Health Policy Report – December 20, 2022

Congress Closes in on Year-End Deal 

Early Tuesday morning, congressional appropriators unveiled a 4,155-page, $1.7 trillion bill that will fund the government through September 30, 2023, and help mitigate some of the planned cuts in Medicare. Final passage of the omnibus bill is expected by Christmas Eve.   

This comes as providers and lawmakers lobbied hard to avert the cuts. Last week, there were multiple letters circulating in Congress urging congressional leadership to address the Medicare payment cuts. A bipartisan letter led by Reps. Susan Wild (D-PA) and Mariannette Miller-Meeks (R-IA) garnered 113 signatures. A similar letter led by the House Republican Doctors Caucus captured 83 signatures.  

The bill will provide a 2.5% bump in the conversion factor (CF) for 2023. This will partially offset the currently scheduled 4.5% reduction in the CF, therefore resulting in a net -2% reduction compared to 2022. The bill also provides a 1.25% bump in the CF for 2024.  

The American Medical Association expressed disappointment that Congress would allow doctors to face a 2% pay cut in 2023. “We are deeply worried that many practices will be forced to stop taking new Medicare patients — at a time when access to care is already inadequate. Congress must immediately begin the work of long-overdue Medicare physician payment reform that will lead to the program stability that beneficiaries and physicians need,” said AMA President Jack Resneck. 

The omnibus bill also includes a 1-year extension of the bonus for providers participating in advanced alternative payment models; however, that bonus is lowered from 5% to 3.5%. National Association of ACOs (NAACOS) President and CEO Clif Gaus, Sc.D. said: “While this is not the full 5 percent that providers have been receiving and NAACOS asked for, it does maintain some incentive to keep the momentum while Congress works on a long-term solution to encouraging adoption of alternative payment models.” 

To read the Reps. Wild/Miller-Meeks letter, CLICK HERE.  

To read the Doctors Caucus letter, CLICK HERE. 

To read the full text of the omnibus bill, CLICK HERE. 

Inflation Reduction Act (IRA) Implementation Update    

After a kick-off meeting between pharmaceutical companies and Medicare officials on December 13, key tenets about the implementation of the Inflation Reduction Act’s (IRA) drug pricing provisions remain unclear—particularly the process the Centers for Medicare & Medicaid Services (CMS) will use to identify drugs eligible for negotiations starting in 2026. 

According to industry sources, new progress has yet to come about on how the federal government will negotiate high-cost drug pricing. This call, the first in a series of monthly meetings, comes as the industry and policy analysts hope to find clarity on the Biden Administration’s landmark legislation.    

It is still uncertain whether drugs will be assessed by net or gross sales. Starting in 2023, Medicare will begin ranking drugs based on total expenditures and enter talks with pharmaceutical companies to determine maximum fair prices.   

This was the first of many monthly meetings between CMS and drugmakers. In an email following the call, CMS stated that the goal of the meeting was to get technical feedback from drug manufacturers and that the outcomes of their discussions were set to guide CMS’ implementation of the IRA.  

CMS administrator Chiquita Brooks-LaSure has also come out saying that CMS will not outsource for drug price evaluations but instead plans to build its staff’s ability to operate Medicare drug price negotiations.    

To view CMS’ implementation timeline for the IRA, CLICK HERE. 

Pharmacies Send Letter to Cigna, Express Scripts on TRICARE Issue   

On December 6, pharmacy groups sent a letter to Cigna and its pharmacy benefit manager (PBM) subsidiary, Express Scripts, calling for the company to rethink its decision to downsize TRICARE patient networks by nearly 15,000 pharmacies, which cover active-duty military member beneficiaries.    

In the letter, the pharmacy groups indicated that they were concerned about the timing and impacts of Cigna’s decision and detailed the widespread confusion over which pharmacies will remain in-network. The pharmacy groups also criticized Cigna’s decision to keep just one specialty pharmacy in its network: Express Scripts’ sister company, Accredo.   

The pharmacy groups, including the Senior Care Pharmacy Coalition and the American Pharmacists Association, said that patients have reported missing doses and denials of sterile supplies for safely administering specialty medications when they attempted to use Accredo.    

“The relationships between pharmacists and patients are built on trust, and for many patients, is not something easily transferrable,” according to the letter. “Keeping patients’ trusted pharmacies in-network is critical to the patient’s care.”   

Lawmakers have joined the pharmacy’s concerns and have criticized the decision by Cigna and Express Scripts to shrink their networks. Sen. Jon Tester (D-MT) called Express Scripts’ network changes “unacceptable,” especially concerning the impact this network change will have on rural areas. Reps. Buddy Carter (R-GA) and Mike Rogers (R-AL), Rep. Mike Johnson (R-LA), and more than 100 bipartisan Members of Congress have questioned Cigna and Express Scripts’ policy to shrink access for TRICARE beneficiaries.    

To read the pharmacy group’s letter to Cigna and Express Scripts, CLICK HERE.   

CMS Issues Proposed Rules on Prior Authorization Process 

The Centers for Medicare & Medicaid Services (CMS) recently released two proposed rules intended to strengthen protections for patients enrolled in Medicare Advantage and Medicare Part D, including significant changes to prior authorization. On December 6, CMS issued a proposed rule to change the prior authorization process by supporting the use of electronic prior authorization. The proposed rule applies to Medicare Advantage organizations, Medicaid and CHIP managed care plans, Medicaid and Children’s Health Insurance Program (CHIP) agencies, and Qualified Health Plan (QHP) issuers on Federally-facilitated Exchanges (FFEs). 

Early reaction from stakeholders was positive. The Medical Group Management Association said: “MGMA is encouraged to see that CMS heeded our call to include Medicare Advantage plans in the scope of this proposed rule… This is a positive step forward for both medical groups and the patients they treat. We look forward to working with CMS to refine and finalize this rule.” 

Stakeholders have a 90-day comment period lasting until March 13, 2023 to provide feedback on the proposed rule. 

On December 14, CMS issued another proposed rule outlining significant changes to strengthen protections for people enrolled in or seeking coverage from Medicare Advantage plans or Medicare Part D prescription drug plans, including through improvements to prior authorization. CMS says its proposed rule is meant to counteract concerns about improper prior authorization usage following a report from the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) earlier this year. The proposed rule incorporates several recommendations from the OIG report and builds on the prior authorization rule released earlier in December. 

The second rule proposes policies to streamline prior authorization requirements and reduce disruption for enrollees, including a proposal that would clarify a prior authorization approval remains in effect for an enrollee’s full course of treatment. Comments on this proposed rule are due February 13, 2023. 

To view the CMS press releases on the proposed rules, CLICK HERE and HERE. 

CMS Maintains Copay Accumulator Policy Despite Patient Group Protests 

Despite calls from patient advocacy groups to require healthcare exchange plans to count copay assistance toward beneficiaries’ deductibles and out-of-pocket costs, the Centers for Medicare & Medicaid Services (CMS) opted not to change this controversial policy in the 2024 proposed rule for exchange plans issued earlier this month. 

Under current policy, copay coupons are banned by Medicare but allowed in the commercial market. Accumulator adjustment programs instituted by insurers and pharmacy benefit managers (PBMs) prevent copay assistance from applying toward out-of-pocket costs and deductibles, which patient groups have called discriminatory. The 2021 final rule for exchange plans allowed enforcement of copay accumulator programs, despite objections from patient groups, and CMS has continued to maintain this policy. 

In an October 2022 letter, more than 70 patient groups wrote to the Department of Health and Human Services (HHS) raising concerns about discrimination in health practices, including discrimination caused by copay accumulator adjustment programs.  

“Copay accumulator adjustment programs are harmful policies instituted by insurers and PBMs that do not apply copay assistance towards beneficiaries’ out-of-pocket costs and deductibles. Insurers and PBMs take the copay assistance provided by drug companies that is meant for the patients but are not counting it toward the patient’s deductible and out-of-pocket cost obligations…These policies also allow insurers to ‘double dip’ and increase their revenue by receiving patient copayments twice,” the groups wrote. 

To read the patient group letter, CLICK HERE. 

To read the CMS fact sheet on the proposed rule, CLICK HERE. 

Drug Pricing Remains on Agenda for 2023  

Drug pricing reform will continue to be a top area of interest for Congress and the Biden Administration in 2023.  

On December 7, Axios hosted an event with several policymakers and key stakeholders to discuss the healthcare agenda for next year. Representative Brett Guthrie (R-KY) said that drug transparency would likely be a bipartisan issue and specifically said there would be a focus on understanding the difference between what is paid and how much pharmacies receive. The Chief Operating Officer of the Pharmaceutical Research and Manufacturers of America (PhRMA) said that the Inflation Reduction Act’s drug pricing provisions would negatively impact patients because they would thwart innovation. Drugmakers may look to unwind some of these provisions, including Medicare’s drug pricing negotiation mechanism through legislation, executive action, or judicial decisions. 

PhRMA also called for scrutinizing pharmacy benefit managers (PBMs). However, on December 8, the Pharmaceutical Care Management Association (PCMA) released a set of recommendations that call for policies that the pharmaceutical industry opposes, including reducing marketing exclusivity periods for biologics, prohibiting “patent thickets” and “product hopping,” and blocking pay-for-delay agreements to maintain competitive advantages. On December 14, Senate Finance Committee Chairman Ron Wyden (D-OR) said reforming the prescription drug rebate system and increasing oversight over pharmaceutical benefit managers (PBMs) would be a top priority.  

Meanwhile, the Biden Administration continues to face pressure from patient groups and progressive lawmakers to take over patents on expensive drugs. On December 1, the Food and Drug Administration (FDA) responded to a patient petition calling for the government to use march-in rights to lower the cost of Xtandi, an expensive prostate cancer drug. While a decision has not been made yet, the FDA said it is “currently coordinating with HHS to review and assess the information” included in the petition. Meanwhile, the U.S. Trade Representative punted a decision on whether it should support expanding patent waivers for COVID-19 tests and treatments.   

Drug prices continue to rise, spurring more calls for the government to act. On December 6, the Institute for Clinical and Economic Review (ICER) released its 2022 Unsupported Price Increase Report, which found that seven of the ten drugs with the most significant price increases last year did not have sufficient clinical evidence to justify the price. The price increases of these ten drugs resulted in $805 million in additional costs.  

One of the drugs, leuprorelin, often used to treat prostate, breast, ovarian, and endometrial cancers, saw AbbVie raise its price by 10%, resulting in a nearly $55 million increase in spending after the price change. Another drug, Adcetris, which can be used to treat Hodgkin lymphoma and systemic anaplastic large cell lymphoma, had its price raised by Takeda Pharmaceutical Co. and Seagen by over 9%. The average per-patient increase in spending resulting from the price hike was $1,640.  

To watch the Axios conversation on drug pricing policy, CLICK HERE. 

To read the PCMA’s press release on its policy principles, CLICK HERE. 

To read the FDA’s letter on march-in rights, CLICK HERE. 

To read the U.S. Trade Representative’s press release, CLICK HERE. 

To read the ICER report, CLICK HERE. 

MedPAC Recommends Congress Boost Medicare Rates for Physicians and Hospitals  

On December 8 and 9, the Medicare Payment Advisory Commission (MedPAC) held its latest meeting where it recommended increasing Medicare rates in 2024 for both hospitals and clinicians in its draft payment recommendations to Congress. Factoring in high inflation and the rapidly rising costs of delivering care, MedPAC supported increasing payments to hospitals by 1% over current law. It also called on Congress to increase rates through the Physician Fee Schedule, with an even higher proposed boost for physicians treating low-income traditional Medicare patients.  

MedPAC will now review commissioner feedback, vote on the recommendations in January, and formally submit them to Congress in March. While these recommendations help inform congressional decision making, there is no requirement for Congress will act on them.   

To view transcripts and presentations from the MedPAC meeting, CLICK HERE.