by Stanton Mehr | Jun 6, 2023 | Uncategorized
I’ve written about aspects of the patient journey in the past, and one thorny difficulty is the problem of inappropriate claim denials. Note, I used the word “difficulty” here, not “challenge” because there is no need for diplomacy here. When someone is seriously ill and needs medical care, and obtains that care within the insurer or plan network, wrongful rejection of claims (whether partial or in full) is a dreaded and wholly avoidable chapter in the patient’s medical journey. From the perspective of the insurer or health plan in 2023, the denial of appropriate, in-network care could be described in a couple of pejorative terms: (1) greedy and/or (2) incompetent.
As reported in Fierce Health Payer, claims filed in 2021 for payment by exchange plans were analyzed by the Kaiser Family Foundation (KFF), finding that some plans erroneously rejected 40% or more of payment claims generated by in-network providers. This is then automatically billed to the patient, who can then appeal the denial. Even after the appeal is filed, plans commonly deny the claim.
Within exclusive provider organizations (EPOs)
and health maintenance organizations (HMOs), referrals are required for nearly any specialty office visit or service. This is a common cause of denial of services (preferred provider organizations usually waive referral requirements when services are delivered in-network). Even if the specialty referral is obtained, this is no guarantee that the insurer will deny the claim: either incorrectly identifying a specialty provider as out of the plan’s network or failing to update the provider directory and listing the specialist as a network provider erroneously.
Across the country, average denial rate in 2021 for in-network services was 17% for these exchange plans. Celtic Insurance Company of Florida denied 42% of these claims. In contrast, Bright Health Insurance Company of Florida denied only 6% of these claims. According to KFF’s data, 56% of all insurers denied at least one-fifth of their incoming claims.
The reasons given for payment denial is of interest, as well. For example, Cigna Health and Life of Tennessee rejected 180,124 claims from members of its silver EPO plan, 37% of those for reasons of medical necessity. Overall, of the 44.7 million claims rejected for in-network services, 8% were for lack of prior authorization/referral, 13% for excluded services/benefits, 2% for medical necessity, and 76% for “all other reasons” (which includes out-of-network services). Examples provided by Kaiser counter each one of these reasons, including denial of epinephrine injections and steroid therapy for an anaphylactic reaction as “not medically necessary” or the insurer categorizing cardiac ablation for arrhythmia as “coverage for injections into the spine” (despite receiving prior approval for the procedure from the insurer). For the former, filing of two appeals did not resolve the issue.
Claims denials is a big revenue generator or saver, depending on how you view it, for insurers. Data from the analysis showed that only 0.2% of all claim denials were appealed (based on initial appeals only), regardless of whether the denial was appropriate. This contributes $11 billion annually in extra revenue to the insurance industry. I cannot estimate the amount of aggravation, waste of time and resources, and medical debt this causes patients. Claims denial rates should be of priority interest to consumers who are choosing an insurance plan.
As reported by KFF, “Consumers are not provided any information about how reliably marketplace plan options pay claims and plans reporting high claims denial rates do not appear to face any consequences.”
We are on the cusp of an artificial intelligence (AI) revolution in this country, and one might expect that AI applied to the process of claims review could improve the situation. Of course, this depends on the algorithm used by the individual insurer. One investigation, published in March by KFF, found Cigna’s use of an automated system allowed medical reviewers to make claims acceptance/denial decisions on 50 charts in 10 seconds. At this speed, a review of the patient’s records is not humanly possible.
Assuming an accurate algorithm is utilized, AI should only be used as a first step in the process—to pick out claims that seem to fail some basic tests, like out-of-network providers for a member of an EPO (which does not cover any nonnetwork services). Following this identification, the claim should be manually reviewed before a claim denial is sent. Clearly, the system is not working in several plans, and the external checks on the system are not being conducted as directed by law.
by Stanton Mehr | Apr 13, 2023 | Uncategorized
I am appalled that this subject needs to be addressed.
The US Food and Drug Administration (FDA) isn’t perfect, but it is still the global gold standard for evaluating medicines for safety and effectiveness. The FDA, though not quite recovered from the self-inflicted damage caused by the Aduhelm® approval mess, is staffed by scientists who have done an admirable job of navigating the question of which drugs should be prescribed in the US. Who wants the judicial system deciding which medicines are safe and effective? No one. That’s right. Not a single thinking person would believe that the science-centric approach for evaluating pharmaceuticals, complex and otherwise, should be the purview of judges at any level of the system.
Texas District Court Judge Matthew Kacsmaryk’s ruling that mifepristone should be withdrawn from the market attempted to thinly mask the real basis for the action: his antiabortion leanings. His line of reasoning in overturning FDA’s decision in approving the drug 23 years ago on the basis of safety and effectiveness is absurd, possibly laughable.
As further evidence of the judiciary’s inability to (1) review this on a scientific basis and (2) comprehend the potentially vast implications of such an action, a federal appeals court preliminarily ruled that, without fully evaluating the safety evidence, the FDA “cannot deny that serious complications from mifepristone.” It pointed to the agreement that patients must sign before receiving it that use of the drug has risks. The New York Times reported that “the court also said that the FDA was incorrect in saying that mifepristone was comparable in safety to ibuprofen. ‘FDA’s own documents show that mifepristone bears no resemblance to ibuprofen,’ the court said.” What? Any healthcare professional will tell you that ibuprofen, when taken chronically and under certain conditions, can cause gastrointestinal bleeding, leading to serious health consequences. Does that mean it should be taken off the market, as well? The court is willing to conflate the experience of mifepristone, which is most often taken in combination with misoprostol, with that of ibuprofen, an analgesic.
Pending a full review by the Appeals Court (two judges appointed by the Trump administration and one by the Bush administration), this issue will likely be escalated to the Supreme Court. If the Appeals Court decides to uphold the Texas judge’s action, it will deal the FDA, the drug industry, and separation of powers a crippling blow.
If the Appeals Court decides to not trample the FDA’s authority, despite the Supreme Court’s recent Dobbs ruling, it should decline to entertain the appeal. The Supreme Court is already facing a crisis of credibility and confidence, and undermining the FDA, whose authority was formally established by an Act of Congress in 1962. Essentially, Congress has passed legislation saying that the FDA is the only entity qualified to make such decisions.
The Court would not question the overall constitutionality of the FD&C Act. Chief Justice John Roberts has long favored narrow rulings to avoid upsetting major legislation. There can be no narrow ruling if the decision to order the withdrawal of a drug is based on something other than scientific rigor. We all have preconceptions of how some of the justices would vote given the opportunity. Are they considering the wider implications? They had better.
The drug industry has reacted with apprehension, justifiably. What other FDA decision could be challenged in court if mifepristone is taken off the market? The only ones who benefit in that case are the lawyers.
by Stanton Mehr | Mar 30, 2023 | home2, Uncategorized
Throughout its development, the US healthcare system has been attracted to new and shiny technologies like bees to honey. This is a significant reason why the cost of healthcare rises over time. It is also one reason why value-based care initiatives show smaller savings than hoped—the downward pressure they exert on the cost curve is overcome by the upward pressure maintained by a steady stream of new and more expensive technologies.
Prescription Digital Therapeutics, the Next Frontier
Digital health applications have had a rockier road to acceptance than traditional pharmaceuticals, and that is mainly for two reasons: (1) lack of data on their effectiveness and (2) lack of reimbursement. The reason for the former is simple—evidence for their efficacy is not generally required for FDA authorization (if they are authorized at all). The reason for the latter is also straightforward: Are they covered under the medical benefit, pharmacy benefit, something else, or not at all? Responses to the question are rather vague, ambiguous, and disparate.
When manufacturer activity picks up in specific area of medicine, so does funding for awareness campaigns, drug advertising, and funding for additional research. Examples of this well-worn paradigm include the migraine arena with the approval of the triptans in the 1990s, rheumatoid arthritis and the approval of anti-TNF inhibitors in the 2000s, and Crohn’s disease and interleukin inhibitors in the 2010s. General and specific digital health applications can be expected to follow this trajectory, especially noting the involvement of Google, Apple, Amazon, and other extremely deep pockets.
That is not necessarily the case with PDTs. Manufacturers of digital health applications that are aimed at treating a disease, like substance-abuse disorder, opioid-abuse disorder, depression, insomnia, post-traumatic stress disorder, and more, are not large pharma companies, but smaller entities with more experience in the coding world than in reimbursement and coverage.
Approximately 20 manufacturers have either brought their PDTs to market or are currently developing them. These manufacturers are smaller concerns with more limited resources than conventional pharma companies. For the next few years, a good portion of their resources will be spent expanding awareness of these new treatment options.
First, PDT manufacturers need to focus their efforts on differentiating themselves from other digital health applications, including unregulated wellness apps. Second, they must emphasize their use of cognitive behavioral therapy, an accepted method for treating behavioral health disorders. Third, they are approved by the FDA as “software as a medical device,” and it will take a bit of explaining to attain recognition by payers and plan sponsors about what this term means for reimbursement and coverage. Finally, they need to spotlight the prescription-only feature for access (and adjunctive nature of their treatment). This is no small task for an industry that saw its first FDA authorization the second half of 2017.
Added Value to Adjunctive Therapy?
There may be a value-based aspect to PDTs. Consider that PDTs are not very expensive (although generally out of the range of uninsured patients or those paying out of pocket—probably up to $1,000 per prescription). They are not meant to be used as exclusive treatment; patients should be under the active care of a health professional and receiving live counseling, pharmaceutical therapy, or both. They are intended to improve the effectiveness of overall care and patient engagement. For example, a PDT for substance-abuse disorder seeks to improve abstinence rates and avoid recidivism. For the employer, that may translate into greater productivity, less disability, and less absenteeism.
The evidence for several of these PDTs is promising. Employers are only now awakening to the potential of PDTs to address important, stigmatizing conditions, with on-demand education and treatment modules.
Technical coverage and reimbursement questions will have to be resolved; for instance, can utilization of a PDT be tracked through pharmacy management, especially without a national drug code? They do carry unique device identification codes, but PDTs are not devices like glucose monitors. Will patients’ PDT data be reviewed and not simply relayed to the healthcare team? Will patients only be able to get a prescription through certain providers (e.g., will a nurse or pharmacist be able to prescribe it)?
This is a burgeoning treatment modality and worth tracking, with the introduction of PDTs for several new indications in the near future.
by Stanton Mehr | Jun 8, 2022 | home1, Uncategorized
Scrutiny on pharmacy benefit managers (PBMs) has just been ratcheted up considerably. The Federal Trade Commission (FTC) announced on June 7 the launch of its investigation into PBM practices, targeting the largest players. This investigation comes at an extremely crucial time for the biosimilar industry, as manufacturers prepare to negotiate with these same PBMs for coverage of adalimumab biosimilars.
The PBMs are the chief purchasers of medications for commercial plans and Medicare part D members. They negotiate drug pricing contracts with drug manufacturers for the vast majority of the insured population in the US. They are another unique feature of global health systems: No other advanced country allows private middlemen to serve such a role.
A 90-Day Deadline
The FTC will send “compulsory orders” to CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc., who purchase medications and make pharmacy coverage decisions for approximately 90% of the commercial and Medicare part D insured population.
According to the FTC, these PBMs will be compelled to “provide information and records regarding their business practices,” which are notoriously opaque. The investigation will focus on how these PBMs affect access and affordability of prescription drugs. The FTC’s deadline for compliance will be 90 days from issuance of the orders.
“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” stated Federal Trade Commission Chair Lina M. Khan in the FTC’s release. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”
How Do Net Prices and Rebate Contracts Buy Coverage?
At the center of the FTC investigation of PBMs is the PBMs’ encouragement of rebates to negotiate low net prices, and how this results in barriers to coverage of other drugs. For example, a PBM may allow a drug manufacturer exclusive formulary coverage for their drug if the rebates offered are sufficiently attractive.
This is potentially a huge obstacle for makers of adalimumab biosimilars. AbbVie passes millions of dollars in rebates to PBMs at present in exchange for Humira® coverage. Biosimilar manufacturers who seek PBM coverage must contend with the PBM’s lost or reduced Humira rebates if their biosimilar is to be covered exclusively or at parity with the reference product. Further, how are these rebates passed along to payers and ultimately to patients?
The Influence of PBMs
“In these roles,” says the FTC, “[PBMs] often have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter. Many of these functions depend on highly complicated, opaque contractual relationships that are difficult or impossible to understand for patients and independent businesses across the prescription drug system.”
In addition to the impact of rebates, the FTC will also review practices that involve the PBM’s relationship with the pharmacy network, including reimbursement; their use of prior authorization and other administrative tools to manage access, and the PBM’s specialty drug policies.
This inquiry is the next step in the FTC’s request for information about PBMs issued in February (and elicited 24,000 public comments). It is not known when the FTC’s investigation will conclude or whether it will immediately impact the negotiations for the multitude of adalimumab biosimilars to be launched in 2023. However, this inquiry may begin to pry open the lockbox on PBM practices. There will certainly be more to report on these developments.
by Stanton Mehr | Jun 8, 2021 | Uncategorized
It is difficult to speculate on what FDA’s motivation might be to overrule the recommendation of its Advisory Committee and approve Biogen’s aducanumab for the treatment of mild Alzheimer’s disease. Relatively few providers are convinced of the value of this agent based on the clinical trial results reviewed, and many are outspoken in their opposition to it. Based on the providers’ perspective, what are payers supposed to think?
Research in the Alzheimer disease category has resulted in depressingly few bright spots. Biogen’s agent does not seem to break any new ground here—a drug that helps clear amyloid plaque from the brain seems to achieve that goal, but without showing meaningful differences in cognitive improvement (or delayed progression). The clinical trials proved this. FDA seems to be holding out hope that this mechanism of action will be proven beneficial at some point in the future. Certainly, they do not have this evidence to date. The fact that the approval will require a phase 4 clinical trial to support this hope is frankly uninspiring. Newly diagnosed patients will clamor for the drug, despite its poor record of efficacy and its significant risks, placing providers and payers in a difficult bind.
Alzheimer’s disease is a disorder heavily weighted toward the elderly population, and Medicare will be expected to bear the brunt of the bill for aducanumab. Early estimates have gone as high as $10 billion annually based on the prevalence and incidence of Alzheimer’s disease. This points to the immediate need for a national coverage determination (NCD) to help guide Medicare coverage. Health policy experts are calling for this to begin now. However, commercial payers will also need to make coverage policies pertaining to the agent.
In other words, payers will have their hands full trying to measure value against the projected $56,000 yearly cost of treatment. In an earlier analysis, ICER revealed that aducanumab may not be cost effective at one-tenth this price. Reacting to the approval, ICER sent out its own commentary, taking the FDA to task.
Payers, including Medicare Advantage plans, can utilize prior authorization criteria and step edits to manage appropriate access to this treatment. In this case, “appropriate access” may be very difficult to define, outside of an investigational clinical trial. Ordinarily, when products are approved by the Food and Drug Administration, there is an expectation of careful evaluation and decision making based on the efficacy and safety of the medication. In an accelerated approval scenario such as this, this expectation is not met. Judging from the cacophony of confusion coming from neurologists on this decision, I don’t believe that we have a clear understanding of whom this agent may benefit. Maybe it is just wishful thinking from the FDA that clearing amyloid plaque will somehow equate to better cognitive function (perhaps in a smaller subset of patients). Until we have real evidence that this is the case, a very conservative approach seems warranted. Let Biogen conduct the new study and prove the concept works. Until then, the number needed to treat, and the cost of that treatment, to gain benefit in one patient could indeed be enormous.
Research in the Alzheimer disease category has resulted in depressingly few bright spots. Biogen’s agent does not seem to break any new ground here—a drug that helps clear amyloid plaque from the brain seems to achieve that goal, but without showing meaningful differences in cognitive improvement (or delayed progression). The clinical trials proved this. FDA seems to be holding out hope that this mechanism of action will be proven beneficial at some point in the future. Certainly, they do not have this evidence to date. The fact that the approval will require a phase 4 clinical trial to support this hope is frankly uninspiring. Newly diagnosed patients will clamor for the drug, despite its poor record of efficacy and its significant risks, placing providers and payers in a difficult bind.
Alzheimer’s disease is a disorder heavily weighted toward the elderly population, and Medicare will be expected to bear the brunt of the bill for aducanumab. Early estimates have gone as high as $10 billion annually based on the prevalence and incidence of Alzheimer’s disease. This points to the immediate need for a national coverage determination (NCD) to help guide Medicare coverage. Health policy experts are calling for this to begin now. However, commercial payers will also need to make coverage policies pertaining to the agent.
In other words, payers will have their hands full trying to measure value against the projected $56,000 yearly cost of treatment. In an earlier analysis, ICER revealed that aducanumab may not be cost effective at one-tenth this price. Reacting to the approval, ICER sent out its own commentary, taking the FDA to task.
Payers, including Medicare Advantage plans, can utilize prior authorization criteria and step edits to manage appropriate access to this treatment. In this case, “appropriate access” may be very difficult to define, outside of an investigational clinical trial. Ordinarily, when products are approved by the Food and Drug Administration, there is an expectation of careful evaluation and decision making based on the efficacy and safety of the medication. In an accelerated approval scenario such as this, this expectation is not met. Judging from the cacophony of confusion coming from neurologists on this decision, I don’t believe that we have a clear understanding of whom this agent may benefit. Maybe it is just wishful thinking from the FDA that clearing amyloid plaque will somehow equate to better cognitive function (perhaps in a smaller subset of patients). Until we have real evidence that this is the case, a very conservative approach seems warranted. Let Biogen conduct the new study and prove the concept works. Until then, the number needed to treat, and the cost of that treatment, to gain benefit in one patient could indeed be enormous.
