Oak Street Health : CMO weighs in on new ‘home run’ healthcare law for vulnerable patients

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President Joe Biden signed a sweeping healthcare bill into law on Tuesday, heralding the biggest changes to federal healthcare policy since the 2010 passage of the Affordable Care Act.

The Inflation Reduction Act brings significant changes especially for Oak Street Health's primary patient population - older adults and those on Medicare. It caps out-of-pocket spending for Medicare Part D prescription drugs at $2,000, eliminates out-of-pocket vaccination costs for those with Part D and puts a $35 per monthly cap on insulin for Medicare customers.

The IRA will also extend low-income subsidies to individuals in 2024with income up to 150% of the federal poverty level, which is currently about $20,385 for a single household.

Oak Street Health's chief medical officer Ali Khan caught up with Healthcare Dive about the IRA's impact on his patients in Chicago's west side, what healthcare policies he's excited to see next, and next steps for the primary care company.

This interview has been edited for clarity and length.

Healthcare Dive: What are you most excited about in the IRA and how will it impact your patients?

Ali Khan: Patients that we serve, like seniors and other Medicare beneficiaries, have to make pretty hard choices today, between paying for the medications and paying for food or paying other bills. So this is actually a home run, first and foremost, around drugs.

I think drug affordability is such a huge issue for so many people, but particularly working class, income-constrained seniors and other patients that we serve at Oak Street. For those patients of mine on the west side of Chicago, putting a $2,000 cap on out-of-pocket drug costs in a given year is an enormous update.

Also, capping insulin costs at $35 a month puts super vital medication much more within reach for patients on Medicare and I'm hopeful that it also drives work nationally to help get insulin costs under control for everyone. Downstream effects are better diabetic control, fewer diabetic complications and avoidance of things like diabetic foot infections or amputations. Having that capped is at least a start, because income insecure patients can budget towards it. So providing more structure and consistency here is a really big win.

Given that Oak Street's primary patient population is made up of seniors and those on Medicare, how do you anticipate the IRA overall impacting Oak Street Health?

Khan: The one thing that I'm very excited about is the expansion of low-income subsidies to a greater number of seniors. The patients I serve on Chicago's west side are really struggling to stretch their dollar, to make the choice between paying electric bills for the fridge that stores their insulin, versus paying for the insulin, versus paying for the food that they need insulin to help digest.

So many people are just above that eligibility line for additional help. That change is going to save lives because right now there are low-income subsidies that apply to a certain percentage of people who are near 100% of the federal poverty limit. But, as you get past 125%, they start to phase out and then phase out completely. Taking that to 150% for low-income subsidies is an enormous population of people who are otherwise locked out.

What healthcare issues do you want to see the government tackle next?

Khan: There's some really interesting work happening, particularly at the Centers for Medicare and Medicaid Services, that's looking at how to address social risk. People living in communities that have high social vulnerability, those are the communities that were hit hardest by the pandemic.

We are starting to see new policies emerge from CMS that recognize foundational inequity across communities and ask how the federal government incentivizes investment in those communities.

At Oak Street, we've been thinking about addressing those problems for years. So can changes from CMS create the momentum to take the work that we do today at Oak Street across the country and apply that to 60 million plus people on Medicare? That would be enormous. The fact that this has entered the national conversation, and we're seeing some bold proposals here, is very heartening for me.

There's been a lot of interest in primary care companies since CVS announced acquisition plans and Amazon announced it would acquire One Medical for $3.9 billion. How is that interest changing the landscape for primary care operators like Oak Street?

Khan: Overall, this is validation that we've all been on the right path.

It's also a recognition of the opportunity to still hit. Amazon sees a huge opportunity in primary care, and they see it not in the context of trying to buy up a bunch of physician groups, it's not a private equity play. It's a venture capital play.

One Medical has a different patient population than Oak Street, so obviously there are certain things that I may firmly believe differently in terms of health equity, and community reinvestment.

But I think there's still a huge milestone for the industry. And it's a real promise for what can happen if we all get this right, in terms of primary care leading the way and how American healthcare foundationally transforms.