CMS released final market stabilization rule after short comment period. Learn more.

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Apr. 21, 2017

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Watching: Like hammerhead sharks, the GOP is hoping to finally nail the repeal and replace of the Affordable Care Act. The White House is pushing for a repeal vote in the House of Representatives next week, but (based on the limited details emerging from conversations over the Easter recess) it’s unclear if the “new” ideas being floated—like invisible risk sharing—will bridge the divide between political factions in the House. Toss in the impending deadline to keep the government funded (April 28), and it could be a long weekend at the Capitol.

 
FEATURED STORY
 

Say You Won’t Let Go: CMS Mum on Subsidies in Final Exchange Rule

 
 

Late last week, the Centers for Medicare & Medicaid Services (CMS) released its final market stabilization rule, 2 months after the proposed rule was released. Given the uncertainty of all things Affordable Care Act, stabilization would very much be appreciated by those running (and utilizing) the Exchange plans.

Despite receiving 4,000 comments (in a very short 20-day comment period), the final rule is largely unchanged from the proposed rule. The final rule looks to “stabilize” the individual and small-group health insurance markets through changes in the special enrollment periods (SEPs), the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements.

In summary:

  • SEPs: Plans have been complaining about enrollees’ ability to game the system with SEPs. The final rule tightens the SEPs by requiring proof of eligibility. This proof must be provided within 30 days, but coverage could be retroactive to the date of plan selection. In addition, the rule limits which types of SEPs could change metal levels during the year. There will also be a limit on eligibility for other SEPs, like permitting plans to reject SEPs based on loss of coverage due to non-payment of premiums or SEPs due to exceptional circumstances.
  • Annual open enrollment: The rule finalized shortening open enrollment to 45 days from November 1 to December 15, rather than the 3-month window used to date.
  • Guaranteed availability: Because it is possible now to “game” the system to have coverage but not pay the premiums for 90 days, the rule says plans can collect unpaid premiums from members when they enroll with the same issuer again. Insurers must clearly describe their policies.
  • Network adequacy: The rule defers to states to determine network adequacy. If states cannot determine it, then the Department of Health and Human Services (HHS) will use an insurer’s accreditation from an HHS-recognized accreditation body.
  • Essential community providers (ECPs): Rather than the current 30% ECP requirement, the final rule requires plans to have only 20% of ECPs in their networks.
  • Actuarial value requirements: The rule expands the actuarial-value variation around the metal ratings from ±2% to -4/+2% (eg, a silver plan, with an actuarial value of 70%, could expand its range from 68%–72% to 66%–72%). Bronze plans can vary from -4/+5%.

In the proposed rule, CMS had requested comments on established continuous coverage requirements (favored by some Republicans) but will not move forward on these requirements at this time. CMS made other announcements to support the final rule: Key Dates for 2017; Issuer Guidance on Uniform Rate Review Timeline; Good Faith Compliance Guidance; QHP Certification Guidance for States; and Final Actuarial Value (AV) Calculator for 2018 and Methodology.

What isn’t mentioned? There is no discussion of how the Administration plans to move forward with the Exchange subsidies. The final rule is also mum on whether the individual mandate will be enforced.

 

The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?

 
 

With increased scrutiny surrounding specialty drug pricing, has the demand for health economic (HE) information and real-world evidence stretched beyond the limitations of FDAMA 114?

Matt Sarnes, PharmD, Senior Vice President of Commercial Consulting, and Jay Jackson, PharmD, MPH, Senior Vice President of Scientific Consulting, will present, “The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?” They will shed light on recent recommendations shared with the FDA, new research regarding payers’ requests for data, common practices and challenges in producing and sharing this information, and the emerging role of providers as they take on more economic risk for their patients.

Read more

 
 

 
LEGISLATIVE UPDATE
 

Getting the Party Started: Clarifying ‘Intended Use’ for Drugs and Devices

 
 

On the heels of the enactment of the 21st Century Cures Act and delays by the Food and Drug Administration (FDA) on additional regulation, Congressman Morgan Griffith (R-VA) introduced H.R.1703 to clarify the concept of “intended use” of drugs and devices and to allow for more robust exchanges of information between manufacturers and physicians.

Under the FDA’s current regulations, any discussions regarding unapproved or off-label use of a drug or device leads to a new “intended use.” In providing a new definition of “scientific exchange,” H.R.1703 would narrow the ability of the FDA to determine “intended use.”

Under H.R.1703, communications constitute “scientific exchange” when:

  • They are supported by scientifically appropriate and statistically sound data, studies, or analyses
  • They include a conspicuous and prominent statement that the product is not approved or that the information is not contained in the approved product labeling
  • Manufacturers and sponsors make no claim that the product or use has been demonstrated to be safe or effective

Scientific exchange of information may include:

  • Release of findings and publication of studies
  • Communications at conferences
  • Dissemination of publications, reference texts, or clinical practice guidelines
  • Communication, both proactive and reactive of:
    • Information regarding a manufacturer’s research and development efforts
    • Scientific, medical, or technical information
    • Healthcare economic and health outcomes information

H.R.1703 has been referred to the Subcommittee on Health.

The 21st Century Cures Act clarified and expanded the communication of healthcare economic information to the payer community; H.R.1703 seeks to put a finer point on the communication of such information.

The FDA is also currently considering comments on this matter and announced it would delay amendments to the regulations regarding “intended use" until March 19, 2018. But, given the budgetary and staffing pressures at the FDA, additional clarity sooner rather than later would be appreciated by the pharmaceutical industry.

 

Nothing Generic About Maryland’s Price-Gouging Bill

 
 

Last week, the Maryland House of Delegates passed, with a near unanimous 137-4 vote, a bill that would authorize the State’s Attorney General’s Office to take legal action to stop “price gouging” of off-patent or generic drugs.

House Bill 631 (HB 631) would require generic drug manufacturers to notify the state’s Attorney General of any planned price increase, to provide specific details within 20 days of a request from the state, and to include reasons for the price increase. The Attorney General could also order pharmaceutical manufacturers to turn over documents associated with the price increase to see if the hike violates the law (ie, greater than 50% of the drug’s current list price). The Attorney General would be authorized to levy a $10,000 civil penalty for each violation.

In a Baltimore Sun opinion piece, Maryland State Senator Steve Hershey (R) countered, “The generic drug market is working. Encouraging more generic drug competition will do for Maryland what it has done for the past three decades—lower costs and increase patient access to more affordable medicines. If policies like those in the attorney general’s bill penalize manufacturers indiscriminately, they pose a very real risk of reducing the number of companies providing medicines to Maryland consumers and ultimately causing prescription drug prices to increase.”

Maryland Governor Larry Hogan (R) has not yet signed the bill.

Maryland joins California, New York, and Nevada as states whose officials have recently tried to pass legislation controlling drug prices. State officials are likely feeling emboldened to pursue these price-control efforts since President Donald Trump has repeatedly pledged to lower costs through “increasing competition.”

 
REGULATORY UPDATES
 

IPPS Proposed Rule Aims to Streamline and Reduce Regulation

 
 

Last Friday, CMS released the fiscal year (FY) 2018 proposed rule for the Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System proposed rule.

The proposed rule also includes a request for information (RFI). This brief update addresses the RFI and proposed IPPS changes and policies.

Request for Information
As with the final call letter for Medicare Part D, CMS is releasing an RFI for approaches “to better achieve transparency, flexibility, program simplification and innovation.” The agency will use the feedback to help inform future regulatory action related to inpatient and long-term hospitals.

Proposed Payment Changes and Updates
CMS projects a total increase in IPPS operating payments of 2.9%. Other payment adjustments would include continued penalties for excess readmissions, a continued 1% penalty for hospitals in the worst performing quartile under the Hospital Acquired Condition Reduction Program, and continued upward and downward adjustments under the Hospital Value-Based Purchasing Program.

Medicare Disproportionate Share Hospital (DSH) Payments
CMS proposes to use data from its National Health Expenditure Accounts instead of data from the Congressional Budget Office (CBO) to estimate the percent change in the rate of those without insurance. These data are used to determine the total amount of uncompensated care payments available to Medicare DSHs. According to CMS, this proposed change would result in DSH payments increasing by $1 billion in FY 2018.

Proposed Add-On Payments for New Services and Technologies
CMS received 9 applications for new technology add-on payments for FY 2018; 3 applicants withdrew their applications, so CMS is evaluating the remaining 6:


Other Provisions
CMS is proposing several changes to the Hospital-Acquired Conditions (HAC) Reduction Program, including requesting comments regarding additional measures and how to account for social risk factors. CMS has several proposals for the Hospital Readmissions Reduction Program (HRRP), including changing the payment adjustment factor in accordance with the 21st Century Cures Act and assessing penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid. This has long been a bugaboo for many hospitals that feel that their population has a patient mix that puts them at a disadvantage for the HRRP.

For 2018, CMS is proposing to modify the electronic health record reporting periods for new and returning participants attesting to CMS or their state Medicaid agency from the full year to a minimum of any continuous 90-day period during the calendar year.

With its first significant regulation related to payment reform, the Trump Administration is clearly pursuing its campaign promise of deregulation. CMS Administrator Seema Verma said in the press release accompanying the proposed rule, “Through this proposed rule we want to reduce burdens for hospitals so they can focus on providing high quality care for patients. Medicare is better able to support the work of dedicated hospitals and clinicians who provide the care that people need with these more flexible and simplified approaches.”

The proposed rule is scheduled to be published in the Federal Register’s April 28 issue. The proposed changes would affect discharges occurring on or after October 1, 2017. Interested parties can also review the proposed rule’s fact sheet.

 

May Not Be Worth It: Medicaid MCO Companies Juggle Risk/Reward

 
 

According to a recent report from The Society of Actuaries, states are not paying Medicaid managed care organizations (MCOs) enough to generate adequate margins. Possible reasons for this situation include state budget challenges, increased Medicaid enrollment, and states’ competitive bidding processes which cause carriers to underestimate their risk. As a result, a number of carriers are either planning to leave or have already left the market (eg, Medica cancelled 2017 coverage for more than 300,000 enrollees in Minnesota).

Medicaid provides health coverage for 69 million Americans and is the largest payer of birth costs, mental health services, and long-term care in the US. More than 50% of Medicaid beneficiaries get all or most of their care from MCOs; 39 states use managed care programs for some portion of their Medicaid populations, and 28 states with Medicaid MCOs report greater than 75% of all Medicaid beneficiaries are enrolled in MCOs. As of July 2016, only 3 states had no managed care programs.

In short, Medicaid has shifted from state-based risk under a fee-for-service payment model to an MCO-delegated risk model. MCOs are paid on a capitated basis by states, and most rates include a provision for margin. According to the report, most for-profit MCOs target a margin that is higher than 2.0%, and most nonprofit MCOs target a margin of around 2.0%. The average margin reported by MCOs in 2015 was 1.8% for for-profits and 1.5% for nonprofits. Without providing an opportunity for reasonable margins, states cannot attract and retain MCOs, which threatens the sustainability of the dominant administration of Medicaid benefits.

 

Information Buffet (AKA, Other Stuff That Caught Our Attention)

 
 

We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • The Senate Health, Education, Labor and Pensions (HELP) Committee will vote next Wednesday on Scott Gottlieb’s nomination to lead the FDA.
  • The Institute for Clinical and Economic Review (ICER) released a final evidence report on the effectiveness and value of targeted immune modulators for rheumatoid arthritis.
  • A Kaiser Family Foundation issue brief examines proposed changes to workplace wellness programs.
  • The FDA posted the report by Janet Woodcock (Director, Center for Drug Evaluation and Research) on the “Future of Drug Development.”
  • Rep. Brett Guthrie (R-KY) introduced the Pharmaceutical Information Exchange (PIE) Act of 2017 (H.R.2026) that incorporates the multi-stakeholder consensus recommendations developed during an Academy of Managed Care Pharmacy partnership forum to allow biopharmaceutical manufacturers to proactively share clinical and economic information with population health decision makers on emerging therapies in advance of FDA approval.
 

FDAMA 114 and the 21st Century Cures Act: Insights From Payers and Manufacturers, and Implications for the Exchange of Health Care Economic Information

 
 

ISPOR 22nd Annual International Meeting
May 20–24 l Boston, MA

Join Xcenda’s Jay Jackson, PharmD, MPH, Senior Vice President of Scientific Consulting, as he moderates a Tuesday lunchtime symposium titled, “FDAMA 114 and the 21st Century Cures Act: Insights From Payers and Manufacturers, and Implications for the Exchange of Health Care Economic Information,” at the ISPOR 22nd Annual International Meeting in Boston May 20–24. Visit us at booth #817 to meet with our global HEOR team and learn more about our award-winning research.

Read more

 
 

 
HEARD ON THE STREET
 

“[B]y giving the Attorney General this unbounded and unprecedented level of authority to control pricing in a competitive free market, generic companies will be exposed to a level of risk in Maryland that will require them to evaluate whether they want to continue to market affordable medicines within the state.”

– Chester “Chip” Davis Jr., President and CEO of the Association for Accessible Medicines, expressing opposition to Maryland HB 631, which would provide the state Attorney General with unprecedented power to impose costs and regulatory burdens on pharmaceutical manufacturers

Source: “Veto Maryland House Bill 631, Which Would Harm Patients by Chilling Generic Drug Competition,” Association for Accessible Medicines, April 10

 
POLICY BY NUMBERS
 

823 vs 10

 

The Leapfrog Group announced new grades for its Leapfrog Hospital Safety Grade, a national healthcare rating focused on errors, accidents, and infections. The program has been assigning A, B, C, D, and F letter grades to general acute care hospitals in the US since 2012. Of the 2,639 hospitals rated in last week’s program, 823 earned an “A,” 706 earned a “B,” 933 earned a “C,” 167 earned a “D,” and 10 earned an “F.”

Source: “Five Years After the Launch of the Leapfrog Hospital Safety Grade, Patient Safety Improves, But Crucial Work Remains,” The Leapfrog Group, April 12

 
UPCOMING MEETINGS & CONFERENCES
 

Asembia Specialty Pharmacy Summit 2017

April 30–May 3 l Las Vegas, NV
Join Xcenda at the largest US conference for specialty pharmacy. Matt Sarnes, PharmD, Sr. Vice President of Commercial Consulting, and Jay Jackson, PharmD, MPH, Sr. Vice President of Scientific Consulting, will present, “The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?” at the upcoming Asembia conference. Meet leaders and experts from AmerisourceBergen at booth #316. Learn more

 

ISPOR 22nd Annual International Meeting

May 20–24 l Boston, MA
Join Xcenda’s Jay Jackson, PharmD, MPH, Senior Vice President of Scientific Consulting, as he moderates a Tuesday lunchtime symposium titled, “FDAMA 114 and the 21st Century Cures Act: Insights From Payers and Manufacturers, and Implications for the Exchange of Health Care Economic Information,” at the ISPOR 22nd Annual International Meeting in Boston May 20–24. Visit us at booth #817 to meet with our global HEOR team and learn more about our award-winning research. Learn more

 

2017 ASCO Annual Meeting

June 2–6 l Chicago, IL
Join leaders and experts from AmerisourceBergen at ASCO’s Annual Meeting in Chicago. This meeting brings together more than 30,000 oncology professionals from around the world to discuss state-of-the-art treatment modalities, new therapies, and ongoing controversies in the field. Visit AmerisourceBergen’s booth at #6135. Learn more

 

2017 BIO International Convention

June 19–22 l San Diego, CA
Join leaders from World Courier at the 2017 BIO International Convention in San Diego. This annual conference, hosted by the Biotechnology Innovation Organization (BIO), is the largest global event for the biotechnology industry and attracts the biggest names in biotech. The convention offers key networking and partnering opportunities while providing insights and inspiration on the major trends affecting the industry. Visit the World Courier booth at #5408. Learn more

 

2017 Pharmaceutical End-to-End Supply Chain Management Summit

July 24–25 l Philadelphia, PA
Matt Sample, Senior Director, Secure Supply Chain at AmerisourceBergen, will present, “Utilize Serialization and Traceability Data to Ensure End-to-End Supply Chain Visibility.” He will discuss standardized product packaging and serialization, show how to integrate data standards within the commercial supply chain for enhanced visibility, and review the methods to secure the data and ensure interoperability throughout the end-to-end supply chain. 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.

 
 
 
 
 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

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

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

Tommy Bramley, PhD, RPh
President | Xcenda

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

CONTRIBUTING AUTHORS:

Bernard Falkoff | Scott Shields | Jennifer Snow | Stephen Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson | Tia O’Brien | Adam Mathieu

 

Apr. 21, 2017

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