New Medicare payment plans proposed for new technology and innovative medicines, including CAR-T.

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Apr. 26, 2019


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On top of all of the rules we’re waiting for…it’s now just the regular old rule season. On Monday, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the fiscal year (FY) 2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Prospective Payment System. It proposes several major changes, including adjusting add-on payment amounts for new technology, a new add-on payment pathway for devices, payment increases for chimeric antigen receptor (CAR) T-cell therapy, and a bump in pay for rural hospitals. We highlight some of the relevant IPPS proposed changes below.

Adjusting Add-On Payments for New Technology
Under the current new technology add-on payment (NTAP) calculation, Medicare pays a marginal cost factor of 50% of the estimated costs of the case in excess of the full Medicare Severity Diagnosis Related Group (MS-DRG) payment, up to a maximum of 50% of the costs of the technology. CMS indicated that setting the maximum add-on payment percentage at 50% may not result in an adequate add-on payment. As a result, CMS has proposed increasing the add-on payment beginning in FY 2020 from 50% to 65%.

CAR T-Cell Therapy Proposals
CMS is seeking public comments on a number of payment items for CAR T-cell therapies, which has been a concern for many hospitals. While CAR T-cell therapies are eligible for NTAP and outlier payments, providers continue to experience significant financial losses when these therapies are administered.

CMS received a request for a new MS-DRG and a modification of the payment mechanism to use a cost-to-charge ratio (CCR) of 1.0 for charges associated with CAR T-cell therapy. While CMS is proposing not to modify the current MS-DRG assignment for CAR T-cell therapies in 2020, it has proposed that CAR T-cell therapies retain eligibility for NTAP and is seeking comment on the following:

  • Payment alternatives for CAR T-cell therapies with comments on how these alternatives would affect access to care and incentives to lower drug price
  • Appropriate way to develop the relative weight for a new MS-DRG, as the agency does not have sufficient clinical and cost data
  • Application of geographic adjustment to a lower proportion of payers under any new MS-DRG and how it should be determined
  • Removal of indirect medical education and disproportionate share hospital additional payments for any new MS-DRGs for CAR T-cell therapies, as the payment amounts would be substantially inflated
  • Elimination of CCR in calculating NTAP by making uniform add-on payment at a maximum of 65% of the cost of the new technology, resulting in $242,450 NTAP payment for the current CAR T-cell therapies

CMS goes into great detail regarding the ramifications of setting the CCR equal to 1.0, which would result in higher outlier payment, higher NTAP payment, or the determination of higher costs for IPPS-excluded cancer hospitals.

Proposed NTAP Pathway for Devices
CMS has proposed an alternative NTAP pathway for a medical device that receives Food and Drug Administration (FDA) marketing authorization and is part of an FDA expedited program for medical devices, which is currently the Breakthrough Devices Program.

If a medical device subject to one of the FDA’s expedited programs has received marketing authorization from the FDA, CMS would consider that product “new” and “not substantially similar” to an existing technology for purposes of the NTAP. Under this proposal, the medical device would only need to meet the cost criterion to receive the add-on payment. This change would begin with applications received for new technology add on payments for FY 2021.

Proposed Add-On Payments for New Services and Technologies for FY 2020
CMS is considering the following medical services or technologies for NTAP in FY 2020:

Leveling the Playing Field for Rural Health
A change in the wage index methodology has been a long time coming to help curtail the disparities between high- and low-wage index hospitals. Beginning in FY 2020, and for at least 4 years, CMS proposes to increase these hospitals’ wage indexes by half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value across all hospitals. On the other side, CMS proposes to reduce the wage index for hospitals above the 75th percentile so that the policy would not result in increased Medicare spending.

CMS also proposes changes to the wage index “rural floor” calculation, a statutory requirement that does not allow the wage index for an urban hospital to be less than those of hospitals located in rural areas in the state. As of FY 2020, CMS plans to remove urban-to-rural hospital reclassifications from the calculation of the rural-floor wage index value. Additionally, CMS would place a 5% cap on any decrease in a hospital’s wage index from the final wage index for FY 2019, so that a hospital’s final wage index for FY 2020 would not be less than 95% of its final wage index for FY 2019.

Quality Measures
CMS plans to adopt 2 new opioid-related electronic clinical quality measures (eCQMs) beginning with the calendar year 2021 reporting period (FY 2023 payment determination) for safe use of concurrent prescribing and opioid-related adverse events.

Payment Rates
CMS projects a total increase in IPPS payments of 3.7%, which includes the following adjustments:

  • Projected hospital market basket update of 3.2%
  • Productivity reduction of 0.5%
  • Proposed 0.5% increase required by legislation
  • Proposed changes in uncompensated care payments, capital payments, and changes to low-volume hospital payments providing a 0.2% increase

CMS projects that total Medicare spending on inpatient hospital services, including capital, will increase by about $4.7 billion in FY 2020.

The proposed rule, accompanied by a press release and a fact sheet, will be published in the May 3 issue of the Federal Register. The comment period is 60 days. The proposed changes, which would apply to approximately 3,330 acute care hospitals and approximately 390 long-term care hospitals, would affect discharges occurring on or after October 1, 2019.


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Legislative Bytes

  • On April 30, the Subcommittee on Health of the Committee on Energy and Commerce will hold a hearing on “Prescription Drug Coverage in the Medicare Program.”
  • Meanwhile, with a dueling hearing, the House Rules Committee will hold a congressional hearing on “Medicare for All” (HR 1384) with 5 majority witnesses and 2 minority witnesses, also on April 30.
  • Washington State lawmakers passed first-of-its-kind legislation (HB 1087) that created a public long-term-care insurance benefit. The bill would require workers to pay about 0.5% of their wages to the state starting in 2022, with benefits beginning in 2025.

PM360: Dealing With Insurers’ Copay Accumulators


As more and more insurers begin to implement copay accumulator programs, how will pharmaceutical manufacturers and patients be affected?

Corey Ford, Director of Reimbursement and Policy Insights at Xcenda, emphasizes the importance of a tailored, consultative approach to identify the best solutions for patients.

Read more in PM360 >





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You May Want to Delay Those Early Retirement Plans


Earlier this week, the Medicare Board of Trustees announced the release of its annual report for Medicare’s 2 trust funds: the Hospital Insurance (HI) Trust Fund, financing Medicare Part A; and the Supplementary Medical Insurance (SMI) Trust Fund, partially financing Medicare Parts B and D. The report states the HI Trust Fund will be able to pay full benefits until 2026, the same finding reported last year. In 2026, the Medicare Trust Fund will only have enough money to cover 89% of benefit costs. That will gradually dip to 77% in 2046.

Because income from premiums and general revenue for Parts B and D are reset each year to cover expected costs, the SMI Trust Fund is expected to be adequately funded over the next 10 years and beyond. While this structure provides longer solvency for the SMI Trust Fund, the Trustees expect costs to average 8.3% for Part B and 7.3% for Part D over the next 5 years, which will result in higher premiums for beneficiaries.


Primary Care: 2 Roads Diverged in the Woods, Anyone Sorry They Can’t Take Both?


CMS released information this week about the Primary Cares Initiative that will provide primary care practices and other providers with 5 new payment model options under 2 paths: Primary Care First, and Direct Contracting. The new payment models were developed with input from providers and promise to reduce administrative burden. The American Medical Association supports these programs.

Participation in the experiments is voluntary and will last 5 years. CMS hopes to cover one-fourth of Medicare fee-for-service (FFS) beneficiaries with these programs.

The programs are aimed at 2 types of providers:

  • The Primary Care First program is geared toward individual practices and builds off the Comprehensive Primary Plus program, another 5-year program that began in January 2017. Providers will receive a monthly fee, a flat primary care visit fee, and a performance-based payment adjustment. The adjustment appears to be designed to provide a substantial benefit for excellent outcomes compared to a minor penalty for sub-par outcomes. Within Primary Care First, there is a separate model for high-need populations. CMS provided a fact sheet for the Primary Care First program.
  • The Direct Contracting model, created for larger medical organizations, provides 3 options with varying degrees of financial risk, 1 of which is still under development and seeking public comments. All 3 programs provide risk-adjusted monthly payments and vary in the degree of financial risk accepted (50% for the Professional model and 100% for the Global and still-evolving Geographic models). CMS provided a fact sheet for the Direct Contracting model.

In addition to reducing administrative burden, these new programs are designed to appeal to providers by evening out payment cycles and allowing more personalized and flexible care to patients. Some earlier, value-based programs have been criticized by providers as being limiting to the point of negatively impacting patient care which, likely, has reduced participation.


CPC+ Off to Slow Start; Maybe Participants Thought It Was a Programming Language


This week, Mathematica Policy Research released an independent evaluation of the first year of the Comprehensive Primary Care Plus Initiative (CPC+), a national advanced primary care medical home model, launched on 2 practice tracks, running from 2017 until 2022. CPC+ had minimal effects on cost, service use, and quality for Medicare FFS beneficiaries in the first year.
Partnering with 79 public and private payers, and over 3,000 practices, CPC+ is designed to transform primary care practice across 5 care delivery functions: 1) access and continuity; 2) care management; 3) comprehensiveness and coordination; 4) patient and caregiver engagement; and 5) planned care and population health.
Among Mathematica’s key findings:

  • CPC+ provided significant financial support to practices. The median practice received CPC+ care management fees of over $88,000 per Track 1 practice and $195,000 per Track 2 practice.
  • Participating practices have significantly changed their care delivery. Practices focused on risk stratifying patients, hiring and deploying care managers, and integrating behavioral health into primary care in 2017; 90% of practices empaneled at least 95% of their patients to a care team.
  • Practices are generally supportive of CPC+. While 93% of practices said CPC+ improved quality of care, 49% found meeting the requirements burdensome; 64% would agree to participant in any future CPC+ Initiative.
  • CPC+ had few favorable effects on Medicare in 2017. Against comparison practices, changes in service use, quality-of-care outcomes, and total expenditures were insignificant without the CPC+ payments. When including the payments, expenditures averaged 2.5% higher.

Without any clear evidence of support for CPC+, Mathematica’s authors concede that a few more years of data are necessary to predict if CPC+ can improve key outcomes. More measurable and favorable effects are expected over time as practice changes begin to affect patients’ health, service use, and costs. The findings mirror the agency’s experience with the Medicare Shared Savings Program, which found accountable care organizations did not lower costs and marginally improved treatment quality for beneficiaries.


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 Medicine Maker: Cell and Gene Pricing: How Can Manufacturers Get It Right?


Manufacturers are becoming increasingly more open to alternative payment and reimbursement models for cell and gene therapies.

Xcenda’s Ana Stojanovska, Vice President of Commercial Consulting, discusses her approach and experience when working with manufacturers and their payment models in The Medicine Maker.

Read the article >





“At CMS, we are focused on being a strong partner with states. Whether you are working on a 1332 waiver, 1115 waiver, or other options, our staff are here to help you as you work to develop better healthcare programs.

“Look, we’ve given you options and now you have the power to make the individual markets work through innovative policies that best meet the needs of your citizens. We are returning freedom, authority, and innovation to you, state leaders.”

– Seema Verma, CMS Administrator, speaking about the Administration’s support of states pursuing waivers to waive certain ACA regulations to design and implement new state healthcare programs

Source: “Speech: Remarks by Administrator Seema Verma at the CMS National Forum on State Relief and Empowerment Waivers,” April 23



68% | 64% | 50% | 31% | 27%


An April Kaiser Family Foundation poll found that a majority of Americans want lawmakers to address the rising costs of healthcare ahead of pursuing broader reforms such as Medicare for All or repealing the Affordable Care Act (ACA). Roughly 68% of respondents said lowering prescription drug costs should be a top priority, with preserving pre-existing condition protections cited by 64% and addressing surprise medical bills by 50%. Only 31% felt reforms like Medicare for All should be a top priority, and 27% said repealing and replacing the ACA should be a top issue.

Source: “KFF Health Tracking Poll—April 2019: Surprise Medical Bills and Public’s View of the Supreme Court and Continuing Protections for People With Pre-Existing Conditions,” Kaiser Family Foundation, April 24


2019 Asembia Specialty Pharmacy Summit

April 29–May 2 | Las Vegas, NV
Join Platinum sponsor AmerisourceBergen at this year’s Asembia Specialty Pharmacy Summit at the Wynn & Encore Las Vegas. Each year, the Summit welcomes thousands of senior executives, key decision makers, and other industry professionals to the nation’s largest annual gathering for specialty pharmacy. Visit the AmerisourceBergen associates at booth #311. 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
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Doug Cook
President | Commercialization Services & Animal Health

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


Dan Cadle | Isabell Kang | Jenna Kappel | Stew Kaufman | Scott Shields | Stephen Wilson


Laurie Kozbelt | Ellen Olson | Tia O’Brien


Apr. 26, 2019


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