Health Policy Report – June 27, 2023

MedPAC Releases June 15 Report to Congress

On June 15, the Medicare Payment Advisory Commission (MedPAC) released its annual report to Congress, which included recommendations on site neutral pay for 66 outpatient procedures.

The committee cited “recent growth in hospital acquisition of physician practices” as a reason for the recommendation. According to the report, the site neutral pay recommended by MedPAC would have saved Medicare $7.5 billion in 2021; however, due to existing budget neutrality requirements, the reduced spending would be offset through higher payment rates in the OPPS for the 103 APCs for which MedPAC did not recommend aligning payment rates.

While these changes initially would be budget neutral, “over time, we are thinking that changing payment rates in a site-neutral manner would produce savings in the future by reducing the incentives for hospitals and health systems to acquire physician practices,” explained MedPAC executive director James Mathews, PhD.

House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) has previously stated her support for site neutral payments in an April committee hearing on “Lowering Unaffordable Costs: Legislative Solutions to Increase Transparency and Competition in Health Care.” Chair McMorris Rodgers has stated that patients and Medicare pay more at hospitals than outpatient centers or physician offices for the same services that can be routinely done safely in a doctor’s office.

The report also made three main recommendations for curbing Medicare Part B drug spending: the HHS secretary could cap the prices Medicare pays for drugs under accelerated approval pathways, Congress could give the HHS secretary authority to use reference pricing, and Congress could reduce the current +6% add-on payment based on the price of the drug.

To read MedPAC’s June 2023 report to Congress, CLICK HERE.

Senators Introduce Patients Before Middlemen Act

On June 14, leaders on the Senate Committee on Finance, including Chairman Ron Wyden (D-OR), Ranking Member Mike Crapo (R-ID), and Senators Bob Menendez (D-NJ), Marsha Blackburn (R-TN), Jon Tester (D-MT), and Roger Marshall (R-KY), introduced the Patients Before Middlemen (PBM) Act. This bipartisan legislation aims to lower prescription drug costs for Medicare Part D recipients by preventing PBMs from tying service fees to the price of a drug, rebates, or other fees.

This marks Congress’ continued efforts to crack down on PBM practices. This legislation would require PBMs to repay amounts charged in excess of those connected to drug prices or other required fees. One of many similar pieces of legislation being introduced recently, the bill is expected to be included in a broader package of policies targeted at lowering prescription drug prices.

“Delinking PBM compensation from sticker prices would take a critical first step in ensuring that all supply chain participants seek out the best deals available, driving down out-of-pocket spending and promoting cost-cutting competition. I look forward to continuing our committee’s bipartisan efforts to advance comprehensive, patient-focused policies moving forward,” Ranking Member Crapo commented in a statement.

To read the legislation, CLICK HERE.

To read the statement from the Senate Committee on Finance, CLICK HERE.

Energy and Commerce Holds Subcommittee Hearing on MACRA
On June 22, the House Energy and Commerce Oversight and Investigation Subcommittee held a hearing on the implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which overhauled the formula used to pay doctors under Medicare. The legislation aimed to bring greater stability to Medicare reimbursements and provide incentives for doctors and practices to adopt payment models tied to quality and care outcomes. 

Yet, in recent years, physicians have expressed concern that their Medicare payments are being cut under the current system, fueling consolidation among doctors and hospitals. The hearing came amid a renewed push for Medicare physician fee schedule reform, marked by the introduction of the Strengthening Medicare for Patients and Providers Act (H.R. 2474), which seeks to provide an annual Medicare physician fee schedule (MPFS) bump tied to the Medicare Economic Index.

At the hearing, Representatives Larry Bucshon, MD (R-IN) and Raul Ruiz, MD (D-CA) – both sponsors of H.R. 2474 – urged support for MPFS reform, claiming that patient access to care and the survival of practices will be jeopardized without an inflationary update.

Lawmakers also focused on how MACRA has presented unique challenges to specialists and small practices. Committee Chair Cathy McMorris-Rodgers (R-WA) commented that while the Oncology Care Model and Enhancing Oncology Model – both value-based care models – have represented a step forward overall, “they have also highlighted areas where we need to improve.” This hearing represents the first step in allowing Congress to understand what has been working and what needs to be improved.

To watch the hearing, CLICK HERE.

To ask your Member of Congress to Cosponsor H.R. 2474, CLICK HERE.

Dr. Mandy Cohen Tapped to Lead Centers for Disease Control (CDC)

On June 16, President Biden announced his intent to replace former Centers for Disease Control (CDC) director Dr. Rochelle Walensky with Dr. Mandy Cohen, an internal medicine physician.

Dr. Cohen is currently the Executive Vice President at Aledade, a network of independent primary care practices, and CEO of the organization’s health services unit, Aledade Care Solutions. In her work with Aledade, Dr. Cohen focused on supporting positive patient outcomes, cutting costs, and bringing innovative care solutions to scale.  

Previously, Dr. Cohen served as North Carolina’s health secretary, where she was widely praised for her leadership during the COVID-19 pandemic, expanding Medicaid in the state, and a focus on “whole person health” through the state’s coordination platform, NCCARE360.  In addition, Dr. Cohen held senior positions at the Centers for Medicare and Medicaid Services (CMS) and helped implement the Affordable Care Act.  

The CDC director role does not currently require Senate confirmation, so Cohen is expected to start soon after Walensky steps down on June 30. The Consolidated Appropriations Act of 2023 requires Senate confirmation of CDC directors beginning in January of 2025.

To read a statement from the White House, CLICK HERE.

To learn more about Dr. Mandy Cohen’s work at Aledade, CLICK HERE.

Overpayments to Medicare Advantage Plans Could Exceed $75 Billion in 2023, USC Schaeffer Center Research Finds
According to new analysis by researchers at the University of Southern California (USC), overpayments to Medicare Advantage plans are now projected to exceed $75 billion annually.

This projection more than doubles previous estimates of overpayments made by the Medicare Payment Advisory Commission (MedPAC).

The current payment structure for Medicare Advantage plans is based on county-level expenditures derived from claims data for traditional Medicare, not data from Medicare Advantage expenditures – a payment methodology that is fueling concern. Medicare Advantage enrollment has surpassed traditional Medicare, with over half of Medicare beneficiaries opting for private insurance plans.

The researchers suggest two critical strategies for improving rate setting: reforming the current payment approach and implementing competitive bidding by Medicare Advantage plans. The researchers concluded that “Without reform, overpayments to Medicare Advantage plans will only increase, costing tens of billions in federal healthcare spending and threatening the long-term viability of the Medicare program.”

To read the full USC report, CLICK HERE.

FDA Launches Pilot Program for Oncology Drug Products    

The U.S. Food and Drug Administration (FDA) has launched a voluntary pilot program to improve the selection of cancer treatments for patients. The program focuses explicitly on oncology drug products used in conjunction with certain in vitro diagnostic tests, providing transparent performance recommendations for clinicians.  

The pilot program is part of the FDA’s effort to reduce the risk of using unauthorized laboratory-developed tests (LDTs) for oncology treatment decisions.

“We believe this guidance and the launch of the pilot program are important steps towards addressing safety risks posed by poorly performing laboratory-developed tests,” said Jeff Shuren, M.D., J.D., director of the FDA’s Center for Devices and Radiological Health. “The pilot aims to help by making transparent performance recommendations for diagnostic tests to select certain oncology drug treatments.”  

Under the program, the FDA may request performance information for the tests used to enroll patients into the clinical trials that support drug approval. The FDA can then publish on its website the minimum performance characteristics recommended for similar tests that may be used to select patients for treatment with the approved drug. The initial phase of the pilot program is anticipated to last up to one year, during which the FDA will evaluate no more than nine drug sponsors for possible acceptance into the pilot program.

To learn more about the program, CLICK HERE.