California to Repay Loans of Docs Who Take Medicaid Patients

California has launched a program that will repay young doctors’ medical school loans if they agree to carry a caseload 30% of which consists of patients on Medi-Cal, the state’s Medicaid program.

This year, the CalHealthCares program will repay student loans totaling $58.6 million for 247 physicians in 40 specialties, including pediatricians, psychiatrists, and obstetrician/gynecologists, according to a news release from the California Department of Health Care Services (DHCS), which administers Medi-Cal.

These physicians were selected from more than 1300 who applied to the program.

The state will pay off loans of up to $300,000 over a 5-year period. That’s the same amount of time for which the recipient doctors have committed to caring for underserved patients.

This is the first of five rounds of awards to doctors and dentists from the CalHealthCare program. The DHCS will start accepting applications for the next round in January.

The money for the loan repayment is coming from an increase in the state tobacco tax that took effect in 2017, according to the Sacramento Bee. The following year, the legislature established the loan repayment program and appropriated $220 million for it. Gov. Gavin Newsom added $120 million to CalHealthCares in his recently approved 2019–2020 budget.

Physician Shortage

California is not doing this just to help physicians. It desperately needs more doctors to serve the growing Medi-Cal population, which includes 1 in 3 Californians. The expansion of Medi-Cal under the Affordable Care Act added about 4 million people to the rolls, according to a news story on the website of KQED, a public radio station in northern California.

Medi-Cal also covers about 200,000 undocumented children. The recently enacted state budget includes funding for Medi-Cal coverage of nearly 100,000 undocumented adults.

Many Medi-Cal beneficiaries have difficulty obtaining access to care. One reason for this is that there aren’t enough physicians in the poverty-stricken areas where Medi-Cal beneficiaries live. In addition, Medi-Cal pays providers very little, even by Medicaid standards. The program reimburses doctors at 52% of Medicare rates; nationwide, the average Medicaid payment is 72% of Medicare rates, according to the California Health Care Foundation (CHCF).

Unsurprisingly, just 60% of California doctors accept new Medi-Cal patients; in contrast, 77% take new Medicare patients, and 85% take new patients covered by commercial insurance. In 2015, a study conducted by the CHCF found that 34% of primary care doctors had no Medi-Cal patients. Just 28% of doctors had as many Medi-Cal patients as the physicians whose loans are being repaid must have.

The large number of applications to CalHealthCares can be attributed to the heavy loan burdens that young doctors carry. Nearly half of US medical school graduates now leave residency with loans of $200,000 or more, according to a survey by Merritt Hawkins, a physician recruiting firm.

Other national and state loan repayment programs also encourage doctors to work in underserved areas. For example, the National Health Service Corps Loan Repayment Program offers up to $50,000 in repayments for primary care physicians who work for at least 2 years in a health professional shortage area. The Association of American Medical Colleges offers a database of state and federal loan repayment programs.

Considering that there are more than 60,000 practicing physicians in California, how much of a difference would it make to inject 247 physicians temporarily into areas with large Medicaid populations? More than you might think, Janice Coffman, PhD, MPP, a professor at the University of California, San Francisco, told the Sacramento Bee. The 5 years required by CalHealthCares, she said, is enough time for young doctors to make friends and put down roots in the community.

https://www.medscape.com/viewarticle/915479

Lawmakers seek scientific review of plan to tightly regulate all fentanyl copycats

Lawmakers on the U.S. Senate Judiciary Committee have urged the Trump administration to conduct a scientific review of a Justice Department-backed bill to classify all illicit chemical knockoffs of the potent painkiller fentanyl in the same legal category as heroin.

The sweeping legislation may “deter valid, critical medical research aimed at responses to the opioid crisis,” the senators said in a July 10 letter to Department of Health and Human Services (HHS) Secretary Alex Azar seen by Reuters on Thursday.

Lawmakers and health officials have said fentanyl, which is about 100 times more potent than morphine, has fueled the opioid overdose epidemic.

As prescribed by physicians, fentanyl is classified as a Schedule II drug, meaning it is highly addictive but has a medicinal purpose, typically to treat intense cancer pain.

But chemists primarily in China have created numerous slightly altered versions of the drug, known as “analogues,” that have hit the U.S. streets.

If the draft bill is passed by Congress, it would place all illicit fentanyl analogues in Schedule 1, along with heroin, would means that they are addictive, have no medicinal purpose and are effectively banned.

The legislation is designed to help prosecutors keep pace with criminals who churn out chemically tweaked fentanyl analogues to evade strict Schedule I regulations.

But scientific experts, including some within HHS, contend that automatically placing all analogues into Schedule 1 could stifle research to combat the opioid crisis. They argue that Drug Enforcement Administration (DEA) regulations to win approval for such research are so onerous that they will deter many scientists from applying for needed waivers.

In their letter to Azar, senators said the administration had “not adequately consulted with public health agencies” about the impact of classifying all fentanyl analogues as Schedule I.

“We are concerned that the failure to engage necessary health experts vests far too much authority to a law enforcement agency,” they wrote, adding that it could also “deter valid, critical medical research.”

The letter was signed by Democratic Senators Richard Durbin, Sheldon Whitehouse, Amy Klobuchar, Christopher Coons, Mazie Hirono, Cory Booker and Kamala Harris, as well as Republican Senator Mike Lee.

A spokesperson for HHS confirmed receiving the letter and said all congressional inquiries are taken seriously.

The DEA did not have any immediate comment.

The letter came after Reuters this week reported about an ongoing interagency dispute between an office within HHS and the DEA over the proposed fentanyl analog legislation.

In a June 20 closed-door briefing with Senate Judiciary Committee staffers, an official from the National Institute on Drug Abuse warned that the bill as drafted could create regulatory hurdles that will make it too hard for scientists to research possible medical benefits of fentanyl analogues.

Such benefits could include antidotes to overdoses, or the creation of pain killers without addictive properties.

Normally, the DEA and the U.S. Food and Drug Administration review chemical compounds individually to assign each one a controlled substance classification, with the FDA determining if such “scheduling” decisions are scientifically valid.

The draft bill, introduced by Republican Senator Ron Johnson and Republican Representative Jim Sensenbrenner, would cut the FDA out of that process.

https://www.reuters.com/article/us-usa-congress-fentanyl-letter/lawmakers-seek-scientific-review-of-plan-to-tightly-regulate-all-fentanyl-copycats-idUSKCN1U62I7

Air Methods, Global Medical Response most at risk with surprise billing ban

• The biggest air ambulance companies have the most to lose should a balance billing ban working its way through Congress become federal law, a new report by S&P Global says.
• According to the report, the companies most at financial risk are Colorado-based Air Methods Corp. and Global Medical Response, both of which derive a large portion of their profits from out-of-network charges. S&P Global says both companies would suffer impaired credit ratings if the current version of a bill currently being debated is passed. The two companies have projected combined 2019 revenues of $5.2 billion and “stable” ratings from S&P, although the ratings firm considers Global Medical Response the stronger of the two companies.
• The report noted that the proposed legislation “has strong tailwinds” given strong public interest in addressing the issue, as well as bipartisan support in Congress.

S&P Global’s report comes after a Senate committee introduced a bill that takes aim at surprise billing and includes air ambulances after early drafts excluded the aircraft from regulation.

Many Americans each year are exposed to balance billing — being charged by providers in excess of what their insurer allows or covers. It can occur during an emergency room visit, or when a patient is unknowingly put under for surgery by an out-of-network anesthesiologist. These bills often amount to tens of thousands of dollars.

But the potential financial burden placed on patients who need emergency medical transport by air can be significant. That has led to the introduction in the Senate of the Lower Health Care Costs Act, which would ban balance billing in many areas of healthcare, including for air ambulance services. S&P Global expects the bill to reach the Senate floor this month.

The legislation would essentially cap out-of-network rates. First, it would bar air ambulances from sending a balance bill to patients and would allow insurers to pay out-of-network air ambulance providers the median in-network amount, which is based on other negotiated contracts in a given area.

S&P said the surprise billing bans would be the most severe on the air transport industry given the frequency of out-of-network rides, coupled with the high usage of unprofitable transports by Medicare and Medicaid patients.

According to a March report by the Government Accountability Office, the median price for a fixed-wing aircraft emergency medical transport in 2017 was $40,600 and $36,400 for helicopter transport — up 60% since 2012. And 69% of air ambulance transports in 2017 were out-of-network.

“The emergency nature of most air ambulance transports, as well as their relative rarity and high prices charged, reduces the incentives of both air ambulance providers and insurers to enter into contracts with agreed-upon payment rates,” the GAO report noted.

GAO also analyzed air ambulance balance billing complaints in two states, Maryland and North Dakota. Only one balance bill in the group was for less than $10,000. Some topped $50,000 and even $60,000.

Another study published last week by Health Affairs concluded that recent charges to Medicare for air ambulance services were 4.1 to 9.5 times higher than what they were in 2016.

The S&P Global report expects “insurance companies will gain negotiating power in setting in-network rates” if a bill is signed into law. However, it expects the bill will likely be tweaked significantly before a final version is voted on by both chambers of Congress.

The balance billing ban being debated in Congress has raised concerns among major air ambulance providers. Both Air Methods and Global Medical Response prominently feature balance billing-related stories on their corporate websites.

While Global Medical Response has mostly restricted its coverage to its “Newsroom” section, Air Methods has taken a more aggressive approach. Its home page features a story about Karen Epsinosa, a Florida resident who suffered a stroke in 2017 and required emergency air transport. The Air Methods article celebrated the fact that Espinosa’s husband worked for six months with one of its employees to convince their insurer to pay the entire air ambulance bill.

https://www.healthcaredive.com/news/air-methods-global-medical-response-most-at-risk-with-surprise-billing-ban/558252/

Amazon momentum in medical supply chain slows: UBS poll

• Providers are allocating a smaller percentage of medical supply purchases to Amazon this year compared to 2018, though they’ve increased the percentage of non-medical office supplies buys, perhaps because companies receive higher discounts in office than medical supplies from the e-commerce giant, a survey of hospital purchasing managers by UBS found.
• This isn’t ruinous news for the retailer’s health supply chain ambitions, however — a majority of the 100 respondents to the the investment bank’s poll expect to increase their percent allocation of medical supply purchases through Amazon in three years.
• UBS also found a larger percentage of respondents were using a group purchasing organization (81%) compared to last year (75%), while fewer were using a regional purchasing organization. The percentage of hospitals using Premier grew significantly year over year, from 30% to 44%, largely at the expense of GPO competitor HealthTrust.

E-commerce giant Amazon continues to wiggle into multiple healthcare markets, including at-home prescription drug delivery, HIPAA-compliant artificial intelligence and machine learning, selling glucose monitors and blood pressure cuffs direct to the consumer and more. But this survey’s results are a mixed bag in terms of one area Amazon believes it can majorly disrupt: medical supply chains.

U.S. hospitals could save $25.4 billion annually by streamlining their supply chains to eliminate waste and unnecessary cost, according to a Navigant analysis of 2,300 hospitals. That’s roughly $11 million in savings per hospital per year and a tempting opportunity for supply chain players. The market is forecast to reach $2.3 billion by 2022.

Though Amazon already sells some healthcare and IT equipment to hospitals, integrated delivery systems and physician offices (and touts the cost-saving benefits of its multiple supplier marketplace, Amazon Business), initial provider results vary. Amazon Business head Chris Holt told Healthcare Dive last year the platform helped Summit Pacific Medical Center in rural Washington cut labor expenses by 80%, lowering related spend.

However, New York-Presbyterian was unable to achieve better supply chain pricing by using Amazon, alongside concerns about lack of options or less control over purchases and shipping.

According to the UBS survey, the top reservation health systems have about working with Amazon is lack of control, oversight or standardization (30%), followed by worries around product quality (20%) and limitations on the types of products available (10%). Respondents were less concerned about the three than last year, though the order of reservations remained the same — all contributing to why acute care hospitals seem to be using Amazon less for their medical supplies purchases.

Researchers from UBS aren’t sure whether Amazon’s discounts on medical supplies declined, or if competitors’ prices came more in line with the e-commerce giant, driving clients away.

The survey also dove into utilization and satisfaction with group purchasing organizations, when a group of businesses form a single purchasing entity to obtain discounts from vendors. The country’s some-600 GPOs save the healthcare industry an estimated $34.1 billion annually, according to the Healthcare Supply Chain Association.

Though a greater number of respondents were likely to use Charlotte, North Carolina-based Premier, users reported similar amounts of satisfaction across Premier, HealthTrust and Vizient and its subsidiary MedAssets. Premier customers saw larger discounts versus other GPOs, a boon UBS chalked up to Premier’s sourcing ability and its associated savings. Smaller hospitals expect to see the largest discounts versus mid- and large-size hospitals, UBS found, likely because smaller facilities have more to gain from joining with other groups to leverage purchasing power.

https://www.healthcaredive.com/news/amazon-momentum-in-medical-supply-chain-slows-poll-finds/558301/

Hookipa on go with study of HB-201 in HPV+ cancers

Thinly traded micro cap HOOKIPA Pharma (NASDAQ:HOOK) is up 37% after hours on modestly higher volume in reaction to the FDA’s sign-off on its IND to start a Phase 1/2 clinical trial evaluating HB-201 for the potential treatment of HPV-positive cancers. The study should launch in H2 with preliminary data available in late 2020/early 2021.

The company says HB-201 is a TheraT-based immunotherapy that expresses a non-oncogenic but highly antigenic E6/E7 fusion protein derived from HPV16, adding that it induced strong immune system responses (E6 and E7 antigen-specific CD8+ T cell response) in animal models. It believes that HB-201 has the potential to induce CD8+ T cell levels on par with adoptive cell therapies in an off-the-shelf approach.

https://seekingalpha.com/news/3477280-hookipa-go-study-hbminus-201-hpv-cancers-shares-37-percent-hours

Invitae to acquire Jungla for $50M

Invitae (NYSE:NVTA) has agreed to acquire privately held, Andreessen Horowitz-funded Jungla, a developer of a cloud-based platform that combines clinical knowledge with advances in functional genomics, biophysics, cellular engineering, machine learning, and distributed systems to help clinicians and patients understand the results of genetic and genomic tests.

Under the terms of the deal, Invitae will pay $15M in cash and $35M in common stock. It will also pay up to an additional $15M (mostly stock) upon the achievement of certain milestones.

The transaction should close in the next few days.

https://seekingalpha.com/news/3477284-invitae-acquire-jungla-50m

Amgen & Novartis bail on Alzheimer’s candidate umibecestat

By mutual agreement, Amgen (NASDAQ:AMGN), collaboration partner Novartis (NYSE:NVS) and Banner Alzheimer’s Institute will terminatedevelopment of BACE1 inhibitor CNP520 (umibecestat) for the potential prevention of Alzheimer’s disease due to lack of efficacy.

Preliminary data from two Phase 2/3 studies showed a worsening of some measure of cognitive function in the treatment groups.

https://seekingalpha.com/news/3477289-amgen-and-novartis-bail-alzheimers-candidate-umibecestat