This Week in Managed Care: July 12, 2019

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This week, the top managed care news included uncertainty surrounding the fate of the Affordable Care Act's individual mandate; a study finding Medicare beneficiaries may be paying more for some generics than brand-name drugs; the Trump administration proposing 5 new payment models to transform kidney disease care.


An appeals court hearing suggests uncertainty for the individual mandate, seniors may pay more for some generics than brand-name drugs, and the Trump administration offers a new plan to pay for dialysis.

Welcome to This Week in Managed Care, I’m Laura Joszt.

Appeals Court Signals Uncertainty Over Constitutionality of the Individual Mandate

A federal appeals court heard oral arguments this week on whether the Affordable Care Act’s individual mandate should remain intact. The 3-judge panel meeting in New Orleans seemed likely to uphold a lower court ruling that the mandate became unconstitutional once its tax penalty was eliminated in 2017. But it was unclear whether the panel would overturn the entire law.

Asked Judge Jennifer Elrod, appointed by President George W. Bush: “If you no longer have the tax, why isn’t [the mandate] unconstitutional?”

California Deputy Solicitor General Samuel Siegel, representing several Democratic states, said that even though the tax is now 0, people still have a choice whether to buy health insurance.

The case arose when 20 Republican states, led by Texas, sued to overturn the individual mandate after President Trump eliminated the tax penalty. In December 2018, a District Court Judge in Texas found the entire law unconstitutional, not just the mandate.

For more, visit

Some Generics May Cost More Than Brand-Name Drugs

Medicare beneficiaries may be paying more for some generics than brand-name drugs. A study in Health Affairs finds this is due to manufacturer discounts on brand-name drugs in Part D, and a recent change in the way the discounts work. The researchers compared data from Medicare formulary files from early 2018 with prices, formulary coverage, and annual out-of-pocket spending. They used a sample of nine brand-name drugs that have generics of biosimilars.

Said lead author Stacie Dusetzina, PhD, associate professor of health policy, Ingram Associate Professor of Cancer Research, Vanderbilt University Medical Center, “This is happening because branded drug manufacturers now pay a discount in the donut hole, which gets counted as out-of-pocket spending. This helps patients reach catastrophic coverage faster, where they pay 5% of the drug’s price instead of 25%. Generic drug makers do not pay these same discounts, so patients have to spend more of their own money to make it to the catastrophic phase of the benefit.”

For more visit

Uptake of Downside Risk in ACO Contracts Remains Low

The number of accountable care organizations (ACOs) taking on downside risk is growing, but very slowly. That’s what researchers found after crunching data from the National Survey of Accountable Care Organizations, which reported that only 33% of ACOs were taking on downside risk in 2018, up from 28% in 2012.

The researchers wrote: “Prior work indicates that ACO participants with risk-bearing experience are more likely to achieve shared savings with the Medicare program. Therefore, the assumption that inducing more ACOs to bear downside risk would result in increased savings should be questioned, based on what is known to date.”

This slow level of progress prompted CMS to revamp the Medicare Shared Savings Program into Pathways to Success, which will push ACOs to take on risk more quickly.

ACOs that took on downside risk were more likely to have at least one of these features:

  • Be integrated delivery systems with at least one hospital, and have a greater number of hospitals
  • Directly provide or contract for inpatient rehabilitation, routine specialty care, palliative or hospice care, home health or visiting nurse services, and skilled nursing facility care
  • Report that 50% to 100% of their primary care patients were covered by an ACO contract

Trump Administration Aims to Transform Kidney Disease Care

The Trump administration this week announced Advancing American Kidney Health, a plan to help 37 million Americans with kidney disease through 5 new payment models. HHS Secretary Alex Azar said the effort is the most significant move any president has made to manage kidney disease since Medicare began covering all patients with end-stage renal disease in 1973.

Goals of the plan are:

  • Reduce the number of Americans with end-stage renal disease by 25% by 2030.
  • Have 80% of new patients with end-stage renal disease receiving dialysis at home or receive a transplant by 2025.
  • Double the number of kidneys available for transplant by 2030.

More than 700,000 Americans have kidney failure and nearly 100,000 are waiting for a transplant.

Kidney failure and dialysis are among the most expensive and debilitating conditions in all of healthcare. One percent of patients in Medicare have end-stage renal disease, but they account for 7% of the costs.

For more, visit

Highlighting the Connection Between Diabetes, Renal Failure, and Cardiovascular Disease

The connections between renal failure, diabetes, and cardiovascular disease was a major theme of the recent American Diabetes Association meeting and is covered in the most recent issue of Evidence-Based Diabetes Management.

The issue features a cover story by Doctors of Pharmacy Joseph Cruz and Mary Barna Bridgeman on how recent outcomes trials are setting the stage for a new era in care, as new evidence shows that therapies for type 2 diabetes can prevent renal decline.

For the full issue, visit

For all of us at the Managed Markets News Network, I’m Laura Joszt. Thanks for joining us.