Health Policy Report – March 21, 2023

Biden Administration Provides Greater Detail on Drug Negotiation Process; Announces 27 Drugs Subject to Coinsurance Reduction

Last Wednesday, the Biden administration released new guidance on the implementation of drug-pricing provisions in the Inflation Reduction Act (IRA). The guidance outlines a multi-step negotiation process in which the Centers for Medicare & Medicaid Services (CMS) will accept a counteroffer from the manufacturer and hold one to three meetings with the company before settling on a “final maximum price offer.” Negotiations are set to end by Aug. 1, 2024, with the negotiated price becoming effective in 2026. Any company that does not comply will be hit with an excise tax.

Earlier in the week, Senate Finance Committee Chairman Ron Wyden (D-OR), Senator Jon Tester (D-MT), and 20 Senate Democrats raised concerns about the effect of the IRA’s Medicare Part B inflation rebate on coinsurance in the program.  In their letter to CMS administrator Chiquita Brooks-LaSure, the senators called on the Biden administration to provide a list of Medicare Part B medications that will be subject to a coinsurance reduction and the percentage and amount of the coinsurance reduction for each Part B drug. The next day, CMS announced that 27 drugs, including AbbVie’s Humira and the CAR-T cancer treatment Yescarta from Gilead, would have an adjusted coinsurance rate as prices for these drugs rose faster than the inflation rate.

To read CMS guidance on the drug price negotiation program, CLICK HERE.

To read more about the drug price negotiation program, CLICK HERE.

To read Senate Democrats’ letter to CMS on the IRA’s Part B coinsurance reduction, CLICK HERE.

To read the CMS announcement on drugs subject to coinsurance adjustment, CLICK HERE.

Amid TRICARE Scrutiny in Congress, DoD Under Secretary of Defense for Personnel and Readiness Defends Program

Following Express Scripts’ decision last fall to reduce the number of in-network TRICARE pharmacies across the country, a bipartisan group of lawmakers is continuing to demand that the Department of Defense (DoD) safeguard access for TRICARE beneficiaries.

Senator Jon Tester (D-MT), Chairman of the Defense Appropriations Subcommittee, held a briefing on March 7 to evaluate the DoD’s health care program. Senator Tester (D-MT) pressed DoD officials on the declining number of independent pharmacies participating in the TRICARE program as a result of the Express Scripts decision. Similarly, Senator Jerry Moran (R-KS) focused his questioning on barriers that this action creates for independent pharmacies, who cannot accept the contract due to low reimbursement rates.

On March 9, just two days after the hearing, Under Secretary of Defense for Personnel and Readiness Gilbert Cisneros Jr. penned an op-ed in Military.com in response to Buddy Carter’s (R-GA) January op-ed criticizing the program. Cisneros maintained that the Express Scripts decision to limit the TRICARE network improved access for beneficiaries and generated cost savings for taxpayers. This move is likely to increase concern amongst lawmakers, as the Defense Health Agency has yet to respond directly to letters from Members of Congress expressing concern about the TRICARE contract.

To read more about the briefing, CLICK HERE.

To read Under Secretary Cisneros’s op-ed, CLICK HERE.

To read Rep. Buddy Carter’s (R-GA) op-ed, CLICK HERE.

To read Rep. Buddy Carter’s (R-GA) letters to the DHA on TRICARE, CLICK HERE and HERE.

Republican Senators Send Letter to HHS on Proposed CMMI Drug-Pricing Model

Senate Republicans, led by Mike Crapo (R-ID) and Susan Collins (R-ME), urged government health officials against the implementation of the Accelerating Clinical Evidence Model selected by the Department of Health and Human Services (HHS). This proposed model would develop payment methods for drugs approved under accelerated approval, with the aim of reducing Medicare spending on drugs that have no confirmed clinical benefit.

In a letter to HHS Secretary Xavier Becerra and Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure, the senators highlighted key concerns with the model, including its potential to reduce reimbursement rates for drugs and providers, deter innovation, and delay patient access to life-saving therapies for cancer and other serious conditions.

“If proposed and finalized as described, this profound policy shift would inevitably chill incentives for leveraging the FDA’s game-changing expected regulatory avenue, which has served patients with life-threatening diseases for decades,” the senators wrote. This opposition shows the political headwinds that the Center for Medicare & Medicaid Innovation could experience as it seeks to launch the drug price models, which were directed by an executive order from President Biden.

To read the full letter, CLICK HERE.

To read more, CLICK HERE.

Community Health Centers, Drug Manufacturers Form Alliance to Reform 340B Program

Community health centers and drug manufacturers formed an unlikely alliance to push for reforms to the 340B drug discount program. The group, called the Alliance to Save America’s 340B Program (ASAP 340B), argues that the 340B program has expanded beyond its original mission to help low-income and other vulnerable populations and instead benefits large, well-resourced hospitals.

“The status quo simply isn’t working. Our detailed policy principles — which are fully focused on getting the program back working for patients and true safety-net providers — will provide certainty and predictability for all stakeholders in the program,” a spokesperson said.

ASAP 340B supports a multifaceted approach to improve the federal drug discount program, including ensuring 340B prescriptions are offered at a discount to patients, improving access and enhancing oversight, preventing middlemen and for-profit entities from profiting off the 340B program, and updating and strengthening hospital eligibility requirements, and several other policies.

340B hospitals have been engaged in a long dispute with drug manufacturers over which pharmacies should be allowed to dispense 340B drugs as the use of contract pharmacies has intensified in recent years.

To read an explainer from the ASAP 340B, CLICK HERE.

To read industry reactions to the alliance, CLICK HERE.

MedPAC Releases 2024 Medicare Payment Policy Recommendations

The Medicare Payment Advisory Commission (MedPAC) recently released its March 2023 report to Congress on Medicare Payment Policy and recommended several updates for 2024. This announcement comes shortly after draft recommendations indicated that MedPAC might recommend expanding site-neutral payment, where Medicare pays the same amount for the same service.

Though the report did not include specific recommendations for site-neutral payments, the advisors recommended a higher-than-current-law Fee-For-Service payment update for acute care hospitals and positive payment updates for physician and other health professional services and outpatient dialysis.

When speaking with reporters, MedPAC’s executive director Jim Mathews, PhD, stated that the recommendation to increase physician payments was in part motivated by the fact that the commission wanted to increase hospital payments.

“MedPAC has always endorsed a principle of ‘site neutrality,’ where Medicare should pay the same amount for the same service, regardless of where it is provided,” Mathews told reporters.

To read the full report, CLICK HERE.

To read more, CLICK HERE.

Medicare’s E/M Payment Changes Only Modestly Narrowed Pay Gap Between Primary and Specialty Care Physicians

On February 28, the Journal of the American Medical Association (JAMA) published new research that analyzed how 2021 changes in evaluation and management (E/M) payment policies were associated with payments to different types of medical specialties.

Recognizing the historical undervaluing of E/M services in Medicare’s reimbursement system, the Centers for Medicare & Medicaid Services (CMS) increased payments for E/M services for all physicians in January 2021. At the same time, it also reduced the Medicare conversion factor for all medical specialties, which essentially cut payments for specialty services.

The new research published in JAMA found that though Medicare’s E/M policy was associated with changes in Medicare payments by specialty, the median payment gap between primary care physicians and specialists was reduced by just $825, falling from $40,259.80 to $39,434.70. However, the E/M policy changes did not impact all specialties equally. Physicians in family practice (12.1 percent), otolaryngology (9.9 percent), internal medicine (8.9 percent), dermatology (7.4 percent), and neurology physicians (6.9 percent) all saw the largest increases in reimbursements, while radiologists (-2.1 percent) and general surgery physicians (-4.2 percent) experienced decreased Medicare payments.

“If policymakers want to shrink the primary care/specialist pay gap, they may need to focus on broader changes to Medicare’s physician payment policies (i.e., reforming the Relative Value Scale Update Committee, which advises Medicare on valuing the roughly 8000 payment codes comprising the physician fee schedule) and other tools such as primary care payment reform that are explicitly targeted to primary care physicians,” researchers wrote.

To read the JAMA study, “Association of Evaluation and Management Payment Policy Changes With Medicare Payment to Physicians by Specialty,” CLICK HERE.

To read more, CLICK HERE.