INSIDE THE ISSUE

> Tier 3: “High Risk”
> Governor’s Budget
> State Limits 340B Reimbursement
> Loan Forgiveness
> Schuster’s Chamber Award
> Paxlovid
> Medicare Advantage

MONDAY REPORT

State Declares Parts of Health System at “High Risk”

On any given day in Massachusetts, more than 1,000 people who are awaiting discharge from hospitals are literally stuck in those facilities with no ability to transition to the next level of care. The system is stressed to such an extent that last week the Department of Public Health declared that much of the health system is at “high risk.”

MHA’s latest throughput survey – a point-in-time questionnaire to hospitals asking how many patients in their facilities are awaiting discharge to a post-acute facility or services – showed 1,077 patients were stuck in just 42 of the hospitals that responded to the MHA survey.

Of that patient total, 570 were awaiting discharge to a skilled nursing facility (SNF). The survey found that 44% of patients awaiting discharge to a SNF were waiting for 30 days or more. When patients cannot transition out of an acute care hospital bed, other patients boarding in hospital EDs or in medical/surgical units awaiting that occupied bed have nowhere to go.

The state last week determined that much of the state’s healthcare system is at “high risk” due to the capacity issue. DPH moved two of the five medical regions in the state – the entire Boston Metropolitan area out to about Route 495 and Northeastern Massachusetts – to “Tier 3” which is the capacity designation created during the height of the pandemic. Region 5 (Southeastern Mass. and the Cape and Islands) has been in Tier 3 since the beginning of 2023, following the fire at Signature Brockton Hospital on top of the prolonged closure of Norwood Hospital due to flooding. Tiering is based on a series of factors, including spikes in disease-specific cases including respiratory diseases, staffing constraints, ED usage, and medical/surgical bed availability. Tier 3 requires hospitals in the affected region to meet frequently to share bed availability, and may result in facilities implementing “gradual and dynamic reductions in elective, non-urgent procedures and services.” The situation is made even more precarious due to the unstable finances and uncertainty surrounding the Steward Health Care system.

“It is indeed a crisis for those on the frontlines and the public can play a role in helping to alleviate the stresses hospitals are under,” said Patricia Noga, R.N., MHA’s vice president of clinical affairs. “It’s imperative to seek the right care in the right place. Emergency departments will see any patient in need of care, but they are designed to handle severe illnesses and injuries that can’t be addressed in the primary or urgent care setting. Going elsewhere when appropriate saves you time and ensures that patients with true emergencies get the care they need, when they need it. That being said, you should never hesitate to call 911 or visit an ED if you feel you need immediate, serious care.”

Governor’s FY25 Budget Reimagines Healthcare Assessments

The Healey Administration’s FY2025 proposed budget, known as H.2, envisions $56.1 billion in spending – a 2.9% increase over the current fiscal year.

The administration noted that due to the end of the enhanced pandemic-era federal Medicaid funding as well as general spending growth in the program, the MassHealth budget faced an increase of approximately $940 million net of federal revenues. To address the substantial increase, the Executive Office of Health and Human Services (EOHHS) assumed numerous savings initiatives in its FY2025 budget that will hold the MassHealth program’s spending growth to 3.7% relative to FY2024.

The savings plan assumptions include the annualization of the FY2024 9C budget reductions that resulted in a 1.5% decrease in Medicaid Managed Care Organization (MCO) rates effective January 1, 2024, which also affects financing to hospital health system Accountable Care Organizations (ACOs). EOHHS has assumed more than $300 million in gross spending reductions that have yet-to-be-determined, which will negatively affect healthcare providers and MCOs.

Part of the plan also assumes changes to the hospital assessment, increasing the total amount by $347 million per year. Hospitals are already assessed $880 million, which supports funding dedicated to health equity, clinical quality improvements, safety net hospitals, and other hospital payments, as well as general support of the MassHealth program. The additional hospital assessment proposed in H.2 would be used to increase payments to safety net hospitals and improve inpatient psychiatric hospital reimbursement, while also relieving the General Fund of $100 million in customary support of safety net hospital Medicaid spending. EOHHS has made a commitment to work with MHA and its members to secure the support of the hospital community.

The governor also proposes to restructure six existing assessments (surcharges) paid by health insurers and consolidate these into a single assessment. As part of the restructuring, an additional $246 million is also assumed in the proposed new assessment to support the Medicaid program and General Fund. Assessments that insurers pay would vary depending on the number of Medicaid and commercial enrollees they serve. It appears the additional assessment funds assumed in the restructuring plan are financed by Medicaid MCOs, not commercial payers.

MassHealth Restricts Reimbursement of Certain 340B Drugs

Effective April 1, 2024, EOHHS has directed its MassHealth Managed Care Entities to no longer reimburse certain obesity drugs if those drugs were purchased through the federal 340B Drug Pricing Program. The new policy states the drugs can be reimbursed if purchased from non-340B pharmacy stock.

The high cost of pharmaceuticals is well documented, and the commonwealth is undertaking numerous efforts to achieve savings. For example, the state has been granted additional authority to negotiate with pharmaceutical manufacturers on their pricing through the form of supplemental drug rebates in the MassHealth program. For many Massachusetts hospitals, the federal 340B program is the vehicle that provides needed savings for purchasing medication and drug therapies for patients, including those covered by MassHealth. Hospitals rely heavily on 340B drug discount financing, and the savings yielded through 340B also extend beyond pharmacy and help to support the entire mission of hospitals.

Since rebates to the state and discounts to providers cannot be both claimed for a single prescribed drug, debate has increased on which entity should be able to claim the discount. Through regulations, EOHHS has recently prevented select “high-cost” drugs from being covered by the MassHealth program if the provider purchased the drug through the 340B Drug Pricing Program. Based on an extensive comment process with the hospital community, the regulations permit EOHHS to designate such drugs high-cost only if the price is $100,000-plus per utilizer per year. Regulations also limit the number of drugs subject to this rule to no more than 25. State Medicaid law also requires 180-days notice and a financial impact analysis prior to restricting or limiting access to hospital 340B drug discounts. It remains unclear whether the new EOHHS reimbursement policy for obesity drugs should have been subject to these requirements.

MHA’s Vice President of Healthcare Finance and Policy Dan McHale said, “Addressing the high and growing cost of pharmaceuticals is a concern we and our members share with EOHHS. The federal 340B program is a critical component to achieving savings, not only for hospitals but for the commonwealth as a whole. We look forward to ensuring that Massachusetts continues to recognize the tremendous importance of the 340B program in financing healthcare operations, the preservation of community resources, and access to services for all patients.”

More Loan Repay Funding Available for Healthcare Workers

In round three of the MA Repay program announced last week, the Healey Administration is making funding available to direct care professionals, and supervisors of direct care professionals, “who provide treatment, support, or services to clients or their families in a home-based or community-based human service organization.” For the first time, early education, childcare, home health, and other home- and community-based workers are eligible to apply for MA Repay funding.

The first round of MA Repay was awarded in August 2023 and provided $140.9 million in student loan repayments to primary care and behavioral health providers. Round 2 launched in September and provided loan repayment to RNs and LPNs providing skilled nursing care to MassHealth members, and to Department of Mental Health direct care workers.

Qualifying professionals for the new round include care coordinators, peer specialists, social workers, nurses, personal care attendants, certified nursing assistants, developmental specialists, educator assistants, and family childcare assistants working in eligible settings. Awards range from $3,000 to $30,000 depending on academic degree level attained and whether the individual works part- or full-time. Priority will be given to those who can communicate and provide care in a language other than English; who can “support access and delivery of services in a culturally competent manner;” and who either live or work in one of 20 communities identified in the COVID-19 Vaccine Equity Initiative.

Applications close on February 26 at 11:59 p.m. MA Repay is funded through the American Rescue Plan Act with funding appropriated by the legislature. Three additional rounds of this program will be made available in 2024.

Boston Chamber Recognizes Schuster for Leadership, Commitment

Winners are selected for “demonstrated leadership that has made a tangible, positive difference within her organization,” as well as “demonstrated commitment to enhance the quality of life in her community.” Schuster (center) is shown here with Susan Loconto Penta, chair of the Chamber’s Women’s Network Advisory Board and co-founder and managing partner of MIDIOR Consulting; and Greater Boston Chamber President & CEO James Rooney. Schuster was one of nine women to receive this year’s award.

Paxlovid Still Available Under New Authorization

The Federal Drug Administration announced last week that the emergency use authorization (EUA) for Paxlovid, the drug used to treat mild-to-moderate COVID-19, was being rescinded effective March 8. However, the exact same drug in a different package, which the FDA granted “new drug application” (NDA) authority to, can still be prescribed and used by patients. Said another way: EUA-labeled Paxlovid has to be taken off the shelves after March 8, at which point NDA-labeled Paxlovid can be used.

During the pandemic, Paxlovid was distributed for free. Now, through December 31, 2024, those on Medicare or Medicaid, or who are uninsured can get free Paxlovid with a prescription. Those who are commercially insured may be able to get it for free, depending on their insurer or of they qualify through the PAXCESS program, operated by Pfizer and the government.

Medicare Advantage: Request for Info, Criticism, Payment Cut

Is the Medicare Advantage program working correctly? Do the plans operate fairly? Any suggestions for improvement? Last week, the Centers for Medicare & Medicaid Services (CMS) issued a request for information on the Medicare Advantage program, and said it is specifically interested in, among other items, beneficiary access to care, including provider directories and networks; prior authorization and utilization management, including denials of care, the appeals processes, and use of algorithms; cost and utilization of different supplemental benefits; and all aspects of Medicare Advantage marketing and consumer decision-making.

CMS’s RFI comes at a time when the Medicare Advantage (MA) program is under intense review and criticism. Last week, U.S. Senator Elizabeth Warren (D-Mass.) joined with U.S. Representative Pramila Jayapal (D-Wash.) to send CMS a letter criticizing “billions in overpayments” to private MA insurers.

“The MA program was founded on the premise that private insurance companies would administer Medicare coverage more cost-effectively, saving taxpayer dollars,” Warren and Jayapal wrote. “However, the MA program has failed to deliver savings in any year since its inception; in fact, the Medicare Payment Advisory Commission (MedPAC) estimates that CMS pays MA plans 6 percent more than what it would cost to cover the same enrollee in Traditional Medicare (TM), even though MA plans spend up to 25 percent less on health care per enrollee … The combination of overpayments and aggressive denials of care has allowed private MA insurers to more than double their profit margins compared to other health insurance markets.” The legislators outlined a series of steps CMS could take to curb the overpayments.

On January 31, CMS issued the 2025 Advance Notice for the Medicare Advantage and Medicare Part D Prescription Drug Programs, which, if finalized, would update payment policies for these programs. (See CMS’s FAQ document here.) The proposal would result in a 3.7% (or $16 billion) payment increase to the MA plans in calendar year 2025. The payment would have been higher if the Biden Administration had not cut the MA benchmark used to calculate the update; it was the second consecutive year the benchmarks has been reduced.

John LoDico, Editor