DSH Decision, Conference Committee, Pharmacy News, and more ... 

Supreme Court Rules Against 2014 DSH Reimbursement Rule

The United States Supreme Court in a 7-1 decision last week determined that the U.S. Department of Health and Human Services (HHS) violated the law in 2014 when it changed a formula used to set Medicare reimbursements to disproportionate share hospitals (DSH) without first carrying out the required public rulemaking process. The Centers for Medicare and Medicaid Services (CMS) had issued a rule that would include Medicare Part C patients (those in Medicare Advantage health plans) as part of its calculation to determine a hospital’s share of low-income Medicare patients. Medicare Advantage patients typically are not low-income and therefore would have negatively affected hospital DSH reimbursement.
"In 2014, the government revealed a new policy on its website that dramatically—and retroactively—reduced payments to hospitals serving low-income patients. Because affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, we agree with the court of appeals that the new policy cannot stand,” Justice Neil Gorsuch wrote in the majority opinion. The D.C. Circuit Court in 2017 found that HHS had violated the Medicare Act by imposing the reimbursement change outside of the rulemaking process. The government appealed to the U.S. Supreme Court. (Current Supreme Court Justice Brett Kavanaugh wrote the Circuit Court opinion, and therefore recused himself from the Supreme Court vote.) 
Nine hospitals, led by Minneapolis-based Allina Health, originally brought the suit. MHA was one of 14 hospital associations that signed on to a friend of the court brief in support of the disproportionate share hospitals.
The ruling affects up to $4 billion in DSH payments, according to HHS.

Budget Conferees Meet; Hospitals Lay Out Priorities

The Massachusetts House-Senate Conference Committee began meeting last week to iron out differences between the two chambers’ state budgets for Fiscal Year 2020, and MHA weighed in with the conferees to explain the healthcare community’s thoughts about some important budget items.
The conference committee is led by the chairs of the House and Senate Ways & Means Committees, Rep. Aaron Michlewitz (D-Boston) and Sen. Michael Rodrigues (D-Westport), along with Ways & Means Vice Chairs Rep. Denise Garlick (D-Needham) and Sen. Cindy Friedman (D-Arlington), and the committee’s ranking members Rep. Todd Smola (R-Warren), and Sen. Viriato “Vinny” deMacedo (R-Plymouth).
The final totals of each chamber’s budget proposal are similar – about $42.8 billion – but the two bills differ in a variety of instances. Focusing on the healthcare components of the document, MHA asked conferees to support, among other items, the Senate’s line items that would devote $250,000 to expand the Massachusetts Consultation Service for the Treatment of Addiction and Pain, and $300,000 to increase the availability of nasal naloxone rescue kits given to patients prior to discharge following treatment for an opioid overdose. The Senate budget plan also includes a provision to put in place next fiscal year a method to cover reimbursement for the provision of the kits through hospital EDs.
One ongoing budget element that hospitals hope to resolve this year involves the Health Safety Net, which covers the cost of care to the hundreds of thousands of residents that remain without comprehensive insurance. MHA is asking the conferees to approve language that would mandate that the state contribute $15 million to help fund the Health Safety Net. The Health Safety Net is consistently underfunded; this year’s shortfall is estimated to be $69 million, which hospitals must cover alone.

Pharmacy Benefit Managers Get a Close Look

Pharmacy benefit managers (PBMs), the companies that administer drug benefits for health insurance companies, came under scrutiny last week from the Health Policy Commission, which found that there needs to be more transparency in how PBMs operate to ensure they’re not inflating their profits at the expense of patients and payers, including government programs like MassHealth.
The HPC’s report focused on a pharmacy benefit manager practice known as “spread pricing” for generic drugs. Spread pricing results when PBMs charge payers substantially more for drugs than what they reimburse pharmacies. This is opposed to the other pricing method where PBMs charge insurers the same amount that they reimburse pharmacies, plus a set administrative fee. HPC wrote, “By industry estimates, the share of PBM revenue from spread pricing has grown from 22% in 2014 to 54% in 2016.”
For certain drugs, the PBM reimbursement rate may even fall below the pharmacy acquisition cost of the drug, affecting the long-term financial viability of pharmacies and potentially affecting access to care.
The HPC concluded that, “Greater transparency in spread pricing is needed so payers, employers, and government can make informed choices about allocation of state spending or commercial premium dollars, including appropriate compensation for both pharmacies and PBMs.”

HPC Recommends Rules on White-bagging, Brown-bagging

Last week, HPC staff presented recommendations for a legislatively mandated report on insurer-compelled “brown-bagging” and “white-bagging” of pharmaceuticals that is forthcoming later this month. 
Brown-bagging refers to the dispensing of a medication from a pharmacy (typically a specialty pharmacy) directly to a patient, who then transports the medication to the physician’s office for administration. White-bagging is the distribution of patient‐specific medication from a pharmacy, typically a specialty pharmacy, to the physician’s office, hospital, or clinic for administration.
The Health Policy Commission recommended, due to a number of patient safety concerns that MHA and its member hospitals have drawn attention to, that: 
1. Payers should not require brown-bagging for any drug;
2. Payers should offer home infusion as an optional benefit, not as a requirement;
3. Payers that require white-bagging should ensure minimum safety standards and capabilities in the third-party specialty pharmacies with which they contract;
4. Payers that require white-bagging should offer site neutral payment;
5. Lawmakers should take action to increase public transparency and public oversight for the full drug distribution chain; and 
6. The Group Insurance Commission, the Massachusetts Health Connector, MassHealth and all other state payers should require all plans with which they contract to adopt best practice provisions.

Bipartisan Pandemic and Preparedness Bill Passes Congress

The U.S. House of Representatives on June 4 passed S.1379, the Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019, which the Senate had passed in May. The bill, which provides healthcare workforce training, stockpiles vaccines and medical equipment in the case of an emergency, and re-funds the Hospital Preparedness Program, among many other provisions, now heads to the White House, where the president indicated he plans to sign it.
Another bill provision directs the Assistant Secretary for Preparedness and Response to develop guidelines for hospitals to follow when treating patients affected by chemical, biological, radiological, or nuclear threats, as well as emerging infectious diseases.
“The guidelines will build on lessons learned from the Ebola virus outbreak in 2014 and will provide a roadmap for regions across the country to best leverage their health system infrastructure in the event of a bioterror attack, an emerging infectious disease outbreak, or a pandemic,” according to a Senate summary of the law. The new law would also bolster medical surge capacity.

Betsy Lehman Center Releases New Report

The Betsy Lehman Center, a state agency that supports providers, patients and policymakers on patient safety issues, today published its latest report on opportunities for quality improvement in healthcare settings. 
The report seeks to analyze the financial and human cost of medical errors in Massachusetts settings that provide services covered by health insurance. Its findings include that medical errors persist despite considerable progress – particularly by hospitals – on improving patient safety at the state and national level. It also finds patient dissatisfaction with the level and frequency of communication by caregivers when medical mistakes occur; and also that open communication is linked to lower levels of adverse emotional impacts for patients.
“This new report from the Betsy Lehman Center both acknowledges the advances Massachusetts hospitals have made in terms of patient safety in recent years and helps illustrate how care provided in hospitals and other healthcare settings must improve,” said Steve Walsh, president and CEO of MHA. “Our hospitals are working hard every day to bolster their harm prevention efforts and enhance patient safety. This report will serve as an important component of the hospital community’s roadmap to continued advancement.”

“Healthcare is a human-based complex technical system endeavor, and therefore it’s very difficult to completely eliminate errors, but I think we have to be driving toward zero errors and zero harms,” said Kim Hollon, president & CEO of Signature Healthcare, a member of MHA’s Board of Trustees and Chair of MHA’s Clinical Issues Advisory Council. “Often, errors are related to the process, not the care itself. Patients appreciate when we explain to them what happened and how we can improve the process.”
MHA is attending today’s Lehman Center public event where the report will be released. 

Rhode Island to Try to Go it Alone, Without Bay State Help

At the urging of Rhode Island Governor Gina Raimondo, Care New England based in Providence ended its merger negotiations with Massachusetts-based Partners HealthCare and will instead see if it can work out a merger agreement with Rhode-Island’s Lifespan and the medical school at Brown University.
“While I have little control over private hospital systems, I do have the ability to bring these parties together and ask them to reconvene negotiations on a crucial decision that will impact all Rhode Islanders for decades,” Raimondo said.
Partners said it respected the Rhode Island decision to coordinate care within its own borders, adding, “We look forward to reengaging at the appropriate time – especially with a fully integrated local system.”
Lifespan, Care New England, and Brown are fast-tracking negotiations in the hopes of having a deal by summer’s end. In an interview with the Boston Business Journal, Care New England President James Fanale said if a Rhode Island deal can’t be worked out. “I anticipate we’d reengage in those discussions [with Partners] and see where they go.” In the meantime, Care New England is maintaining its clinical ties to Partners in cardiology, and colorectal, thoracic and vascular surgery.


Pamela Daley Whelton has been named President of South Shore Hospital and Executive Vice President of South Shore Health. She is the first female president in the hospital’s 97-year history. Whelton has been with the health organization for the past 22 years, most recently as Chief Operating Officer and previously as Chief Administrative and Financial Officer. Whelton received her undergraduate degree from UMass Amherst and has an MBA from Northeastern.
Cambridge Health Alliance (CHA) has chosen its Chief Medical Officer Assaad Sayah, M.D., to serve as its interim CEO following the retirement of current CEO Patrick Wardell, effective June 30. Sayah joined CHA in 2006 and previously served as Chief of Emergency Medicine and Senior Vice President of Primary Care. He received his M.D. from the UMass Medical Center and completed his residency in emergency medicine at William Beaumont Hospital in Michigan.


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