In another effort to lower drug costs, the Trump Administration releases advanced notice of proposed rulemaking (ANPRM).

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Oct. 26, 2018

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FEATURED STORY
 

SERIOUSLY? I Thought America Was the Best

 
 

Yesterday, healthcare stakeholders did a collective gasp as the Trump Administration rolled out yet another effort to lower drug pricing—an advanced notice of proposed rulemaking (ANPRM). This conceptual approach combines 2 unlikely elements—the Competitive Acquisition Program (CAP) and international price benchmarks—into a pilot program run by the Center for Medicare and Medicaid Innovation (CMMI).

As President Trump spoke at the Department of Health and Human Services (HHS), policy nerds scrambled to their inboxes to find the announcement (including a fact sheet) and ANPRM. With one ear to the speech and both eyes on the proposals, we jumped into action. There was some advance warning of where all of this might be going due to a report released earlier in the day by the Administration highlighting the differential between Medicare Part B prices and those paid by foreign markets.

As currently envisioned, the International Pricing Index (IPI) model would include the following components (the model affects only Part B drugs):
 
1. Reset Part B drug payment from average sales price (ASP) to a Target Price derived from the IPI

  • For drugs whose ASP exceeds the international price, the Centers for Medicare & Medicaid Services (CMS) would apply a reference pricing methodology based on the established international benchmark
  • The payment model would be applied to 50% of the country

2. Establish a CAP-like model using private-sector vendors to supply physicians, hospital outpatient departments (HOPDs), and other providers/suppliers

  • Vendors would be paid the Target Price driven by the IPI instead of bid amounts; they would not operate formularies
  • Would require mandatory participation of physician practices and HOPDs in selected geographic areas across the US; anticipate that selected geographic areas would include 50% of Part B spending on separately payable Part B drugs

3.    Establish an alternative to ASP add-on payments for drug administration

  • Under the IPI model, Medicare would pay providers a drug-administration payment plus a “drug add-on payment” (non-participating providers would continue to be paid based on ASP + 6%)
  • Model participants would receive a set payment amount per encounter or per month for an administered drug; the set payment amount would be based on: 1) which class of drugs the administered drug belongs to; 2) the physician’s specialty; or 3) the physician’s practice
  • The final payment amount would be calculated annually based on the +6% of ASP revenue that model participants would have garnered without sequestration in the most recent year of claims data

With yesterday’s release, CMS is opening a comment process for stakeholders to weigh in on the potential parameters of the program. The comment period will stay open through December 28.

This release is the first step in the process to get to a proposed rule next year. CMS has suggested a potential program start date of 2020. The model essentially imports international price controls with a focus on reducing Part B prices by 30%, which leaves little to no room for value-based considerations like outcomes-based pricing and/or indication-based pricing. Expect a significant, multi-stakeholder offensive to work to tame and potentially extinguish this proposed model.

 

AMCP Update: FDA Preapproval Information Exchange

 
 

Live Webinar: Tuesday, October 30 | 2:00 PM ET

Xcenda’s Amy Duhig, PhD, Vice President of Strategic Market Access and Intelligence, will present insights and perspective in a live AMCP webinar titled, AMCP Update: FDA Preapproval Information Exchange (PIE), on Tuesday, October 30 at 2:00 PM ET. Dr. Duhig will also share survey results from Xcenda’s 2018 manufacturer survey on PIE communications.

Learn more >

 

 

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LEGISLATIVE UPDATES
 

Congress: OOPS! OPPS May Cut Out Value-Based Care

 
 

Last week, over 130 members of the House of Representatives sent a letter to CMS Administrator Seema Verma regarding the 2019 outpatient prospective payment system (OPPS) proposed rule. In July, CMS proposed to expand certain site-neutral payment policies to grandfathered off-campus hospital provider-based departments in calendar year 2019.

The Representatives’ letter explained that the proposed cuts to HOPD evaluation and management services and future services from new clinical families may “run contrary to actions by Congress under Section 603 of the Bipartisan Budget Act of 2015” and “may affect efforts to move to value-based care.”

The letter called into question the CMS claim that the agency’s intent in expanding site-neutral payment rates to clinic visits and services from new clinical families was to “control unnecessary increases in the volume of covered outpatient department services” by countering, “It is unclear how CMS has deemed all of the HOPD services at the grandfathered off-campus HOPDs as cause of an unnecessary increase in volume of HOPD services,” noting that the impacted facilities “provide care to some of the most vulnerable patient populations in difficult to serve areas.”

Hospitals have also criticized the proposed expansion of site-neutral payments for off-campus provider-based HOPDs. Specifically, the American Hospital Association (AHA) recently urged CMS to withdraw the proposed policies, arguing the expansion of site-neutral payments for grandfathered HOPDs would exceed CMS’ authority.

It is a difficult situation. CMS is looking to reduce its spending and, thus, reduce the shift to the more expensive HOPD setting of care. Hospitals, on the other hand, are concerned the reduction in payments to clinics could lead to decreased investment in new technology needed to shift from volume-based to value-based care. This will not be the last time growing pains cause such a conflict.

CMS has not finalized the site-neutral payment policies. The comment period for the proposed rule closed on September 24, 2018. The OPPS final rule is due to be released on or around November 1.

 

Legislative Bytes

 
 
  • Sixteen House Democrats sent letters to 5 drug manufacturers asking why drug prices continue to rise despite recent corporate tax cuts.
  • Pennsylvania Governor Tom Wolf (D) vetoed House Bill 2138 that would have had the commonwealth apply to HHS for a section 1115 waiver to institute work requirements for Medicaid eligibility.
  • Maryland Attorney General Brian Frosh petitioned the US Supreme Court to uphold a first-in-the-nation law against pharmaceutical price gouging that a US Circuit Court of Appeals struck down in April by finding the legislation violated the US Constitution by trying to regulate trade beyond Maryland’s borders.

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REGULATORY UPDATES
 

Be Careful What They Asked For: States Given Waiver Flexibility

 
 

This week, CMS and the Treasury Department released a new guidance document that increases state waiver flexibility around the “statutory guardrails” under section 1332 of the Affordable Care Act (ACA). Section 1332 State Innovation Waivers, now also referred to as State Relief and Empowerment Waivers, grant the federal government authority to approve a state’s proposal to waive specific provisions of the ACA provided the section 1332 state plan meets certain requirements.
    
Previously, state waiver proposals had to:

  1. Provide coverage at least as comprehensive as that offered through the health insurance exchanges under the ACA, defined as coverage that meets all ACA essential health benefit requirements
  2. Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as coverage that would have been offered under the ACA
  3. Provide coverage to a comparable number of the state’s residents as would have been covered under the ACA
  4. Not increase the federal deficit

The new guidance increases flexibility around the guardrails. Comprehensive coverage that meets the essential health benefit requirements for state residents must remain, but association health plans or short-term, limited-duration plans can be included. States can reallocate subsidies, and the guidance also loosens the definition the federal government will use to define affordability as well as the process for evaluating the number of covered lives.

Democrats excoriated the guidance, with Sen. Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, issuing a scathing statement:

“The only thing more insistent than President Trump and Republicans’ false promises to protect pre-existing conditions are their sabotage efforts to do the exact opposite. This rule is yet another big step backwards that aims to loosen patient protections and important guardrails meant to ensure all families have access to quality, affordable health coverage. President Trump lit a fire with his decision to offer junk plans that give insurance companies power to ignore protections for people with pre-existing conditions, now he’s pouring on the gasoline with this new guidance.”

These changes are effective immediately, but there is not expected to be an impact for the 2019 plan year. Comments on the guidance are due December 24. Section 1332 has held great promise for states to create innovative coverage schema for their residents, but previous guidance was deemed too strict. This guidance grants states new functionality and flexibility within the federal health insurance exchanges to cover more residents, potentially at lower costs.

 

Evidence: Give Plans an Inch…

 
 

A recent report released by the HHS Office of the Inspector General (OIG) analyzed Medicare Advantage Organization’s (MAO) denials and appeals from 2014 to 2016. Beneficiaries initiated a first-level appeal for only 1% of denials; however, 75% (216,000 letters/year) of these led to a decision to overturn. Higher-level appeals overturned additional denials.

Medicare Advantage currently covers one-third of all Medicare beneficiaries and is expected to grow to about 50% of beneficiaries by 2025. The findings suggest that many beneficiaries are inappropriately denied services and that most beneficiaries are not sufficiently educated on the appeals process. An examination of CMS citation letters issued to MAOs found 45% of audited contracts sent denial letters with incomplete/incorrect information, and 56% made an inappropriate denial.

With open enrollment beginning Monday, this report warrants targeted action by CMS. Although prior authorizations and other utilization management programs are intended to prevent unnecessary and inappropriate care, these programs must be continuously evaluated for their impact on patient access. The OIG recommended, and CMS concurred, a 3-pronged approach to include enhanced, targeted oversight of repeat-offender MAOs, analysis of recurring problems, and education for beneficiaries on the appeals process.

 

Living in Alternate Realities: APMs Grow

 
 

This week, the Healthcare Payment Learning and Action Network (LAN) released the 2018 HCP-LAN APM Measurement Effort that tracks the adoption of alternative payment models (APMs). The report estimates that close to one-third of healthcare payments were made through APMs in 2017, moving closer to its goal of associating 50% of healthcare payments with APMs by 2018.

The report, representing 226.3 million covered lives (61 plans, 3 Medicaid fee-for-service [FFS] states, and Medicare FFS) in 2017, provided both overall findings as well as detailed findings by type of payment model.

One notable finding was that Medicare FFS had the lowest proportion of payments not linked to quality and value while having the highest proportion of payments in FFS linked to quality and value, compared to all other payers. This reflects Medicare’s efforts toward shifting to value-based payment methodologies.

Medicaid, on the other hand, had the highest proportion of payments not linked to quality and value, and the lowest proportion of payments in some type of APM compared to other market segments. The authors suggested some reasons for Medicaid’s lack of a push toward APMs, including regulatory and legislative implementation challenges, uncertainty around the attempted repeal of the ACA, and lack of time and resources.

The sector most adopting of APMs was Medicare Advantage, which may be due to its financing structure of monthly, capitated payments based on enrollees’ demographics and health status. The results for the commercial sector generally fell within the Medicare Advantage and Medicaid sectors, probably due to the lack of capitated financing with commercial payers.

As payment models continue to evolve and change over time, stakeholders should monitor the changes affecting each of the market segments individually and as a whole—and also how items and services are managed.

In related news, on Monday, America’s Physician Groups (APG) announced the formation of its Risk Evolution Task Force, a learning collaborative dedicated to accelerating the volume-to-value movement and supporting the development of the next iteration of the Advanced Alternative Payment Models (Advanced APMs). APG represents physician organizations practicing capitated, coordinated care.

 

Higher OOP: The Reality Most Employees Face

 
 

Earlier this month, the Kaiser Family Foundation, in collaboration with the Health Research and Educational Trust, NORC at the University of Chicago, and National Research, released their 2018 Employer Health Benefits Survey. Since 1999, this annual survey has tracked employer-sponsored health insurance trends, including coverage costs, such as premiums, deductibles, contributions, and other employer cost-sharing practices.

The following list summarizes a few major findings from more than 2,000 non-federal employers with at least 3 employees.

  • Coverage
    • On average, 57% of employers offer health benefits (56% of small firms and 98% of large firms), which cover roughly 152 million people
  • Premiums
    • Average annual premiums for individual coverage ($6,896) increased by 3%, while family premiums ($19,616) increased by 5% from 2017; these gains are relatively modest, considering that overall premiums in the past 6 years went up by 25%, premiums between 2000 and 2006 jumped 78%, and they showed gains of 37% between 2006 and 2012
    • The average employee premium contribution for single coverage is roughly $1,186 (17% of total), while employee premium contribution for family coverage is $5,547 (28% of total)
  • Deductibles
    • Roughly 85% of employees with employer-sponsored coverage pay a deductible, a 4% gain from 2017 and a 26% increase from a decade ago
    • The average deductible for plans with a deductible is $1,573 for single coverage, a 5% jump from 2017, and nearly twice what the average employee paid nearly a decade ago
    • 26% of employers offer plans with deductibles exceeding $2,000, a historic high

These trends are likely to continue showing modest growth as employers attempt to manage increasing healthcare costs, while employees bear a greater proportion of the burden, especially among lower-wage workers with families.

 

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:

  • HHS issued a request for information on provider and health plan approaches to improve care for Medicare beneficiaries with social risk factors.
  • UnitedHealthcare lists biosimilars INFLECTRA (infliximab-DYYB) and RENFLEXIS (infliximab-ABDA) as preferred agents for its Medicare Advantage plans, as of January 1, 2019. The insurer will require step therapy prior authorization for REMICADE (infliximab), which is a non-preferred agent.
  • Researchers at the Wellcome Sanger Institute have created the first comprehensive summary of all genes known to be involved in human cancer, the “Cancer Gene Census.” Describing all genes strongly implicated in causing cancer, the Census also describes how they function across all forms of the disease.
  • The Institute for Clinical and Economic Review (ICER) announced it will not proceed with its comparative clinical effectiveness and value assessment of ILARIS (canakinumab). ICER made the decision based on the Food and Drug Administration (FDA) recently issuing a Complete Response Letter to Novartis Pharmaceuticals, declining to approve ILARIS’ expanded indication for atherosclerotic cardiovascular disease.


 
HEARD ON THE STREET
 

“When you’re looking at drugs targeted for rare diseases, we have a highly nimble, highly innovative paradigm for drug development and an ossified paradigm for reimbursement, and there are places where I’m extremely worried that if we don’t adapt the approach to reimbursement soon, we may foreclose therapeutic opportunities.... We have a window of opportunity to think about how we’re going to reimburse for CAR-T appropriately.”

– Scott Gottlieb, FDA Commissioner

Source: “A Conversation with Scott Gottlieb, Commissioner, US Food and Drug Administration,” Future of Health Summit 2018, Milken Institute, October 24

 

 
POLICY BY NUMBERS
 

Survey Says...

 


This Kaiser Health Tracking Poll was designed and analyzed by public opinion researchers at the Kaiser Family Foundation (KFF). The survey was conducted September 19—October 2, 2018, among a nationally representative random digit dial telephone sample of 1,201 adults ages 18 and older living in the US, including Alaska and Hawaii.

Source: “KFF Election Tracking Poll: Health Care in the 2018 Midterms,” Kaiser Family Foundation, October 18

 
UPCOMING MEETINGS & CONFERENCES
 

Live Webinar:
AMCP Update: FDA Preapproval Information Exchange (PIE)

Tuesday, October 30 | 2:00 PM ET | Live Webinar
Xcenda’s Amy Duhig, PhD, Vice President of Strategic Market Access and Intelligence, will present insights and perspective in a live AMCP webinar titled, AMCP Update: FDA Preapproval Information Exchange (PIE), on Tuesday, October 30 at 2:00 PM ET. Dr. Duhig will also share survey results from Xcenda’s 2018 manufacturer survey on PIE communications.
Learn more on the AMCP Calendar

 

ISPOR Europe 2018

November 10–14 | Barcelona, Spain
Are you Barcelona bound? Xcenda will be at ISPOR Europe 2018 and invites you to connect with our global associates at the conference. Visit us at booth #314. 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
Vice President,
Reimbursement and
Policy Insights,
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

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 | Commercial Consulting | Xcenda

CONTRIBUTING AUTHOR:

Stacie Heller | Maureen Holmes | Isabell Kang | Jenna Kappel | Jennifer Le | Irene Sheynis | Scott Shields | Soham Shukla | Jennifer Snow

PRODUCTION:

Laurie Kozbelt | Ellen Olson | Tia O’Brien

 

Oct. 26, 2018

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