IMPROPER PAYMENTS THREATEN MEDICAID AND MEDICARE

America's most vulnerable populations turn to Medicaid and Medicare for essential healthcare services. Regrettably, these programs lose billions of dollars annually as a result of improper payments. Just recently, the Subcommittee on Oversight and Investigations delved into this pressing issue in a pivotal hearing titled "Examining How Improper Payments Cost Taxpayers Billions and Weaken Medicare and Medicaid." The discoveries shed light on the far-reaching effects of these errors and highlighted the urgent need for reform.

At the heart of the hearing was an exploration of the extent and impact of improper payments within Medicare and Medicaid. These erroneous disbursements, whether stemming from fraud, waste, or abuse, represent a substantial strain on public resources, amounting to billions of dollars annually. This sort of waste not only erodes the fiscal integrity of these critical healthcare programs but also undermines their ability to fulfill their mission of providing crucial medical services to vulnerable populations.

The subcommittee's inquiry revealed a complex landscape of improper payments, with fraudulent activities and administrative errors adding to the problem. Fraudulent schemes, such as billing for services not rendered or inflating claims through deceptive practices, exploit vulnerabilities within the system, leading to substantial financial losses. Furthermore, administrative inefficiencies, outdated technology, and bad-quality data intensify the issue, hindering accurate eligibility determinations and claims processing.

The effects of improper payments extend beyond mere monetary loss. They disrupt access to quality care for beneficiaries, diverting resources away from legitimate medical services and interventions. Beneficiaries may encounter barriers to receiving needed treatments, while providers face increased scrutiny and regulatory burdens. Moreover, the broader healthcare system bears the brunt of these inefficiencies, grappling with rising costs and diminished effectiveness.

The hearing also highlighted the significance of proactive measures to combat improper payments and strengthen the integrity of Medicare and Medicaid. Enhanced oversight, quality data and analytics, and targeted reforms were among the proposed strategies to reduce fraud and waste. By leveraging technology solutions and promoting collaboration among government agencies and healthcare providers, policymakers aim to identify and prevent improper payments more successfully.

In conclusion, the Subcommittee on Oversight and Investigations hearing shed light on the prevalent problem of improper payments within Medicaid and Medicare. By confronting this issue head-on and implementing meaningful reforms, policymakers can help safeguard the fiscal integrity of these vital healthcare programs and ensure that program dollars are appropriately used to fulfill the mission of providing healthcare to the nation's most vulnerable populations.

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HOW TRUMP’S 2020 BUDGET PROPOSAL AFFECTS MEDICAID

The Trump administration released its 2020 budget proposal on Monday and it gives some insight into the president’s priorities. The budget includes $1.9 trillion in cost savings for Medicaid and other safety net programs. According to the administration, A Budget For A Better America will balance the nation’s budget by 2030 and promote economic prosperity. Despite its major reductions for welfare programs and increases in defense spending, Congress will be the primary decision maker and the budget is unlikely to pass on Capitol Hill.

President Trump’s budget is the largest in federal history and includes spending increases for defense and border security while reducing costs of Medicaid, Medicare, and disability programs. The proposal will cut spending by $4.6 trillion over a ten-year period. That equates to 9% of the country’s $53.5 trillion projected spending over that time. 

The White House Chief of Staff, Mick Mulvaney, believes the proposal will favor taxpayers. He stated, “This is, I think, the first time in a long time that an administration has written a budget through the eyes of the people who are actually paying the taxes.”

Chris Edwards is the director of tax policy studies at the CATO Institute. Edwards evaluated the administration’s proposal and stated, “Cuts would reduce federal deficits, which have plagued the government since the turn of the century. The budget’s spending cuts are being called cruel and heartless, but chronic deficits are imposing huge costs on young Americans down the road, which is totally unethical.”

The proposal is finding support among conservative groups due to its focus on economic growth, increased Medicaid eligibility checks, and in that it promotes self-sufficiency versus dependence on government-funded welfare programs.

Kristina Rasmussen, Vice President of Federal Affairs at the Foundation for Government Accountability (FGA) commented, “With no real incentive in place for individuals to leave the program, the welfare system has transformed from a safety net originally intended to serve the truly needy into a trap for able-bodied adults, many of whom report no income.”

Critics, on the other hand, view the budget as extreme and harsh since it will prevent people, who rely on welfare programs, from accessing the support they need. They point out that the budget breaks key campaign promises as Trump approaches the 2020 elections.

Senator Amy Klobuchar, (D)-MN says, “The President has proposed a budget that cuts hundreds of billions of dollars from domestic programs like Medicare and environmental protections. But he still found billions of dollars for his wall. We need a smart budget, not one based on empty campaign promises.”

Senator Kamala Harris (D)-CA commented on the budget saying, “This would hurt our seniors and is yet another piece of evidence for why we need a new president.”

Despite their criticism, the administration denies that the president wants to cut from these programs. In addition, they point out that the previous administration reduced Medicare spending.

The Office of Management and Budget Deputy Director, Russ Vought, testified in front of the House Budget Committee. According to Vought, “The President doesn’t believe he’s breaking his commitment to the American people at all. There are no structural changes to Medicare. There is no cut to Medicare. Medicare continues to grow each and every year.“

In 2000, federal spending for the Medicaid program was at $118 billion. In almost twenty years, that amount has climbed to $389 billion. The cost is unsustainable and a driving factor in why Trump wants to cut $200 billion from Medicaid and $800 billion from Medicare.  Additionally, the budget also introduces block grants for states in an effort to save $610 billion in tax dollars over the next 10 years.

The budget could be a starting point to reduce debt and an opportunity for states to have more control and flexibility in managing their programs. Additionally, health consumers may have more control over their insurance to make it more affordable. In order to accomplish this, the budget includes association health plans and short-term plans for the uninsured.

Kristina Rasmussen says, “The Trump administration has outlined a plan to move government out of the way, take down nonsensical barriers to work, and promote a safety net that encourages upward mobility to empower more Americans to win.”

Salim Furth is a Former Research Fellow from Heritage’s Center for Data Analysis. He determined, “A restoration of growth will not, however, follow automatically from enacting the president’s agenda. A lot of other things have to go right as well as policy. So the president’s plan to eliminate the deficit and control the debt should not depend so much on things outside his control. Limiting the growth of entitlement spending would be a more certain path to balance than relying on historical forces.”

Currently, the nation’s debt is unsustainable and safety net programs are continuing to grow at accelerated rates. In an attempt to remedy the situation, the president has introduced his 2020 budget proposal, A Budget For A Better America. It aims to make major reductions that would significantly impact Medicaid and Medicare. Despite criticism over the president’s budget proposal, large reforms will be necessary as the debt continues to climb.

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HEALTHCARE MEGA-MERGERS

Over the last year, there has been a wave of PBM and health care provider mega-mergers. The acquisitions have been under rigorous evaluation and the approvals indicate that government regulators are more comfortable with vertical integration rather than horizontal. Here is an overview of these mergers.

CVS HEALTH ACQUIRES AETNA FOR $69 BILLION

CVS Health revealed that it would merge with Aetna on December 17, 2017. The decision would add a PBM to one of the nation's leading health insurance companies.

CVS Health's President and Chief Executive Officer, Larry J. Merlo, said, "This combination brings together the expertise of two great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals. We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers."

The decision to merge went under review by the DOJ and has been met with criticism from industry groups. In June, the American Medical Association objected the deal and started pushing for regulatory authorities to block it.

In a hearing held by the California Department of Insurance, the AMA's President, Dr. Barbara McAneny, stated, "After very careful consideration over the past months, the AMA has come to the conclusion that this merger would likely substantially lessen competition in many health care markets, to the detriment of patients. The AMA is now convinced that the proposed CVS-Aetna merger should be blocked."

In August, California's Insurance Commissioner, Dave Jones, asked the DOJ to block the merger over Part D concerns. He contended that lowering competition for drug plans would lead to higher premiums. Currently, CVS Health possesses 24% market share and Aetna has 9% of Part D plans.

On October 10th, the merger was authorized by the DOJ under the condition that Aetna would sell its private Medicare drug plans. Despite criticism from industry specialists, Larry J. Merlo, stated that this, "is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience."

CENTENE PURCHASES FIDELIS CARE 

On September 12, 2017, the Centene Corporation announced that it agreed to merge with the healthcare provider, Fidelis Care. According to the terms of the deal, Fidelis Care will become Centene's health plan in New York and Centene will take ownership of Fidelis Care's assets.

In July 2018, the procurement was finalized. The deal was worth $3.75 billion and it increased Centene's position in government-sponsored healthcare significantly. As a result of the merger, Centene's national membership rose to 14 million members and the corporation assumed a leadership position in the four largest managed care membership states: New York, California, Florida and Texas.

"We are pleased to have completed our transaction with Fidelis Care on schedule and to enter the New York market by joining with a company with which we are closely aligned on many levels," said Michael F. Neidorff, Chairman and CEO of Centene. "By bringing together two leaders in high quality, affordable health care with a shared mission of promoting accessible care and services for all, this transaction creates opportunities for us to further transform the health of the communities we serve, one person at a time."

WELLCARE HEALTH PLANS ACQUIRES MERIDIAN

In May, WellCare Health Plans announced that it was looking to merge with Meridian Health Plan of Michigan, Meridian Health Plan of Illinois, and MeridianRx. Over the course of 4-months, the company obtained all the necessary regulatory approvals and on September 1st the acquisition was completed. The merger was worth an estimated $2.5 billion.

Because of the merger, WellCare will have the top Medicaid membership market share in Michigan and Illinois. Furthermore, the company will increase its leading market position from four to six states.

In addition to expanding in the Medicare Advantage market, the health care provider's Medicaid membership is projected to grow nearly 40%. WellCare's CEO, Ken Burdick, believes that the addition of a proprietary PBM platform will help support growth within government-sponsored programs.

CIGNA MERGES WITH EXPRESS SCRIPTS HOLDING COMPANY

In early March, Cigna announced that it would purchase Express Scripts Holding Company for $67 billion. Cigna is the fifth largest health insurer in the country and Express Scripts is the biggest stand-alone PBM.

Shortly thereafter, the DOJ Antitrust Division conducted a thorough six-month investigation. They investigated if the merger would significantly decrease competition among PBM services or increase the cost of these services for rival insurance providers. During that time the DOJ received more than two million documents, examined transaction data, and spoke with over 100 knowledgeable industry participants.

On September 17th, the DOJ cleared the pending merger. According to the DOJ's Assistant Attorney General of the Antitrust Division, Makan Delrahim, "After a thorough review of the proposed transaction, the Antitrust Division has determined that the combination of Cigna, a health insurance company, and ESI, a pharmacy benefit management company, is unlikely to result in harm to competition or consumers."

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