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Clinical Pathways GPS

Ramifications of “Medicare for All” and Implications for Clinical Pathways

Authored by

Matthew Pakizegee, PharmD, MS; Richard G Stefanacci, DO, MGH, MBA, AGSF, CMD—Column Editor

Affiliation

EVERSANA™, Berkeley Heights, NJ

Disclosures

Dr Stefanacci is the chief medical director for the managed markets agency of EVERSANA™. Dr Pakizegee is the clinical content lead for Government Policy Systems at the managed markets agency of EVERSANA™.

Citation

J Clin Pathways. 2019;5(6):32-33. doi:10.25270/jcp.2019.08.00089

As the Medicare for All (M4A) debate continues into 2020, clinical pathway organizations, payers, health systems, providers, and patients will all play a role in shaping future policies around patient access and reimbursement. While it is certain that clinical pathways are shaping and will continue to shape health care regardless of system, what is far from certain is who the primary pathway developers will be and how the pathways will be utilized. Also uncertain is what impact a M4A system would have on access for new innovative therapies, both in terms of development and for access to these therapies once they are available.


Medicare for All (M4A) aims to provide universal health care coverage for Americans and, in doing so, reduce their costs. Under M4A, people who currently have private insurance would be required to enroll in the public program. Recently, the national debate for the 2020 election has focused on health care, with several presidential candidates committing to varying positions on M4A.

Several versions of M4A bills have been introduced to the current Congress, but the version that has been part of public discussion for several years was re-introduced in April 2019 by Sen Bernie Sanders (D, Vermont).1 This bill would shift all Americans with employer-sponsored, private insurance; Medicaid; Children’s Health Insurance Program; private individual market coverage; and no insurance at all into Medicare. Medicare benefits would be expanded to include dental, hearing, and vision coverage. Sen Sanders’ bill would also remove out-of-pocket costs at the point of service for patients. Copays, deductibles, and premiums would be a thing of the past, with the exception of brand name prescription drugs and biologics, which could carry copays totaling no more than $200 per year per patient. This benefit package with limited beneficiary out-of-pocket costs, either as pre-paid premiums like Medicare or copayments, actually makes these programs similar to Medicaid. 

In May 2019, the Congressional Budget Office (CBO) published a report, “Key Design Components and Considerations for Establishing a Single-Payer Health Care System,” to discuss various options for key policymaking decisions associated with proposals for M4A and provide a qualitative assessment of the trade-offs each decision presents.2 One main result of M4A would be that the Department of Health and Human Services is essentially determining provider payment rates and having more influence on the price of prescription drugs.

According to the report, key issues policymakers need to consider include: (1) how quickly people with private insurance would switch their coverage to the new public plan; (2) what would happen to workers in the health insurance industry if private insurance were banned entirely or if its role were limited; and (3) how quickly provider payment rates under the single-payer system would be phased in from current levels. 

Setting payment rates equal to Medicare fee-for-service rates under a single-payer system would substantially reduce the average payments most providers and hospitals receive. Current payment rates for hospitals are below cost. According to a recent analysis of hospitals in California, Medicare paid an average of 79% of hospital costs, while private insurers paid an average of 165% of cost, helping to subsidize the difference.3 The amount of care supplied and the quality of that care may suffer if providers and hospitals are reimbursed at current Medicare reimbursement rates, according to the CBO report.2 This would likely force an increase in M4A rates to avoid massive bankruptcies of current providers.

As the M4A debate continues into 2020, clinical pathway organizations, payers, health systems, providers, and patients will have a role in shaping future policies around patient access and reimbursement.

The Role of Private Insurance

Under M4A, commercial insurance would have a niche as supplemental insurance, similar to other countries with single-payer health care. Supplemental insurance would fill gaps in care, such as reducing patient cost-sharing for patients with branded treatments, or may include additional services, such as cosmetic surgery. High-income individuals and patients who seek substitutive private plans that meet their individualized needs might prefer to purchase substitutive private insurance that offers more generous benefits or greater access to providers. If physicians are not allowed to participate in both the single-payer system and the substitutive private insurance market, some physicians may choose to completely forgo lower reimbursement from a single-payer system to focus on patients who are willing to pay out of pocket. If many people enroll in substitutive insurance, patients in the single-payer health plan might have longer wait times and reduced access to care due to provider shortages. 

With the role of private insurance reduced with M4A, the clinical pathways developed by commercial organizations and supplemental insurance will have reduced clinical impact. Clinical pathways also would be impacted by challenges and potential disruption under M4A, because private payers are the main organizations that implement them. Clinical pathways developed by health systems and providers will have a role in controlling costs and in disease states and rare diseases that do not have guidelines. In cases where a pathway is developed by the government, these would likely supersede health system pathways. Beyond the “who” question for development of clinical pathways, there is also the question of “how” they would be followed. But even more far reaching is the open question on how a single payer would impact access to new innovative therapies.

Single Payer for Prescription Drugs

According to the CBO report, designers of a single-payer system would need to consider whether a substantial reduction in drug prices would reduce manufacturers’ incentive to develop new drugs. Coverage decisions may be political and highly influenced by lobbying capabilities of patient advocacy groups. It is unclear what criteria will be used to determine which diseases and drug classes will be covered and when utilization management may be implemented.2

CBO evaluated the following methods single payers use to control drug costs:

  • Value-based pricing. Cost-effectiveness and long-term studies of a drug will be prioritized in this system since linking these data to a national health technology assessment along with a proposed price will be the basis of price negotiations.
  • Direct pricing negotiation. A single-payer system would have more negotiating leverage with manufacturers than private insurers have, since they determine coverage for a whole country but may face political backlash if a drug is excluded from a national formulary. 
  • Reference pricing. External reference pricing bases prescription drug prices on a median or average price of a group of countries, while internal reference pricing would use existing prices for drugs in the same class or therapeutic area as a benchmark for negotiations.
  • Administered pricing. Prices are set by the government or a monopoly.

The “who” side of the equation is complicated as it remains unclear whether pathways would continue to be payer-developed like the AIM Pathways by Anthem, provider-created/provider-facing pathways like Via Pathways, or institutionally developed in-house pathways like Moffitt Cancer Center’s. The “who” is typically driven by the needs of the organization. In the case of M4A—with payers having limited involvement and providers shifting back to more independent practices and away from total-cost-of-care responsibilities and unknown quality metrics—the needs are also uncertain.

While it is not clear whether government organizations will develop clinical pathways or independent organizations will still develop them, if M4A is implemented, patients will most likely look to be active in clinical pathway development to ensure that clinically appropriate pathways are followed rather than ones that may be too restrictive under a M4A system. However, pathways may eventually be forced to limit access, ie, ration care to control cost. Rationed care is often seen in other single-payer countries where the government can choose to not fund certain treatments based on cost, even for conditions like cancer. 

Conclusion

While it is certain that clinical pathways will play a critical role in guiding care for millions of Americans in a M4A system, what is far from certain is who the primary pathway developers will be and how the pathways will be utilized. Also uncertain is what impact this system will have on access for new innovative therapies, both in terms of development and for access to these therapies once they are available. As is typically the case, uncertainty, especially with this level of chaos, often brings with it great opportunities for intuitive innovators, but it can also spell disaster for those not able to master this storm.

References

1. Alonso-Zaldivar R, Schor E. Sanders relaunches ‘Medicare for All’ with dems divided. Associated Press. April 10, 2019. https://www.apnews.com/ec36c409be344f23854ae4497ad87ee5. Accessed July 25, 2019. 

2 Congress of the United States Congressional Budget Office. Key design components and considerations for establishing a single-payer health care system. https://www.cbo.gov/system/files/2019-05/55150-singlepayer.pdf. Published May 2019. Accessed July 25, 2019.

3. Kronick R, Hoda Neyaz S. Private insurance payments to California hospitals average more than double Medicare payments. West Health Policy Center. https://www.westhealth.org/resource/private-insurance-payments-to-california-hospitals-average-more-than-double-medicare-payments/. Published May 2019. Accessed July 25, 2019.

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