We examine the proposed changes from CMS for IPPS for FY 2021.

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May 15, 2020


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Editor’s Note: The last 8 weeks have been an ocean of emotions. Some days it’s low tide and we feel like we can see what’s coming, and other days it’s a tidal wave. It reminds us of when our kids were babies and people used to say, “The days are long and the weeks fly by.” The days when kids are riding hover boards in the kitchen while dressed in an inflatable T-Rex costume are long. So we’re taking a break next Friday, and we’ll see you on the 29th. No pool for us, but we might find some dirt to dig in.


Upsetting the Apple CAR-T: CMS Rules Offer Some Treats (and Some Bruises)


On Monday, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the fiscal year (FY) 2021 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Prospective Payment System. In recognition of the impact of the COVID-19 public health emergency and the limited capacity of healthcare providers to review and provide comment on extensive proposals, CMS has limited annual rulemaking to essential policies, as well as proposals that reduce provider burden and help providers in the COVID-19 response.

Proposed Changes to Payment Rates Under IPPS
The proposed increase in operating payment rates for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 3.1%. After adjustments, CMS estimates a total increase in overall IPPS payments of approximately 1.6%. CMS projects total Medicare spending on inpatient hospital services will increase by about $2.07 billion in FY 2021.

Potential Methodology Change for Calculating MS-DRG Relative Weights
Before FY 2007, CMS based the diagnosis-related group (DRG) payment on a charge-based DRG relative weight methodology. Starting in FY 2007, CMS used a cost-based methodology. Now, CMS wants to use the payer-specific negotiated charge data that hospitals make publicly available under the Hospital Price Transparency final rule. CMS believes this data set would better approximate actual resource use and, thus, provide more appropriate payment. This proposal would apply to all Medicare severity diagnosis-related groups (MS-DRGs).

The American Hospital Association immediately responded to this proposed payment methodology change by reiterating its disagreement with the price-transparency requirement and its doubt that the proposal would succeed:

“We are very disappointed that CMS continues down the unlawful path of requiring hospitals to disclose privately negotiated contract terms. The disclosure of privately negotiated rates will not further CMS’ goal of paying market rates that reflect the cost of delivering care.”

New Technology Add-On Payment (NTAP)
CMS is considering 24 new applications for NTAP for FY 2021. CMS proposes to continue the NTAP for 10 of the 18 technologies currently receiving the add-on payment. The remaining 8 technologies will no longer be within their newness period in FY 2021, including the chimeric antigen receptor (CAR) T-cell therapies approved for NTAP in FY 2019.

New MS-DRG for CAR T-Cell Therapy
Speaking of CAR-T, CMS proposed creating MS-DRG 018 (Chimeric Antigen Receptor [CAR] T-cell Immunotherapy). Any cases reporting the existing CAR-T ICD-10/PCS procedure codes would be assigned to the new MS-DRG. If CMS approves and finalizes additional procedure codes describing CAR T-cell therapies, CMS will use its established process to assign these procedure codes to the most appropriate MS-DRG. The creation of this MS-DRG establishes a more permanent and stable payment rate for CAR-T providers and puts them closer to the cost of providing the treatment.

ICD-10-CM Code Updates
CMS proposed 490 new, 47 revised, and 58 invalidated ICD-10-CM codes. Newly proposed ICD-10-CM codes include options for sickle cell anemia and arthritis. The list of proposed changes to the ICD-10-CM/PCS codes is available in tables 6A–6K and 6P.1a–6P.4a of the proposed rule.

The proposed rule, accompanied by a press release and fact sheet, will be published in the May 29 issue of the Federal Register. The deadline for submitting comments on the proposed rule is July 10. While the final IPPS rule would usually be published in early August, CMS stated that, due to the COVID-19 pandemic, this year’s final rule may not be released until September 1.


Did You Miss Our “Patient Assistance in the Wake of COVID-19” Webinar?


As the US economy continues to feel the ripple effects of the coronavirus pandemic and more Americans lose their jobs, will patients be able to afford their medications?

A panel of experts from Lash Group and Xcenda offered insights on the impact to insurance coverage and patient assistance programs as the pandemic continues.

Watch On Demand >


Let’s Get Digital: Moving the Physical to the Virtual Visit


With consumers eager to embrace more convenient, safe, digitally enabled care during the COVID-19 pandemic, policymakers and commercial payers are dramatically updating guidelines to meet the surge in demand for telehealth. The disruption to in-person care and digital transformation may create a more accessible system of healthcare for patients over the long term. Turn to Xcenda in this dynamic environment to assess the impact of these policy and regulatory developments and help create coverage and access strategies. 

Learn more in our latest issue brief examining the rapid shift to telehealth.


Gopher Price Transparency


On Tuesday, Minnesota Gov. Tim Walz (D) signed legislation that authorizes drug pricing transparency. The legislation requires pharmaceutical manufacturers to share the wholesale acquisition cost (WAC) and other specified information with the state Commissioner of Health if the price of the drug increased by a certain threshold. The state will publish the price information online. 

Generally, the legislation directs a pharmaceutical manufacturer to disclose pricing details for a brand drug that is priced over $100 for a 30-day supply if its WAC increased by 10% or more in a year or 16% or more over 2 years. For generics, manufacturers would be required to share price information if the WAC of the drug increased by 50% or more over the previous year. A manufacturer of a newly acquired drug whose price exceeds certain dollar thresholds would also be required to disclose pricing information. 

Manufacturers would be obligated to share extensive cost and pricing details within 60 days of a price increase, including:

  • Factors that contributed to the price increase
  • Available generic versions
  • Introductory price when approved for marketing
  • Net yearly increase during the previous 5 years
  • Direct manufacturing, marketing, and distribution costs incurred by the manufacturer
  • Total sales revenue and net profit from the drug over the previous year
  • Financial assistance provided through any patient assistance programs
  • Patent expiration date

PhRMA opposed the bill, saying it would require burdensome reporting, would not help patients, could chill drug innovation, and could threaten access to needed drugs.

While federal drug pricing legislation has stalled, over 20 states have drug pricing laws with a transparency component. It will be a question of bandwidth for states, as they clearly have other health priorities. This week, Maryland Gov. Larry Hogan (R) vetoed funding for the state’s drug affordability board—essentially ending it until the state legislature meets again and is able to potentially override the veto.


This HERO Can’t Fly: Democrats Propose Pandemic Spending Wish List


Early this week, House Democrats proposed a $3 trillion pandemic relief bill, called the HEROES Act. The bill is drawing strong opposition from top Senate Republicans who argue that such an increase to the national debt will erode the long-term health of the US economy. Conversely, House Speaker Nancy Pelosi (D-CA) argues that we need to “think big” about additional federal aid; the needs of the American people have not decreased and, therefore, neither should the aid they receive. Essentially, the HEROES Act will serve as a starting point of negotiation between Democrats and Republicans.

Currently, key components in the HEROES Act include $915 billion in funding for states and local governments. The aid would be flexible, allowing state and local agencies to spend funds as they see fit, including to backfill revenue loss. Additional bill components include funding for testing and tracing, extension of expanded unemployment insurance, small business grants, personal stimulus checks, vote by mail, and funding for the US Postal Service.  

Senate Majority Leader Mitch McConnell (R-KY) is not expected to push the bill forward in the Senate. He believes the best way to stimulate the economy is by raising the threshold for virus-related malpractice lawsuits and by providing increased legal protections for government agencies, non-profits, and businesses open during the pandemic. The Trump Administration has stated that a payroll tax cut should be included in the next stimulus package.

In the coming weeks, we can expect bipartisan negotiations among Senate Republicans, House Democrats, and the Trump Administration. The next bill may include muted versions of the interests proposed by all 3 stakeholders.


IRS Announces What We All Knew: COVID-19 Is a Life-Changing Event


Earlier this week, the Internal Revenue Service (IRS) released a notice allowing employers to consider the COVID-19 pandemic a “life event” and give employees the chance to change health insurance coverage and flexible spending accounts. 

Currently, employees are locked into their benefit choices after open enrollment, unless they experience a life event such as a marriage, divorce, or new baby. Employers choosing to open their coverage could be useful for furloughed employees or those who may have missed open enrollment and now find themselves without coverage.

In addition, the IRS notice allows for changes in flexible spending accounts. For example, employees may have added funds to a healthcare spending account to pay for an elective procedure, such as Lasik, that has been postponed, or they have funds in dependent care accounts that cannot be used because there is no care available with daycares, aftercare, and summer camps on hold. 

This change does not apply to the health plans on the exchanges, just employer-sponsored programs that qualify as Section 125 Cafeteria plans. It is unclear how many employers will decide to embrace the administrative burden and allow the changes, but the increased flexibility could ease the burden of the pandemic on some employees.


COVID-19 Resources


Coronavirus Task Force Resources and Updates

Centers for Disease Control and Prevention (CDC) Information for Healthcare Professionals

Centers for Medicare & Medicaid Services (CMS) Current Emergencies (Coronavirus)

Food and Drug Administration (FDA) COVID-19 Information

Medicaid and Children’s Health Insurance Program (CHIP) Resources

American Medical Association (AMA) Physician’s Guide to COVID-19

Health Affairs COVID-19 Resource Center

National Foundation for Cancer Research (NFCR) Coronavirus Resource Center for Cancer Patients and Caregivers


COVID-19 Bulletin

  • The Senate Judiciary Committee held a hearing, Examining Employer Liability During the COVID-19 Pandemic. Read testimony from:
    • Kevin Smartt, Chief Executive Officer, Kwik Chek Convenience Stores
    • Anthony Perrone, International President, United Food and Commercial Workers International Union
    • Rebecca Dixon, Executive Director, National Employment Law Project
    • Leroy Tyner, Jr, General Counsel, Texas Christian University
    • Professor David Vladeck, A.B. Chettle Chair in Civil Procedure, Georgetown University Law Center
    • Helen Hill, Chief Executive Officer, Explore Charleston
  • The Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing, COVID-19: Safely Getting Back to Work and Back to School. Read testimony from:
    • Anthony Fauci, MD, Director, National Institute of Allergy and Infectious Diseases, National Institutes of Health
    • Robert Redfield, MD, Director, CDC
    • Admiral Brett Giroir, MD, Assistant Secretary for Health, Department of Health and Human Services (HHS)
    • Stephen Hahn, MD, Commissioner of Food and Drugs, FDA
  • The FDA issued 2 guidances intended to accelerate the development of products to treat or prevent COVID-19:
    • The first guidance focuses on providing feedback to manufacturers through the pre-Investigational New Drug (IND) process to help them advance their products into clinical trials in a quick and efficient manner.
    • The second guidance provides recommendations for clinical trial design for phase 2 and 3 clinical trials intended to establish safety and efficacy for therapeutic or prophylactic drugs and biologics for COVID-19.
  • The FDA granted fast-track designation to Moderna’s coronavirus vaccine candidate.
  • BIO created an interactive view of the COVID-19 pipeline, which shows each drug as to original inventor (company/country), mechanism of action, and strategic approach. It will update the data on Monday mornings.
  • The Government Accountability Office (GAO) published a report on the Science of Social Distancing During Pandemics, with an accompanying interesting graphic on droplet size and transmission risk:


The Value of Hope: ICER Not Exactly Encouraging Innovation


On Monday, Forbes published an opinion article by Wayne Winegarden criticizing the Institute for Clinical and Economic Review (ICER) for its recently released assessment of alternative pricing models for remdesivir. Dr. Winegarden states that ICER performed analyses of remdesivir based on inaccurate or unknown assumptions around its treatment for COVID-19, producing erroneous cost estimates. In particular, the cost-recovery model set the costs of research and development to $0, an assumption the author not only states is incorrect but also believes can disincentivize companies from exploring whether a drug in clinical trials, or a failed drug, can address urgent global health problems. ICER also claims the price of remdesivir should be $4,500 per treatment course, but Dr. Winegarden asserts that this price ignores the non-health benefits of an effective treatment. The article concludes by stating how it is premature to be discussing the cost of a treatment for a pandemic when its effectiveness and value are not yet known.

Also on Monday, The New York Times published an article titled “Putting a Dollar Value on Life? Governments Already Do,” which provides historical, political, and global context for how the value of life is measured from a health economics perspective. In the US, studies have shown that Americans’ opinions vary on what they are willing to pay for a year in good health, ranging from $10,000 to $1 million. Although $100,000 to $200,000 is the standard range endorsed by many health economists, the US does not have a threshold that is explicitly applied to healthcare coverage decisions. The author suggests there are multiple approaches to combining all the factors and perspectives that contribute to the value of healthcare treatments, all of which are ultimately discriminatory to someone in the absence of infinite resources. Nevertheless, a transparent process involving open deliberation helps to find a balance between varying personal healthcare preferences and society’s economic constraints.

Last Wednesday, the Innovation and Value Initiative (IVI) announced the appointment of 7 members to its Patient Advisory Council, an advisory body designed to ensure that the organization remains patient-focused and transparent. The Council members, which include high-profile leaders with extensive experience in patient engagement, will inform IVI research, strategy, methods, and priorities as the organization continues to prioritize the inclusion of patient perspectives in value assessment models.

Earlier this month, the Partnership to Improve Patient Care (PIPC) wrote a letter to the Patient-Centered Outcomes Research Institute (PCORI) offering input on key priorities to consider after Congress’ reauthorization of PCORI for 10 years. PIPC’s recommendations include: 1) creating a national agenda for research priorities; 2) expanding collection of and access to patient-centered outcomes; 3) advancing the use of patient-centered outcomes in value assessment; and 4) promoting patient-centered methods. Additionally, PIPC provided guidance around new research priorities, consideration of the full range of outcomes data, and elevation of patient-centeredness in value assessment.

If you need assistance with all things ICER or value-related, please contact Linnea Tennant.


Mixed Messages: Affordability Is Important Until It’s Not


Last Friday, CMS released the HHS Notice of Benefit and Payment Parameters for the 2021 benefit year. In addition to finalizing parameters for the 2021 health insurance exchange market, the rule addressed the use of copay accumulator adjustment programs. Beginning in 2021, CMS will permit insurers to use copay accumulator programs in commercial plans, including in the employer and individual markets.  

Under the final rule, health insurers:

  • Have full discretion to count or not count coupons toward a patient’s out-of-pocket (OOP) costs
  • Can count or not count coupons toward OOP cost limits regardless of whether the coupon or assistance is for a brand drug and, if so, regardless of whether the brand name drug does or does not have a generic equivalent. This represents a significant distinction from CMS’ proposed rule on this topic last year that was ultimately rescinded
  • Must apply any copay accumulator program in a uniform, nondiscriminatory manner
  • Are encouraged (but not required) to disclose the use of accumulator adjustment programs on websites, brochures, plan documents, and other collateral materials

Additionally, CMS will afford states the flexibility to prohibit accumulator adjustment programs.

Over the past 2 decades, health insurers have continued to place more of the OOP burden for prescription drugs on patients, and, in turn, drug manufacturers have sought to minimize the financial impact with copay assistance to help patients pay for those costs. In recent years, health insurers in the commercial market have targeted this assistance, primarily by employing copay accumulator programs. Under these programs, insurers may exclude manufacturer-sponsored copay assistance or coupons from the calculation of a patient’s OOP expenses for the purposes of exhausting a deductible or hitting a plan OOP maximum. 

The insurance industry believes this direct support increases insurers’ costs by directing patients toward more expensive brand drugs. Supporters, including many patient advocacy organizations, assert that the coupons help patients afford their medications, particularly in this current crisis in which patients may face economic hardships. Some states, such as Virginia, West Virginia, and Arizona, have enacted laws prohibiting insurers from using accumulator programs.

Copay accumulator programs raise significant concerns about patients remaining adherent and compliant to prescribed treatment regimens. To that end, manufacturers offering commercial copay assistance should continue to model the impact of these programs on their patient populations, prepare for various scenarios related to accumulators, and explore operational tools to minimize the impact. The move to limit patient assistance during this current economic climate is somewhat baffling with patients struggling to afford prescription drugs and manufacturers willing to help.


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:

  • Politico reports that Moncef Slaoui, the former head of GlaxoSmithKline’s vaccine division, will serve as the Trump Administration’s “therapeutics czar,” working to speed the development of potential coronavirus vaccines.
  • Gov. Larry Hogan (R-MD) announced that UnitedHealthcare filed to enter the Maryland health benefit exchange individual market.
  • The HHS Office of Inspector General finds Medicare Part D beneficiaries are at serious risk of opioid misuse or overdose.
  • A study was published in JAMA Network Open that suggests watching Disney movies during chemotherapy is associated with improved emotional functioning, social functioning, and fatigue status in patients with gynecologic cancer.


Heard at the Senate HELP Committee hearing, COVID-19: Safely Getting Back to Work and Back to School:

“…[T]he “Rapid Diagnostic” and “Rapid Point of Care Diagnostic” are very slow. So each machine can only do 4 per hour….”


 – Admiral Brett Giroir, MD, Assistant Secretary for Health, HHS


“If you’re only doing 4 an hour, that’s not a rapid test—maybe it is a rapid slow test.”


 – Sen. Pat Roberts (R-KS)




The Kaiser Family Foundation (KFF) estimates that, as of May 2, 2020, nearly 27 million people could potentially lose employer-sponsored insurance and become uninsured following job loss.

Source: “Eligibility for ACA Health Coverage Following Job Loss,” KFF, May 13


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 | Daniel Fellenbaum | Isabell Kang | Scott Shields | Jennifer Snow | Ryan Sullivan | Robin Tan


Laurie Kozbelt | Ellen Olson


May 15, 2020


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