like a stick of dynamite waiting for [the] DEA to light the fuse,'” the statement said.

And executives at Rochester Drug Co-Operative purposefully kept suspicions of pharmacies’ illegal activity from the DEA, fearing investigations into the pharmacies and potentially losing customers, according to a criminal complaint.

The company identified about 8,300 “potentially suspicious ‘orders of interest,’ including thousands of oxycodone orders,” between 2012 and 2016, but only reported four, the U.S. attorney said.

In that time, Rochester Drug Co-Operative’s sales of oxycodone tablets grew almost nine-fold, from 4.7 million to 42.2 million, prosecutors said. Their fentanyl sales grew from approximately 63,000 dosages in 2012 to more than 1.3 million in 2016.

In that same time, Doud’s compensation ballooned to $1.5 million a year.

“Doud cared more about profits than the laws intended to protect human life,” Berman said.

Rochester Drug Co-Operative announced it has entered into a plea agreement in the criminal case and a settlement in the civil case. The company has agreed to admit to the accusations, submit to supervision by an independent monitor, reform its compliance program and pay a $20 million fine.

“We made mistakes … and RDC understands that these mistakes, directed by former management, have serious consequences,” Jeff Eller, a spokesperson for Rochester Drug Co-Operative, said in a statement. “We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better.”

“One element of the opioid epidemic is a dramatic increase in the volume of prescriptions for opioids and all narcotics,” Eller said. “From 2012 to 2017, we did not have adequate systems in place nor were our compliance team and practices rigorous enough to provide adequate controls and oversight over the increased demand for narcotic drug products from pharmacies.”

A new management team was put in place at Rochester Drug Co-Operative in 2017, and “began making significant changes with a focus on implementing a world-class compliance program,” the company’s statement said.

https://www.nbcnews.com/news/us-news/former-ceo-major-drug-distribution-company-first-face-criminal-charges-n997571

Hospitals, cancer centers chafe at CMS’ approach to national CAR-T coverage

With a decision less than a month away, hospital and cancer center executives hope to persuade the CMS to be more flexible in covering a new and costly cancer treatment that’s still evolving.

The CMS in February proposed that it make a national coverage determination for chimeric antigen receptor T-cell therapy, or CAR-T, that boosts a person’s immune system cells to combat cancer.

A decision is expected by the end of May for a treatment that can cost as much as $1 million.

However, hospitals and oncology centers believe the proposal creates new reporting burdens and limits reimbursements for a therapy that has two available treatments but with more on the way.

HOW CAR-T THERAPY WORKS

A patient’s T cells are removed.

The cells are modified so they have a receptor that recognizes cancer, and then a large number of cells are grown.

The T cells are infused back into the patient.

The CAR-T cells now have receptors that help them better recognize cancer and attack it.

Source: University of Texas MD Anderson Cancer Center

Under current policy, a local Medicare administrative contractor decides whether to cover the therapy, but a national coverage determination would require Medicare to pay for the therapy.

A sticking point for some is that the CMS proposal restricts coverage of CAR-T to hospitals.

While CAR-T is now only administered in hospitals, there are clinical studies exploring administering the treatment in outpatient settings. Oncology providers are very worried that the restriction to only reimburse facilities with a hospital ID could hamper patient access.

“Probably half of oncology providers in the U.S. fall under a hospital management system and the other half are independent of hospitals,” said Dr. Jeff Sharman, an oncologist with a private practice in Oregon and director of hematology research for U.S. Oncology, a McKesson Corp. company that assists physicians with cancer treatment. “It almost divides the medical economics halfway through.”

There are now two CAR-T treatments: Novartis’ Kymriah, with a list price of $475,000; and Gilead Sciences’ Yescarta, which costs $373,000. Both are highly toxic and require administration in the hospital because of the potential for quick onset of negative side effects. Hospitalization and administration costs can push the price tag for the treatments to around $1 million for some patients.

However, Sharman said, the technology behind CAR-T is still being fine-tuned. “As technology evolves and develops, there are ones that have side effects much later and ones that are much less” toxic, Sharman said in an interview. “In those circumstances, it doesn’t make sense that they are administered in a hospital-based setting.”

Drugmaker Celgene, which is pursuing its own CAR-T treatment, said in comments submitted to the CMS that it is conducting multiple studies in outpatient sites, including those that don’t bill Medicare as hospitals.

But in their comments, several systems said they were concerned that the CMS won’t factor in added costs of administering CAR-T when determining coverage. Northwestern Medical Center in St. Albans, Vt., urged the CMS to “factor in costs associated with the administrative, regulatory and training components necessary for the safe delivery of high-quality CAR-T therapy as it develops its Medicare reimbursement model.”

The CMS proposal calls for hospitals to deliver patient-reported outcomes to the agency, but it’s not clear about reporting requirements, cancer centers and hospitals said. “There are still administrative and operational challenges that would need to be defined in order to effectively implement this coverage policy,” according to the University of Texas MD Anderson Cancer Center’s comments.

The center added in its comments that it can be difficult to track patient-reported outcomes if a patient comes to a CAR-T provider for treatment and goes back to its referring facility immediately after the treatment is done.

The Dana-Farber Cancer Institute called for the CMS to eliminate the requirement for patient-reported outcomes for outpatient administration.

“We fail to understand how CMS access to (patient-reported outcomes) data helps answer the questions of whether CAR-T therapy is reasonable and medically necessary,” the center said in comments.

Sharman said that he doesn’t mind the requirement for patient-reported outcomes data collection, but cautioned the CMS to be broad.

“The devil is in the details,” he said. “If this is used as a tool to exclude or bar access to certain locations, then it is problematic.”

https://www.modernhealthcare.com/government/hospitals-cancer-centers-chafe-cms-approach-national-car-t-coverage

Medicare population budget model could spur major pay shift

The CMS Center for Medicare and Medicaid Innovation’s planned push for a regional population-based budget in traditional fee-for-service Medicare could launch a major transformation in curbing sprawling healthcare costs for the program.

That’s the hope of the Trump administration’s top health officials. On Monday they opened the public comment period for five primary-care pay demonstrations.

Their “population-based payment” demonstration—in which a health system, insurance plan or even a health technology company would bear full risk for at least 75,000 fee-for-service Medicare patients within a targeted geographic region—raised the most eyebrows. With many details yet to be filled in, it has also raised a lot of hope.

“This is a sweeping change,” said Mike Leavitt, former HHS secretary under President George W. Bush and supporter of value-payment shifts. It has the capacity to go “right to the heart of Medicare” and affect regular fee-for-service patients, he said. “It is a move bold enough to really move the process forward, and so I’m very optimistic about what they’ve done.”

According to the details available so far, payment would flow through a per-person fee each month. Patients in the model would include the chronically and seriously ill. The per-person payments for primary care would be based on historical Medicare fee-for-service spending, calculated with geography-specific costs in mind—not unlike the plans for capitated payments in Medicaid that roiled Washington during the Republican Congress’ attempts to repeal and replace Obamacare.

The parameters are hazy enough that experts made the caveat that the Trump administration needs to clarify details before they can accurately assess the plan.

For John Feore, associate principal at the consulting firm Avalere, the model could spur more widespread adoption of something like the Maryland global budget system.

He pictures the demonstration as a state-level push, where “a couple of plans or organizations competing against each other, to take on full risk for all fee-for-service beneficiaries.”

“You could see a real attempt at constraining Medicare costs because the only way you’ll be approved as a geographic participant is, you’re going to need to offer a discount to CMS,” he said. “Whether it’s the Houston area or the state of Ohio that could be covered, that could have pretty strong potential.”

Feore also said Medicare Advantage plans could see the prospect as “welcome news,” representing a chance to expand their business.

But there are substantial questions that need answers. On Twitter, Dr. Farzad Mostashari, CEO of the primary-care startup Aledade, said the CMS needs to decide whether physicians or hospitals could use their global budgets to pay for services beyond what’s covered by traditional Medicare without needing to process claims.

He also criticized the use of a national inflation rate as the mechanism to boost the global budgets every year, saying this would add “variability and uncertainty.” And he argued officials need to find a risk-adjustment mechanism to prevent groups that are shouldering a lot of risk from losing too much money.

Mostashari posited that geographic models aren’t necessarily the best fit for Advantage plans, saying they’re “best suited to primary-care providers that have learned how to use their close knowledge of—and relationships with—their patients to reduce hospitalizations and unnecessary care rather than the typical tools” of insurers.

“MA plans have had great success at using narrow networks with negotiated prices and utilization management to control costs, and neither of those are possible for beneficiaries that have elected for maximum choice offered by traditional Medicare,” Mostashari said.

When it comes to implementation, Leavitt said he suspects CMS officials are eyeing regions currently dominated by one major health system. Under this direct-contracting model, the health system’s payments would be determined by the care it offers rather than its monopoly power, he said.

“In markets where one large system is dominant, where there is no competition at all, it means we need to move those systems away from fee for service but reward them when they produce good results,” Leavitt added.

For the model to work, however, at least one expert said state governments will likely have to play a big role.

Clif Gaus, CEO of the National Association of ACOs, drew comparisons to the Medicaid value-payment efforts in Oregon and Colorado, as well as the global budget model in Maryland.

“Short of a state mandating it or leading it, I’m a little tepid on whether communities will be able to on their own develop a geographic-wide plan,” Gaus said. “Certainly there’s a better chance where the community has an aggregation of providers through big systems primarily, but in those cases there’s lots of competition between those systems, and it’ll take some real on-the-ground discussions and cooperation to evolve a geographic based model.”

The CMS’ financial investment in the model will be key to whether the healthcare industry buys into the geographic model, according to Melinda Abrams, director of the Commonwealth Fund’s Health Care Delivery System Reform program.

“The key is to make sure the payment is substantial enough to enable doctors to care for their patients,” she said. “We can come up with a new set of incentives and a new structure, which are important, but we also need to adequately pay because there’s so much value when there is more investment in primary care.”

Stakeholders have a month to respond to the Innovation Center’s request for information, and the groups that want to participate in most of the models would start transitioning in January 2020. Officials projected the transition period for the geographic model would start in mid-2020.

Overall, the industry response has been far different from other capitation proposals, perhaps because it is a demonstration program.

The proposals vary across the political spectrum and include the GOP-led Congress’ idea to set capped payments for Medicaid as part of the 2017 Obamacare repeal effort. The demonstration echoed that idea, as CMS Administrator Seema Verma on Monday indicated she hopes to wrap some state Medicaid fee-for-service programs into the demonstrations.

It is also a far cry from the response to single-payer ideas. The geographic demonstration carries a cast of the key payment provision in a House Medicare for All proposal introduced earlier this year by progressive Rep. Pramila Jayapal (D-Wash.). Her proposal would use a governmental intermediary in the form of a regional administrator, who would negotiate a lump sum to be paid to hospital systems quarterly, known as a global budget.

Leavitt characterized the discrepancy as political reality, as both Republicans and Democrats see the need to shift from fee-for-service medicine.

The details are where “there are going to be collisions of interest,” Leavitt said. “And when you get close to an election, there is another element in play.”

https://www.modernhealthcare.com/payment/medicare-population-budget-model-could-spur-major-pay-shift

CMS proposes decreasing wage index for high-wage hospitals

The CMS is proposing to increase the wage index of low-wage hospitals to address a disparity in the system. High-wage hospitals would be on the losing end of this change.

The agency late Tuesday released its annual proposed update for the hospital inpatient prospective payment system for federal fiscal 2020 that starts in October.

The agency called for low-wage hospitals that have a wage index value below the 25th percentile to get an increase that is “half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value across all hospitals.”

The proposal would go into effect for at least four years starting this October. The CMS also proposed to decrease the wage index for hospitals above the 75th percentile so “Medicare spending does not increase as a result of this proposal.”

The agency also proposed a new add-on payment in cases where providers use high-cost technology, such as antimicrobial therapies.

https://www.modernhealthcare.com/government/cms-proposes-decreasing-wage-index-high-wage-hospitals

AbbVie (ABBV) BLA for Skyrizi Receives FDA Approval

https://www.streetinsider.com/FDA/AbbVie+%28ABBV%29+BLA+for+Skyrizi+Receives+FDA+Approval/15397949.html

Athersys up on start of Japan study

Athersys (ATHX +16.1%) is up on more than a 4x surge in volume in apparent response to the news that partner HEALIOS K.K. has enrolled the first patient in a study in Japan, ONE-BRIDGE, evaluating MultiStem cell therapy in patients with acute respiratory distress syndrome (ARDS).

The 30-subject trial will compare MuliStem to standard-of-care therapy. The primary endpoint is the number of ventilator-free days in the 28-day period post treatment.

https://seekingalpha.com/news/3453042-athersys-16-percent-start-multistem-study-japan-ards