Bob Herman

Drug companies flood Congress with lobbyists

Andrew Harnik / AP

The pharmaceutical industry heavily increased how much it spent on lobbyists in the first quarter of 2017, just as President Trump entered office and skewered drug companies for their high prices. There's bipartisan support for tackling rising drug costs, but drug makers clearly want to maintain the status quo and have tried to turn attention to wholesalers and middlemen in the supply chain.

The details: Axios reviewed lobbying disclosures for 61 of the largest health care companies and trade groups. Those organizations spent more than $90.6 million on lobbying in the first three months of this year, a 20% jump from the $75.7 million in the first quarter of 2016. Twenty-five drug companies and groups — led by the Pharmaceutical Research and Manufacturers of America, Novartis, Pfizer, Amgen, Teva and Bayer — all significantly bumped up their lobbying expenses.

Here's how a handful of drug companies spent their lobbying dollars so far in 2017 compared with the same period in 2016.

  • PhRMA: $7.98 million vs. $5.95 million
  • Novartis: $4 million vs. $3.09 million
  • Pfizer: $3.74 million vs. $3.28 million
  • Amgen: $3.02 million vs. $1.75 million
  • Teva Pharmaceuticals: $2.67 million vs. $1.24 million
  • Bayer: $2.45 million vs. $2.13 million
  • Biotechnology Innovation Organization: $2.30 million vs. $2.26 million
  • Sanofi: $1.9 million vs. $1.01 million
  • GlaxoSmithKline: $1.64 million vs. $1.49 million
  • Mylan: $1.45 million vs. $610,000
  • Eli Lilly: $1.39 million vs. $1.25 million

PhRMA was the largest lobbying spender in the health care sector in the quarter, but the American Medical Association was close behind at $6.83 million. The American Hospital Association had a lobbying price tag of $4.56 million.

Several health insurance groups also reached deeper into their pockets to sway the new Congress. The Blue Cross and Blue Shield Association ($2.15 million), UnitedHealth Group ($1.65 million), Anthem ($1.64 million), Aetna ($1.38 million) and Cigna ($1.15 million) each boosted their lobbying expenses in the first quarter compared with the same period a year ago. Changes to the Obamacare marketplaces and repealing Obamacare's health insurance tax were at the tops of their wish lists.

However, American's Health Insurance Plans — the industry's main lobbying group that does not include Aetna or UnitedHealth as members — lowered its spending from $2.21 million to $1.65 million.


Physicians want to solve burnout in medical school

Marcy Sanchez / Military Health System

Medical school deans and other health care leaders are convening in Washington Friday to figure out ways to change the medical education system so fewer students and physicians feel stressed or depressed — and to stem the number of doctors who are killing themselves.

Why this matters: Researchers estimate that roughly 400 doctors commit suicide every year, putting medical professionals near the top for suicide rates. And more than half of physicians show signs of burnout or depression often due to the taxing, life-or-death nature of the job, among other factors. That adversely affects physicians as well as the patients they see.

"When anybody is burned out and they go to work every day, they're not putting their heart into it. The person is more likely to make mistakes," said Dr. Christine Cassel, the dean of Kaiser Permanente's medical school that is opening in 2019 and hosting the meeting.


Anthem willing to stay in two Obamacare exchanges

Andrew Harnik / AP

Health insurer Anthem has filed preliminary Obamacare rates in Kentucky and Virginia, the Wall Street Journal reports. That indicates Anthem is willing to stay in some marketplaces even though there's still no guarantee Congress will fund the $7 billion in cost-sharing subsidies. Aetna and Cigna also are staying in Virginia, but UnitedHealthcare is leaving.

Why this matters: UnitedHealthcare's exit is relatively meaningless. The company bailed on nearly all of the Obamacare markets already. But Anthem's decision to stay, at least initially, is important since it is one of the largest publicly traded insurers in the Obamacare exchanges. If Anthem and other companies stay, the marketplaces won't collapse, although rates could go up and hurt those who don't get subsidies.


Drug tech company ZappRx nabs $25 million funding round

Rick Bowmer / AP

Health care startup ZappRx has raised $25 million in a new round of funding led by the health care arm of Qiming Venture Partners. Other big names in ZappRx's round were GV, the venture capital hub of Google and Alphabet, and SR One. The company has now raised $41 million and will use the money to scale nationally.

What ZappRx does: It gets specialty drugs to patients faster by cutting administrative waste. ZappRx CEO Zoe Barry started the company in 2012 after her brother, who has epilepsy, had to wait more than nine months to get the medication he needed. It usually takes 19 minutes for providers to fill out enrollment and prior authorization forms for many specialty drugs, but Barry says her company's technology gets that down to just under two minutes.

Context: Specialty medicines, or those that treat complex and chronic conditions, are a primary cause behind the country's rising prescription drug spending. ZappRx is designed to get patients the treatment they need more quickly, but it doesn't address drug pricing itself.


Providers overwhelmingly back Pence's Medicaid expansion

Andrew Harnik / AP

Indiana's conservative twist on Medicaid expansion — approved when Mike Pence was governor — has solid support among health care providers in the state. The two main reasons: It pays better than standard Medicaid rates, and they prefer it to no expansion at all, which would have left them on the hook for more charity care.

Why it matters: A big problem with Medicaid is getting enough doctors and other providers to participate — so when they support the program, they're going to treat more Medicaid patients. That works out better for everyone, and it's more likely to make Indiana a model for for other Republican-led states to change their Medicaid programs.

Pence's expansion of Medicaid has been a lasting irony as the Trump administration tries to repeal Obamacare. But his plan — called Healthy Indiana Plan 2.0 — bolted on conservative elements, such as requiring low-income people to pay into a health savings account to maintain coverage. (Centers for Medicare and Medicaid Services chief Seema Verma also helped develop the plan.)

You won't hear a lot, if any, negative pushback from hospital leaders, clinic directors and doctors in Indiana. In fact, many providers call HIP 2.0 a lifesaver even though researchers and liberals say it creates barriers to care. Here's why:

Paying Medicare rates

  • States that expanded Medicaid to adults earning 138% of poverty pay Medicaid rates to hospitals and doctors for those patients. But those payments could be low, sometimes to the point where doctors could refuse to see new patients.
  • Instead, the health insurance companies that administer Indiana's Medicaid program pay medical claims at the much higher Medicare rates. It's funded through a cigarette tax and hospital taxes, as well as federal Obamacare funds.
  • "We needed to have a bigger provider network to do those (Medicaid) services," said Dr. Jennifer Walthall, secretary of Indiana's Family and Social Services Administration, which oversees Medicaid. And paying Medicare rates entices more providers.
  • States that haven't expanded Medicaid but are looking at Indiana could get providers to accept conservative elements if it means they are getting Medicare-level reimbursement.

Better than no expansion at all

  • Nineteen states haven't expanded Medicaid, and providers in those states have urged their legislators to act. Hospitals and clinics, especially in rural areas, would gladly take any kind of expansion money instead of absorbing uncompensated care costs from the uninsured.
  • "It's so much better than nothing," said Dr. Sarah Stelzner, a pediatrician at Eskenazi Health, the public safety net system in Indianapolis.
  • Many clinicians in Indiana also believe HIP 2.0 offers robust health coverage. If beneficiaries stay current on payments to their health savings account, the "plus" plan includes vision and dental on top of medical benefits.
  • "It's better insurance than I have," said Dr. Frank Messina, an emergency medicine doctor at Eskenazi, whose uninsured population has been cut in half since the expansion took effect.

One rub: Some people, especially the homeless, struggle to make their health savings account contributions, even if it's the minimum $1 per month. But church groups and not-for-profit hospital foundations are able to pay $12 to cover the poorest members' annual contributions and keep them insured. It's a minimal amount for charity groups — although it raises the question of whether the health savings account is really making people more engaged in their care.


UnitedHealth's profit surges after Obamacare retreat

AP file photo

UnitedHealth Group's revenue jumped 9% annually to $48.7 billion in the first quarter of 2017, even though it withdrew from nearly all of the Obamacare marketplaces, and its profit soared 35% to almost $2.2 billion. Most of the growth at the health care conglomerate is coming from taxpayer-funded insurance programs (Medicare Advantage and Medicaid) as well as from its services arm, Optum.

UnitedHealth also really wants tax reform: Specifically, the company wants permanent repeal of Obamacare's health insurance tax, which Congress suspended for 2017. UnitedHealth CEO Stephen Hemsley said on an earnings call Tuesday that Congress needed to act before the tax "further worsens consumers' premiums, state budgets and seniors' benefits." Repealing the tax would lower consumers' health care premiums, but it's also one of the easiest ways for insurance companies to juice earnings per share, which funnels money back to shareholders and top executives.


Cardinal Health strikes $6.1 billion deal for Medtronic's medical supplies

Kiichiro Sato / AP

Cardinal Health has acquired three medical supplies businesses — patient care, deep vein thrombosis and nutritional insufficiency — from Medtronic for $6.1 billion in cash.

Why this matters: Cardinal Health is most known for its drug distribution business. But drug distributors are facing criticism over their role in the opioid crisis. Cardinal Health and its competitors also are expecting lower profits this year as generic drug prices grow more slowly — a general good for society. The downward trend in generic drug prices is hammering Cardinal Health, so the Medtronic deal allows the company to diversify its revenue more.


Hospital stocks tumble following HCA's lackluster preview

Richard Drew / AP

So much for that upbeat Medicare payment proposal from last week. Stocks of hospital operators plunged Monday morning after HCA — a bellwether company and the country's largest for-profit hospital chain by revenue — previewed first-quarter results below analysts' expectations. HCA's stock tumbled 3% in early morning trading, and its competitors took a bigger beating: Tenet Healthcare dropped 8%, Community Health Systems fell 7.5% and Quorum Health was down 5.5%.

What HCA expects: Adjusted earnings before interest, tax, depreciation and amortization (a juiced-up form of profitability) are expected to stay the same year over year in the first quarter at $2 billion. That's still a hefty profit margin, but it was 6% below what Wall Street projected. HCA said it was "affected by changes in payer mix" — industry jargon that means the company is treating fewer patients with higher-paying commercial insurance and more patients with lower-paying government insurance. It's possible the tepid Obamacare enrollment for this year contributed to that.


Medicare to boost hospital payments, scale back regulations

Phil Sandlin / AP

The Trump administration unloaded the annual Medicare hospital payment proposal Friday, just as many people headed home or took off for the Easter and Passover holidays.

The big figure for hospitals: Total Medicare payments for the nation's 3,300 general hospitals will go up by 2.9% on average in 2018, and that includes extra money for uncompensated care. (Small hospitals in rural areas aren't affected.) That amounts to an extra $3.1 billion of funding. Long-term-care hospitals are getting a slight cut to their payments.

Look for regulations to get scaled back: The Centers for Medicare and Medicaid Services is asking the industry for ways that Medicare "can contribute to making the delivery system less bureaucratic and complex" — a request that mirrors the rhetoric of President Trump and Health and Human Services Secretary Tom Price.

Public comments are due by June 13. Here are more highlights from the 1,832-page proposed rule:

  • Obamacare implemented many programs that penalize hospitals for excessive patient readmissions or infections. Those programs will continue with some proposed changes to how hospitals are measured.
  • Some payment policies — like exempting some physicians from payment cuts if they don't use approved electronic health records — come from last year's 21st Century Cures Act.
  • Medicare is asking hospitals to track four more end-of-life measures for cancer patients, like those who receive chemotherapy in the final two weeks before they die.
  • Private contractors would no longer look at medical claims at rural hospitals to ensure that patients are discharged or transferred within 96 hours, a change rural hospitals have wanted.
  • CMS wants to eliminate newspaper notices for when some health care facilities, like ambulatory surgery centers and health clinics, get terminated from the Medicare program. The agency called newspapers "an outdated means of communication" even though half of seniors rely on print newspapers for their news.

Here's how much of your federal taxes go to health care

AP file image

More than a quarter of what someone pays in federal taxes goes toward Medicare, Medicaid, Obamacare subsidies and other health care programs, according to a Committee for a Responsible Federal Budget analysis for the Wall Street Journal. And for all of the attention Obamacare is getting these days, it only gets a fraction of the tax dollars that go to Medicare.

The amount funneled to Medicare has gone up by 15% since 2011 as more baby boomers age into the program. Tax spending on Medicaid has gone up more than 25% since 2011 due to Obamacare's expansion of the program. For every $100 of tax revenue, this is how much goes toward health care:

  • Medicare: $15.26
  • Medicaid: $9.55
  • Obamacare subsidies: $1.09
  • Other programs tied to health care: $0.36