Tag: health care

Cigna-Express Scripts, CVS-Aetna deals continue vertical integration in healthcare

By Curtis Campbell, Class of 2019; Kim Looney, Partner at Waller

The Cigna-Express Scripts and the CVS Health-Aetna mergers are among the most significant healthcare mergers of the past decade and are anticipated to transform the U.S. healthcare business. Both of these vertical deals have successfully shown how they can provide consumer benefits in order to pass federal antitrust scrutiny.

Cigna-Express Scripts

The Department of Justice decided not to challenge Cigna’s $67 billion acquisition of Express Scripts because the deal would “unlikely result in harm to competition or consumers.” Regulators spent six months on the investigation, reviewed more than 2 million documents, and interviewed more than 100 people before reaching their conclusion. However, while the federal antitrust division will not seek to block the merger, the deal is still subject to state regulations and various departments of insurance. The deal is expected to close at the end of the year.

Because the DOJ is not challenging the merger, Cigna is closer to putting its medical benefit services and Express Scripts expertise in pharmacy benefit management under one roof. This will potentially help rein in spending on costly specialty drugs. However, there is some concern that consumers could end up at the “mercy of a handful of giants” as choices of medical care and pharmacy become a thing of the past. However, backers of the merger thought that it will create efficiencies in the market. Cigna CEO David Cordani stated that “we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company.

Given the lack of overlap between Cigna’s business versus Express Scripts, analysts stated that it is not surprising that the merger went through. Cigna had to overcome last-minute opposition from some investors, but they backed down after major shareholder advisory firms came out in support of the deal. Cigna executives said they expect the deal to result in earnings per share to increase from $18 to $20-21 by 2021 with a long-term annual growth of 6 to 8 percent.

CVS Health-Aetna

Shortly after approving the Cigna-Express Scripts merger, the DOJ also conditionally approved the $69 billion merger between CVS Health and Aetna. The conditional approval was based on Aetna’s decision to sell off its private Medicare drug plans. This addressed the government’s concerns that the combined companies would control too much of the healthcare market.

CVS Health had revenues of about $185 billion last year and provided prescription plans to roughly 94 million customers. Aetna had about $60 billion in revenue last year and currently covers 22 million people in its prescription health plans. With this merger, the two companies hope to better coordinate care for consumers as the mergers aim to help tighten cost controls. The merger focuses on Aetna’s addition of a retail component and the use of CVS’s 10,000 pharmacies and 1,100 retail clinics to deliver care, enabling a variety of new services to be brought into its retail stores, potentially transforming the corner pharmacy chain to a healthcare hub with thousands of locations.   This change could enable CVS stores to serve as a location where someone could get care for ailments ranging from a sore throat to diabetes. A person could also potentially go to a CVS store to get blood tests to monitor chronic conditions.

These two mega-mergers continue the growing trend of healthcare companies vertically integrating to improve quality and lower healthcare costs. With more consumers going to outpatient facilities instead of hospitals, this merger could help claim more of a market share in the healthcare industry by utilizing the CVS stores to attract more consumers. The merger also could help by decreasing deductibles and lowering out-of-pocket spending, which are two primary concerns for consumers when deciding to seek medical care.

These mergers could also put pressure on rival companies to come up with their own deals.  Critics worry that these mergers mean that consumers could end up with fewer options and higher expenses because consumers could have less control over their medical care and prescription drugs. Only time will tell how these mergers actually affect consumers going forward.

Requesting EMTALA waivers during a natural disaster

By Seth Carver, Class of 2020; Andrew F. Solinger, Associate at Waller

With the start of hurricane season, and the recent destruction caused by Hurricane Florence on the Carolinas and beyond, hospitals must review and update their policies and procedures to ensure that proper care can be provided to patients following surges caused by natural disasters and emergencies.

Following large natural disasters such as Hurricane Florence, and other mass casualty events such as terrorist attacks or public health emergencies, hospitals are likely to experience significant surges of patients that will test and push the limits of hospitals’ capacities.  In the face of these mass casualty events, hospitals must quickly and effectively choose which patients will be treated and which will not.

This decision is likely to cause friction with a hospital’s obligations under The Emergency Medical Treatment and Active Labor Act (“EMTALA”), which requires hospitals to properly screen and stabilize all patients that present to an emergency department for care.  Because of this tension between a hospital’s ethical and legal obligations to treat patients and the realities of responding to natural disasters and other mass casualty events, hospitals must understand the requisite responsibilities under EMTALA during such disasters as well as ways in which they can protect themselves from liability for potential, but unavoidable, violations of EMTALA.

EMTALA prohibits all Medicare-participating hospitals from denying emergency medical service to individuals, regardless of ability to pay.  It also requires hospitals to provide an appropriate medical screening to determine if a medical condition exists.  If such a condition exists, the hospital is required to provide stabilizing treatment before transferring or discharging the patient.

Natural disasters do not by themselves absolve hospitals of this requirement under EMTALA.  However, it is foreseeable that hospitals in the path of a natural disaster will need to transfer patients to other facilities without conducting medical screening exams or stabilizing treatment.  An option which has been used in the past to transfer these patients without violating the requirements under EMTALA is a Section 1135 waiver. These waivers are short-term releases from the normal EMTALA requirements in the wake of declared natural disasters.  HHS has issued these waivers in previous natural disasters, including Hurricanes Katrina, Rita, Gustav, Ike and Dean, the Iowa floods of 2008, and the Minnesota floods of 2009.

When utilizing Section 1135 waivers, in order to lawfully transfer patients without conducting such medical screening exams, or if needed stabilizing treatments, all of the following conditions must apply:

  • The President declares an emergency or disaster under the Stafford Act or the National Emergencies Act;
  • The Secretary of HHS declares that a public health emergency (PHE) exists;
  • The Secretary of HHS authorizes EMTALA waivers under Section 1135 of the Social Security Act;
  • Unless EMTALA waivers are granted for an entire geographic area, the hospital in question applies for a waiver from HHS;
  • The hospital has actually activated its emergency operations plan; and
  • The state has activated its emergency operations plan or pandemic plan for the area that covers the hospital.

Once the Secretary of HHS authorizes § 1135 waivers a hospital may submit a request to operate under that authority by sending an email to the CMS regional office in their service area.

The request should contain the following:[i]

  • Provider Name/Type;
  • Full Address (including county/city/town/state) CCN (Medicare provider number);
  • Contact person and his or her contact information for follow-up questions;
  • A brief summary of why the waiver is needed.  For example: “Critical Access Hospital (CAH) is the sole community provider without reasonable transfer options at this point during the specified emergent event (e.g. flooding, tornado, fires, or flu outbreak)” or “CAH needs a waiver to exceed its bed limit by X number of beds for Y days/weeks” (be specific);
  • Consideration – Type of relief you are seeking or regulatory requirements or regulatory reference that the requestor is seeking to be waived;
  • There is no specific form or format that is required to submit the information but it is helpful to clearly state the scope of the issue and the impact;
  • If a waiver is requested, the information should come directly from the impacted provider to the appropriate Regional Office mailbox with a copy to the appropriate State Agency for Health Care Administration to make sure the waiver request does not conflict with any State requirements and all concerns are addressed timely.

The waiver request is then reviewed by a cross-regional waiver validation team.  In reviewing waiver requests CMS makes the following inquiries: [ii]

  • Is the hospital within the defined emergency area?
  • Is there an actual need?
  • What is the expected duration?
  • Can this be resolved within current regulations?
  • Will regulatory relief requested actually address stated need?
  • Should we consider an individual or blanket waiver?

If granted, Section 1135 waivers generally last for up to 72 hours after both the emergency is declared and the hospital’s emergency plan is activated.  In some instances, the waiver will terminate prior to 72 hours if the HHS Secretary determines that the waiver is no longer necessary. It is important to note that this waiver does not allow for hospitals to selectively only treat patients with insurance and to transfer away all uninsured or underinsured patients.  If utilizing the waiver to transfer such patients, hospitals must not discriminate on

In order for hospitals to remain compliant with all EMTLA regulations during natural disasters and emergencies, it is important to review and revise EMTLA policies so that they reflect the proper steps in utilizing Section 1135 waivers.  Natural disasters and other mass casualty events impose large challenges for hospitals regarding treatment requirements. However, with active preparation and well-written emergency policies hospitals can limit violations of government regulations and ease the decision making of hospital personnel.

10 ways you can protect your company from a cyberattack

By Emmie Futrell, Class of 2018; Robb S. Harvey, Partner at Waller; Elizabeth N. Pitman, Counsel at Waller

The government, through the United States Department of Justice, has increased its efforts to respond to cyberattacks, a hot-button issue that extended across disciplines in 2017. The newly created Cyber-Digital Task Force has been charged with developing policies to combat global cyber terror and involve federal law enforcement on the front lines of this virtual battlefield.

The OCR’s January and February 2018 OCR Cybersecurity Newsletters provided targeted tips to HIPAA-covered entities and business partners to prevent cyber extortion as a means to obtain ransom money and to avoid the consequences of phishing attacks. The OCR recommended training, vigilance and bolstering defenses by encrypting and backing up sensitive data and training workforce. Specifically, OCR provided the following list of suggestions:

  1. Train employees to identify unusual emails and other messages that hackers could use to break into your system.
  2. Document suspicious activity and review those logs regularly.
  3. Perform a risk analysis that looks at the entire organization and addresses known risks.
  4. Use anti-malware programs to prevent access by malicious software proactively.
  5. Implement and test cyberattack recovery plans.
  6. Encrypt and back up sensitive data.
  7. Stay on top of new and emerging cyber threats, perhaps by signing up for governmental alerts known as US-CERT alerts, which are generated by the government’s National Cyber Awareness System and received via email or an RSS feed and provide timely information about security issues
  8. Be wary of unusual emails and text messages
  9. Use multi-factor authentication
  10. Stay updated with anti-malware software and system patches

These measures can both protect and prove cost-effective.

The 2017 Ponemon Data Breach report found that the healthcare industry in the United States stands to lose the most from a data breach, with the average cost per lost or stolen record at $380. Estimated savings for companies that only chose to extensively encrypt information are $16 per record and, companies that have a prepared Incident Response Team and Plan could save $19 per record. Saving these costs per record could significantly lessen the inevitable economic impact of a large-scale breach. The report made clear that time is of the essence in a breach, a sentiment that has been echoed by the OCR’s guidance and HIPAA’s response requirements.

Implementing the OCR’s guidance can help healthcare companies save costs when faced with cyber extortion. Many of the suggestions from the OCR will also ensure that HIPAA standards are satisfied. For example, documenting suspicious activity will be key in creating the necessary paper trail in the event of an OCR investigation. This type of documentation is already required by HIPAA. Implementing cyberattack recovery plans like training an Incident Response Team and developing contingency plans, including the possible necessity of paying the ransom, will guarantee that the breach can be identified and contained as quickly as possible and data availability and integrity are maintained. These measures will ensure that electronic health records and other healthcare information continue to be a pathway towards innovation, rather than a backdoor for an insidious attack.

Why telehealth was a big winner in new budget deal

By Andy Cole, Class of 2018; Amber Greene Arnold, Associate at Waller

Hidden in the details of the Bipartisan Budget Act of 2018 are some key telehealth provisions that are receiving praise from many industry groups and could mark a significant development for Medicare telehealth policy.

The new legislation promotes telehealth in several ways.

Tele-stroke. Medicare currently only covers tele-stroke services for patients located in rural health professional shortage areas and counties not classified as a metropolitan statistical area.  Effective January 1, 2019, however, Medicare will cover a telehealth consultation for any Medicare beneficiary presenting at a hospital with acute stroke symptoms, without regard to current geographic restrictions.

End-Stage Renal Disease (ESRD) Services.  Beginning January 1, 2019, the legislation allows nephrologists to use telehealth to provide monthly clinical assessments for ESRD patients on home dialysis.  This provision is not subject to any geographical restrictions and the “originating site” may be a freestanding dialysis facility or the patient’s home. However, ESRD patients benefiting from this provision will still be required to have an in-person assessment each of the first three months of home dialysis and once every three months thereafter.  This provision is notable for ESRD patients who may have difficulty traveling.

Medicare Advantage Plans.  Currently, Medicare Advantage plans may cover telehealth services in addition to those covered by the traditional Medicare program, but these additional telehealth services are not paid for separately by Medicare.  The new legislation, however, authorizes Medicare Advantage plans, beginning with the 2020 plan year, to offer to include additional telehealth benefits beyond those available under traditional Medicare in their annual bid to the government.  These additional telehealth services would also have to be available to patients through in-person visits as well.  Due to the rapidly growing number of beneficiaries enrolling in Medicare Advantage plans, this provision may have a significant effect on the growth of telehealth services under Medicare.

Accountable Care Organizations.  The legislation also allows for increased coverage of telehealth services provided to Medicare patients assigned to certain ACOs.  More specifically, after January 1, 2020, for two-sided ACOs (meaning the ACO shares in both savings and losses) or an ACO tested or expanded through the Center for Medicare and Medicaid Innovation, existing telehealth geographic limitations will not apply.  This will allow for a patient’s home to qualify as an “originating site” even if the patient’s home is not located in a rural health professional shortage area.

These changes reflect a continued interest by lawmakers in supporting and expanding telehealth services and have the potential to increase access to care for Medicare beneficiaries while potentially lowering costs.  Healthcare providers should monitor the implementation of these provisions and evaluate opportunities for participating in Medicare’s expansion of coverage for telehealth.

Between a rock and a hard place: medical-device stakeholders disappointed by cancelled CMS rulemaking

By Emmie Futrell, Class of 2018; Denise D. Burke, Partner at Waller

Another attempt at bridging the gaping lag between FDA approval for medical devices and CMS’s Medicare coverage determinations has been struck down, after a nine-month standstill.

CMS’s proposed rulemaking included a promising new program called EXCITE, or expedited coverage of innovative technology. The proposed rulemaking had not been made public in substance, and the reasons for its cancellation are still unclear.

CMS officials confirmed that EXCITE was intended to improve access to innovative medical-device technologies for Medicare patients.

Members of the medical-device industry, however, believe that EXCITE was patterned after a 2016 industry proposal that had been presented to CMS to correct the backlog.

The 2016 proposal, known as PACER, or the provisional accelerated coverage to encourage research initiative, suggested that CMS grant provisional coverage under Medicare for FDA-approved devices. This would ensure that patients could access innovative technology, while CMS could gather the information necessary for its own approval process.

The provisional coverage would also alleviate pressure on device sponsors, who would not suffer from having to bankroll expensive and highly specific clinical tests before devices are even on the market.

EXCITE is not CMS’s first attempt to reduce the backlog between FDA and Medicare approval for medical devices.

This backlog, which can sometimes last years, results from the independent statutory mandates that tie the hands of the respective agencies. FDA must ensure that the drugs and devices it approves are “safe and effective,” while CMS can only approve products for Medicare coverage if the products are “reasonable and necessary.” This coverage determination requires CMS to evaluate the necessity of devices for typical Medicare patients, which are generally more medically complex than those of patients in FDA clinical trials.

In 2011, the Department of Health and Human Services attempted to address the lag between FDA and Medicare approval by initiating a parallel review program. This program focused on increasing communication between CMS, the FDA and device manufacturers, including providing medical-device stakeholders and manufacturers with detailed information about the study data that each agency would require in the approval process.

It was believed that this would speed the review process by allowing manufacturers to tailor their studies to encapsulate necessary data for each agency.   Lack of resources, however, largely doomed this program before it was effectively launched. Critics have condemned the program, which only resulted in two approvals by CMS.

CMS’s cancellation of the EXCITE program is a strong indication that, for at least the immediate future, medical-device manufacturers will continue to suffer from the bottleneck between the FDA and CMS and experience lengthy delays between FDA approval and CMS reimbursement.

CMS unveils new bundled payment model

By Chase Doscher, Class of 2018; Elizabeth N. Pitman, Counsel at Waller; Zachary D. Trotter, Associate at Waller

Earlier this month, CMS announced the launch of the Bundled Payment for Care Improvement Advanced (BPCI Advanced) payment model.

This is the first Advanced Alternative Payment Model (Advanced APM) introduced under the Trump Administration and the start of the next generation of BPCI models offered through the Center for Medicare and Medicaid Innovation and authorized under the Affordable Care Act.  Under the MACRA Quality Payment Program, providers will be subject to Medicare payment adjustments through one of two tracks: Merit-based Incentive Payment System (MIPS) or Advanced APM.

Under MIPS, a provider may receive a negative, neutral or positive adjustment with the expectation that the majority of participants will experience either negative or neutral adjustments. The BPCI Advanced model, however, entices providers to participate in an Advanced APM by offering the potential for bonus payments under MACRA for those who meet or achieve certain benchmarks during a 90-day episode of care, including the all-cause hospital readmission measure and advance care plan measure.  As with other Advanced APMs, BPCI Advanced requires that participants assume some of the risk and ties payment to quality performance metrics and the required use of certified healthcare technology.

After cancelling an Obama-era proposal for converting certain of the BPCI episode models to mandatory bundled-payment models, the Trump Administration effort to maintain voluntary participation is an attempt to decrease the administrative burdens such models placed on providers. Voluntary participation in BPCI models, such as Comprehensive Care for Joint Replacement and the Cardiac Rehabilitation Incentive model, has been offered since 2016.

This new model will give providers, “an incentive to deliver efficient care,” Seema Verma, CMS Administrator, said. “BPCI Advanced builds on the earlier success of bundled payment models and is an important step in the move away from fee-for-service and toward paying for value.”

Thirty-two clinical care episodes will initially be included in BPCI Advanced, 29 inpatient-setting episodes of care and three outpatient-setting episodes of care and the potential for episode revision for new and existing participants beginning January 1, 2020.   The clinical care episodes include services such as major joint replacement of a lower extremity, percutaneous coronary intervention and spinal fusion.

BPCI Advanced performance period is from October 1, 2018 through December 31, 2023.  Participants joining in the initial stage may not exit prior to January 1, 2020.

Providers interested in at least one of the 32 clinical episodes to apply to the model have until 11:59 pm EST on March 12, 2018 to apply via the application portal.

Back to the Future: CMS revives Obama-era proposed rule on critical access hospitals

By Emmie Futrell, Class of 2018; Kristen A. Larremore, Partner at Waller; Amber Green Arnold, Associate at Waller

Since the 1997 Balanced Budget Act, which created the designation for Critical Access Hospitals (CAH), the requirements for Medicare and Medicaid participation for these rural facilities have largely remained untouched.  But, a recent decision by CMS to revive and finalize an Obama-era proposed CAH rule will change certain Medicare participation requirements for CAHs.

According to a recent rulemaking notice, CMS intends to issue a final version of the proposed CAH rule sometime in the next 17 months.

The CAH designation was created to protect financially vulnerable rural hospitals that provide vital care to rural communities and combat a string of rural hospital closures. However, the intervening years since 1997 have brought many changes to healthcare in the United States, and in June 2016 CMS issued a proposed rule in an attempt to modernize Medicare participation requirements for CAHs and other hospitals.

Highlights of the wide-ranging proposed rule include a requirement that CAHs maintain an infection prevention program, as well as an antibiotic stewardship program to promote the appropriate use of antibiotics.  CAHs would also be required to designate leaders for each of these programs.

CMS hopes these programs will result in a reduction in hospital-acquired infections, including those that may be drug-resistant, which can lengthen inpatient stays and result in increased costs to the Medicare program. However, critics of these proposed requirements have noted that many drug-resistant organisms come into hospitals from other settings and have questioned whether these anti-infection requirements will improve patient care if care delivered outside of the hospital setting is not subject to similar requirements.

The proposed rule also establishes an explicit requirement that CAHs comply with federal anti-discrimination laws — – a requirement already applicable to Medicare providers.  The proposed rule would address this disparity and seek to address reports of discriminatory barriers to access by requiring CAH facilities to adopt and implement nondiscrimination policies.

In addition, the proposed rule would clarify that each patient’s medical records must contain adequate documentation justifying the patient’s admission and continued hospitalization, support the patient’s diagnoses, and describe the patient’s progress and response to medications and services.  The proposed rule also clarifies that patients should be able to access their medical records in form and format requested by the patient, including electronically, if readily producible in that form and format.

In light of recent findings in a Bipartisan Policy Center report that was published in January 2018, CMS may consider additional revisions to the proposed rule.

The report considered the rural communities of seven upper Midwest states and the relationship between local communities and CAHs. The report indicated that, while in many of the smaller localities studied, there were still barriers to access of critical primary care services, CAHs would not necessarily be helpful in addressing such access issues in each rural community.

The report found that, in some instances, CAHs are not financially sustainable due to low occupancy of patients requiring inpatient services. Proposals are wide-ranging to correct this issue, but many proposals include modifying the CAH designation to allow these facilities to include primary care and other outpatient services in addition to the inpatient care that they are already required to provide.

Although the extent to which the Trump administration will finalize the rule as initially proposed remains unclear, CAHs should closely monitor developments for any new CMS proposals addressing CAHs and a final rule implementing changes, because CAHs continue to be a focus of lawmakers and healthcare policy advisors.

OIG Gives Green Light to Gainsharing Arrangement

By Brandon Huber, Class of 2019; Kim Harvey Looney, Partner at Waller; Justin Hickerson, Associate at Waller

A gainsharing arrangement between a non-profit hospital and members of a multi-specialty physician group has been authorized by the Office of Inspector General for the first time since the 2015 enactment of MACRA removed certain roadblocks from the expanded use of gainsharing in the healthcare industry.

An OIG advisory opinion issued earlier this month involves a proposed arrangement in which a non-profit medical center will pay certain neurosurgeons a share of cost savings realized by the selection and use of certain products during spinal fusion surgeries. Thirty-four cost-reduction measures were identified by the medical center based upon considerations of costs, quality of patient care, and utilization on a national level. Thirty-one recommendations involved standardizing certain devices and supplies used in spinal fusion surgeries. The remaining three suggested that the neurosurgeons use Bone Morphogenetic Protein for spine surgeries only on an as-needed basis.

The proposed arrangement established a three-year term, whereby the neurosurgeons would receive 50 percent of the annual cost savings, paid each year over the term of the arrangement. The compensation paid to the neurosurgeons would then be divided on a per capita basis, with the remainder being allocated towards paying the practice group’s administrative expenses. Other safeguards implemented under the arrangement included an oversight committee and a requirement that all patients be given written notice of the arrangement and an ability to review the details prior to the performance of their procedure.

In assessing the legality of the arrangement, the OIG examined the application of both the CMP and the Anti-kickback Statute. Regarding the CMP, although the OIG could not opine as to whether the arrangement would reduce medically necessary services, it found that, based on the methodology for development and payment of the cost savings, along with the monitoring and safeguards put in place, it would not impose sanctions.

Likewise, the OIG concluded that it would not impose sanctions under the Anti-kickback Statute because the arrangement presented a sufficiently low risk of fraud and abuse. The OIG based its decision on several factors:

  • the majority of the money received pursuant to the cost-sharing arrangement would be divided per capita amongst the four neurosurgeons, thereby reducing the risk that any particular physician would be incentivized to generate disproportionate cost savings;
  • there was no prohibition on using nonstandardized products, despite the product standardization recommendations; and
  • no other neurosurgeons from outside groups were allowed to participate, reducing the likelihood that the medical center would use the arrangement to attract neurosurgeons from competing hospitals to perform surgeries at its facility.

Although the opinion only applies to the parties who requested it, the opinion can serve as a valuable reference tool for those wanting to ensure future gainsharing arrangements are legally appropriate. Furthermore, this opinion highlights the OIG’s willingness to support gainsharing arrangements as the healthcare industry transitions from a fee-for-service model of care to a system which emphasizes value-based payments.

Veterans Choice Health Care Program Could Run Out of Funding

By William Dodd, Class of 2019

The Veterans’ Access to Care through Choice, Accountability, and Transparency Act of 2014, more commonly known as the Veterans Choice Program, is a U.S. public law that works to expand the number of healthcare options available for eligible veterans. Among many provocations leading up to the creation of the Program, one of the primary driving forces behind enacting the law was the Veterans Health Administration Scandal of 2014, which uncovered years of lies regarding the true wait times for veterans seeking medical care. Along with expanding medical staff and the number of VA facilities, one of the primary provisions of the Choice Program allows veterans living 40 miles or more from a VA clinic, or who are unable to get an appointment within 30 days, to seek treatment from a non-VA facility. In order to accomplish this, the 2014 Choice Program set forth $2 billion altogether, with $500 million specifically intended to increase the number of medical personnel in the VA system. The result of increased healthcare options after years of systematic failure led to an immediate increase in demand for healthcare services. Ultimately, the initial $2 billion proved insufficient to carry the program through to a long-term legislative remedy.

To combat the lack of funding for the popular program, as well as Congress’s failure to enact a timely and suitable long-term remedy, the Trump administration provided $2.1 billion in emergency funding to keep the Choice program alive. However, only weeks after the emergency funding was provided, it became clear that the program may require additional funding to avoid disruption of care for hundreds of thousands of vets. Based on estimates from David Shulkin, VA Secretary, the $2.1 billion in emergency funds will likely run out by mid-December of this year. In addition, Shulkin stated that any additional funding received would be used to bring facilities closer to where veterans live, which would continue to increase access to care for eligible veterans.

While pouring money into the Program may serve as the best option to temporarily meet the immediate demand – generated by years of lack of access to quality care – a long-term legislative fix is the best step to moving forward. As policy director for Concerned Veterans for America, Dan Caldwell, stated, “while Congress must quickly move forward on a temporary fix for the VCP budget shortfall, the Choice Program must ultimately be overhauled, expanded, and permanently reformed.” A long-term plan would likely save money through the creation of a sustainable, organized system to increase access for veterans across the board; however, before any such plan can be enacted, the immediate goal for lawmakers and the Trump administration is to meet to immediate demands of the current crisis.

After speaking with the Trump administration to address the issue of moving forward, Mr. Shulkin has promised to expand the Program during the 2018 year. Pursuant to Mr. Shulkin’s promise, President Trump has proposed an additional $2.9 billion increase in Program funding for the 2018 year, as well as another $3.5 billion in 2019. Along with increased funding projected over the next two years, proposed revisions in the Choice Program seek to eliminate the 30-day or 40-mile eligibility requirements to receive care from non-VA providers. Namely, this process would be done pursuant to the Veterans Coordinated Access and Rewarding Experiences (CARE) Act, a recent proposal from Shulkin. Along with eliminating the aforementioned eligibility requirements, the CARE Act would also include a “health risk assessment,” to be performed by VA personnel, in order to determine which provider – VA or private – will better meet the needs of the veteran-patient. The results of this assessment, as Mr. Caldwell stated, “will incentivize VHA facilities to become higher-performing health care providers through competition.” In Mr. Shulkin’s words, “at minimum, where the VA does not offer a service, veterans will have the choice to receive care in their communities.”

However, the CARE Act has experienced strong pushback from organizations, such as the American Federation of Government Employees (AFGE), on the basis that the CARE Act and similar proposals would “voucherize” VA in favor of private care. In response to this, House VA Committee Chairman, Phil Roe, stated that “this effort is in no way, shape or form intended to create a pipeline to privatize the VA health care system.” Moreover, in Shulkin’s words, “this is about building a VA that veterans choose for their care . . . We want veterans to choose VA.”

Other parties, such as director of the Schaeffer Center for Health Policy and Economics at USC, Dana Goldman, hold the exact opposite view. Goldman advocates for the VA’s complete integration into mainstream private healthcare through the provision of Platinum Plans under the ACA, which are required to cover 90% of the cost of all essential health benefits, and often include no co-payments or deductibles. According the Goldman’s estimates, the average annual cost of a Platinum Plan is around $5,000. If such plans were offered to every veteran under the age of 65, based on the $5,000 annual estimate, this plan would drastically reduce the amount paid annually for coverage of individual vets, which is currently around $7,700. Pursuant to Goldman’s reasoning, the cost savings could be directed towards specialized care for individuals with unique health needs, such as those who suffer from traumatic brain injuries, PTSD, and infectious diseases.

Currently, due to the organizational, administrative failure within the VA system, in regards to reimbursement within the private sector, many private providers have expressed a lack of interest in treating veteran-patients due to the lack of response, administrative hassle, and delayed payments in dealing with the VA. If Goldman’s plan caught on, the impact on private providers would be substantial. Already, more than 30% of VA appointments are made in the private sector. If complete integration were to ever take place, private providers would receive higher volume and guaranteed federal reimbursement for treating veteran-patients, and the VA could focus its efforts solely on administration and the provision of non-healthcare services. This plan would also eliminate the perpetual conflict in regards to whether veterans are receiving quality care, as well as the shortage of health professionals within the current VA system, as complete integration into private healthcare would offer all veterans an opportunity to seek out the best providers to meet their healthcare needs.  

Concerning where to go from here, for current VA attorneys, staff, and providers in the private sector, much will be determined in the coming months as proposals and reform measures continue to be set forth. With the VA system in its current state, proposed remedies range all the way from complete reform to complete integration. Unfortunately, little can be determined as of the current moment, and a wait and see approach is all anyone can do for the time being. As for the veterans in need of care, change cannot wait, and Congress needs to act quickly in order to ensure proper treatment and quality care for those who served and continue to serve our country valiantly.

CVS and Aetna Merger

By Brandon Huber, Class of 2019

According to the Wall Street Journal, CVS and Aetna are reportedly in serious talks over a potential merger between the two healthcare giants. With the potential buyout price in the ballpark of $70 billion, the deal would not only set the record for the largest merger of any two companies in 2017, it would easily be considered the largest health provider merger of all time, shattering Express Scripts’ $29 billion merger with Medco back in 2012.

The deal would combine CVS, currently the largest pharmacy retail chain, with Aetna, the third largest health insurer provider in the United States. Although both companies have declined to comment on the negotiations of the deal, there have been reports that a deal could be reached by the two companies as soon as December. Despite the growing pressure over the last few years on healthcare providers to consolidate, due in large part to soaring medical costs, a merger of this size promises to send a shockwave across the entire healthcare industry.

The merger comes on the heels of news that Amazon, the online retail giant, almost certainly will enter the prescription-drug market as soon as 2019. Although Amazon has not yet announced any official plans to enter the pharmacy retail business, there can be little doubt that even rumors of such plans would be enough to motivate CVS, and other pharmacy retail chains, to find creative ways to expand and grow.

CVS’ buyout of Aetna, at least from the outset, seems to present the perfect opportunity for both companies to benefit from the deal. On the other hand, however, whether consumers stand to gain any benefit from the merger remains to be seen. From Aetna’s perspective, the merger affords the opportunity to provide better care management. Insurers have long believed that the best way to control rising healthcare costs is to ensure they have more access into the lives of their beneficiaries. The deal would help Aetna ensure its beneficiaries were staying on their medicines, getting the care they need at more cost-effective locations—like a CVS health clinic—as opposed to a more expensive and perhaps unnecessary hospital visit.

Conversely, not only would CVS be able to expand its reach within the healthcare market, the deal would drive more traffic to its stores as more of Aetna’s insured beneficiaries would seek preventive care and treatment for less serious medical issues at the clinics located within CVS stores. Additionally, CVS could expect an influx of customers because Aetna’s beneficiaries would likely use CVS to get their prescriptions filled.

With that said, however, despite the near guarantee that both parties would benefit significantly from such a deal, there are some who remain skeptical as to whether the deal will benefit consumers. According to Amanda Starc, associate professor of strategy at Northwestern’s Kellogg School of Management, CVS’ position as a pharmacy benefit manager would allow the merged companies to negotiate lower drug prices with pharmaceutical manufacturers. It is unlikely, however, that these newly acquired drug-rates, now available to Aetna as a result of its newly acquired market power, would translate into lower prices for customers and not into profits for the company.