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ACA repeal wouldn't stop transition to value-based payment, efforts to lower drug spending

Even if the Affordable Care Act is ultimately deemed unconstitutional, stakeholders wouldn’t allow the momentum surrounding value-based care models and biosimilars to stall, experts and provider groups said.

A Texas federal judge ruled last week that the Affordable Care Act couldn’t stand without the individual mandate, rendering the entire law unconstitutional. The decision is likely to weave its way up to the Supreme Court. If the decision is upheld, it has the potential to upend efforts to bolster value-based care models instituted under the ACA as well as the pathway for biosimilar drugs.

While many didn’t see the latest ruling coming, policy experts don’t expect U.S. District Judge Reed O’Connor’s decision to stand. Even if it does, the government, providers, insurers, drug manufacturers and other stakeholders will find a way to sustain these programs, industry observers said.

Providing preventive care

The ACA has significantly reduced the number of uninsured, cutting the national uninsured rate from more than 13% to around 8.8%, according to Moody’s Investors Services.

Rolling back the law could strip coverage from millions of people, which would translate to more emergency and acute care and less preventive measures. It would also eliminate subsidies on health exchanges, which could make insurance unaffordable for the 8 million to 9 million people who currently receive them.

Providers’ balance sheets would suffer as those that currently receive insurance under expanded Medicaid programs would likely become bad debt or charity, analysts said. This could limit their ability to expand access and provide financial assistance and community outreach.

“The ACA is something to work with and something we can improve upon. To throw the whole thing out hard would make it hard for us to pivot the Titanic on a dime,” said Dr. Allison Suttle, Sanford Health’s chief medical officer. “It is frustrating when we have invested a lot to move down this track.”

When people don’t have insurance coverage, it’s harder to keep people healthy, Suttle said.

Suttle’s boss went into the office to get a flu shot recently and saw her dad sitting there. He wasn’t sick, but a Sanford health coach reached out to him and reminded him to have his A1C levels checked.

“We are not paid to do that—there is no CPT code for that,” Suttle said. “We are finding gaps in care so we can keep patient healthy so they don’t have to come into the ER with high blood sugar. It’s that type of preventive care we can do when people are covered. It changes the paradigm of how we care for patients.”

Sanford health coaches work in tandem with behavioral healthcare workers who screen for depression and other mental health issues. Identifying those issues allows Sanford to better manage chronic diseases, Suttle said.

Insurance coverage facilitates colonoscopy and mammography screenings that can detect early stages of cancer.

“Coverage is key,” she said. “To throw the whole thing out just because one part of it was removed could be devastating. It could have huge implications to a complex large health system that has already been making these moves.”

Providers have also invested in the infrastructure, technology and staff to facilitate new payment models like accountable care organizations, bundled payments and Medicare shared savings.

“To just throw that out seems very unlikely,” said Fred Geilfuss, a partner with the law firm Foley & Lardner. “There would be a lot of people who are motivated to figure out a way to continue that momentum.”

AMGA, a trade association that represents physician groups, doesn’t expect its members to cease its work on value-based payment if the ACA were repealed, especially in regards to ACOs. Chet Speed, the AMGA’s vice president for public policy, said physician practices have invested millions of dollars to get their ACOs up and running.

“They won’t have the financial incentives but once you have created these programs internally, you have invested so much money and time and change management, to unwind it would make no sense,” Speed said.

Although he said ACOs would have a hard time continuing their relationships with physicians and hospitals if the ACA were repealed. Waivers have been applied to the Stark Law so physicians and hospitals can have financial relationships. Those protections would go away if the ACA went away.

However, commercial payers have also begun their own ACOs, which will likely continue even without the ACA, said Don Crane, CEO of America’s Physician Groups, which represents more than 300 medical groups and independent practice associations.

“Their customers, purchasers and employers want to see value in the commercial marketplace, they want to see ACOs, they want measures that bring value. That is what’s driving health plans, meeting the demands of their customers,” he said.

Clare Pierce-Wrobel, senior director of the Health Care Transformation Task Force, said that ACA repeal may invigorate the commercial payers to lead the charge on the value-based movement.

“Commercial payers aren’t dependent on the provisions of the ACA and continue to move forward with ACOs and bundled contracts,” she said. “I don’t see the momentum fading for the private sector at this point.”

Boosting biosimilars

The Biologics Price Competition and Innovation Act of 2009 was folded into the ACA. It essentially allows the Food and Drug Administration to approve biosimilars, which mimic expensive biologic drugs made from living organisms.

If the entirety of the ACA were ruled unconstitutional and the BPCIA wasn’t severed from the act, it would strip authority from the FDA to approve biosimilars.

Biologic drugs are a primary driver of rising pharmaceutical prices. While the FDA has been approving generic drugs in record numbers, more biosimilar competition is also needed to bring costs down.

The FDA’s Center for Drug Evaluation and Research approved 50 biologics from 2013 through 2017, compared with 28 from 2008 through 2012.

The FDA has only approved 16 biosimilar products as of December 2018, and only a handful are on the market.

The RAND Corp. estimates that biosimilars will reduce spending on biologics by $54 billion from 2107 to 2026, or about 3% of total estimated biologic spending.

Medicare spends a disproportionately high amount on biologic drugs, said Kyle Faget, special counsel with Foley & Lardner.

“Biosimilars are absolutely a big part of reducing drug prices,” she said.

Given the potential impact and the push from the current administration to curb pharmaceutical spending, it’s unlikely the biosimilars pathway will entirely go away if the ACA is deemed unconstitutional, experts said.

“If a judge declares the ACA dead, there is no longer a basis to allow FDA manufacturers to market follow-on biologics. It would be as if the (BPCIA) were erased from the books,” said Coleen Klasmeier, head of the food, drug and medical device regulatory practice at law firm Sidley Austin. “In my view, there is a very low likelihood that will actually happen.”

It’s too important to public health and to the financial sustainability of federally funded coverage and reimbursement programs, she added.

The courts could unhook the BPCIA from the ACA. Or if the entire ACA is tossed, Congress could reauthorize the law.

It comes down to the question, would Congress have enacted the BPCIA as a stand-alone law? Faget asked. The answer is likely yes, she said, adding that the issue has drawn bipartisan support.

If Congress has to reauthorize the act, it may re-examine certain parts of the law like the 12-year exclusivity provision for new biologics. Lawmakers might also call into question tactics that biologic manufacturers use to stall competitors. As of now, the BPCIA doesn’t prevent biologic manufacturers from paying biosimilar developers to postpone market entry, known as pay-for-delay agreements.

Value over volume

The current administration has also been pushing alternative payment models, so it would be hard to imagine that the government wouldn’t find a workaround, Geilfuss said.

“We have seen the big commercial players solidify these models and expand utilization,” he said. “There is a lot of momentum so it’s hard to imagine the government wouldn’t resurrect them in some fashion even if the ACA is completely tossed.”

In an email obtained by Modern Healthcare to providers on Sunday, the CMS suggested the administration will remain focused on its efforts around value-based payment despite the federal judge’s ACA ruling. The Innovation Center, which allows the CMS to test new payment models without statutory limitations, would be eliminated if the ACA were repealed.

According to the email, the CMS said, “The recent federal court decision is still moving through the courts and the work of the Innovation Center will continue unchanged. We remain committed to our current and future models as well as our focus on better health outcomes at lower cost.”

While the adoption of these new payment models, particularly ones that include downside risk, has been slow, they have proven to at least moderately slow government healthcare spending.

The movement to value-based payment benefits from bipartisan support, said Dr. Ashish Jha, director of the Harvard Global Health Institute.

“I don’t think anyone has an appetite to go back to where we were eight years ago,” Jha said.

In the unlikely event the ACA is repealed, Jha said he imagines Congress would enact legislation to continue popular programs that have proven to be relatively successful like the Medicare Shared Savings Program. The repeal would also likely encourage an evaluation of programs that have been more controversial and haven’t been as obviously successful like the Hospital Readmissions Reduction Program.

The repeal of the ACA does nothing to MACRA, which passed with bipartisan support in 2015. Physicians still need to participate in the Merit-based Incentive Payment System (MIPS) or an advanced alternative payment model, both of which tie performance to financial incentives.

“I think a big pillar under the value movement would be knocked out if the ACA goes away, and I think chaos would ensue, but the underpinning of the value movement lies mostly in MACRA,” Crane at America’s Physicians Groups said.

While Sanford isn’t making any changes in the short-term, the looming uncertainty around the ACA is in the back of everyone’s mind, Suttle said.

If the health system has to do more emergency care for people who don’t have insurance coverage, it couldn’t invest in exploratory treatments like using stem cells to repair rotator cuffs, she said. It would limit their ability to pursue new technology and hire more clinicians to increase access to care, along with a range of other endeavors.

“It is absolutely in the back of our mind,” Suttle said. “We have to run a tight ship. The stroke of a pen could have dramatic impacts on how we can survive and provide high-quality care.”