IRS Publishes PCOR Fees through September 2019

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending January through September 2019 and the applicable dollar amount is $2.45, which is multiplied by the number of covered lives determined for the appropriate period.

The PCOR program will sunset in 2019. The last payment will apply to plan years that end by September 30, 2019 and that payment will be due in July 2020. There will not be any PCOR fee for plan years that end on October 1, 2019 or later.

The PCOR fee is paid by the health insurer for fully insured plans. All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted benefit:

    • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
    • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCOR fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. Depending on when the plan starts and ends also can determine the fee per form. Participating employees and dependents are counted as covered lives. For HRA and health FSA plans, just count each participating employee as a covered life.

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019 which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. For the current year, clients will need to file the Form 720 by July 31, 2019.

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There’s More to Know About AHPs

bundled-costsMany employers will find it interesting that AHPs will continue to be categorized as MEWAs – Multiple Employer Welfare Arrangements. This consideration will make association health plans subject to some state regulations that severely restrict the formation of self-funded MEWAs.

Having to comply with the rules of each state will make AHPs more difficult to organize. While associations can create a plan that extends across state lines, they will have to follow the rules of the state they are in that has the most restrictive laws. As an example, an AHP based in New Jersey that extends into New York would still have to follow the more restrictive laws of New York.

Even though the regulations are more restrictive than many would like, AHPs should enable many small employers to offer their employees better health benefits at more affordable rates.

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Pharma cash flows to doctors for consultant work despite scrutiny

This article was published on January 6, 2019 on ctmirror.org, written by Sujata Srinivasan.

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Image Source: ctmirror.org

With physicians’ compensation from pharmaceutical and medical device companies under increasing scrutiny, payments to doctors in Connecticut for consultant work rose to $8.5 million in 2017, up from $8 million in 2016.

Payments for meals, travel and gifts also increased from $3.2 million in 2016 to $3.5 million in 2017, data from the Centers for Medicare & Medicaid Services show.

Of the total $27.2 million in payments, $4.37 million – or 16 percent – went to 10 doctors holding licenses in Connecticut.

The highest paid doctor was Dr. Paul Sethi, an orthopedic surgeon in Greenwich, who accepted slightly more than $1 million in 2017 in royalty fees, consulting work, and other services from several companies, including Arthrex Inc., and Pacira Pharmaceuticals Inc., maker of Exparel. The drug, Exparel, is marketed as an alternative to opioid painkillers post-surgery. Sethi frequently takes to Twitter to promote the use of a non-opioid alternative and is listed on the Pacira website in a case study. He did not respond to C-HIT’s request for an interview.

Dr. Robert Alpern, dean of the Yale School of Medicine, received $524,611 for his work as a director on the boards of Abbott Laboratories and AbbVie Inc. Alpern said that he does not provide paid lectures, does not speak for the pharmaceutical companies, does not see patients or write prescriptions, and that his work on the boards is “fully disclosed to Yale University and Yale New Haven Hospital.”

“I recuse myself from any decisions related to either of these companies,” Alpern said.

The financial relationships between pharmaceutical and medical device companies and doctors, as well as teaching hospitals, have been disclosed since 2013, under the Affordable Care Act. The law is intended to provide transparency into the business connections between health care providers and the industry.

The law is also driving some doctors—like infectious diseases specialist Dr. Roger Echols of Easton—to give up their license to practice medicine. “It’s why I did not revive mine last year,” he said, referring to 2016.

Echols was paid $526,881 in 2017 for his work as a consultant primarily for Japan-headquartered Shionogi & Co., best known as the maker of the cholesterol drug Crestor. Echols said he stopped seeing patients and prescribing medication years ago, when he transitioned to the pharmaceutical industry.

Even practicing doctors, Echols said, are now declining payment when they meet with him to discuss drug research. “They’ve gone so far that they won’t even allow us to provide a bagel or a cup of coffee at a meeting because that has to be reported.”

Overall, non-research payments to Connecticut doctors fell 8 percent from $29.7 million in 2016 to $27.2 million in 2017, the data show. Much of the decline occurred in royalty and license fees on sales of drugs and medical devices, charitable contributions, and ownership or investments in companies.

In research payments to Connecticut doctors, pharma and medical device companies paid $901,196 in 2017, down from $1.1 million in 2016, according to the data.

Nationally in 2017, doctors were paid $2.82 billion by 1,525 pharma and medical devices companies. Research payments totaled $4.66 billion.

Dual role of doctors

The dual role of doctors as providers of health care to patients and marketers for drug and medical device companies has been scrutinized for several years and has been the subject of extensive research.

One report, published in a medical cancer journal that examined several studies concluded, “All the money and attention drug representatives shower on doctors has its intended effect: building relationships with doctors and ultimately changing how they prescribe.”

A study published in October 2017 by the U.S. Library of Medicine, National Institutes of Health; found that gifts from pharmaceutical companies result in higher drug costs: “More prescriptions per patient, more costly prescriptions, and a higher proportion of branded prescriptions.”

“There is strong evidence that pharma payments are associated with higher prescribing of the promoted medications, and with higher costs,” said Ellen Andrews, executive director of the Connecticut Health Policy Project.

Dr. Bruce E. Strober, a professor of dermatology at UConn Health, said, “Nearly all my colleagues—anybody who is a specialist in the field—do speak for drug companies, and I am compensated for my time, yes. Unequivocally, it does not alter my prescribing habits.”

Strober received $174,279 in 2017 primarily in consulting fees from Eli Lilly and Co., Bristol-Myers Squibb Co., Sanofi Genzyme, Novartis Pharma AG and Amgen Inc., among others. In 2016, the latest year on record, Strober made out 61 prescriptions for Amgen’s Enbrel amounting to $239,996, according to a C-HIT analysis of Medicare Part D data.  The same year, Amgen paid him $17,000.

Many doctors see their role as merely educating their peers, and being compensated for their time and expertise.

Dr. Mark Milner, an ophthalmologist in Hamden, received $186,125 in 2017 primarily in consulting and speaking fees from pharma companies specializing in dry eye, including Allergan Inc., maker of the blockbuster drug Restasis.

“There is nothing unethical if I am paid for my time. I give a comprehensive dry eye lecture whether I’m sponsored by Allergan, or Shire [North] or Bausch [formerly Valeant],” Milner said.

Dr. Steven Thornquist, a Waterbury-based ophthalmologist and former president of the Connecticut State Medical Society (CSMS), said, “The onus is on the individual physician to be ethical. I don’t think patients should give their doctor the third degree.”

It’s a fine line. Dr. Claudia Gruss, CSMS president, said physicians should decline a cash gift. “At the same time, there are certain physician experts that other physicians look up to, and educational events allow a very frank interchange between physicians in the field. We don’t want to decrease productive collaboration.” In 2017, Gruss received $120.94 in the general category – the category includes food and beverage at medical conferences.

Dr. Niranjan Sankaranarayanan, a nephrologist in Bloomfield, does not accept money for consulting and speaking engagements from pharma companies, though he did earlier in his career. “I was naïve. They invited me to talk about a medication that I was already prescribing, but after one or two talks, I didn’t feel comfortable,” he said. “This is a gray zone. They entice you with more and more, and there is no ceiling to this,” Sankaranarayanan said.  He received $201.60 in general category in 2017.

Medical ethicists say the public must know that their physicians very often have complex interests. “Medicare has databases but more research needs to be done on incentives ad kickbacks,” said Dr. Howard Forman, a Yale professor of diagnostic radiology, economics and public health, who often speaks about medical ethics.

“We have to prove cause-causation rather than correlation. It’s pernicious how the money flows,” said Forman.

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Troubleshooting Telemedicine

telehealthThe healthcare landscape is changing as providers increasingly offer virtual care options, and naturally it’s taken some getting used to. A recent study by the Deloitte Center for Health Solutions found that while patients who have used virtual care reported a 77% satisfaction rate, only 44% felt that their wait time was reduced compared to an in-person office visit. Some offices are designating doctors for virtual care on specific days of the week to circumvent wait times caused by healthcare professionals bouncing between in-person and virtual patients.

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Why The U.S. Remains The Most Expensive Market For ‘Biologic’ Drugs In The World

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This article was published on December 19, 2018 on NPR.org, written by Sarah Jane Tribble. Photo Source: NPR.org.

Europeans have found the secret to making some of the world’s costliest medicines much more affordable, as much as 80 percent cheaper than in the U.S.

Governments in Europe have compelled drugmakers to bend on prices and have thrown open the market for so-called biosimilars, which are cheaper copies of biologic drugs often derived from living organisms.

The brand-name products — ranging from Humira for rheumatoid arthritis to Avastin for cancer — are high-priced drugs that account for 40 percent of U.S. pharmaceutical sales.

European patients can choose from dozens of biosimilars — 50 in all — which have stoked competition and driven prices lower. Europe approved the growth hormone Omnitrope as its first biosimilar in 2006, but the U.S. didn’t follow suit until 2015 with cancer-treatment drug Zarxio.

The U.S. government generally stops short of negotiating prices and drugmakers with brand-name biologics have used a variety of strategies — from special contracting deals to overlapping patents known as “patent thickets”— to block copycat versions of their drugs from entering the U.S. or gaining market share.

As a result, only six biosimilars are available for U.S. consumers.

European countries don’t generally allow price increases after a drug launches and, in some cases, the national health authority requires patients to switch to less expensive biosimilars once the copycat product is proven safe and effective, says Michael Kleinrock, research director for IQVIA Institute for Human Data Science.

If Susie Christoff, a 59-year-old who suffers from debilitating psoriatic arthritis, lived in Italy, the cost of her preferred medicine would be less than quarter of what it is in the U.S., according to data gathered by GlobalData, a research firm.

Christoff tried a series of expensive biologics before discovering a once-a-month injection of Cosentyx, manufactured by Swiss drugmaker Novartis, worked the best.

Without the medicine, Christoff says her fingers can swell to the size of sausages.

“It’s 24/7 constant pain in, like, the ankles and feet,” says Christoff, who lives in Fairfax, Va. “I can’t sleep, [and] I can’t sit still. I cry. I throw pillows. It’s just … awful.”

At first, Christoff’s copay for Cosentyx was just $50 a month. But when a disability led her to switch to a Medicare Advantage plan, her out-of-pocket costs ballooned to nearly $1,300 a month — more than three times her monthly car loan.

Christoff, with the help of her rheumatologist, Dr. Angus Worthing, tried Enbrel, Humira and other drugs before finding Cosentyx, the only drug that provides relief.

Christoff’s case is “heartbreaking,” Worthing says. Continue reading

Getting Creative About Behavioral Health

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With behavioral health conditions impacting one in five Americans, it’s no wonder we’re seeing more employers search for ways to provide members with better access to behavioral healthcare benefits.

Statistics show that many employees, including some that are insured, fail to get the mental healthcare they need. Because self-funded health plans provide plan design flexibility, some plans are taking bold steps to address this growing need. While many are using telemedicine to improve access and lower costs, some employers are treating out-of-network behavioral health treatment as in-network, enabling employees to pay the same amount for treatment regardless of which provider they use. Others are covering out-of-network behavioral healthcare services even when their plan doesn’t cover out-of-network services for other types of care.

When you consider that mental illness has become the greatest cause of disability claims in the U.S., it is not surprising that employers are looking for ways to help employees obtain the care they need.

Significant Action is Warranted

There is plenty of research to show that Americans are not getting the mental healthcare they need. According to Mental Health America, despite having health insurance, 56.5% of adults with mental illness received no treatment in the past year.

Another problem is that behavioral health treatments are rarely classified as primary care, and are regarded instead as specialty treatment. This makes people find an in-network provider, go out-of-network, pay higher out-of-pocket costs or avoid treatment altogether. Claims data from Collective Health shows that more than 40% of the 2017 behavioral health spend was out-of-network, which is many times the amount spent on primary or preventative care.

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