It's CMS fall rule season and we summarize the updates to MPFS payments, biosimilars coding, and more.

View as webpage.

hpw - topbar hpw - topbar - diag hpw - topbar xce

Nov. 3, 2017


Forward to a Friend



View Archived Issues


Look What We Made You Do: CMS Fall Rule Season


It's one of those weeks—when it rains, it pours. This week, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2018 Medicare Physician Fee Schedule (MPFS) final rule, in addition to the CY 2018 Outpatient Prospective Payment System (OPPS) final rule and the Quality Payment Program (QPP) rule (more on that below). The MPFS final rule is big news with its biosimilars payment update and the OPPS final rule is notable for its payment change for drugs under the 340B program. (And also for spilling the beans about the Part B coding and payment policy for biosimilars a full day before the MPFS was released.)

MPFS Payment Update
The MPFS payment update for CY 2018 will be 0.41%, reflecting the 0.50% update established under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, reduced by 0.09%, due to the misvalued code target recapture amount required under the Achieving a Better Life Experience (ABLE) Act of 2014.

After applying these adjustments and the budget-neutrality adjustment to account for changes in relative value units, the final 2018 MPFS conversion factor is $35.99, an increase over the 2017 MPFS conversion factor of $35.89.

Currently, all biosimilars for the same reference product use the same Healthcare Common Procedure Coding System (HCPCS) code while the reference product is assigned a different code, a policy CMS finalized in the CY 2016 MPFS final rule. The average sales price (ASP) of the biosimilar is calculated on the volume-weighted utilization of these grouped biosimilars.

CMS received a storm of criticism for this policy. Critics asserted it inhibited price transparency and raised the possibility of a death spiral in pricing. Once the Food and Drug Administration (FDA) approved multiple biosimilars, other manufacturers might have little incentive to develop biosimilars of their own.

After reviewing comments from payers, manufacturers, and physician groups and the Medicare Payment Advisory Commission’s recommendations issued in June, CMS decided to change its policy and assign each biosimilar its own HCPCS code. This policy will result in each biosimilar having its own ASP.

CMS noted this new policy will affect claims payment systems; therefore, the agency will not issue new codes until after January 1, 2018, perhaps as late as mid-2018. CMS stated, “We will issue detailed guidance on coding, including instructions for new codes for biosimilars that are currently grouped into a common payment code and the use of modifiers.”

Payment Rates for Nonexcepted Off-Campus Provider-Based Hospital Departments
For CY 2018, CMS is finalizing a reduction to the current MPFS payment rates for non-excepted off-campus provider-based hospital departments by 20%. CMS currently pays for these services under the MPFS based on 50% of the OPPS payment rate; the final rule will reduce the MPFS payment rates to 40% of the OPPS rates. CMS stated this adjustment will “provide a more level playing field for competition between hospitals and physician practices by promoting greater payment alignment.”

Medicare Diabetes Prevention Program Expanded Model
The final rule also implements the Medicare Diabetes Prevention Program (MDPP) expanded model starting in 2018. CMS announced the MDPP expanded model in early 2016. The final rule includes additional policies necessary for suppliers to begin furnishing MDPP services nationally in 2018, including the MDPP payment structure, as well as additional supplier enrollment requirements and supplier compliance standards aimed to enhance program integrity.

Evaluation and Management (E/M) Comment Solicitation
CMS received a number of comments in response to the proposed rule’s comment solicitation on the E/M guidelines and summarized the comments in the final rule. The agency agrees with stakeholders who believe the E/M guidelines may be outdated and need revision. CMS stated it will consider the comments for future rulemaking.

Additional information about the CY 2018 MPFS final rule is available in the accompanying press release and fact sheet.

OPPS Payment Update
After considering all the policy changes under the final rule, CMS estimates an overall impact of 1.4% payment increase for providers paid under the OPPS in CY 2018.

Payment for Drugs and Biologicals
In CY 2018, CMS is adopting its controversial proposal to pay for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B program at ASP minus 22.5%. CMS is implementing this policy in a budget-neutral manner by offsetting the projected decrease in drug payments of $1.6 billion by redistributing an equal amount for non-drug items and services across the OPPS. Children’s hospitals, certain cancer hospitals, and rural sole community hospitals will be exempt from these drug payment reductions for 2018.

CMS estimates this policy will save beneficiaries $320 million on drug copayments in 2018.

CMS will continue to pay for drugs not purchased under the 340B drug program at a rate of ASP plus 6%. The drug-packaging threshold for CY 2018 is $120.

In the OPPS final rule, CMS references the new coding and payment policy for biosimilars it adopted in the CY 2018 MPFS final rule. CMS has made a “conforming amendment” to its pass-through payment policy for biosimilars. Each biosimilar will be eligible for transitional pass-through payment instead of only the first biosimilar for a particular reference product.

Consistent with the conforming amendment, CMS has adopted a policy that any biosimilar with pass-through payment status will be exempt from the alternative payment methodology for 340B drugs (ie, ASP minus 22.5%) and will continue to be paid at ASP plus 6% of the reference product. However, biosimilars not on pass-through payment status will be paid at the new 340B program rate of ASP minus 22.5% of the reference product.

Packaging of Low-Cost Drug Administration Services
For CY 2018, CMS finalized its proposal to conditionally package payment for low-cost drug administration services assigned to Ambulatory Payment Classification (APC) 5691 (Level 1 Drug Administration) and APC 5692 (Level 2 Drug Administration). In CY 2015, CMS had conditionally packaged payment for ancillary services assigned to an ambulatory payment classification group with a geometric mean cost of $100 or less but excluded certain low-cost drug administration services from this policy.

Pass-Through Payment Status of Drugs and Biologicals
CMS is expiring pass-through payment status of 19 drugs listed in Table 69 of the OPPS final rule. Fifty drugs and biologicals continue to have pass-through payment status for CY 2018 or have been granted pass-through payment status as of January 2018. These are shown in Table 70.

Hospital Outpatient Quality Reporting (OQR) Program
CMS finalized the removal of 6 measures from the Hospital OQR Program:

  • OP-21: Median Time to Pain Management for Long Bone Fracture
  • OP-26: Hospital Outpatient Volume Data on Selected Outpatient Surgical Procedures
  • OP-1: Median Time to Fibrinolysis
  • OP-4: Aspirin at Arrival
  • OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional
  • OP-25: Safe Surgery Checklist Use

Additional information about the CY 2018 OPPS final rule is available in the accompanying press release and fact sheet.

CMS is continuing to follow its belief that a prospective payment system should package all integral, ancillary, supportive, dependent, or adjunctive services into payment for primary services.

The final rules demonstrated the power of public feedback; CMS clearly internalized the comments it received regarding biosimilar coding and payment and was willing to reverse course.


Precision Valuation: A Discussion of How Value Assessment Frameworks Can Account for Personalized Medicine


13th Annual Personalized Medicine Conference
Boston | November 14–16, 2017

Xcenda's Director of Health Policy, Jennifer Snow, MPH, will be moderating an expert panel that will examine how value frameworks can and should consider personalized medicine when evaluating therapeutic options. Panelists include:

  • Dane J. Dickson, MD, CEO, Cure-One (formerly MED-C); Director, Precision Medicine Policy and Registries, Knight Cancer Center at OHSU
  • Robert Dubois, MD, PhD, Chief Science Officer, Executive Vice President, National Pharmaceutical Council
  • Andrea Stern Ferris, MBA, President, Chairman of the Board, LUNGevity Foundation
  • Steven Pearson, MD, MSc, Founder and President, Institute for Clinical and Economic Review (ICER)

Join this expert group on Tuesday, November 15 at 3:15 PM during the conference. Learn more.




Legislative Bytes


Amanda Forys Featured in The Center for Biosimilars


Biosimilars Payment: New Market Could Reduce Drug Costs but Faces an Uphill Policy Battle

“Because Medicare will be such a large payer for these drugs, coding and payment policy set forth by CMS will have a significant effect on the success, sustainability, and availability of these lower-cost alternative products.”

The promise of biosimilar cost savings in the US market faces an uphill battle. Coding and payment policies could hinder the potential for a robust biosimilars market. In a series appearing in The Center for Biosimilars, Amanda Forys, Director of Xcenda’s Reimbursement & Policy Insights team, looks into the controversial payment model and its implications for the healthcare market. Read more




Shake It Off: Proposed Rule Would Loosen Requirements of Exchange Plans


Late last Friday, CMS released a wide-ranging proposed rule on various aspects of health insurance exchanges, including cost-sharing, essential health benefits (EHBs), qualified health plan certification, medical loss ratio (MLR), and states’ abilities to operate and establish exchanges.

The proposals addressing EHBs could potentially have the most far-reaching impact to patients. CMS proposes to provide states with additional flexibility in the definition of EHBs “to increase affordability of health insurance in the individual and small group markets.”

CMS also believes states should have greater choices for a benchmark plan than among the 10 plan types originally listed in its 2013 final rule; therefore, citing the National Academy of Medicine’s recommended approach in 2011, CMS is considering establishing a federal default definition of EHB that “would better align medical risk in insurance products by balancing costs to the scope of benefits.”

The agency is also considering allowing states to update their EHB-benchmark plans more frequently and to select among the following additional options:

  1. Selecting the EHB-benchmark plan that another state used for the 2017 plan year
  2. Replacing one or more EHB categories of benefits in its EHB-benchmark plan used for the 2017 plan year with the same categories of benefits from another state’s EHB-benchmark plan used for the 2017 plan year
  3. Otherwise selecting a set of benefits that would become the state’s EHB-benchmark plan, provided the EHB-benchmark plan does not exceed the generosity of the most generous of among a set of comparison plans

CMS acknowledged this proposal could either remove or add coverage for some items and services:

“Consumers who have specific health needs may also be impacted by the proposed policy. In the individual and small group markets, depending on the selection made by the state in which the consumer lives, consumers with less comprehensive plans may no longer have coverage for certain services. In other states, again depending on state choices, consumers may gain coverage for some services.”

CMS is proposing to allow states to relax the 80% MLR requirement for individual-market plans. States would be allowed to lower the 80% standard if they can demonstrate a lower MLR could help stabilize their individual insurance market.

Premium Rate Review
The Affordable Care Act (ACA) requires that insurers planning to increase premiums by 10% or more submit their rates to regulators for review. CMS has proposed to increase the rate-review threshold to 15% “in recognition of significant rate increases in the past number of years.”

While the agency views the proposed rule as a mechanism to stabilize the ACA exchanges, it also paradoxically represents the Administration’s latest effort to weaken the ACA. In fact, portions may be illegal. Nicholas Bagley wrote a thoughtful blog post on Monday analyzing the proposed rule’s reconfiguration of the states’ ability to choose an EHB benchmark plan and believes it is not legal because the proposal expands the definition of a “typical plan” enough that outlier plans offering far “stingier” benefits would be considered “typical” and, therefore, permissible to be considered EHB benchmark plans for any state in the country.

CMS is accepting comments on the 365-page proposed rule until November 27. The changes would take effect in 2019


(Not) Out of the Woods: The Nation Officially in Crisis—But Now What?


On the heels of President Trump’s announcement last week declaring the opioid epidemic a public health emergency, the Commission on Combating the Opioid Epidemic and Drug Addiction submitted its final report on Thursday. The commission, chaired by New Jersey Governor Chris Christie, was established via executive order this past March in response to the opioid epidemic plaguing the country. In an attempt to address the crisis, the 131-page report provided numerous recommendations aimed at enhancing prevention, education, funding, and access to treatment.

One recommendation for immediate action was to grant waiver approvals for all 50 states to eliminate treatment barriers for patients in the Medicaid program. The report asserts that this will immediately grant access to treatment for thousands of Americans in existing facilities across the nation.

CMS also announced a new policy on Wednesday to allow states to design demonstration projects to combat the opioid crisis through enhancing access to treatment. Another recommendation aimed at increasing access to treatment for opioid-use disorder was to establish and fund a federal incentive to enhance access to medication-assisted treatment (MAT). The recommendation suggested partnering with the National Institutes of Health (NIH) and the pharmaceutical industry to facilitate testing and developing new MAT treatments.

While the commission’s report provides a robust history of the opioid epidemic and recommendations to remedy the situation, what it does not provide is a guarantee of funding for these initiatives. The President’s fiscal year (FY) 2018 Budget Request represents an increase of $279.7 million to fund drug control efforts; however, the administration has also recently proposed massive cuts to Medicaid. Since Congress has not enacted full-year appropriations for FY 2018, it remains to be seen how all of this will play out on Capitol Hill.


…Ready for It?: QPP Final Rule Aims to Solidify Program for Smooth Transition


On Thursday, CMS released the CY 2018 QPP final rule. The agency finalized changes to both the Merit-Based Incentive Payment System (MIPS) track and the Advanced Alternative Payment Model (A-APM) track of the QPP. Most of the policies were finalized as proposed and apply to payment year 2020, Year 2 of the QPP.

To help clinicians affected by hurricanes Irma, Harvey, and Maria and other natural disasters, CMS is issuing an interim final rule with comment for extreme and uncontrollable circumstances where clinicians can be automatically exempt from these categories in the transition year (Year 1, 2019) without submitting a hardship exception application. Clinicians will also have the opportunity to be exempt for Year 2.

Although CMS acknowledges receiving “a number of comments from stakeholders in regards to the application of MIPS to certain Part B drugs,” there is no discussion of the comments or change of policy in the rule. CMS directs stakeholders to the QPP website for more information on how the MIPS adjustment is applicable to Part B drugs, but, as of press time, no further information could be found.

CMS finalized relaxing who is subject to the QPP by exempting clinicians treating fewer than 200 Medicare Part B beneficiaries and/or receiving less than $90,000 in Medicare Part B payments. CMS proposed to spare clinicians from the cost measures in Year 2 but, instead, finalized a weight of 10% of the total performance score, which was the original plan. CMS believes reverting back to 10% should ease the transition to Year 3 when these measures will be worth a hefty 30% of the overall score.

Some of the highlights of scoring changes to the MIPS track include giving bonus points to small practices to help offset the relatively high investment costs of participation. To reduce the reporting burden and align value-based programs, CMS proposed allowing the Hospital Value-Based Purchasing (HVBP) program score to be used in place of a MIPS score for clinicians who primarily practice in the inpatient hospital setting. Due to operational challenges, this proposal is delayed until 2021, QPP Year 3.

CMS also finalized the proposal to hold steady the amount of risk APMs must absorb to qualify as A-APMs in an effort to increase participation. CMS is also making it easier for clinicians to qualify for incentive payments by participating in A-APMs that start or finish in the middle of a year. CMS estimates that participation in A-APMs will double in year 2 as more clinicians attempt to receive the 5% bonus, the major incentive of the A-APM track.

As with the other rules released this week, CMS believes the changes to the QPP support the “Patients Over Paperwork” initiative and will continue to help ease the transition into the program for clinicians. Most provider organizations reacted positively to the 2018 rule changes. However, certain physician specialty societies expressed patient-access concerns with including Part B drugs in the performance-based payment adjustment methodology. It is unclear how CMS clarified or modified the policy to ease these concerns.


We Are Never Ever Getting Back Together: APMs Move Ahead, Leaving FFS Payment Models in the Dust


Last week, the Health Care Payment Learning and Action Network’s (LAN) released a report that linked 29% of healthcare payments in 2016 to APMs. Only in its second year of the initiative, APM spending has steadily increased from 23% in 2015 and is on track with LAN’s goal of shifting 50% of US healthcare spending to APMs by 2018.

To gauge spending via its APM Measurement Effort, LAN captured spending from 4 data sources: the LAN; America’s Health Insurance Plans (AHIP); the Blue Cross Blue Shield Association (BCBSA); and CMS across commercial, Medicaid, Medicare Advantage, and fee-for-service (FFS) Medicare market segments.

LAN researchers found that:

  • 43% of healthcare payments went to FFS or other legacy payments that were not linked to quality
  • 29% went to shared savings, shared risk, bundled payments, or population-based payments
  • 28% went to pay-for-performance or care-coordination fees

As a private-public collaboration launched in March 2015, the Department of Health and Human Services’ (HHS) Health Care Payment mission via the LAN initiative has been “to accelerate the health care system’s transition to [APMs].” Ultimately, LAN wants to drive as much healthcare spending as possible toward patient-centered care that promotes value and quality.


“We want to move to a system that pays for value and quality—but how we define value and quality today is a problem. We all know it: Clinicians and hospitals have to report an array of measures to different payers. The measures are often different and there are many steps involved in submitting them, taking time away from patients. Moreover, it’s not clear whether all of these measures are actually improving patient outcomes….

“We have too many measures. We are measuring process and not outcomes.

“We all agree that quality measures are a critical component of paying for value. But we also understand that there is a financial cost as well as an opportunity cost to reporting measures. Until we get to a smaller set of more impactful measures that assess outcomes rather than processes, the burden associated with reporting measures will run the risk of outweighing their intended purpose.”


– CMS Administrator Seema Verma, introducing “Meaningful Measures,” a CMS initiative to assess only the core issues that are the most vital to providing high-quality care and improving patient outcomes

Source: “Speech: Remarks by Administrator Seema Verma at the Health Care Payment Learning and Action Network (LAN) Fall Summit,” October 30




Premiums in health insurance exchanges are increasing by a national average of 27.2% in 2018

Source: “2018 Premium Increase Tracker,” Freedom Partners, November 1


ISPOR 20th European Congress

November 48 l Glasgow, Scotland
Join Xcenda’s Jay Jackson, PharmD, MPH, Senior Vice President of Consulting Services, as he moderates a Tuesday lunchtime symposium titled, “Practical Implications of Value-Based Pricing and Emerging Value Frameworks in Health Technology Assessment,” at the ISPOR 20th European Congress in Glasgow, Scotland. Visit us at booth #602 to meet with our global HEOR team and learn more about our award-winning research. Learn more


13th Annual Personalized Medicine Conference

November 14–16 l Boston, MA
Join Jennifer Snow, MPH, Director of Health Policy, at the 13th Annual Personalized Medicine Conference in Boston as she moderates a panel titled, “Precision Valuation: A Discussion of How Value Assessment Frameworks Can Account for Personalized Medicine.” Learn more


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Health Policy

Scott Shields
Associate Director,
Health Policy



Peyton Howell, MHA
President | Global Sourcing & Manufacturer Relations | AmerisourceBergen Corporation

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda


 Andrew Gaiser | Marla Kugel |  Irene Sheynis | Scott Shields


Kylie Matthews | Ellen Olson


Nov. 3, 2017


Forward to a Friend



View Archived Issues


Connect with AmerisourceBergen:   I   LinkedIn   I   Twitter   I

Connect with Xcenda:   I   LinkedIn   I  Twitter