CMS Administrator Seema Verma looks to state-led Medicaid reforms for better health outcomes.

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Nov. 10, 2017


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Heigh-Ho, Heigh-Ho: CMS Promoting State-Initiated Medicaid Reforms


On Monday, the Centers for Medicare & Medicaid Services (CMS) released 2 Informational Bulletins for the Section 1115 Demonstration Process and the State Plan Amendment (SPA) and 1915 Waiver Process. CMS Administrator Seema Verma put a finer point on the agency’s new Medicaid direction in an address on Tuesday at the Conference for the National Association of Medicaid Directors (NAMD): reset the federal-state relationship, with an emphasis on state-led innovation.  

Before her role at CMS, Verma was a key architect of Medicaid reforms in several states, most notably Indiana where certain beneficiaries were required to make contributions based on income. CMS has updated its Section 1115 Demonstrations page to reflect a focus on evidence-based interventions and to encourage states to propose employment-based coverage requirements. Specific provisions to further streamline and improve Medicaid reforms include:  

  • Extending demonstrations up to 10 years
  • Fast-tracking successful demonstrations
  • Reducing paperwork and other reporting requirements
  • Setting a “within 15-day” initial review call with CMS officials for new SPA and 1915 waivers
  • Developing “scorecards” to promote transparency and accountability and to track outcomes

Strong criticism from across party lines was expected, and Senator Ron Wyden (D-OR), a critic of the new direction, quickly issued a statement condemning such measures as working against the original intent of the program and as an attempt to cull the Medicaid population.


Precision Valuation: A Discussion of How Value Assessment Frameworks Can Account for Personalized Medicine


13th Annual Personalized Medicine Conference
Boston | November 14–16, 2017

Xcenda's Director of Health Policy, Jennifer Snow, MPH, will be moderating an expert panel that will examine how value frameworks can and should consider personalized medicine when evaluating therapeutic options. Panelists include:

  • Dane J. Dickson, MD, CEO, Cure-One (formerly MED-C); Director, Precision Medicine Policy and Registries, Knight Cancer Center at OHSU
  • Robert Dubois, MD, PhD, Chief Science Officer, Executive Vice President, National Pharmaceutical Council
  • Andrea Stern Ferris, MBA, President, Chairman of the Board, LUNGevity Foundation
  • Steven Pearson, MD, MSc, Founder and President, Institute for Clinical and Economic Review (ICER)

Join this expert group on Tuesday, November 15 at 3:15 PM during the conference. Learn more.




Dirigo: Maine Voters Approve Medicaid Expansion


On Tuesday, Maine voters passed a referendum allowing the Lumber state to join 32 other states and the District of Columbia in expanding Medicaid under the Affordable Care Act (ACA). The measure represented the first time since the ACA took effect that the issue of expansion had been put in front of voters.

Expansion of the program would enable approximately 70,000 people in Maine to gain health coverage, joining the 268,000 people currently enrolled in the state’s Medicaid program.

The Maine voters rebuked Gov. Paul LePage (R), who had vetoed 5 different attempts by the state legislature to expand the program since 2013. Nevertheless, within hours after the vote, LePage said he would not implement it unless the legislature funded the state’s share of an expansion.

So, what’s next? Per the Bangor Daily News, if there is no funding agreement, the law voters passed Tuesday will technically take effect 45 days after the state's next legislative session begins, in January. After that, LePage would have 90 days to submit an expansion plan to the federal government, with approval and actual expansion coming in the summer.

The vote in Maine could be reflective of a larger voting trend in the country and provide momentum to hold referenda in states such as Idaho and Utah, where groups are working to get Medicaid expansion questions on the 2018 general election ballot.


Pharma Breaks Out the Buckeyes: OH Voters Sink Drug-Price Measure


On Tuesday, Ohio voters soundly defeated Issue 2 that would have required the state to buy prescription drugs at the same, deeply discounted price as the Department of Veterans Affairs.

The law would have only applied to drugs purchased by the state through a state-run program, such as Medicaid, and not to state residents who have commercial insurance or Medicare. Supporters said it would have affected medications for about 4 million Ohioans.

A similar measure in California, Proposition 61, failed last year; however, the failed ballot initiative emboldened the California assembly, which just enacted one of the most stringent drug price transparency measures in the country.

Drug-pricing measures will continue to be placed on ballots and through state legislatures.


Amanda Forys Featured in The Center for Biosimilars


Biosimilars Payment: New Market Could Reduce Drug Costs but Faces an Uphill Policy Battle

“Because Medicare will be such a large payer for these drugs, coding and payment policy set forth by CMS will have a significant effect on the success, sustainability, and availability of these lower-cost alternative products.”

The promise of biosimilar cost savings in the US market faces an uphill battle. Coding and payment policies could hinder the potential for a robust biosimilars market. In a series appearing in The Center for Biosimilars, Amanda Forys, Director of Xcenda’s Reimbursement & Policy Insights team, looks into the controversial payment model and its implications for the healthcare market. Read more




BIO Releases Plan of Action to Combat Opioid Abuse


Last Thursday, the Biotechnology Innovation Organization (BIO) released a set of priorities and solutions to help overcome the prescription opioid abuse and addiction crisis by “unleashing the power of innovation.” The organization’s priorities to realign and change the treatment course of action for pain and addiction include the following actions:

  • “Increased leadership engagement, expertise, and resources within the Food and Drug Administration (FDA) and the Drug Enforcement Agency (DEA) to promote effective and efficient review of innovative treatments for pain and addiction”
  • “Modernizing and streamlining the drug development and review processes to enable effective and efficient drug development and review”
  • “The establishment and utilization of expedited approval pathways for novel treatments for pain and addiction”

BIO pointed out that its member companies have developed therapies to assist the body’s nervous system to treat pain without the addictive qualities traditionally associated with opioids, such as:

  • A new medication to prevent patients from relapsing to opioid dependence and overdosing following detox and treatment
  • A new injectable to target areas of pain using capsaicin, a byproduct of chili peppers
  • Abuse-deterrent formulations of existing therapies to mitigate and prevent risk of abuse

In addition to a press release and the full plan, both linked above, BIO has also made available an executive summary of its plan.

This innovative approach to overcoming the opioid abuse epidemic and its priorities are in alignment with the President’s recent executive order to help overcome drug addiction and the opioid crisis in America. The opioid crisis has attracted the attention of the president and Congress, and offering solutions would certainly help build goodwill for an industry that has been battered by the debate over high drug prices.


Moodi-Cal, Medicaid in California an Unexpected Cash Cow


Earlier this week, Kaiser Health News released an analysis of financial data from California’s Medicaid program (Medi-Cal) and found several insurers profiting immensely from it. Rarely does one associate Medicaid, which runs on a marginal budget, as being a highly profitable enterprise, and yet, that is the outcome Kaiser Health News uncovered.

Between 2014 and 2016, Medicaid insurers in California made $5.4 billion in profits, mostly due to the state paying higher rates to insurers during the Medicaid expansion initiative, when state officials increased their payments to cover anticipated cost increases to plans for providing medical services to newly insured patients. Those higher costs, however, did not materialize; instead, the same insurers would realize revenue that surpassed other Medicaid managed care plans in 34 states combined.

The most profitable Medi-Cal insurers are still earning hundreds of millions of dollars, despite many having some of the worst ratings for patient care based on medical quality scores and recorded complaints. The plans (and their respective net profits earned from 2014 to 2016), include:

  • Health Net, a wholly owned subsidiary of Centene ($1.1 billion)
  • Inland Empire Health Plan ($792 million)
  • LA Care Health Plan ($654 million)
  • Anthem ($549 million)
  • Community Health Group ($344 million)

Of the 22 Medi-Cal managed care plans, only Kaiser Permanente saw a net loss during the 2014 to 2016 timeframe.

Historically, Medi-Cal has yielded profit margins of 2% to 3%, in line with the average profit margin of 2.7% for the 22 Medi-Cal plans in 2016. However, the range varies considerably between -52.2% (Kaiser Permanente) and 18.9% (Community Health Group).

California expects to recoup much of the money from retroactive rate adjustments once audits are completed within the next year. But to provide cost-effective and high-quality healthcare to its insured population, California will need to reassess its payments to these managed care programs to rein in the unexpected cash cow. And do not be surprised if insurers’ outsized profits get some attention from federal lawmakers.


Losing Your Appetite: Health Insurance Costs More Than Food


Last week, an article published in the Journal of the American Medical Association (JAMA) proposed the Affordability Index, a novel metric for measuring rising healthcare insurance costs compared to household incomes.

Calculated as a ratio dividing the mean cost of an employer-sponsored health insurance policy by median household income, the Affordability Index offers a simple and comprehensible measure for capturing health insurance costs as a percentage of income. The graph below shows how the Affordability Index has increased steadily since 1999:

The graph shows the Affordability Index more than doubled from 14.2% in 1999 to 30.7% in 2016. During the same period, the mean cost of an employer-sponsored health insurance plan increased 4.7 times faster than median household income (213% vs 45%). To put the Index in context, in 2015, the average US household spent an estimated $7,023 on all food purchases (including out-of-home purchases), so healthcare was nearly 2.5 times as expensive as food.

The Affordability Index signals the downward pressure that increasing health insurance costs exert on wages. As the cost of health insurance rises, employers become limited in their ability to increase wages.

The authors noted that the Affordability Index could help sensitize stakeholders to the financial burden that health insurance imposes among US households. The authors suggest potentially enacting policies to help maintain the Affordability Index at current levels. Federal and state governments could also use the Index to identify and scrutinize organizations and industries that increase prices that exceed household income growth. While the Index can be readily generated annually, the future utility of the Affordability Index remains unknown.


Information Buffet (AKA, Other Stuff That Caught Our Attention)


We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • In week 1 of open enrollment for the health insurance exchanges for 2018, 601,462 people selected plans using the platform. By comparison, last year 1,008,218 people selected plans in weeks 1 and 2 of open enrollment.
  • The Congressional Budget Office (CBO) and Joint Committee on Taxation estimated that repealing the individual mandate would reduce federal deficits by about $338 billion over the 2018 to 2027 period and increase the number of uninsured people by 4 million in 2019 and 13 million in 2027. It updates a December 2016 CBO analysis that found repealing the individual mandate would reduce the budget deficit by $416 billion over nearly a decade and result in 15 million more uninsured Americans in 2026.
  • According to a new study in JAMA Oncology, state parity laws did not protect cancer patients from higher out-of-pocket costs from orally administered chemotherapy drugs
  • A National Bureau of Economic Research working paper concludes that research productivity has fallen at an average annual rate of 3.5% since 1970, although the decline has slowed since 2007.

“We’ll see. I’m not sure that we know what the score is and what the impact of that is on our tax bill. We’re trying to make parts of the bill that we can make permanent, and if we can do that some people are considering it. I want to look at the scores before we decide.”


– Sen. Rob Portman (R-OH), responding to whether the repeal of the individual mandate will be included in the House’s tax-reform bill

Source: “House, Senate GOP Keeping Individual Mandate Repeal Out Of Tax Bill For Now,” Inside Health Policy, November 9


$8.5 Billion


Spending on urine screens and related genetic tests quadrupled from 2011 to 2014, to an estimated $8.5 billion a year—more than the entire budget of the Environmental Protection Agency

Source: “How Doctors Are Getting Rich on Urine Tests for Opioid Patients,” Bloomberg, November 6


13th Annual Personalized Medicine Conference

November 14–16 l Boston, MA
Join Jennifer Snow, MPH, Director of Health Policy, at the 13th Annual Personalized Medicine Conference in Boston as she moderates a panel titled, “Precision Valuation: A Discussion of How Value Assessment Frameworks Can Account for Personalized Medicine.” Learn more


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Senior Director,
Health Policy

Scott Shields
Associate Director,
Health Policy



Peyton Howell, MHA
President | Global Sourcing & Manufacturer Relations | AmerisourceBergen Corporation

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda


Josh Olivero | Aakash Patel |  Irene Sheynis | Scott Shields | Stephen Wilson


Adam Mathieu | Kylie Matthews | Ellen Olson


Nov. 10, 2017


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