December 4, 2017
CVS expands footprint, purchases Aetna
CVS has finalized an agreement to purchase Aetna for about $69 billion in a deal that will combine one of the nation’s largest drugstore chains with one of the largest health insurers. The move comes as a part of a broader push by CVS to expand its footprint in the health care industry. The merger will boost the pharmacy’s customer base, providing CVS with more leverage when negotiating with drug makers. CVS also plans to increase access to medical care by transforming its 9,700 retail stores into health care supermarkets with wellness clinics for preventive care, vision and hearing services, telemedicine connections with doctors, and on-site nurse practitioners to assist with chronic conditions. Experts believe the move will help CVS secure its position as an industry leader and fend off emerging competitors, which could potentially include Amazon. Aetna will operate as a standalone unit within CVS and will be run by the insurer’s current management team.
ACA takes a hit from tax plan
Congress is on the verge of passing a monumental tax bill that could significantly impact the health care industry. The most obvious effect comes from a provision repealing the individual mandate, which would likely cause premiums to rise and lead to the loss of coverage for 13 million Americans. The package would also increase the federal deficit and — unless lawmakers intervene — would trigger $25 billion in cuts to Medicare next year in addition to the impact on other public health services. The reductions would be the result of a law that requires offsets for increases in federal spending. Both chambers have passed a version of the tax legislation, but lawmakers still have to consolidate the bill and pass it one more time before sending it to President Trump for his signature.
Future of CHIP still in the air, state uncertainty increases
Several states will run out of reserve CHIP funding next month if Congress does not reauthorize the program. Funding for CHIP is still in limbo as millions of children rely on the program for health coverage, and uncertainty about the program’s future has many families anxious. The National Governors Association is urging Congress to authorize the funding, as states are conflicted on whether or not to notify CHIP recipients that coverage may end. Officials are worried such notifications could cause unnecessary confusion and worry if Congress moves to reauthorize the program; however, states are required to notify beneficiaries 30 days before coverage ends. Both chambers of Congress have passed legislation, but key differences remain. House Energy and Commerce Chair Greg Walden (R-OR) has proposed a temporary fix that would allow states that have spent all their federal funds to receive additional support from previously unused CHIP money allocated to CMS.
CMS eliminates two mandatory bundled-payment models
CMS has finalized its decision to eliminate two mandatory bundled-payment models and lower the number of providers required to participate in a third. Only 470 hospitals in 34 geographic regions—rather than 800 hospitals in 67 regions—will be required to participate in the Comprehensive Care for Joint Replacement Model, or CJR, according to a rule released last Thursday. CMS acknowledges the government will spend more as a result of the rule change; the agency estimates the government savings from the program will be $106 million less over the next three years. The decision comes as part of a broader push by the Trump Administration to shift toward voluntary participation in value-based models.
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