The Essential Scan: Top Findings in Health Policy Research | Edition 80

What’s the latest in health policy research? The Essential Scan aims to help keep you informed on the latest research and what it means for policymakers. It is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics. To sign up to receive the Essential Scan straight to your inbox, sign up here.

Impact of Non-Pharmaceutical Interventions (NPIs) to Reduce COVID-19 Mortality and Healthcare Demand

Study by: Neil M. Ferguson, Daniel Laydon, Gemma Nedjati-Gilani, et al.

As the COVID-19 pandemic continues to spread across the globe, and a vaccine remains in development, public health measures are at the forefront in reducing transmission of the virus. A new study uses a microsimulation model to analyze the policy options available to two countries: the United Kingdom and the United States. The authors examine two classes of strategies: mitigation strategies, which seek to slow but not necessarily stop the spread of the virus (thereby reducing peak demand for health services); and suppression strategies, which aim to reverse epidemic growth and reduce case numbers to low levels. The researchers find that optimal mitigation policies—which include combining home isolation of suspect cases, home quarantine of those living in the same household as suspect cases, and social distancing of the elderly and those at higher risk of severe disease—could reduce peak demand for healthcare by two-thirds, and cut deaths in half. But this would still result in hundreds of thousands of deaths, and health systems would remain overwhelmed by the remaining number of patients. The authors estimate that suppression strategies—which could require a combination of social distancing for the entire population, home isolation of cases, and quarantine of their family members—could much more substantially limit the pandemic’s toll. However, to be successful these intensive interventions would need to be continued until a vaccine becomes available, which is generally believed to be at least a year into the future. While China and South Korea have demonstrated that suppression is possible, researchers note that it remains to be seen whether it is possible—and at acceptable cost—over the long-term. Full study here.

How Would Sharing Rebates at the Point-of-Sale Affect Beneficiary Cost-Sharing in Medicare Part D?

White paper by: Erin Trish, Katrina Kaiser, and Geoffrey Joyce

Drug rebates – as a share of total drug spending – have grown considerably over the last decade. In Medicare Part D, rebates have grown from about 10 percent of spending in 2007 to about 22 percent in 2017. While rebates help to reduce premiums, cost- sharing in the program is based on the list price – not the net price after rebates and other discounts – so patients do not share in the negotiated savings at the point of sale. In a new Schaeffer Center white paper, researchers modeled a Part D policy change that would instead base beneficiary cost-sharing on net price for patients who do not receive low-income subsidies. They find that this would reduce out-of-pocket spending for about 47 percent of these beneficiaries with approximately 20 percent saving more than $100 over the year. In addition, 36 percent fewer of these beneficiaries would reach catastrophic coverage, resulting in federal reinsurance savings of about 19 percent. These results indicate that tying cost-sharing to net price has the potential to provide meaningful financial relief to many Part D beneficiaries. Full white paper here.

Economic Report of the President: Understanding the Opioid Crisis

Report by: Council of Economic Advisers

The opioid crisis has taken the lives of more than 400,000 Americans in the past 20 years. In 2018 it cost an estimated $665 billion, or 3.2 percent of gross domestic product. A new analysis from the Council of Economic Advisers (CEA) in the Economic Report of the President breaks the crisis into two waves and analyzes their causes. During the first wave, between 2001 and 2010, out-of-pocket prices for prescription opioids declined by 81 percent—due to government subsidies and new opportunities for generic substitution—which reduced the price in the primary and secondary (black) market for diverted opioids. The report estimates that this decline can explain 31 to 83 percent of the growth in the death rate during this time period. The share of publicly funded opioid prescriptions increased from 17 percent in 2001 to 60 percent in 2010. The second wave of the crisis began around 2010, when efforts to limit prescription misuse led to a large market for illegal opioids. The CEA finds that the second wave was driven by supply expansions in the illicit market in addition to demand expansions following efforts to limit prescription misuse. The authors conclude that the first wave suggests a need to ensure the appropriate prescribing and safe use of opioids, and the second wave demonstrates the need for both supply and demand side restrictions, through actions from law enforcement, as well as prescription drug monitoring programs and improved guidance to clinicians. Full report here (chapter 7).

Mortality and Hospitalizations for Dually Enrolled and Non- Dually Enrolled Medicare Beneficiaries Age 65 Years or Older, 2004 to 2017

Study by: Rishi K. Wadhera, Yun Wang, Jose F. Figueroa, et al.

More than seven million individuals enrolled in the Medicare program are also dually-enrolled in the Medicaid program because they are low-income. Dually enrolled beneficiaries have previously been found to have a higher burden of chronic disease, worse clinical outcomes, and greater overall Medicare spending levels compared to non-dually enrolled beneficiaries. In recent years, changes to the Medicare program have focused on delivery improvements and care coordination. A new study looks at whether mortality or hospitalization rates differed between dually and non-dually enrolled populations from 2004 to 2017. During the study period dually enrolled beneficiaries had higher observed annual all-cause mortality rates, higher hospitalization rates, and higher observed in-hospital, 30-day, and 1-year mortality rates compared to individuals who were only enrolled in Medicare. Since the early 2000s, the Medicare program has implemented significant changes to improve health outcomes for older adults. However, disparities between dually enrolled and non-dually enrolled beneficiaries remain. The authors provided a potential explanation: different financial structure of the two programs creates conflicting incentives among clinicians, health systems, and payers—which may lead to inefficiencies, such as poor care coordination and care fragmentation. Full study here.

The Affordable Care Act at 10 Years — Payment and Delivery System Reforms

Report by: David Blumenthal and Melinda Abrams

The Affordable Care Act (ACA), now 10 years old, changed many aspects of the healthcare system in the United States. While the coverage and access provisions of the ACA have received significant attention, a new report looks into the payment and delivery reforms enacted through the law. The article focuses on changes in payments, primary care enhancement, and the Center for Medicare and Medicaid Innovation (CMMI), an office created by the ACA. Annual increases in hospital payments were lowered in the Medicare program, which saved the government an estimated $200 billion. Along with lower hospital payments, the ACA decreased payments to Medicare Advantage plans. This was projected to save the government over $500 billion from 2012 to 2021, and to date has kept Medicare expenditures 20 percent lower than pre-ACA estimates. In addition to these payment changes, the ACA also experimented with value-based payments, such as the Hospital Readmission Reduction Program (HRRP), the Hospital-Acquired Condition Reduction Program (HACRP), accountable care organizations (ACOs), and bundled payments for care improvement. These all had at least neutral effects on both cost reduction and outcomes. Primary care enhancement programs implemented by the ACA, such as the Primary Care Initiative, have yielded mixed results. CMMI, the office created by the ACA to research and implement improvements to Medicare and Medicaid service and reduce overall costs, has received positive reviews from both the GAO and CBO, and currently receives bipartisan support. Full report here.

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The Essential Scan is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics.