July 25, 2019

Issue Spotlight

Scrutiny of CVS-Aetna deal shows AMA's powerful impact

The word "unprecedented" is used frequently in news reports to describe the CVS-Aetna merger, a $69 billion deal approved by the Justice Department last year.

Forbes called the merger an unprecedented "concentration of power in the health care system." Modern Healthcare and The Hill both used the word "unprecedented" to describe U.S. District Court Judge Richard Leon's continued investigation of the deal after it had already formally closed last November. And the Wall Street Journal said Leon's move to schedule a hearing last month with live testimony was without precedent.

The AMA has opposed this merger in which the nation's third-largest health insurer, Aetna, gets absorbed by CVS Health Corp., a sprawling conglomerate that includes the largest retail pharmacy chain and specialty pharmacy in the U.S. and the largest pharmacy benefit manager (PBM), Caremark.

The deal would lead to the "formation of a vertically integrated PBM tight oligopoly of CVS-Aetna, Express Scripts/CIGNA and United Health/OptumRx," the AMA told U.S. Assistant Attorney General Makan Delrahim in a 2018 letter.

The DOJ approved the merger last fall subject to Aetna divesting its prescription drug plan (PDP) business. That business was subsequently sold to WellCare Health Plans, which the AMA argued served only to further reduce competition among PDPs.

Judge Leon also criticized the divestiture, saying it represented "less than one-tenth of 1%" of the CVS-Aetna deal.

The loss of competition in the PBM market is just one of the angles from which the AMA has argued against the deal, backing its arguments with loads of data obtained from nationally recognized antitrust experts who have evaluated the merger.

Other reasons to oppose the CVS-Aetna merger include:

For a hint at what PBM market concentration makes possible, look to Ohio's Medicaid managed care program. According to the Columbus Dispatch, PBMs "transferred $224 million from taxpayers' wallets" directly to theirs through "spread pricing" where the PBMs reimbursed pharmacies almost 9% less than they were paid by the state.

The paper also reported that, as PBMs cut payments to pharmacies struggling to remain open, the parent company of one of them, CVS, sent their owners letters "sympathizing with their financial woes and offering to buy them out."

The AMA outlined in a recent 141-page analysis why the proposed CVS-Aetna merger would run afoul of federal antitrust law, noting how it would likely harm patients. CVS is one of the two largest players in the retail pharmacy market and operates the largest pharmacy benefit manager. The merger also would reduce competition in certain pharmaceutical benefit markets, leading to higher premiums and lower-quality insurance products. The merger faces enormous implementation challenges and is unlikely to realize efficiencies that benefit patients.

Learn more about the AMA's competitive concerns with this merger.

Kai Sternstein, JD, vice president of the AMA Advocacy Resource Center discusses the CVS-Aetna merger and its implications in a brief video.

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National Update

House committee reports surprise billing proposal and other legislation

On July 17, the House Committee on Energy and Commerce reported out health care bills reauthorizing a number of programs, including: Title VIII nursing workforce grants; the "Autism CARES Act" to support programs at the National Institutes of Health (NIH), Centers for Disease Control and Prevention (CDC), and Health Resources and Services Administration (HRSA); and the Emergency Medical Services for Children program, among others. Significantly, the committee also advanced the "REACH Act" which would extend funding for Community Health Centers, the Teaching Health Centers GME program and the National Health Service Corps. Included in that bill was the "No Surprises Act" to address the contentious issue of surprise medical billing.

Most stakeholders agree that patients should be held accountable only for their in-network cost-sharing amounts in situations where they are unable to select an in-network physician, such as in a medical emergency. Where views diverge is how to determine appropriate payment amounts for out-of-network physicians and other providers. As originally introduced, the "No Surprises Act" would have plans pay out-of-network physicians the median in-network contract amount for the service provided in that particular geographic area. Not only would that bind out-of-network physicians to contracted amounts they did not agree to accept, but it would eliminate much of the incentive for plans to contract with an adequate number of physicians in the first place. Furthermore, as the Congressional Budget Office (CBO) has noted on similar proposals, plans would have an incentive to cancel or cut contracted amounts for any physicians currently above the median rate, reducing payment for both in- and out-of-network physicians. Such a solution would tilt the advantage in negotiating fair contracts even further in the direction of plans. 

At the urging of committee members Rep. Raul Ruiz, MD (D-CA), Rep. Larry Buschon, MD (R-IN) and others, the committee adopted an amendment to provide for an independent dispute resolution process loosely based on the successful baseball-style arbitration model used in New York. Under the proposal, if either party was dissatisfied with the initial payment offer, an appeals process could be triggered that would allow an independent entity to decide between the payment offer of the plan and the physician's billed amount while considering a number of other factors related to the circumstances of the case and the training and experience of the physician. While the proposal still needs improvement, it represents an important step forward by recognizing that the resolution of these disputes requires a solution that is fair and encourages both sides to make reasonable initial payment offers and charges. 

AMA will continue to work to make improvements to these provisions over the August congressional recess and when Congress returns in September.

HHS delays effective date of rule on conscience rights in health care

The U.S. Department of Health and Human Services (HHS) announced that it will delay the effective date of the conscience rule finalized in May of this year. The rule dramatically expands the discretion that religious or moral objectors can exercise in refusing care without meaningful safeguards to ensure that the rights of those receiving care are protected. It covers a wide array of existing federal laws that provide conscience protections including those related to abortion, contraception, sterilization, vaccines, end-of-life care and care of often-marginalized groups like LGBTQ patients. 

The rule would have gone into effect on July 22, but multiple lawsuits prompted the U.S. Department of Justice to reach an agreement with plaintiffs to postpone the rule for four months. The newly scheduled effective date is Nov. 22 and will potentially allow enough time for some of the litigation around the rule to be settled.

Multiple lawsuits seek to have the rule declared unlawful and thus be rescinded or enjoined. Plaintiffs, ranging from city, county and state governments to non-governmental organizations such as Planned Parenthood, claim that the rules violate constitutional law and conflict with other current laws guaranteeing treatment, such as the Emergency Medical Treatment and Active Labor Act (EMTALA). The AMA raised similar concerns in its response to the proposed conscience rule, which expressed opposition to the proposal, citing concern for vulnerable patient populations and asserting that conscience rights for physicians are not unlimited.

"The proposed rule would undermine patients' access to medical care and information, impose barriers to physicians' and health care institutions' ability to provide treatment, impede advances in biomedical research, and create confusion and uncertainty among physicians, health care professionals and institutions," AMA Executive Vice President and CEO James L. Madara, MD, wrote in the letter. 

While the AMA is committed to conscience protections for physicians and other health professional personnel, the letter states that the exercising of those rights must "be balanced against the fundamental obligations of the medical profession and physicians' paramount responsibility and commitment to serving the needs of their patients." 

According to the AMA Code of Medical Ethics, the freedom to act according to conscience is not unlimited. Physicians are expected to provide care in emergencies, honor patients' informed decisions to refuse life-sustaining treatment, and respect basic civil liberties and not discriminate against individuals in obligation to patients with whom they have a patient-physician relationship. 

This principle is in keeping with many AMA's policies protecting access to care, especially for vulnerable and underserved populations, and its anti-discrimination policy, which opposes any discrimination based on an individual's sex, sexual orientation, gender identity, race, religion, disability, ethnic origin, national origin or age.

Trump Administration pulls drug rebate rule; DTC drug price disclosure rule tossed by court

Two of the Trump Administration's key drug pricing efforts suffered defeats in recent weeks, with neither policy proposal moving forward towards implementation. The much-touted drug rebate rule was recently pulled back by the administration over the high price tag of the policy changes. The rule, which looked to ensure that drug rebates were passed on to consumers at the point of sale, was thwarted over the estimated $170 billion cost and concerns about the impact on Part D premiums. In its comments on the proposal, the AMA supported proposals to pass rebates and discounts to patients at the point of sale but did raise concerns about unintended consequences, such as increased Part D premiums and reductions in the size of rebates and other discounts. It is unclear if the administration will try to find a new path forward to reform the drug rebate system.

Separately, the administration's effort to mandate disclosure of drug list prices in direct-to-consumer (DTC) television advertisements was defeated in federal court on first amendment grounds. The judge also ruled that the administration's final rule exceeded their statutory authority. The suit was brought by several drug manufacturers, arguing that the rule improperly limited free speech and that the required disclosures would confuse patients. It is unclear if the administration will pursue an appeal to overturn the ruling.

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State Update

NCOIL discusses prior authorization reforms, AMA calls for state action

Jack Resneck, MD, Immediate Past Chair, AMA Board of Trustees, last week presented the AMA's position and state legislative priorities on prior authorization during a special health care session at the National Council of Insurance Legislators' (NCOIL) summer meeting. Dr. Resneck, a practicing dermatologist, started the session with an overview of why prior authorization reform is needed using data to illustrate the burden on patients and physicians, as well as personal experiences from his practice where prior authorization delays on even inexpensive medications have resulted in harm to his patients and practice. Dr. Resneck highlighted AMA resources including and expressed disappointment with insurers' efforts to realize the prior authorization reform goals outlined in a multi-stakeholder consensus statement. He then detailed the AMA's recently revised prior authorization model state legislation and called on NCOIL members to support prior authorization and step therapy reforms in their states.

A representative from the Blue Cross Blue Shield Association attempted to frame prior authorization as a medical management tool that promotes patient safety and directs physicians to lower-cost treatments. The representative suggested more back-office staff is needed to reduce the prior authorization burden and, without citing sources, that physicians are often not practicing evidence-based medicine as a justification for prior authorization.

Benjamin Chandhok, Senior Director of State Legislative Affairs at the Arthritis Foundation, presented a report on the impact from the patient perspective, drilling down on irreversible harm that can result when medication is delayed or switched. He called for legislators to act now on at least the "low-hanging fruit" outlined in the prior authorization reform principles  (e.g. transparency, notification) to improve the situation for patients.

For more information on the AMA's model legislation or state legislative efforts on prior authorization, please email Emily Carroll at

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Judicial Update

Court holds that a physician cannot be held liable for an injury unrelated to their conduct

The Superior Court of New Jersey Appellate Division on June 24 upheld a trial court decision to dismiss a psychiatrist from a lawsuit filed by the family of a woman who died after a car-bicycle crash involving the physician's patient. The decision was a positive one for physicians who—as the Litigation Center of the AMA and State Medical Societies cautioned in an amicus brief it filed in the case—could have been subjected to profound harm if the court ruled the other way and expanded physicians' legal obligations to the general public.

In its opinion, the court likened this case to instances of social host liability and dram shop cases where person "A" provides alcoholic beverages to visibly intoxicated person "B" and "B" then injures innocent third party "C." The court said because the patient "was not demonstrably impaired by her medication at the time she caused the fatal crash, [the physician] cannot be held liable for an injury unrelated to his conduct."

Read more about the case here.

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Other News

Medicare Diabetes Prevention Program: The role of the referring physician

Last year, the Centers for Medicare & Medicaid Services (CMS) began covering weight loss counseling services and other behavioral change interventions for Medicare beneficiaries with a diagnosis of prediabetes. Collectively referred to as the Medicare Diabetes Prevention Program (MDPP), these services offer Medicare beneficiaries the possibility of preventing or delaying the onset of type 2 diabetes. A new CMS publication, Pre-Diabetes Services: Referring Patients to the Medicare Diabetes Prevention Program, explains the role of the referring physician in making their patients aware of this new benefit, ensuring all eligibility criteria are met and providing a list of local MDPP suppliers.

New payment models announced for kidney disease care

On July 10, HHS and CMS announced new physician-focused alternative payment models (APM) for managing the care of Medicare patients with kidney disease. Kidney Care First builds upon a proposed APM developed by the Renal Physicians Association that was recommended to HHS by the Physician-focused Payment Model Technical Advisory Committee with strong support from the AMA.

The voluntary model would allow participation by small nephrology practices and provide more flexibility to nephrologists than the current payment system. It would provide positive incentive payments for important goals like helping patients delay or avoid progressing from late-stage chronic kidney disease to end-stage renal disease, receiving dialysis at home instead of at a facility, increasing the number of patients who receive kidney transplants, and improving health outcomes and reducing complications as patients transition to receiving dialysis. Kidney Care First is one part of a broad new administration initiative to advance kidney health.

MIPS and APM participation and performance increased in 2018

According to initial results released by CMS, Merit-based Incentive Payment System (MIPS) participation rates increased from 95% in 2017 to 98% in 2018, with 98% of clinicians earning an incentive payment that will apply to Medicare physician fee schedule payments in 2020. The AMA's strong advocacy for additional flexibilities for small practices resulted in nearly 85% receiving a positive payment adjustment, up from 74% in 2017. Additionally, the number of eligible clinicians who qualified for a 5% APM incentive payment nearly doubled from 2017 to 2018, increasing from 99,076 to 183,306 clinicians.

The AMA is encouraged by these results and will continue to work with CMS and the physician community to identify solutions that will reduce the burden and cost to participate in MIPS and increase opportunities for physicians to move to APMs.

CMS to begin 2017 and 2018 MIPS educational data validation and audit requests

CMS has begun auditing 2017 and 2018 MIPS participants. As clarified by CMS to the AMA, the 2017 and 2018 performance year audits are designed to be educational and to confirm MIPS participants' understanding of measures and activities. While compliance is not mandatory and non-punitive, noncompliance of data validation and audit requests may result in further education, and/or inclusion for future data validation and audits. Requests will be sent on Guidehouse letterhead and clearly state the request is being made on behalf of CMS and include the CMS Service Center contact information for any questions and verifications.

CMS has developed the following data validation guides to assist practices in the educational reviews:

2017 MIPS Data Validation Criteria - Lists the 2017 criteria used to audit and validate data submitted in each performance category

2018 MIPS Data Validation Criteria - Lists the 2018 criteria used to audit and validate data submitted in each performance category

Two podcasts now available on new HHS payment models for primary care

HHS Secretary Alex Azar held an event this past April to unveil an initiative with five new primary care payment models at the AMA's Washington, D.C., office. Azar was joined by Seema Verma, CMS administrator, and Adam Boehler, director of the Center for Medicare and Medicaid Innovation (CMMI), in presenting two new types of new models: Primary Care First and Primary Care First-High Needs Populations. Listen to part one and part two here.

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Upcoming Events

Register now for 2020 AMA advocacy conferences and save 20%

The 2020 AMA State Advocacy Summit will be held in Bonita Springs, Florida, at the Hyatt Regency Coconut Point Resort and Spa, Jan. 9-11. The 2020 AMA National Advocacy Conference will be held in Washington, D.C., at the Grand Hyatt, Feb. 10-12. Register now for both meetings and save 20%.

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