2018 15th Annual MHA Business Summit Highlights
The 2018 15th Annual MHA Business Summit that took place March 7-9 in Las Vegas, Nevada, was a resounding success. Twenty educational sessions spanning a variety of topics took place over the three days, with more than 1,400 long-term care, home infusion and specialty pharmacies; health care executives; and industry partners participating.
The March 7 sessions included four Business Breakout educational tracks, with three focusing on the most important issues affecting long-term care (LTC) pharmacy and one focusing on the most important issues among home infusion and specialty pharmacies. Participants explored new and innovative ways to improve their businesses and were provided with tools to maximize business opportunities and meet ongoing challenges.
With this background, the March 8 and 9 general sessions provided participants with a high-level synopsis of the current state of alternate care site pharmacy, ongoing technology transformation within the health care industry, and analysis of legal and marketplace dynamics that are affecting or will affect LTC, home infusion, and specialty pharmacy.
This highlighter provides an overview of selected sessions that took place during the three-day Summit
Michael J. Sicilian,
President, Managed Health Care Associates, Inc.
Mr. Sicilian kicked off the March 8 general session by exploring how the health care industry is undergoing a major transformation. The issues that were the focus last year such as the Affordable Care Act, accountable care organizations, and MAC pricing are no longer the center of discussions. The issues most important to MHA customers today and in the future will be prescription drug plans (PDPs) and pharmacy benefit managers (PBMs), and how these entities are getting bigger and broader; disruptors partnering with traditional providers, such as Amazon entering the health care marketplace; Direct and Indirect Remuneration (DIR); contracted Generic Effective Rate (GER); and long-term care at home.
Mr. Sicilian also emphasized that the controversy around drug pricing is only going to grow with the introduction new gene therapy and oncology agents entering the market at a cost of more than $1 million per year. Moreover, competition does not seem to be slowing drug price increases, and the FDA has approved a record number of drugs in 2017.
Next Mr. Sicilian discussed how consumerism in health care is driving innovation. He cited high-deductible plans as an example of how consumers are increasingly active in the health care decision-making process. Pharmaceutical companies are spending millions of dollars on direct-to-consumer advertising to influence the prescription drug selection process. Additionally, many new models and partnerships are emerging to reach and influence consumers.
Mr. Sicilian closed the presentation by highlighting challenges and opportunities within the markets MHA members serve. In the home infusion/specialty pharmacy space these include drug shortages; the lack of a Medicare infusion payment model; health plan-owned specialty pharmacies aggressively forcing patients into their networks; and narrowing of specialty pharmacy networks. In the LTC pharmacy space these include increased drug costs; DIR fees; contracted GER; and generic deflation. He emphasized that MHA will continue to be a major supporter of marketplace activities affecting LTC, home infusion and specialty pharmacies.
Andrew M. “Andy” Slavitt
Former Acting Administrator
Centers for Medicare & Medicaid Services
Mr. Slavitt began his presentation by discussing the Affordable Care Act (ACA) — what worked and did not work with passage of this legislation. Accomplishments of the ACA included:
- It cut the number of uninsured by half.
- Pre-existing conditions did not matter — everyone could get coverage no matter their underlying conditions.
- It allowed people to have mobility and flexibility — they were not tied to a job to have the ability to obtain health insurance.
- It pushed providers to change how their care was delivered.
- Getting middle class people to buy health insurance on their own. For those not receiving a subsidy (generally those making more than $100,000/year), health insurance might still not be affordable.
- Care continues to be expensive. Mr. Slavitt indicated that this is due to the government not making the “tough decisions” regarding the primary drivers associated with increasing health care costs.
- There continues to be a lack of competition, especially in rural areas. This is most acute with hospital systems in rural areas.
- The unit cost of drugs is a major issue. He noted that the government is looking closely at the rebate process.
- Health care is tied to personal responsibility, and we don’t have a good grip on where health care costs are. This is a bigger problem than just the science; we need to treat the whole patient and understand how people live to make a real impact.
Alvarez & Marsal
Former Amazon Executive
Amazon’s customer service and customer-centric attitude is legendary. It is driven by leadership that can deduce the needs and wants of the customer and constantly push to improve the customer experience. This presentation focused on how Amazon became and continues to be a world-class corporation. Mr. Rossman organized his presentation around Amazon key principles.
Leadership Principle #1: Being Customer Obsessed. As stated by Mr. Rossman, Amazon strives to be “Earth’s most customer-centric company.” He provided the concept of the Flywheel (Figure 1), explaining that through customer experience, growth and innovation occurs.
Leadership Principle #2: Ownership. Someone within the organization must take ownership of the idea, concept, or process and be responsible for it from the time of inception through implementation or launch in the marketplace.
Leadership Principle #7: Think BIG. Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold vision that inspires results. They think differently and look for ways to serve customers. Don’t be afraid to think big because of concerns about failure. As stated in the 2015 Amazon Shareholder letter, “Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”
Mr. Rossman closed by asking the audience to consider the following questions when thinking about new areas of opportunity:
- Do gatekeepers make access difficult?
- Are traditions and assumptions relatively unchanged?
- Are there oversized margins?
- Is there poor integration across the value chain?
- Is there poor trust and transparency?
- Can we be a customer?
- Is there a poor customer experience?
The Honorable Mark Parkinson
President & Chief Executive Officer
American Health Care Association
Mr. Parkinson began his presentation by noting that the rapidly increasing number of people requiring long-term care and the limited resources currently available to manage this population have resulted in significant challenges. He focused his presentation on three areas: Medicaid, regulatory relief within facilities, and ongoing and future challenges within the nursing home industry.
Regarding Medicaid, the initiative to pass block grants has subsided, but it has not gone away. The House of Representatives continues to be interested in reducing Medicaid costs, but the Senate does not appear willing to take up this issue in 2018. Mr. Parkinson noted the significant negative impact of reductions in Medicaid, with facilities in 28 states potentially losing more than $100,000 per building per year.
Nursing facilities are seeing regulatory relief in 2018. Civil monetary penalties (CMPs) declined in 2017 and will likely continue to decrease in 2018. In addition, selected revisions to the Requirements of Participation (RoP) for nursing facilities have been delayed.
Mr. Parkinson closed his session by discussing the changing payment models that are being used to reimburse for care within nursing facilities. Fee for service continues to decrease while there is an increase in Medicare Advantage payments. He also noted the continued decrease in nursing facility census due to a decrease in the population most likely to need post-acute care services, although this should shift in the coming years.
Major Dan Rooney, USAF
Fighter Pilot, PGA Professional, Patriotic Philanthropist, and Author of A Patriot’s Calling: Living Life Between Fear and Faith
In Major Rooney’s presentation, he described how he started his life mission, the Folds of Honor.
Shortly after returning from his second tour as an F-16 fighter pilot in Iraq, Major Rooney’s life changed forever when he was a passenger on an airline flight. That night he witnessed the other side of war as Corporal Brad Bucklin escorted his twin brother, Corporal Brock Bucklin, home from Iraq.
Major Rooney watched as Brock’s four-year-old son stood helpless on the tarmac as his father’s flag-draped casket inched down the cargo ramp. At that moment, Rooney was called on a mission to ensure that the sacrifices of America’s heroes — our fallen military personnel — would never go unappreciated or unrewarded. This led him to start Folds of Honor, a charitable foundation that has raised over $100 million and has awarded more than 13,000 educational scholarships to the family members of soldiers killed or disabled in combat.
Major Rooney closed by stating that people have unlimited potential; they simply need to try and tap into this, potential and amazing things will happen.
John W. Jones, Jr.
Pepper Hamilton LLP
The long-term care and specialty pharmacy industries continue to be targets of scrutiny by federal and state agencies. Mr. Jones focused his presentation on the legal and regulatory landscape; areas of risk, including those under the federal Anti-Kickback Statute; and enforcement trends.
He discussed how the health care industry is regulated differently than other industries. Legislators and regulators put quality of care and patient outcomes before company profits, and because of this practices that are common in other industries may violate the law in health care. Unfortunately, the long-term care industry is at risk for fraud and abuse, and pharmacy arrangements with nursing facilities have been and continue to be heavily scrutinized by government agencies.
Mr. Jones stated that the federal Anti-Kickback Statute/False Claims Act historically target pharmacies and skilled nursing facilities. These organizations must be very sensitive to these statutes because noncompliance can lead to fines, penalties, suspension of programs, disgorgement, and even imprisonment. He described several instances of recent pharmacy industry enforcement.
Mr. Jones concluded his presentation by discussing corporate codes of compliance and the requirements of fiduciary responsibilities that pharmacy directors must undertake. These duties include making a reasonable effort to assure that compliance programs are in place; actively monitoring and restoring compliance; inquiring when made aware of system failures; undertaking reasonable efforts to detect signals of system weaknesses; and exercising general supervision of quality of care and patient safety. These responsibilities are essential for a pharmacy to stay compliant with current guidance and regulations.
Chief Executive Officer
Mr. Roades started his presentation by discussing the unsuccessful “repeal and replace” of the Affordable Care Act by Congress. He went on to state that even with this unsuccessful attempt, Congress is still exploring new strategies to constrain the growth of federal health spending, including premium support for Medicare, block grants for Medicaid, and loosening regulations to enable more marketplace competition in health care.
Unfortunately, the current health care system is operating like the system of yesteryear and cannot manage the costs and care associated with the changing demographics. Mr. Roades noted that mean hospital margins were 2.7% in 2016 and are estimated to be -0.2% by 2027. So how will cost controls be managed? They will be managed by reducing provider costs, including drugs, care models and supplies. In addition, consumers of care are increasingly bearing the costs and risks associated with an ever more expensive health care delivery system through high deductibles and copays.
Mr. Roades then discussed how consumers and consumerism will change the health care market. He stated that the consumer is the “Sleeping Giant” and will dictate how, when, and where care will be delivered. As shown in Figure 2, consumers will drive care delivery by weighing benefits versus price. Only those delivery systems in which benefit outweighs price will survive long-term.
The presentation concluded with Mr. Roades providing the audience with a list of questions that should be asked when developing post-acute care strategies.
Causes and Insights on Regulatory Constraints During Industry Consolidation
Joseph M. Miller
Crowell & Moring LLP
Mr. Miller began his talk by noting that M&A activity touched off by health care reform continues, and it appears to be accelerating. Recent completed activities will have a large and lasting impact on the industry and the economy in general. A primary goal for companies is to align assets to deliver better care to patients at lower cost. Other reasons for deals include improved ability to share risk between payers and providers, acquiring technology to lower costs in a variety of ways, using outpatient and home-based care instead of a traditional inpatient setting, and acquiring skills and knowledge needed to react to anticipated regulatory changes. He noted that regulatory and legal implications have not slowed activity.
The presentation ended with a discussion of how all these deals may affect alternate care site pharmacies. Mr. Miller emphasized that there is significant growth opportunity in alternate site pharmacy due to the aging population and the focus on one-stop care for disease prevention and management.
Ms. Frizzera started her session by focusing on the two major factors affecting Medicaid today: unsustainable growth in health care expenditures and the vision and strategy of the current administration.
To control health care expenditures, the government is analyzing the current health care system and identifying reforms that will increase quality, improve health outcomes, and reduce overall cost. Unfortunately, there are uncertainties in the marketplace, including how Medicaid will be financed, stability of the individual health insurance marketplace, effects on Medicaid expansion within states, the Medicaid work requirement, and managed care regulations. Ms. Frizzera noted that states will have more flexibility and responsibility to manage their Medicaid programs, while at the same time the administrative burden on providers will be reduced. Still, there continues to be uncertainty around the role of Medicaid in long-term care.
Ms Frizzera closed her presentation with the following key takeaways:
- It is unlikely that any Medicaid legislation will be passed, but CMS has a great deal of authority under waivers to change the Medicaid program significantly.
- States will drive prescription drug pricing changes.
- Work requirements will face legal challenges and may not significantly decrease overall expenditure.
- The market will drive innovations and program redesign as more financial risk is placed on providers and payors.
Kyle Janssen, PharmD
Owner & Chief Executive Officer
Mr. Janssen began his discussion by first asking audience members to think about what their business is built on — their core beliefs, employees, customer focus, fundamental and detailed processes, and what separates their business from others. He then discussed each of these areas in detail.
Mr. Janssen emphasized that employees are the most important aspect of a business. It is critical for a successful business to attract and retain great employees. As an owner or operator, it is essential to inspire staff to do their best every day and to celebrate successes when they occur. He noted that it is easy to find the flaws, but pointing out the positives is more important, and business owners need to create methods to focus on the positives.
A customer focus is also essential for success. A pharmacy is not a vendor but a business partner. It is imperative to identify and define what values you bring to this partner, including the type of business you want to work with, such as skilled nursing facilities or assisted living facilities. Mr. Janssen suggested that the facility itself is not the customer, but rather each individual resident, the facility staff, and facility administrators are the customers. It is very important to remember to meet and exceed the needs of each and every one of these groups. One small mistake with any of these groups may ultimately lead to a former customer.
Identification of Current Reimbursement Trends for Pharmacy Providers
Jonathan E. Levitt, Esq.
Mr. Levitt focused his presentation on three key topics:
- What PBMs fear: rights and tools for specialty and home infusion pharmacies
- DIR fees: where are we now?
- 2019 Plan Year CMS Proposed Rule
Mr. Levitt next discussed DIR fees and provided an overview of stakeholder positions on DIR. For example, the PBM lobbying group, PCMA, states without proper statistical backup that DIR fees reduce costs to customers, when actually these fees result in Medicare beneficiaries prematurely entering the “donut hole,” which greatly increase out-of-pocket expenses. Numerous pharmacy providers and organizations throughout the country have argued against these fees, have begun arbitrations and even a White House Panel of Economic Advisors issued a white paper stating that the “list price” of drugs is “artificially inflated” by the rebates and DIR fees.
Mr. Levitt wrapped up his presentation by discussing the 2019 Plan Year CMS Proposed Rule. The 2019 Proposed Rules address both Any Willing Provider law and DIR fees in positive ways. Any Willing Provider Laws state that PBMs may not exclude pharmacies based on unique business models including “mailing”, and it restates that a pharmacy meeting basic terms must be admitted into the network. Regarding changes to DIR fees, the proposal is to move pharmacy DIR to the point of sale, resulting in lower upfront patient costs and lower copay amounts. From a pharmacy perspective, though, there is a concern about tolerance for being paid the lowest possible reimbursement at the point of sale. Mr. Levitt opined that providers are guaranteed by Medicare rules to have a net point of sale price that yields fair and reasonable reimbursement.