Coming Changes in Spending Growth What Can Policy Contribute? - - PowerPoint PPT Presentation

Coming Changes in Spending Growth What Can Policy Contribute?

Richard G. Frank Assistant Secretary for Planning and Evaluation, USDHHS

Overview

• What are the recent trends in spending growth?
• How should we understand some recent

upticks in spending?

• What are the future prospects and what does

policy have to do with it?

• Use multiple data source across payer groups

to provide a picture

2

Per Capita Growth, GDP and NHE

GDP and National Health Expenditures (NHE) shared similar growth rates between 2010 and 2013

3

• 4%
• 2%

0% 2% 4% 6% 8%

Per Capita Growth GDP NHE

• 2%

0% 2% 4% 6% 8% 10%

Per Enrollee Spending Growth NHE Total Medicare (OACT) Medicare FFS (MBSF)

Per Capita Growth, NHE and Medicare

2014 Uptick appears to be moderating

4

Note: 2014 Medicare FFS estimate based on claims data 2014 and 2015 Total Medicare estimates based on Treasury Monthly Statements

Service Category Growth, Medicare FFS

5

• 10%
• 5%

0% 5% 10% 15%

Per Beneficiary Spending Growth Inpatient Facility Outpatient (Hospital+ASC) Physician E&M Part B Drug Part D PAC

Observations

• Medicare spending experienced an uptick in

growth in 2014

• One important factor was new products

introduced into the market to treat Hepatitis C. That contributed to Part D increases (note differences in Parts B and D drugs)

• Outpatient care spending grew more rapidly

across service categories (MD, OPD)

6

Service Category Growth, Medicare FFS

After removing the contribution of specialty drugs used to treat Hepatitis C, the 2014 Part D spending growth rate declines substantially.

7

• 10%
• 5%

0% 5% 10% 15%

Per Beneficiary Spending Growth Part D w/Hep C Specialty Drugs Part D w/o Hep C Specialty Drugs

• 2%

0% 2% 4% 6% 8% 10% 12%

Per Enrollee Spending Growth NHE Private Insurance (OACT) Private Insurance (MarketScan) Private Insurance (S&P)

Per Capita Growth, NHE and Private Insurance

Following fairly steady growth 2010 to 2013,spending trended upward in 2014: Due largely to Rx spend and compositional change in individual market. Early 2015 data suggest a moderating of trend.

8

Service Category Growth, Private Insurance (S&P)

Spending growth decreased for most service categories, but increased substantially for prescription drugs.

9

• 2%

0% 2% 4% 6% 8% 10%

Per Enrollee Spending Growth Inpatient Outpatient Professional Drug

Per Capita/Enrollee Growth, NHE and Medicaid

Medicaid spending growth per enrollee has remained below 3% since 2008; due in part to compositional changes from expansion.

10

• 4%
• 2%

0% 2% 4% 6% 8%

Per Enrollee Spending Growth NHE Medicaid (OACT)

2014 Actuarial Report Projection

Observations

• Outpatient spending has ticked up in Medicare but not for
• ther payers

– Hypothesis: policy emphasis in Medicare has been on inpatient care (value based purchasing, readmissions and hospital acquired conditions) all therefore serve to shift locus of care to outpatient settings

• Prescription drug spending has grown notably across all payer

classes including and excluding Hep C drugs

11

Estimated Effects of Specialty Drugs

• 2014 total US drug spending was $373.9B, up 13.1%*
• Growth driven by innovation, less expiry impact, and pricing dynamics
• Spending on specialty medicines grew by 26.5% and reached one-third of

medicine spending

• Innovations in Hepatitis C, cancer, multiple sclerosis and diabetes drugs

drove new spending

• ASPE estimates that specialty drugs used to treat Hepatitis C accounted for

approximately $3.8 B in Medicare FFS spending in 2014

• ASPE estimates the annual PCSK9 cost to Medicare to be $27 B (based on

2015 dollars), or 5% of total Medicare annual net outlays

12

* IMS, 2015, A Review of the Use of Medicines in the U.S. in 2014

Looking Ahead

• Payment reforms such as MSSP rules, bundling, Part C regulations, and MACRA

along with private ACOs and exchanges expected to attenuate growth; payment rate reductions continue to impact overtime (productivity adjustment)

• Continuation of trends in market such as larger deductibles and narrower networks

may also blunt some spending growth (but less than claimed)

• Spending growth on prescription drugs is likely to be lower than 2014 but will

persist at levels above recent experience – The late stage of development pipeline is well populated with specialty drugs – Policy efforts aimed at increased competition could moderate trend somewhat (biosimilar regulations, pay for delay action, anti-trust) – Targeted negotiation could also help—political constraints are significant

• Thus while spending growth may not remain at the low level of recent years we do

not expect a return to anything like the pre-ACA rates

13