We summarize CMS’ final rule on CY2019 Medicare Advantage and Prescription Drug Benefit Program and the 2019 Call Letter.

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Apr. 13, 2018


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CMS Hits Us With Its Best Shot, Let’s Get Right to It: Parts C and D Palooza


Last Monday, the Centers for Medicare & Medicaid Services (CMS) dazzled Medicare prescription drug benefit (Part D) fans with not 1 but 2 major document dumps. CMS released the final rule for the Contract Year 2019 Medicare Advantage and Prescription Drug Benefit Program as well as the 2019 Call Letter for Medicare Advantage and Part D plans.

Both releases were highly similar to their proposals back in November 2017 and February 2018, respectively. Highlights include:

  • Medicare Advantage (MA) payments will have an effective growth rate of 5.28% on average for 2019, which ultimately will translate to a revenue increase of about 3.40%. This is an appreciable difference from the expected figures in the Advance Notice, which foresaw an effective growth rate of 4.35% and a revenue increase of 1.84%
  • CMS confirmed it is implementing the closing of the coverage gap discount a year early (in 2019) and increasing the manufacturer discount to 70%; the agency does have concerns about the incentives for plans to promote the use of high-value drugs
  • Will eliminate the “meaningful differences” requirement for MA plans for 2019
  • Will base eligibility for tiering exceptions on the lowest applicable cost-sharing for the tier containing the preferred alternative for treatment—not simply based on the names of tiers
  • Will limit the special enrollment period (SEP) annually to dual-eligibles and Low-Income Subsidy (LIS) beneficiaries who are assigned a plan by CMS or the state by permitting a quarterly change for the first 9 months of the year
  • Will codify the current methodology, measures, and data collection of the Star Ratings program, with slight modifications, with the result that changes to the program will happen more slowly
  • Redefined retail pharmacy as “any licensed pharmacy that is open to dispense prescription drugs to the walk-in general public from which Part D enrollees could purchase a covered Part D drug at retail cost-sharing without being required to receive medical services from a provider or institution affiliated with that pharmacy”
  • Shortened the current requirement for a temporary 90-day fill in the long-term care setting to 30 days
  • Established a lower maximum copay for biosimilar and interchangeable biological products that is equivalent to the lower copay required for generic and preferred multiple-source drugs for LIS
  • Finalized its proposal to increase the time frame for a plan to issue a decision on payment redeterminations from 7 calendar days from the date the plan sponsor receives the request to 14 calendar days from the date the plan sponsor receives the request
  • CMS moved ahead with its proposal to allow variation in cost-sharing and supplemental benefits based on health status or disease state
  • MA plans will also have the flexibility to offer supplemental benefits by expanding their definition of “primarily health related”

CMS also provided final regulations on implementing key provisions of the Comprehensive Addiction and Recovery Act of 2016 (CARA):

  • Part D sponsors may voluntarily implement drug management programs that limit beneficiaries who are deemed at risk from accessing drugs that are deemed frequently abused
  • Designate both opioids and benzodiazepines as frequently abused drugs, which allows for better monitoring of beneficiaries’ use of the products, identification of at-risk and potentially at-risk beneficiaries, limits the average daily dose of products, and narrows the number of prescribers and pharmacies that at-risk and potentially at-risk beneficiaries can use for frequently abused drugs
  • Exclusions include buprenorphine for Medication Assisted Treatment (MAT) from the list of frequently abused drugs; cancer patients, beneficiaries in hospice or receiving palliative care, and beneficiaries in long-term care facilities are also excluded from provisions

The releases continue the trend of deregulating federal programs and providing market flexibility. The ultimate question is if the balance of business vs patient protection has swung too far in favor of those managing the programs.


Raise a Glass: Case Studies on Medicare Part B Success


In Health Policy Weekly, we usually cover change—a new piece of legislation or a regulation or guidance. But sometimes even we slow down to appreciate how well something works. This week, we toast to Medicare Part B and its continued evolution. When the program began, CMS was largely a claims payer. The program has kept up and, in fact, often inspired the US healthcare system to change and focus on value. Four areas where we think Medicare has got it right are reimbursing physician-administered drugs, enabling beneficiary choice through Medicare Advantage, looking at total cost of care, and tying payment to quality.

Click on the issue brief to read more.


Making Progress: Opioid Hearings Continue


On Wednesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee debated The Opioid Crisis Response Act of 2018, resulting from 6 bipartisan hearings on the opioid crisis. The large package of legislation is aimed at strengthening addiction treatment access, developing non-opioid pain medications, and creating new programs to curb the crisis.

On the other side of the Capitol, the House Energy & Commerce Committee’s Health Subcommittee held a hearing, “Combatting the Opioid Crisis: Improving the Ability of Medicare and Medicaid to Provide Care for Patients,” to consider a package of legislation to address the opioid crisis, including amendments to the Medicaid, Medicare Part B, and Medicare Part D programs.

It appears the months-long series of discussions on the Hill may be approaching a climax, with a host of new legislation to guide the nation’s battle against opioid addiction and abuse.


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Bittersweet Memories Are All I Am Taking With Me: Killing ACA With 1,000 Cuts


On Monday, the Department of Health and Human Services (HHS) released the final rule for the 2019 benefit and payment parameters for the federally facilitated exchanges and state exchanges on HealthCare.gov. Below, we include the salient points from the 523-page document.

  • Essential health benefits (EHBs). The final rule provides more flexibility to states for what is included in their EHB-benchmark plans. The new rule expands the EHBs to 50 benchmark-plan options, allowing states to create their own benefit set for the benchmark plan. States will also now be able to build their own set of benefits that could potentially become their EHB-benchmark plan.
  • Hardship exemptions from individual mandate. The new rule expands the list of reasons people can avoid the mandate to purchase health insurance; for example:
    • Americans living in counties with 1 or no insurers
    • If the only plans available to them cover abortion services
    • If personal circumstances cause a hardship in obtaining health insurance (eg, increased out-of-pocket costs because a person requires specialized care by a specialist physician, but the exchange plans offered do not provide access to such specialty care)

CMS also issued additional guidance on hardship exemptions on Monday.

  • Special Enrollment Periods (SEPs). CMS is aligning the enrollment options for all dependents who are newly enrolling in exchange coverage through an SEP and are being added to an application with current enrollees.
  • Medical loss ratio (MLR). The rule reduces quality improvement activity reporting burdens on insurers and allows states to request reasonable adjustments to the MLR standard for the individual market if the state shows a lower MLR standard could help stabilize its individual insurance market.

The actions the Trump Administration is taking, as manifested in this final rule for the exchanges, conveys the intent more clearly than any statement on Twitter could: it is doing its best to dismantle the Affordable Care Act (ACA) in an incremental, provision-by-provision fashion. The vast majority of changes enacted by the final rule serve to weaken the power of government and to loosen requirements imposed on plans and consumers, similar to the Part C and D regulations covered in our feature story. If actions speak louder than words, then HHS delivered a thunderclap on Monday.


So Nice, So Nice That I Got You: FDA and Patient Input


On March 30, the Food and Drug Administration (FDA) released an update on its implementation of efforts to enhance the agency’s benefit-risk assessment and communication in the human drug review process. The document provides an overview of the agency’s progress since the program began in 2013 as part of the Prescription Drug User Fee Act (PDUFA) V. It also discusses new efforts in 2017 as part of PDUFA VI and further expanded under the 21st Century Cures Act.

The FDA assesses the safety of a drug by determining whether its benefits outweigh its risks. In the past, critics felt the agency’s clinical analysis was not always readily understood by the broader audience who wanted to understand the FDA’s thinking. Therefore, the agency began an initiative to develop a structured approach for drug benefit-risk assessments that could serve as a template for product reviews as well as a vehicle for explaining the basis for the FDA’s regulatory decisions in drug approvals. The update released on March 30 was its latest discussion of the initiative.

The update also provides a roadmap for enhancing the Benefit-Risk Framework and the FDA’s plans to publish guidance on the agency’s decision-making context and framework for benefit-risk assessment by June 2020. The guidance will also outline how patient-experience data and related information can be used to inform benefit-risk assessment.

The goal of the FDA’s Benefit-Risk Framework is to improve the clarity and consistency in communicating the reasoning behind drug regulatory decisions and to ensure the FDA reviewers’ detailed assessments can be readily understood in the broader context of patient care and public health.

After reviewing patient-focused drugs developed in more than 20 disease areas, the FDA concluded that patient input can:

  • Inform the clinical context and provide insights to frame the assessment of benefits and risks
  • Provide a direct source of evidence regarding the benefits and risks, if methodologically sound data-collection tools could be developed and used within clinical studies of an investigational therapy

The ACA accelerated the incorporation of the patient voice into clinical research with the creation of the Patient Centered Outcomes Research Institute (PCORI). The influence and importance of patient feedback has now percolated through the FDA’s guidance. The FDA appears to view the patient and stakeholder communities as a resource, which is a net positive for public health.


The Lights Go On, the Music Dies: Questioning Money-Back Guarantees


A study published this week in Annals of Internal Medicine evaluated the effect of “money-back guarantees,” or outcomes-based contracts (OBCs), on the cost-effectiveness of a PCSK9 inhibitor in atherosclerotic cardiovascular disease (ASCVD). While OBCs are thought of as an innovative payment model to improve access to high-cost drugs, in this instance, the authors from the University of California San Francisco (UCSF) and the Institute for Clinical and Economic Review (ICER) asserted an outcomes-based payment scheme did little to reduce the drug cost or improve cost-effectiveness.

At the current price when compared to ezetimibe added to a statin, treatment with the PCSK9 inhibitor generated an incremental cost-effectiveness ratio that exceeded commonly accepted willingness-to-pay (WTP) thresholds. The results showed the OBC scenarios all improved the incremental cost-effectiveness ratio, but only marginally—still remaining above the WTP threshold, with the largest improvement around 3% when all drug costs plus inpatient costs were refunded.

According to the authors, their study shows outcomes-based pricing has limitations for high-cost, preventive therapies. The savings from OBCs in preventive therapies may be limited by already-low event rates in these indications; in this analysis, a low annual ASCVD event rate of 3% translated into payers incurring the full cost of the drug 97% of the time. They believe the logistical challenges of attributing an event to the failure of a preventive treatment, coupled with patients’ frequent switching of plans, limit the ability to track events that trigger reimbursement and the payers to whom the reimbursement is due over a long-term treatment period.

While this analysis demonstrates that OBCs may not improve the cost-effectiveness of high-cost, preventive therapies taken for an extended period, this type of agreement may work well in other therapeutic settings. OBCs are evolving, and lessons learned from one will be applied to the next one.


Strangers Waiting Up and Down the Boulevard, Obvi for More Info


JPMorgan’s CEO, Jamie Dimon, in his 2017 letter to shareholders, shared more information about the joint venture with Amazon and Berkshire Hathaway to lower healthcare costs for their employees. Little has been said by the companies since the initial announcement, but the healthcare industry has been buzzing with speculation. Dimon outlined some of the goals the partnership hopes to accomplish, which include:

  • Aligning incentives among doctors, patients, and insurers
  • Understanding waste, fraud, and administration costs
  • Empowering employees with their healthcare data and access to telemedicine
  • Developing better wellness programs
  • Understanding the over- and under-utilization of specialized medicine and pharmaceuticals
  • Exploring the costs of (frequently unwanted) end-of-life care

Dimon indicated they thought their solutions may possibly help inform public policy for the country, but he was also clear the effort was just beginning, they were starting small, and there would be progress reports in the coming years.

Warren Buffett’s quote from a CNBC interview sums it up: “I’m hopeful but don’t expect any miracles out of us soon,” said Buffett. “This is not easy. If it was easy, it would have been done.”


MEGA 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:


Amanda Forys Contributes Indication- and Reference-Based Pricing Insights in Biosimilar Development


Indication- and Reference-Based Pricing: A Positive for Biosimilar Manufacturers?

With biosimilar approvals expected to increase, reference-based pricing presents opportunities for the US biosimilar market. Amanda Forys, Senior Director of Reimbursement Strategy Insights, discusses how biosimilar manufacturers can stay on top of ever-changing pricing trends. Learn more



“Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research (CDER), said she ‘live[s] in fear’ of providers using outdated treatment methods based on FDA-approved drug labels which, the director admitted, are updated less and less after FDA first approves a drug.”


Source: “Inside Health Policy—Woodcock ‘Lives in Fear’ Outdated Labels Will Lead to Patient Harm,” Friends of Cancer Research, April 5


8.7% vs 1.2%


Wall Street analysts calculate that CMS’ 2019 increase to Medicare Advantage plans of 3.4% is closer to 8.7% when all factors are taken into account, including “risk creep” and the sunset of the insurance tax for 2019. The increase represents a “huge bump” from 2018, when they calculated a 1.2% increase.

Source: “Wall Street analysts see big bucks for Medicare Advantage,” PoliticoPRO, April 3


AMCP Managed Care & Specialty Pharmacy Annual Meeting

April 23–26 l Boston, MA
Join AmerisourceBergen companies, US Bioservices and Xcenda, at AMCP’s Annual Meeting at the Boston Convention and Exhibition Center, April 23–26. Meet with our specialty pharmacy and commercialization experts at the largest gathering of managed care professionals who work, lead, and innovate in the ever-changing world of pharmaceutical management. Visit AmerisourceBergen at booths 316 and 321. 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
Senior Director,
Health Policy

Scott Shields
Associate Director,
Health Policy



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


Dan Cadle | Maureen Holmes | Scott Shields | Jennifer Snow | Rebecca Sugarman


Laurie Kozbelt | Ellen Olson


Apr. 13, 2018


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