MHA Today | June 1, 2018

June 1, 2018
MHA Today: News for Healthcare Leaders

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June 1, 2018

MHA Today is provided as a service to members of the Missouri Hospital Association. Additional information is available online at MHAnet.


Herb Kuhn, MHA President & CEOThird-party validation is powerful. Take, for example, a company that is in financial trouble that hires a new CEO to implement a turnaround plan. When the plan is released, everyone holds their breath to see how investors and experts react. A favorable review can propel the company in a new direction, while a bad review can sink it further.

Three weeks ago, a slightly modified version of the process occurred when President Trump rolled out his new drug cost containment plan, “American Patients First” initiative, an ambitious 50-point plan targeting high prescription drug prices. Trump called the plan the “most sweeping action in history to lower the price of prescription drugs for the American people.”

After the announcement, the third-party crowd huddled up to render their verdict. Many expected pharmaceutical stocks to trend downward because manufacturers would soon be receiving less for their products. The opposite happened. Policy and Wall Street thinkers largely viewed the President’s proposal as benign, and pharmaceutical company stocks went up.

What the administration says matters. Medicare is the big dog on pharmacy spending, and its share of drug spending continues to grow. Medicare currently spends $174 billion, or 23 percent of its total spending, on drugs. That’s up from $109 billion, or 17 percent, in 2012. Pharmacy spending increased at an average annual rate of 18 percent between 2012 and 2016.

Trump has effectively tapped into the zeitgeist. He has said that drug companies are “getting away with murder” when it comes to how much the government pays for pharmaceuticals. That mirrors critics who have castigated the pharmaceutical industry, pointing to data showing that some European consumers pay half of what their U.S. counterparts do.
President Trump Quote
The administration’s 44-page plan calls for implementation in two phases. The first phase includes items for immediate action while the second includes a set of recommendations pending feedback. Secretary of Health and Human Services Alex Azar defines success as the following: list prices must come down, the government must get better pricing from negotiations in Medicare Parts B and D, reforms must reduce patient out-of-pocket costs, and reforms must create greater fairness with foreign countries’ investment in research and development.

Critics were quick to react. They charged the plan did not go far enough to address the fundamental reforms necessary to bring relief at the prescription drug counter. They claim there are few immediate actions and the actions are too timid.

Notably, one policy option is conspicuously absent — federal direct price negotiation. Trump highlighted price negotiation during his campaign. And, absent this reform, many naysayers believe the pharmaceutical industry can easily weather his stated reforms.

The Trump administration is pushing back by highlighting many of the plan’s consumer-focused features. These include immediate action to require drug companies to post their prices in television ads. The administration’s rationale is that if an ad encourages a consumer to request a specific drug when visiting a physician, the consumer also should know about its side effects and price. In addition, the administration is promoting changing the current gag rules that pharmacy benefit managers use to keep pharmacists from discussing cheaper alternatives with their customers.

All of health care is complex. The drug channel is no exception. Azar — a former Eli Lilly executive now in charge of implementing Trump’s plan — understands both the complexity and the challenge. Rewiring a $400 billion enterprise is no small undertaking. However, he firmly believes the stock analysts and others are missing how significant the proposed changes could be for drug prices.

Ultimately, time will tell whether the president’s new plan will effectively reduce prices. Earlier this week, Trump said, “We’re going to have some of the big drug companies in in two weeks, and they’re going to announce — because of what we did — they’re going to announce voluntary massive drops in prices, so that’s great.” Industry was more circumspect. Nonetheless, pharmacy stocks fell then quickly rebounded.

The president’s remarks aside, reforms will take time. For example, the 2019 Medicare Part D plans have been approved. It won’t be until next February when these reforms will be proposed for the 2020 plan year. That’s an 18-month wait before Medicare beneficiaries could begin to see change in drug pricing. Nonetheless, the fact that the administration is launching this massive undertaking validates what Azar says every chance he gets — “change is coming.”

The third-party validators that matter on drug prices are the nation’s consumers, including the Medicare beneficiaries that have an outsized influence on systemwide policy. If the administration can make progress toward reduced prices, or even generate a perception of progress, the public’s anger over this issue could abate.

Send me an email to let me know what you’re thinking.

Herb Kuhn, MHA President & CEO

Herb B. Kuhn
MHA President and CEO

In This Issue
FRA Renewal Bill Among Seventy-Seven Bills Gov. Greitens Approves On His Last Day In Office
MO HealthNet Files Outpatient Reimbursement Rule
White Paper Explores Health Care Workforce Strategies

state and federal health policy developments

FRA Renewal Bill Among Seventy-Seven Bills Gov. Greitens Approves On His Last Day In Office

Staff Contacts: Daniel Landon or Rob Monsees

On his last day in office, Governor Greitens signed 77 bills, including Senate Bill 775, which reauthorizes the Federal Reimbursement Allowance for one year and upgrades a 17-year-old safeguard in current law for hospital payments funded by the FRA. The new safeguard emphasizes greater transparency and accountability, particularly for FRA-funded payments flowing through Medicaid managed care plans.

The Governor also signed SB 982. This bill includes an MHA-promoted proposal to clarify how the prudent layperson law applies to insurers’ coverage restrictions on hospital emergency department services and a provider-insurer negotiated agreement on direct provider payment for out-of-network services, insurer review of emergency care claims and billing standards for out-of-network providers in in-network facilities when the patient needed emergency treatment.

Other bills of interest to hospitals that were signed by the Governor include the following.

House Bill 1719. The bill expands the statutory definition of mental health professional to include advanced practice registered nurses, physician assistants and assistant physicians who have specified training or experience in providing psychiatric care; requires psychologists and other behavioral health providers to have training in suicide risk assessment and response; and adds to the grounds for disciplinary action against a nurse’s license and revamps the State Board of Nursing’s program for licensees or applicants impaired by substance abuse.

HB 1617. The bill expands and clarifies Medicaid coverage of services delivered via telemedicine.

HB 2280. The bill authorizes as much as 12 additional months of Medicaid coverage of substance abuse and mental health treatment for post-partum women who receive substance abuse treatment within 60 days of giving birth and who adhere to the treatment program. The added coverage is contingent on federal approval.

HB 1252. The bill adds digital mammography and breast tomosynthesis to the definition of low-dose screening mammography in a state law requiring insurance coverage of mammography.

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MO HealthNet Files Outpatient Reimbursement Rule

Staff Contacts: Daniel Landon, Kim Duggan or Brian Kinkade

MO HealthNet filed a proposed rule that would change reimbursement for outpatient surgical procedures and pharmaceuticals from being made on a cost to charge basis to being paid on fee schedules. Pharmaceuticals would be reimbursed on the same fee schedule as retail pharmacies, but the rule is not clear about how fee schedules for surgical procedures would be set. For this reason, MHA strongly opposes MO HealthNet’s rule and expects to register its objections with The Joint Committee on Administrative Rules, the legislative body that oversees executive branch rulemaking. Comments on the rule must be filed by Saturday, June 30, and may be submitted by mail to Department of Social Services, Legal Services Division-Rulemaking, PO Box 1527, Jefferson City, MO 65102-1527, or by email to

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Workforce News

White Paper Explores Health Care Workforce Strategies

Staff Contact: Jill Williams

A report released by B.E. Smith provides insights from the 2018 Executive Workforce Intelligence survey. More than 400 health care leaders shared their experiences and expectations on talent management. The report includes key highlights in recruitment, retention, engagement and leadership development.

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Did You Miss An Issue Of MHA Today?

May 29, 2018
MHA Distributes Analysis Of Proposed FFY 2019 IPF PPS
AHIP Suggests Large Marketplace Premium Increases Likely
GAO Announces MedPAC Appointments

May 30, 2018
$1.6 Billion Reduction In Medicare 340B Payments Could Affect S&P Ratings
MHA Distributes Analysis For FFY 2019 Proposed Medicare IRF PPS
Trajectories: Advancing Population Health: Assessment And Action In Missouri Hospitals
NIH Convenes Experts To Discuss Chronic Pain And The Opioid Crisis

May 31, 2018
MHA Receives AHA’s Dick Davidson Award For Leadership In Quality Improvement
Joint Commission To Institute Ligature Deficiency Changes
Emergency Rule And Proposed Rule Filed On APRN Collaborative Practice
MLN Connects Provider eNews Available

Consider This ...

With the aging of the U.S. population, the prevalence of doctor-diagnosed arthritis is expected to increase in the coming decades. By the year 2040, an estimated 78.4 million (25.9 percent of the projected total adult population) adults aged 18 years and older will have doctor-diagnosed arthritis. Two-thirds of those with arthritis will be women.

Source: Centers for Disease Control and Prevention