Tag: healthcare providers

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.

Combatting the Opioid Crisis

By Andy Cole, Class of 2018

Florida Governor Rick Scott announced on September 26, 2017, plans to introduce legislation that would limit opioid prescriptions to only three days unless a set of very strict standards are met. If the standards are met, then a seven day supply would be permitted. Currently, this bill has not been filed in the House or Senate, but a similar seven day limit bill has been filed.
This legislation follows President Donald Trump declaring the opioid epidemic as a national emergency and many other states and pharmaceutical retailers taking similar stances. Less than a week before Gov. Scott’s announcement, pharmaceutical retailer CVS announced that beginning next February it will limit opioid prescriptions to seven days for patients who are new to pain therapy. Additionally, the Pharmaceutical Research and Manufacturers of America has announced its support for a seven day limit on opioid prescriptions with exceptions for certain conditions such as cancer.
It is unclear if this legislation will pass as it is currently planned. If so, it will be the strictest opioid limitations in the country. Many states have passed seven day limits for first time opioid patients.
In Massachusetts, Governor Charlie Baker proposed a similar 72 hour limit on opioids for first time users. This proposal was met with much criticism from many doctors and advocacy groups who called the proposal “draconian.” The final product of the bill had overwhelming support from both parties. Baker, a Republican, signed the final bill after it passed unanimously through the Democrat controlled legislature.
Many state legislatures have found it hard to balance the need for doctors to maintain discretion and to curb a national crisis. Many doctors and organizations are calling for tighter restrictions that prevent overprescribing of opioids to patients who do not need the medication.
Dr. Steven Stanos, president of American Academy of Pain Medicine, said the academy “supports any initiative that would help limit the effects of over prescribing medications or leading to excessive unused medicines that could lead to harm to a patient or family members or their community.”
The trend of states seeking to regulate the amounts of opioids doctors are allowed to prescribe will continue to grow until the epidemic can be helmed. As many states look to begin drafting their legislative initiatives for 2018 and many politicians prepare for midterm elections, combating opioid addictions will undoubtedly be a bipartisan effort.
There is a possibility that many states will push for law similar to the law enacted in Massachusetts, which requires practitioners to take more steps to combat opioid misuse. The first point of the law is to limit opioid prescriptions to seven days for any new opioid prescription. This applies to all opiates Schedule II through Schedule VI. There are exceptions to this limit. Physicians can prescribe for more than seven days if the prescription is designed for the treatment of substance use disorder or opioid dependence, for inpatient prescriptions, for pain related to an acute medical condition, for chronic pain management, for pain associated with a cancer diagnoses, or for palliative care.
If a first time opiate prescription is being written for greater than a seven-day supply pursuant to an exception, the prescriber must document in the medical record the specific exception for which the opiate is being prescribed; and provide brief information about the actual condition or treatment that necessitates more than seven days; and indicate whether there were known and available non-opiate alternatives. The state has added an additional requirement for prescribing opioids to minors under the age of eighteen. For minors, the prescriber must also document that there was a discussion with the parent/guardian of the known risks with the specific prescription and why it is necessary for that condition/treatment. Additionally, prescribers must document in the medical record each and every time an outpatient opioid prescription is being issued to anyone.
This law moves beyond the prescription limit and also requires prescribers to check the Prescription Monitoring Program every time he or she schedules a Schedule II or III narcotic. The law also requires prescribers to complete training in pain management and addiction. In addition, it requires prescribers and patients to enter into a written pain management treatment agreement for prescriptions for extended-release long-acting opioids.
Finally, this law also places a new burden on pharmacists. If a patient requests a partially filled opioid prescription, the pharmacist must notify the prescriber within seven days. Then the prescriber is responsible for discussing with the patient the quantity of the prescription and the option to partial fill.
From an attorney’s point of view, it is important to make sure your client is aware of all of these changes and their new obligations under the law. While Tennessee has not enacted this type of law yet, combatting the opioid crisis in the state will be high on the legislative agenda for the next few years. A piece of legislation similar to this is bound to be at least be discussed by lawmakers as a potential route to take. At the moment it is difficult to tell how difficult it will be to monitor providers who may abuse the system.

CMS Proposes Change to Joint, Episodic, and Cardiac Rehabilitation Payment Models

By Emmie Futrell, Class of 2018; Patsy Powers, Partner at Waller; Daniel Patten, Associate at Waller

On August 17, 2017, CMS published a proposed rule that could bring about significant changes to some of its Innovation Center’s major payment models. Specifically, the Proposed Rule would:

  • reduce the number of mandatory geographic area participants of the Comprehensive Care for Joint Replacement (CJR) model;
  • cancel the Episode Payment Models (EPMs) and Cardiac Rehabilitation (CR) incentive payment model; and
  • increase the pool of practitioners that qualify under the Advanced Alternative Payment Model.

These changes may be surprising to some as these models are still in their infancy. The CJR model started last year, and the EPMs and CRs were not scheduled to begin until January 1, 2018.

Perhaps the most striking element of the Proposed Rule is the removal of 33 geographic areas (of the currently 64 geographic areas) where participation in the CJR model has been mandatory. Instead, CMS proposes that such hospitals participate in the CJR model on a voluntary basis, especially hospitals with low volume or those located in rural areas. These hospitals are provided with a one-time option whereby continued participation in the CJR model will be left to their discretion. CMS believes that moving the CJR model away from a mandatory requirement will increase the likelihood that providers will participate in future voluntary initiatives. Hospitals that choose to continue participation in the CJR model will receive a target price for these procedures from CMS each year, and the proposed rule includes refinements and clarifications to this payment process.

CMS is accepting public comments on these revisions, which can be electronically submitted here, until October 16, 2017.

Increased Price Transparency

By Zachary Gureasko, Class of 2017

On President Donald Trump’s website, one of his objectives is: “Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.” President Trump believes that by allowing the individual to “shop around” for the best prices, competition among providers will increase and they will be forced to lower costs.

There are some organizations that already attempt to use existing data to provide consumers with cost estimates that they can use to make cost-informed choices. One such organization is FAIR Health, which is an independent, non-profit corporation whose mission is to promote cost transparency in healthcare costs. Using the website highlights some discrepancies in costs that would be helpful to consumers. For example, a procedure done in Nashville proper priced at $5,000 could potentially cost as low as half of that amount if it was performed more than 45 miles away from Nashville.

The health care industry has long been viewed as “hiding the ball,” so to speak, when it comes to the full prices of their services. Generally, the only information they offer before the patient elects to undergo a procedure or treatment is the immediate cost, such as a co-payment or deductible. Arguments have been made, even prior to President Trump’s call for increased transparency, for the provision of total costs to the consumer. The justification for this is that consumers with more information will be able to comparison shop and obtain the desired care for a relatively affordable price.

There are issues with price transparency from both provider and consumer perspectives. There are impediments to price reporting, such as contractual provisions preventing health plans from negotiating their rates with providers, as well as the indication that encouraging patients to be more price-conscious could have negative impacts on low-income consumers due to cost-shifting. Additionally, there is currently no standard structure for reporting prices, and the interplay between health care providers, insurance companies, and government agencies almost require some sort of formatted structure to be in place to enable providers to adequately report in a way that would achieve the intended result of these price transparency efforts.

Several studies have also shown that price transparency initiatives, such as requiring hospitals to publish the prices of their procedures and treatments up-front, do not truly lead to changes in either consumer behavior or pricing. This result is potentially attributable to a perceived correlation between high cost and high value, one that is not necessarily accurate in the health care industry as it might be in other industries. Another wrinkle in the fold from a consumer perspective is the notion that consumers will use price transparency tools in their decision-making. However, many consumers are unaware that such tools exist; moreover, even if they are aware of the tools’ existence, research has shown that this has little to no bearing on the consumers’ ultimate decisions or determinations.

As a final consideration, although efforts to increase price transparency are still in their early stages (and thus there is not enough data to form a fully conclusive study on their impact), not all health care services are amenable to “shopping around.” For instance, a person in an emergent situation will not be on his or her smartphone comparing the prices of different ERs. The person will assuredly utilize the nearest hospital with an emergency room. Emergency room services comprise a fairly substantial portion of health care costs. Therefore, it remains to be seen whether increased price transparency will truly increase competition or lower health care costs for consumers.