January 24, 2023
Health Policy Report – January 24, 2023
CMS Outlines Plan to Implement Drug Price Negotiation
The Centers for Medicare and Medicaid Services (CMS) recently announced its plan for implementing its drug price negotiation program. As authorized in the Inflation Reduction Act (IRA), CMS now has the power to directly negotiate drug prices for certain high-expenditure, single-source Medicare Part B or Part D drugs.
According to a memo from CMS, the Department of Health and Human Services (HHS) Secretary will select 10 Part D high-expenditure, single-source drugs for negotiation during the program’s first year. The maximum fair prices that are negotiated for these drugs will be announced in September 2024 and go into effect in January 2026. Fifteen additional drugs will be subsequently selected for 2028 and 20 more for each year following.
CMS also highlighted the critical need for engaging members of the public and encouraged stakeholders to provide feedback on the process it has laid out with the commitment to prioritize transparency and robust engagement among all interested parties. “CMS has an ambitious and important mandate to implement the Inflation Reduction Act’s Medicare Drug Price Negotiation Program effectively and expeditiously,” said CMS Administrator Chiquita Brooks-LaSure in a statement. “We cannot do this important work alone and will engage with the public early and often. We are proactively seeking feedback and insights from a broad range of interested parties throughout implementation of this historic law,” she continued.
To read the CMS memo, CLICK HERE.
To read the CMS timeline, CLICK HERE.
Federal Judge Orders HHS to Handle 340B Underpayments
A federal judge ruled that the Department of Health and Human Services (HHS) must create a plan to correct underpayments made to 340B hospitals.
This new ruling aims to correct a nearly 30% reimbursement cut to drugs provided through the 340B drug discount program implemented by CMS in 2018. The 340B program gives eligible hospitals outpatient drug discounts ranging from 25% to 50% directly from pharmaceutical companies. But the $1.6 billion generated from the cut was redistributed to all hospitals, including non-340B hospitals, causing ire among those in the program.
This comes after the Supreme Court ruled that HHS had no legal authority to implement changes to the 340B program without determining what hospitals pay for outpatient drugs. CMS subsequently proposed reimbursing 340B drugs at the same rate as other medicines. Hospitals have expressed dissatisfaction with this district court ruling deferring to HHS on how to handle repayments.
To read the court decision, CLICK HERE.
HHS Secretary Xavier Becerra Renews COVID-19 PHE
On January 11, Department of Health and Human Services (HHS) Secretary Xavier Becerra officially renewed the public health emergency (PHE) for the COVID-19 pandemic that has been in place since January 27, 2020. The renewal will extend provisions for telehealth and other flexibilities until mid-April unless the PHE is renewed again.
Some PHE provisions, such as the maintenance of effort (MOE) requirement, have begun to phase out. The MOE requirement provided a 6.2% increase in federal Medicaid matching funds for states that kept beneficiaries continuously enrolled during the PHE. In response to Medicaid directors’ pleas for certainty in November, Congress included a provision in the Consolidated Appropriations Act of 2023 that decoupled the MOE requirement from the PHE, effectively allowing states to begin disenrolling Medicaid beneficiaries beginning April 1.
The Biden administration has promised to give stakeholders 60 days’ notice before letting the COVID-19 PHE expire. Based on that promise, the next deadline to signal his intent about whether to extend the public health emergency will be in mid-February.
To read the COVID-19 PHE, CLICK HERE.
To read the National Association of Medicaid Directors’ letter to Congress on the MOE requirement, CLICK HERE.
To read more about the MOE provisions in the Consolidated Appropriations Act of 2023, CLICK HERE.
The US Oncology Network Signs Stakeholder Letter Urging Substantive Medicare Payment Reform
The US Oncology Network sent a letter, alongside physician and non-physician organizations representing over one million clinicians and their patients, urging Congress to work on long-term, substantive reforms to the Medicare payment system.
In their letter, the groups outlined the growing challenges they face in providing care to Medicare beneficiaries. Considering the adverse impacts caused by the tripledemic (COVID-19, influenza, and RSV), workforce shortages, provider burnout, ongoing reductions to Medicare payment provider reimbursement under Part B, and the lack of a statutory inflationary update to payments, the organizations called on Congress to take quick steps to explore long-term payment solutions that would help stabilize the country’s healthcare system and ensure seniors’ continued access to care.
“While Congress has taken action to address some of these fiscal challenges by mitigating some of the recent Medicare Physician Fee Schedule (MPFS) cuts, payment continues to decline. According to an American Medical Association analysis of Medicare Trustees data, when adjusted for inflation, Medicare payments to clinicians have declined by 22% from 2001–2021,” noted the organizations who signed onto the letter.
Additionally, the letter calls for Congress to “adopt comprehensive, transformative reforms to the Medicare payment system over the next several years” through annual inflationary updates to the Medicare Physician Fee Schedule (MPFS) and to mitigate year-over-year cuts.
The signatories end their call to action with a desire to collaborate with Congress in exploring long-term substantive payment reforms and urge the scheduling of congressional hearings as soon as possible.
To read the full letter, CLICK HERE.
MedPAC Proposes Changes to Part B Policy and Pay Increases for Physicians and Hospitals During January Meeting
On January 12 and 13, the Medicare Payment Advisory Commission (MedPAC) held a series of meetings outlining their ideas for Medicare policy in 2023, including the adequacy of current payments and if payment updates are warranted.
One of the biggest sets of policy recommendations that came out of the series dealt with concerns on how Medicare Part B drugs are priced. Specifically, MedPAC called for:
- Capping the price of drugs approved under the accelerated approval process until the drug has received full approval.
- Establishing a single payment based on average sales price (ASP) for drugs and biologics with similar health effects. Medicare could base payment on the volume-weighted ASPs of all the products in the reference group.
- Reducing add-on payments for Part B drugs paid based on ASP to improve financial incentives.
- Making formal recommendations on reference pricing and ASP at its June meeting.
However, some MedPAC commissioners voiced concerns about the potential for these recommendations to fuel the continued vertical integration of community oncology practices. “One of the things we don’t want to continue to incent or enable or encourage is the selling of private oncology practices to either hospital-based systems or private equity,” said commission member Scott Sarran, MD, of MoreCare in Cook County, Illinois. Another commissioner, Lawrence Casalino, MD, Ph.D., of Weill Cornell Medicine in New York City, agreed, saying, “It will undoubtedly lead to more acquisition of oncology practices.”
Some commissioners also voiced concerns that the Inflation Reduction Act might lead to higher drug prices because it includes provisions that might make it easier for pharmaceutical manufacturers to raise the launch price of drugs coming to the market in six protected classes: 1) antidepressants; 2) antipsychotics; 3) anticonvulsants; 4) immunosuppressants for treatment of transplant rejection; 5) antiretrovirals; and 6) antineoplastics.
During the meetings, MedPAC also recommended increasing Medicare reimbursement for physicians and hospitals. Specifically, it determined Congress should update the 2023 Medicare base payment rate for physician and other health professional services by 50% of the projected increase in the Medicare Economic Index, a policy that would cost an estimated $5-10 billion over 5 years. MedPAC also recommended Congress enact a non-budget-neutral add-on payment, not subject to beneficiary cost-sharing, under the Physician Fee Schedule for services provided to low-income Medicare beneficiaries.
In terms of hospital payments, MedPAC unanimously voted to recommend a slight 1% increase to Medicare payment rates for inpatient and outpatient rates, though this fell short of the targets called for by hospital groups. All recommendations would help account for Medicare’s lack of inflation adjustments built into its reimbursement system.
To view the presentations from the MedPAC meetings, CLICK HERE.
New Research Shows US Cancer Death Rate Dropped by One-Third Since 1991
New research from the American Cancer Society revealed that the cancer mortality rate has dropped by 33% since 1991, representing an estimated 3.8 million lives saved. Research also showed that the cancer death rate declined by 1.5% from 2019 through 2020.
According to the report, this decline was driven by changes in preventative measures and screenings. The study suggests, “This progress increasingly reflects advances in treatment, which are particularly evident in the rapid declines in mortality (approximately 2% annually during 2016 through 2020) for leukemia, melanoma and kidney cancer.”
Danielle Carnival, Ph.D., Coordinator of the White House’s Cancer Moonshot, lauded the progress but stated more work must be done to save lives. “President Biden’s vision for ending cancer as we know it is building on the progress we’ve made with an all-hands-on-deck effort to develop new ways to prevent, detect and treat cancer,” Carnival said.
To read the American Cancer Society’s study, CLICK HERE.