CMS released the final rules for CY 2020 for the Medicare Physician Fee Schedule and the Hospital Outpatient Prospective Payment System.

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Nov. 8, 2019


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When Fri-YAY Becomes What-the-OPPS?


On Friday afternoon, the Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2020 final rules for the Medicare Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment System (OPPS). Below are some of our takeaways.

CY 2020 PFS Final Rule

CY 2020 Conversion Factor (CF)
The finalized CY 2020 PFS CF is $36.09, a slight increase of $0.05 above the CY 2019 PFS CF of $36.04.

Payment for Evaluation and Management (E/M) Services
For office/outpatient E/M visits starting in CY 2021, CMS adopted the new coding framework outlined by the American Medical Association (AMA) and the Current Procedural Terminology (CPT) Editorial Panel. The CPT coding changes retain 5 levels of coding for established patients, reduce the number of levels to 4 for office/outpatient E/M visits for new patients, and revise the code definitions. According to the AMA, “With these landmark changes, as approved by the CPT Editorial Panel, documentation for E/M office visits will now be centered around how physicians think and take care of patients and not on mandatory standards that encouraged copy/paste and checking boxes.”

Payment Adjustments for 2022
Following the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) statute, the maximum penalty or bonus for Merit-based Incentive Payment System (MIPS) reporting in 2020 is increasing to 9%.

MIPS Value Pathways
CMS is proposing to implement a new conceptual framework for MIPS, called MIPS Value Pathways (MVPs), which would take effect after the 2021 performance period. Under MVPs, clinicians would report on a reduced set of measures that are outcomes-based, specific to a clinician’s specialty, and more closely aligned with Alternative Payment Models (APMs).

Friday’s PFS final rule was accompanied by a press release and fact sheet. It is scheduled to be published in the November 15 issue of the Federal Register. The final rule will become effective January 1, 2020.

CY 2020 OPPS Final Rule

CY 2020 CF
CMS set the OPPS CF for CY 2020 at $80.784, an increase of 2.6% over the 2019 CF. Hospitals that fail to meet the Hospital Outpatient Quality Reporting Program reporting requirements are subject to a 2.0% reduction, for a CF of $79.250.

Drug Payment
CMS set the packaging threshold at $130, up from $125 in CY 2019.

CMS will continue its payment policy, in effect since 2013, to pay for separately payable drugs and biologicals at average sales price (ASP) +6%. Continuing its policy from 2019, CMS will continue to use a 3% add-on instead of a 6% add-on for drugs paid based on wholesale acquisition cost (WAC).

CMS finalized its proposal to expire on December 31, 2019 the pass-through payment status of 6 drugs and biologicals (Table 40, page 494 of the unpublished version of the final rule). Pass-through payment status will continue for 61 drugs and biologicals (Table 40, page 497).

For CY 2020, CMS will continue its current 340B drug payment adjustment of ASP −22.5%. CMS also acknowledged the ongoing litigation pertaining to the 340B payment adjustment, and it summarized comments received on alternative payment options for CY 2020 and potential remedies for CY 2018 and 2019 payments in case the agency loses its appeal at the US Court of Appeals. CMS referred to its recently issued notice proposing a new data collection effort on actual acquisition costs for drugs purchased by 340B hospitals and stated that it intends to use the information collected not only to develop a possible remedy but also to pursue future policy changes related to Medicare Part B drugs acquired through the 340B program.

Site-Neutral Payment
CMS will continue implementation of site-neutral payment rates for clinic visits in hospital outpatient departments. Despite a recent district court decision that found the payment cuts to be unlawful, these services will be paid at 40% of OPPS rates beginning in CY 2020. In the final rule, CMS acknowledged that the district court vacated its site-neutral clinic visit cut for CY 2019. It stated that it is “working to ensure affected CY 2019 claims for clinic visits are paid consistent with the court’s order,” but the agency is still “evaluating the rulings and considering, at the time of this writing, whether to appeal from the final judgment.”

Prior Authorization
CMS established prior authorization requirements for a number of outpatient services it believes are overutilized and often medically unnecessary. Beginning July 1, 2020, prior authorization will be required for the following categories of services: blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.

Disclosure of Negotiated Rates
CMS stated it will issue a separate final rule regarding the requirement that hospitals disclose payer-specific negotiated rates, which was initially proposed as part of the OPPS rule.

Friday’s OPPS final rule was accompanied by a fact sheet. It is scheduled to be published in the November 12 issue of the Federal Register. It becomes effective January 1.


Impact of “ICER Formulary” Implementation in Medicaid: Patients Lose


Due to the mounting pressure to reduce Medicaid expenditures, CMS is focused on value-based solutions that create pathways to more cost-effective treatments. However, should CMS mandate that Medicaid can only cover drugs that the Institute for Clinical and Economic Review (ICER) determines to be the most cost-effective, stakeholders should consider the resulting downsides to patient access.

A new analysis from Xcenda applied ICER’s value assessments to state Medicaid programs in California, Massachusetts, Maryland, Nevada, and New York. The study found these one-size-fits-all value assessments could prevent or delay patient access to prescriptions that treat serious, complex conditions such as multiple sclerosis (MS), rheumatoid arthritis (RA), non-small cell lung cancer (NSCLC), and psoriasis.

For example, approximately two-thirds of prescription drugs to treat RA, NSCLC, and psoriasis would potentially be shifted to a different ICER-recommended drug. Also, 100% of patients with MS in the 5 states could be denied access to their current treatment, as ICER reported there was no utilization of the medicine it valued the highest.

Download analysis >

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ICER Pulls a Hat Trick


On Thursday, the Institute for Clinical and Economic Review (ICER) announced the release of its Draft Evidence Report evaluating 2 oral CGRP receptor antagonists, rimegepant and ubrogepant, and a 5-HT1f agonist, lasmiditan (REYVOW), for the acute treatment of migraine. Lasmiditan was approved by the Food and Drug Administration (FDA) last month, while the other 2 agents are under review with an anticipated decision before the end of the year. The draft will be open for public comment through December 6, and the final assessment will be reviewed by the Midwest Comparative Effectiveness Public Advisory Council (CEPAC), one of ICER’s independent evidence appraisal committees, in January 2020.

On Monday, ICER published its Revised Scoping Document evaluating subcutaneous and intravenous vedolizumab (ENTYVIO), infliximab (REMICADE), infliximab-dyyb (INFLECTRA), adalimumab (HUMIRA), golimumab (SIMPONI), tofacitinib (XELJANZ), and ustekinumab (STELARA) for the treatment of ulcerative colitis. The Research Protocol and Model Analysis Plan will be posted on December 11 and February 20, respectively, and the California Technology Assessment Forum (CTAF) will discuss the final evaluation in June 2020.

Last Friday, ICER announced the publication of its Evidence Report evaluating oral semaglutide (RYBELSUS), a GLP-1 receptor agonist, for the treatment of type 2 diabetes mellitus. Oral semaglutide, an oral version of the injectable OZEMPIC approved by the FDA in 2017, was compared to background therapy with metformin alone and to 3 competitors for add-on therapy: liraglutide (VICTOZA), sitagliptin (JANUVIA), and empagliflozin (JARDIANCE). The report concluded that oral semaglutide is less cost-effective than its competitor oral treatments, including SGLT-2 inhibitors (such as JARDIANCE), as it is likely to have a much higher net price with similar clinical benefits and more common side effects. The New England CEPAC will review the report’s findings in a public meeting this coming Thursday, November 14.

Last week, the Innovation and Value Initiative (IVI) presented 2 posters related to its value framework during AMCP Nexus:

  1. Understanding Value Through the Patient’s Eyes: Perspectives From Patients With Genetic Mutations in Non-Small Cell Lung Cancer Treatment,” which explores how the experiences and perspectives of patients diagnosed with non-small cell lung cancer (NSCLC) affect their understanding of value in treatment decision making
  2. A Flexible Open-Source Cost-Effectiveness Model for Metastatic EGFR+ Non-Small Cell Lung Cancer,” which demonstrates how IVI’s NSCLC model and open-source platforms in general foster iterative improvements and partnerships among experts

Value stories hit traditional media outlets this week. Over the weekend, Forbes published an editorial arguing that sponsors of health insurance (self-funded employer groups and health plans) lack evidence-based transparency in formulary decisions. The article condemns the use of an arbitrary cost-per-QALY (quality-adjusted life-year) threshold and criticizes decision makers’ unwillingness to pay for new high-priced drugs or therapies despite evidence of their comparative effectiveness. Then on Monday, The Wall Street Journal published an article discussing how ICER has started to influence decision making in regard to drug pricing. For example, the manufacturers of PRALUENT (alirocumab)‎ and AIMOVIG (erenumab-aooe) lowered the list prices of these drugs after ICER’s assessments indicated they were above the cost-effective threshold at their previous rates.

As always, if you need assistance with all things ICER or value-related, please contact

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Is Vision Care Included? Can’t See $20 Trillion Bill Passing


Last Friday, Democratic presidential candidate Sen. Elizabeth Warren (D-MA) released the long-awaited details of her Medicare for All plan, including how the universal-coverage proposal will be funded. Detailed on her campaign website, Warren’s plan to finance providing public health insurance to all Americans includes increasing taxes on the wealthy and large corporations, reducing military spending, and implementing payment changes to healthcare providers. Also included in the financing are the projected cost savings from a more streamlined national system, payments from employers who would no longer have to subsidize healthcare for their workers, and comprehensive immigration reform.

Although Warren is the first presidential candidate to release a detailed health insurance reform that outlines how a major overhaul to the system would be financed, the estimated $20.5 trillion needed to fund Medicare for All has been criticized for being inaccurate and a misjudgment on the actual amount needed to finance the overhaul of the health insurance system. For example, she proposes reimbursing hospitals at 110% of current Medicare rates, a payment level viewed widely as not adequately compensating for the revenue hospitals now receive from private insurers.

Warren’s plan also outlines several actions intended to lower the cost of prescription drugs and reduce federal spending, including allowing the government to negotiate prices, imposing excise taxes on pharmaceutical manufacturers, and setting price limits at 110% of the average international price. Warren also proposes to use compulsory licensing and public manufacturing to further increase the federal government’s power in setting prices for prescription drugs.

Health insurance reform and prescription drug pricing continue to be key campaign issues for Democratic presidential candidates, as well as a major priority for the current Administration. Warren’s campaign may have felt she needed to distinguish herself from Democratic candidate Bernie Sanders, who initially proposed Medicare for All but has staunchly avoided detailing funding mechanisms. However, Warren’s detailed—and probably underfunded—plan to implement Medicare for All may cool interest in universal coverage as voters realize its steep costs and potential disruption with their current coverage.


When First Is Actually Second?
Oncology Care First Model May Follow Oncology Care Model


Last Friday, the Center for Medicare and Medicaid Innovation (CMMI) announced a new multi-payer oncology model—Oncology Care First (OCF)—that would follow the current Oncology Care Model (OCM). The OCM’s last 6-month episode would begin no later than December 31, 2020, while the OCF would operate from January 2021 through December 2025.

Participants would include physician group practices and hospital outpatient departments that provide oncology care; they would be responsible for the total cost of care using the quality measures in the OCM. The payment part of the model would include 2 components:

  • A prospective monthly population payment (MPP) for a participant’s assigned Medicare Fee-for-Service (FFS) beneficiaries that would include E/M services, enhanced services under the model requirements, and drug administration
    • At Monday’s listening session, CMMI said it is considering including imaging, labs, and the 6% ASP add-on into the prospective payment
  • Total cost of care accountability for Medicare costs, including drug costs, incurred during a 6-month episode of care triggered by a Medicare beneficiary’s receipt of a Part B or D chemotherapy drug, with the opportunity to achieve a performance-based payment (PBP) or owe a repayment to CMS (PBP recoupment), depending on quality performance and costs relative to benchmark and target amounts
    • An adjustment would be made to account for use of novel therapies (eg, CAR T-cell therapies)

The OCF would have 3 financial risk tracks: an upside-only risk group for the first 2 periods of the new model to allow participants time to familiarize them with the OCF model requirements; and 2 upside/downside groups with different risk levels. These last 2 risk groups would qualify for Advanced APMs under the Quality Payment Program (QPP).

At the November 4 listening session, CMMI made it clear that the agency intended to fund only 1 oncology model. Consequently, it had no plans to support the Community Oncology Alliance (COA) OCM 2.0, though the COA still plans to move forward with it for use by commercial and Medicare Advantage payers. Also unfunded was the Making Accountable Sustainable Oncology Networks (MASON) model, even though it went through a massive effort to receive approval by the Department of Health and Human Services Physician-Focused Payment Model Technical Advisory Committee.

Another concern voiced during the listening session was including drugs in the total cost of care, over which participants may have limited control. However, it seemed CMMI was determined to include drugs, and it requested feedback about how it should consider paying for drugs (eg, ASP+6%).

The whiplash-fast comment deadline is November 25. While several commenters at the listening session requested additional time to submit comments and another pass at reviewing a detailed payment methodology, it is uncertain if CMMI will provide either, given the short timeline.


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:

  • President Trump nominated Stephen Hahn for FDA Commissioner.
  • Maybe more weekend reading? Last Friday, the FDA sent to the Office of Management and Budget (OMB) a proposed rule on the importation of prescription drugs; it has since been vacated from OMB.
  • CMS issued the first annual update to the Medicaid and Children’s Health Insurance Program (CHIP) Scorecard. The Scorecard is the public-facing federal dashboard of state health and administrative performance in the Medicaid and CHIP programs. New measures include breast cancer screening, diabetes care poor control, follow-up after hospitalization for mental illness (children), nursing facility long-stay hospitalization rate, and healthcare fraud prevention partnership participation. New national context data points include annual enrollment by payer, enrollment in any type of managed care plan by state, waivers for Home & Community Based Services by state, and substance use disorders Section 1115 Demonstrations by state.
  • CMS has posted the updated roster of the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC).
  • The FDA approved ZIEXTENZO (pegfilgrastim-bmez), Sandoz’s biosimilar referencing NEULASTA (pegfilgrastim). Sandoz plans to launch ZIEXTENZO this year. The biosimilar is Sandoz’s fourth to be approved. The FDA has approved 24 biosimilars.
  • Teva and Celltrion have launched their biosimilar rituximab, TRUXIMA (rituximab-abbs), in the US. They are offering the product at a 10% discount to the list price of reference product RITUXAN (rituximab). TRUXIMA will begin to reach patients on November 11. There are now 10 biosimilars available on the market.
  • A Kaiser Family Foundation issue brief found that Medicare beneficiaries spent an average of $5,460 out of pocket for healthcare in 2016.


“Entities like ICER are devaluing patient’s lives and giving payers permission to deny access.”

 – Jenn McNary of JMcNary Consulting, parent and patient advocate for Duchenne muscular dystrophy

Source: American Society of Gene & Cell Therapy Policy Summit, November 5


88% | 80,000


The Lower Drug Costs Now Act of 2019 (HR 3) would reduce the supply of new drugs from California’s large life science sector by as much as 88%, as well as cutting 80,000 research and development jobs nationwide, as reported in a study commissioned by Biocom and the California Life Sciences Association.

Source: “New Data: Foreign Reference Pricing Proposal in H.R. 3 Would Slash Life-Saving R&D and Lead to Destruction of California’s Life Sciences Sector,” Biocom, October 31


Examining Curative Therapies and Risk-Sharing at ISPOR Europe 2019


Did you miss our ISPOR Europe 2019 educational symposium?

Even if you weren’t able to join us in Copenhagen this week, you can still gain insights from our presentation.

Download our symposium presentation titled, Can We Afford Curative Therapies Without Sharing Risks? Perspectives on HTA and Affordability in This New Innovation Era.

Xcenda’s Dr. Jay Jackson, PharmD, MPH, Senior Vice President of Consulting Services, and Dr. Thomas Mittendorf, Managing Director of Xcenda GmbH, along with industry leaders in France, Italy, and the UK, discussed and presented insights around value assessment and risk-sharing for new and innovative curative therapies.

Download the presentation >


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


Jenna Kappel | Reeya Patel | Scott Shields | Robin Tan


Laurie Kozbelt | Ellen Olson


Nov. 8, 2019


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