Read our take on the main Inpatient Prospective Payment System (IPPS) final rule provisions.

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Aug. 3, 2018


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IPPPPSSSS HERE! Final IPPS Rule Released


Yesterday, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to update fiscal year (FY) 2019 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). In an accompanying press release and fact sheet, CMS emphasized the final rule’s price transparency, interoperability, and burden reduction on hospitals. Here is our initial take on the main IPPS provisions.

Payment Changes and Updates
CMS determined 4 applicable percentage increases to the standardized amount for FY 2019, as specified in the following table.

FY 2019 Status of Technologies Approved for FY 2018 Add-On Payments
CMS approved 7 technologies for add-on payments in FY 2018. Below is the add-on payment status for FY 2019.

FY 2019 Add-On Payments for New Services and Technologies
CMS received 15 applications for new technology add-on payments for FY 2019. CMS did not consider the 4 technologies below for the following reasons:

  • 3 applicants withdrew their applications:
    • Progenics Pharmaceuticals, for AZEDRA (iobenguane I 131)
    • Somahlution, for DURAGRAFT
    • TherOx, for Supersaturated Oxygen (SSO2)
  • 1 applicant did not meet the July 1 deadline for Food and Drug Administration (FDA) approval or clearance of the technology:
    • Isoray Medical and GT Medical Technologies, for GammaTile

Below is the FY 2019 add-on payment status for the remaining 11 technologies.

CAR T-Cell Therapies
During its review of the add-on payment status applications for the 2 chimeric antigen receptor (CAR) T-cell therapies, KYMRIAH and YESCARTA, CMS noted the many inquiries from the public regarding payment of CAR T-cell therapy under the IPPS.

CMS had stated in the proposed rule that, if a new Medicare Severity Diagnosis Related Group (MS-DRG) were to be created, there might not be a need for a new technology add-on payment. However, in the final rule, CMS concluded it would be “premature” to adopt changes to the existing payment mechanisms given the relative newness of CAR T-cell therapy and the request for information in the President’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs for a potential model that would test private market strategies and introduce competition to improve quality of care for beneficiaries, while reducing both Medicare expenditures and beneficiaries’ out-of-pocket spending approach.

CMS reiterated its position in the IPPS proposed rule that it continues to believe KYMRIAH and YESCARTA are substantially similar to each other. Therefore, CMS believed it was appropriate to evaluate both technologies as 1 application for new technology add-on payments. The applicants submitted separate cost and clinical data, and CMS reviewed and discussed each set of data separately. However, the agency stated it was making 1 determination regarding new technology add-on payments that would apply to both applications.

To encourage price transparency by improving public accessibility of charge information, effective CY 2019, CMS updated its guidelines to specifically require hospitals to make public a list of their standard charges via the internet, in a machine-readable format, and to update this information at least annually, or more often as appropriate.

Hospital Inpatient Quality Reporting (IQR) Program
For FY 2019, CMS is finalizing its proposal to “de-duplicate” 21 measures (ie, remove 21 measures from the Hospital IQR Program, while retaining the same measures in 1 of the value-based purchasing programs [Hospital Value-Based Purchasing, Hospital Readmissions Reduction, and Hospital-Acquired Condition Reduction programs]). Other actions for the Hospital IQR Program include:

  • Adopt an additional factor to consider when evaluating measures for removal from the Hospital IQR Program: “The costs associated with a measure outweigh the benefit of its continued use in the program.”
  • Remove 18 previously adopted measures that are “topped out,” do not result in better patient outcomes, or have associated costs that outweigh the benefit of its continued use in the program.
  • The 6 healthcare-associated infection patient safety measures that are being de-duplicated will be removed for CY 2020, which is 1 year later than originally proposed.

Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program adjusts payments to IPPS hospitals for inpatient services based on their performance on an announced set of measures. In the final rule, CMS finalizes proposals to:

  • De-duplicate 1 measure from the Safety domain that is also in the Hospital IQR Program
  • De-duplicate 3 condition-specific payment measures from the Efficiency and Cost Reduction domain that are also in the Hospital IQR Program

Hospital Readmissions Reduction Program (HRRP)
The HRRP provides an incentive for hospitals to provide high-quality patient care by reducing applicable IPPS hospital payments by up to 3% for excess readmissions within hospital peer groups in 6 clinical areas. In the FY 2019 IPPS/LTCH PPS final rule, CMS retains the same measures and adopts various administrative changes.

Hospital-Acquired Conditions (HAC) Reduction Program
The HAC Reduction Program establishes an incentive for hospitals to reduce hospital-acquired conditions by reducing applicable IPPS payments by 1% to qualifying hospitals ranking in the worst-performing 25%. For FY 2019, CMS will retain the measures, adopt a new scoring methodology to equally weight all measures used in a hospital’s program score, and implement other administrative changes.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program collects and publishes data from 11 PPS-exempt cancer hospitals on an announced set of quality measures. In the FY 2019 IPPS/LTCH PPS final rule, CMS finalizes the following actions:

  • Adopt a new measure, “Proportion of 30-Day Unplanned Readmissions for Cancer Patients” (NQF #3188).
  • Remove 4 measures:
    • “Oncology: Radiation Dose Limits to Normal Tissues”
    • “Oncology: Medical and Radiation—Pain Intensity Quantified”
    • “Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk Prostate Cancer Patients”
    • “Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Prostate Cancer Patients”
  • Adopt a new measure removal factor, “The cost associated with the measure outweighs the benefit of its continued use in the program.”

The final rule is scheduled to be published in the Federal Register’s August 17 issue. The changes will affect discharges occurring on or after October 1, 2018.


Emerging Trends in PBM Restrictions on Commercial Copay Assistance


CBI 6th Annual Reimbursement & Access 2018

Join experts Jim Dickey, Director, Product Experience, Lash Group, and Corey Ford, Director, Reimbursement Strategy & Tactics, Xcenda, at the 6th Annual Reimbursement and Access conference August 15–16 in Philadelphia to learn more about copay accumulator programs and their impact on manufacturers and patients.

Learn more >



HPW Rebuild


Legislative Bytes

  • The Mercatus Center at George Mason University finds that the Medicare for All Act of 2017 (S 1804), introduced by Sen. Bernie Sanders (I-VT), would add $32.6 trillion to the federal budget during the first 10 years of its implementation (2022–2031) (see Mercatus Center summary).
  • Rep. Frank Pallone (D-NJ) introduces HR 6563 to prevent growth-rate cliff for out-of-pocket threshold under Medicare Part D.
  • Rep. Janice Schakowsky (D-IL) introduces a variety of bills to lower drug prices and increase price transparency:
    • HR 6574, to require the Secretary of Health and Human Services (HHS) to determine, on behalf of Medicare beneficiaries, covered Part D drug prices for certain covered Part D drugs, and for other purposes
    • HR 6575, to deliver a meaningful benefit and lower prescription drug prices under the Medicare program
    • HR 6576, to disclose the prices of prescription drugs in any direct-to-consumer advertising and marketing to practitioners of a drug
    • HR 6577, to shorten the exclusivity period for brand name biological products from 12 to 7 years

HPW Rebuild


Allagash! The Spotted Cow Reinsurance Waiver Approved


Wisconsin’s and Maine’s State Innovation Waivers were approved this week by HHS and the Department of Treasury under section 1332 of the Affordable Care Act (ACA).

Wisconsin received a 5-year waiver, from 2019 to 2023, to implement the $200 million Wisconsin Healthcare Stability Plan (WIHSP), a state-operated reinsurance program that will reimburse insurers for high-cost medical claims in an effort to stabilize individual market premiums for Wisconsinites.

Maine’s waiver during the same 5-year period (2019 to 2023) reinstates a reinsurance program, Maine Guaranteed Access Reinsurance Association (MGARA). MGARA will provide reinsurance for policies covering high-risk individuals, as identified by medical diagnosis or by the insurer’s underwriting judgment. MGARA will operate as a traditional reinsurance program by reimbursing a portion of an insurer’s claims if they exceed a specified threshold in exchange for a premium.

Wisconsin and Maine are the first states to receive approval for reinsurance waivers this year. Last year, the Administration approved similar programs in Alaska, Minnesota, and Oregon. At least 2 more states, Maryland and New Jersey, have pending applications for waivers that would allow pass-through funded reinsurance programs.


Mind the Gap: Short-Term Insurance Rule


On Wednesday, CMS released a final rule for short-term, limited-duration insurance options that reverses the ACA’s limitation on short-term plans. These plans will allow coverage of up to 12 months initially and no longer than 36 months in total and are designed to provide temporary gaps in coverage; this is a change from the 12-month maximum duration in the proposed rule.

Short-term plans are not required to comply with many of the ACA’s consumer protections. Insurers for these plans can charge higher premiums based on health status, exclude coverage for pre-existing conditions, impose annual or lifetime limits, opt not to cover entire categories of benefits, and require higher out-of-pocket cost-sharing than under the ACA. Due to the loosening of these constraints, short-term plans tend to be less expensive than ACA plans, and the enrollees tend to be younger and healthier.

CMS defended the necessity of short-term plans by pointing out a 20% decrease in enrollment for those without subsidies in the individual market and, at the same time, nearly a 21% increase in premiums.

Those opposed to the expansion of short-term plans expressed concern about the limited benefits these plans offer and the likely adverse selection against the ACA individual market. They worry about consumers being without sufficient protection and about policies in the ACA individual market continuing to increase.

CMS accompanied the final rule and press release with a fact sheet. The final rule takes effect 60 days after its publication in today’s Federal Register.


Policy Conundrum: Lower Premiums or Lower Drug Price at Point of Sale


This week, it was announced that, for the second year in a row, Part D premiums are expected to drop, falling from a current average of $33.59 to $32.50 for 2019 (-3.2%).

CMS Administrator Seema Verma pointed out that policy changes in the Part D program to increase competition and drive down costs are working. Verma emphasized the Administration’s commitment to getting the best deals for seniors and highlighted some recently finalized policy changes to Part D:

  • Reducing the maximum amount paid by low-income beneficiaries for biosimilars
  • Allowing generics to be substituted onto formularies more quickly during the year
  • Removing the requirement that certain Part D plans have to “meaningfully differ” from each other
  • Increase the number of pharmacy options that beneficiaries have

CMS is expected to release next year’s premiums and costs for Part D by late September, and open enrollment runs October 15 to December 7, 2018.


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:


Connected Health: The Next Healthcare Frontier


Digital health, also known as connected health, has a spotlight shining on it thanks to technological advances, as well as increased venture funding, over the past several years.

In this white paper, we examine the factors health technology manufacturers and healthcare firms must review for reimbursement, evidence requirements, data collection, and timing for payer stakeholder consideration.

Download now >




“…I do believe that the intention of the administration is to remove the safe harbor for rebates. Today, I would believe we’re going to go to a marketplace where we don’t have rebates. I don’t know the speed of that. But I do believe the administration has been focused on that because that will reduce pharmaceutical prices at the point-of-sale. And very positively by removing the 40% subsidy, goes to the rest of the health care system and putting it back on reducing pharmaceutical prices at the point-of-sale. So we will be focusing on net price increases, and you would expect them to fluctuate around health care inflation.” [emphasis added]

 – Pfizer CEO Ian Read, discussing how he believes removal of rebates will benefit patients and the pharmaceutical industry, especially those companies launching new products over the next 5 years or so, by removing the “rebate trap, whereby access is denied to innovative products because of a strong position of another product with its rebates”

Source: “Q2 2018 Pfizer Inc Earnings Call,” July 31



37 vs 27


Despite a short 2018 legislative season, state lawmakers across the country introduced an unprecedented 160 bills to stem the rising cost of prescription drugs and have enacted 37 into law—with 7 state legislatures still in session. In 2017, state legislatures introduced 100 Rx cost-control bills and passed 27.

Source: “Twenty States Passed 37 Bills to Curb Rising Rx Drug Costs in the Short 2018 Legislative Session,” The National Academy for State Health Policy


CBI Reimbursement and Access 2018

August 15–16  | Philadelphia, PA
Xcenda’s Corey Ford, MPH, Director of Reimbursement Strategy and Tactics, will team up with Lash Group’s Jim Dickey, Director of Product Experience, to present a session titled, “Emerging Trends in PBM Restrictions on Commercial Copay Assistance.” They will examine and discuss the emerging copay accumulator trends. 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 | Commercialization Solutions | 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


Milda Kaitz | Jenna Kappel | Scott Shields | Stephen Wilson


Laurie Kozbelt | Ellen Olson | Tia O’Brien


Aug. 3, 2018


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