August 19, 2022
Health Policy Report – August 19, 2022
President Biden Signs the Inflation Reduction Act into Law
On August 16, President Biden signed the Inflation Reduction Act (IRA) into law, marking a major legislative milestone for his administration. The bill, which included a sweeping array of climate, tax, and health-related provisions, represents the most momentous piece of healthcare reform since the passage of the Affordable Care Act. Most notably, the legislation allows Medicare to negotiate the price of certain drugs for the first time ever, which the Congressional Budget Office projects will save the government $102 billion by 2031.
Under the new law, Medicare would be directed to identify the 100 prescription drugs it spends the most money on and select a maximum of 10 for which it will start to negotiate prices in 2026. To be eligible for negotiation, the drugs must not have any direct competitors and must have been on the market for at least 9 years for small molecule drugs or at least 11 years for biologics. While the first several years of negotiations will only encompass Part D drugs, the negotiated prices for medicines covered under Part B such as certain types of chemotherapy will go into effect starting in 2028.
Beyond authorizing Medicare’s historic drug price negotiation, the Inflation Reduction Act would also cap seniors’ out-of-pocket costs for Part D drugs to $2,000 per year, penalize drug manufacturers who raise prices above inflation, and cap Medicare beneficiaries’ out-of-pocket costs for insulin to $35 per month.
However, some pharmaceutical industry analysists say the newly signed bill will have serious ramifications for the availability of new cancer therapies. By disincentivizing research and development (R&D) into innovative treatments, the bill could make it less likely for much-needed cancer drugs to come to market in the future. There are still many unknowns about how the pharmaceutical manufacturingrer industry will respond to the IRA, and the industry is expected to use a number of tools at its disposal, including seeking legal action or legislative changes.
To read President Biden’s remarks at the signing of the Inflation Reduction Act, CLICK HERE.
To read the White House’s “By-the-Numbers” Fact sheet on the legislation, CLICK HERE.
To read more about the potential impact of the new law on cancer treatments, CLICK HERE.
Recent Publications Highlight The Network’s Leadership in the Oncology Care Model and Perspective on the Enhancing Oncology Model
The American Journal of Managed Care recently featured a piece by Stuart Staggs, senior director of strategic programs for The Network, highlighting The Network’s success in the Oncology Care Model (OCM). Since OCM’s start in July 2016 through May 2022, the 14 Network practices participating in the OCM enrolled more than 125,000 unique patients into the program. Comparing late 2020 with late 2016, The Network saw emergency department (ED) visits reduced by 24% across the 14 participating practices; hospice utilization beginning more than 3 days before death increased by 11%; and, hospitalizations fell by 37%. Over the first 4.5 years of the OCM—through PP9—practices in The Network saved Medicare $240 million compared with the benchmark amount.
Staggs noted that the comprehensive resources provided by The Network and McKesson were key in helping practices implement this complex program. These resources included industry-leading technologies to support decision-making at the point of care, advanced analytics to provide actionable data and optimal data management, innovative pharmacy solutions to drive and support efficient drug management, and many other useful resources. Practices also had access to thought leaders and key staff with deep expertise in value-based care.
Pivoting to the Enhancing Oncology Model (EOM), Staggs discusses how it compares to the OCM and analyzes its potential challenges. For example, six practice-redesign activities in the OCM are carrying forward to the EOM, but practices must now have technology in place for electronic Patient Reported Outcomes (ePROs) by year 3, and practices will also need to assess health-related social needs. Additionally, practices in EOM must immediately jump into 2-sided risk, and the upfront payment received under the EOM to fund enhanced services will be reduced.
The Network will be helping its practices determine the viability of the EOM for their organizations, doing a deep dive and collaborating with each practice to determine the benefits and risks of jumping into this new model.
Staggs’ analysis of the two models was also featured in Managed Healthcare Executive. He notes that analyzing practices’ success and challenges in the OCM may provide insight into how practices can thrive in the EOM.
To read the AJMC article, CLICK HERE.
To read the Managed Healthcare Executive article, CLICK HERE.
Hospitals Ask Court to Compel CMS to Stop 340B Cuts
Recently, the American Hospital Association, Association of Medical Colleges, and America’s Essential Hospitals asked the US District Court for the District of Columbia to compel the Centers for Medicare & Medicaid Services (CMS) to pay for 340B hospitals’ drugs at the same rate they pay other hospitals for the remainder of the year. The hospitals also asked the court to order CMS to quickly pay 340B hospitals back for the pay cuts they faced from 2018 to 2022, plus interest, without taking those funds from other hospitals.
In July, the US Supreme Court overturned the nearly 30 percent pay cut to hospitals for Part B drugs obtained through the 340B program because CMS failed to collect hospitals’ acquisition costs. The Court left the decision of how CMS will undo those cuts for 2018 and 2019 to a lower court. The cuts, however, have been in place every year since 2018, including 2022. In the 2023 proposed hospital outpatient pay rule, CMS expects to return to the Average Sales Price + 6% pay rate for 340B hospitals in 2023. The agency said, though, it was unable to adjust the proposed payment rates and budget neutrality calculations before issuing the proposed rule given the timing of the Court’s decision.
In an earlier case, the district court sided with hospitals in their lawsuit over the 340B cut, likening the unwinding of the cuts to unscrambling an egg. The Supreme Court used different reasoning in its decision that the cuts in recent years were unlawful, ruling that CMS could not vary pay for certain hospitals without a survey of acquisition costs.
To read the unanimous Supreme Court decision, CLICK HERE.
To read the AHA’s recent Reply in Support of Plaintiffs’ Motion to Vacate the Unlawful Portion of the 2022 OPPS Rule Re: 340B, CLICK HERE.
Federal Trade Commission Issues Policy Paper Critical of Certificate of Public Advantage Laws
The FTC recently issued a policy paper warning that Certificates of Public Advantage (COPAs) lead to hospital consolidation, higher prices, and reduced quality.
In the policy paper, the FTC said it “routinely challenges hospital mergers that would substantially lessen competition, and therefore would raise healthcare prices for patients, reduce quality of care, limit access to healthcare services, and depress wage growth for hospital employees. COPA laws attempt to immunize such hospital mergers from the antitrust laws by replacing competition with state oversight and limiting the FTC’s ability to challenge them.”
In analyzing the effects of COPAs, the FTC examined hospital mergers under COPA approvals in North Carolina, Montana, South Carolina, Maine, Tennessee/ Virginia, West Virginia, and Texas.
The FTC issued this policy paper to inform state lawmakers considering proposed legislation regarding COPA laws. The agency also urges states that have existing COPA laws to consider repealing those laws if they do not have an active COPA in place.
To read the FTC press release, CLICK HERE.
To read the FTC policy paper, CLICK HERE.
To read the FTC Factsheet on COPAs, CLICK HERE.
JAMA Analysis Examines NCI Cancer Center Price Transparency Compliance
According to a report published in JAMA Surgery on August 10, fewer than one-third of America’s 63 National Cancer Institute-designated cancer centers are currently fully compliant with federal price transparency rules.
In an effort to increase transparency and competition, the Centers for Medicare & Medicaid Services (CMS) required hospitals to publicly disclose non-discounted prices for services provided starting on January 1, 2021. In their analysis, the study’s authors assessed compliance rates of hospitals with NCI-designated cancer center status.
The researchers evaluated compliance against 5 federal criteria, including how the data file was posted, the content of the data file, and variations based on the hospitals’ type of NCI designation (e.g. comprehensive cancer center vs clinical cancer center).
In summary, the JAMA analysis found:
- By August 2021, 42 of the 63 cancer hospitals provided some information on negotiated rates.
- Only 20 of the nation’s 63 NCI-designated hospitals were fully compliant.
- Comprehensive cancer center–designated hospitals had higher compliance than those with clinical cancer center designation.
“An optimistic view of the current analysis is that among the few hospitals that did provide adequate and well-annotated information, there was large variation in payments both within and across hospitals. If a well-executed mandate did spur competition, the large variation identified in this study could suggest significant cost savings,” the author’s noted.
To view the JAMA analysis, CLICK HERE.