October 21, 2022
Health Policy Report – October 21, 2022
Congressman Neal Dunn Visits Florida Cancer Affiliates
On October 19, Congressman Neal Dunn (R-FL) visited the Florida Cancer Affiliates practice in Panama City, Florida. Dr. Steven Finkelstein led a tour of the clinic and spoke with Congressman Dunn about issues impacting community oncology, such as the Medicare Physician Fee Schedule and implications of the newly passed Inflation Reduction Act (IRA) for patients. Congressman Neal Dunn represents the 2nd District of Florida and sits on the House Energy & Commerce Committee. A former urologist, the Congressman shared his interest in community cancer care and the importance of delivering those services in his district. The Congressman also spoke with Dr. Andrew Weber, Dr. Christopher Haberman, Executive Director John Kerstiens, and several practice staff.
If your practice is interested in hosting a visit with your Member of Congress or local legislator, please contact Lisa Langenderfer at Lisa.Langenderfer@McKesson.com.
Latest Developments on Drug Pricing Reform
On October 14, President Biden signed an executive order directing the Department of Health and Human Services (HHS) to consider new healthcare payment and delivery models intended to lower the cost of prescription drugs and increase Medicare and Medicaid beneficiaries’ access to the medications they need. Specifically, the executive order instructs HHS to develop a plan, within 90 days, that outlines the actions that the Center for Medicare and Medicaid Innovation (CMMI) could take to make prescription drugs more affordable. The new executive order is intended to build upon the recently enacted Inflation Reduction Act (IRA), President Biden’s Executive Order 14036, “Promoting Competition in the American Economy,” and the Assistant Secretary for Planning and Evaluation’s (ASPE) Comprehensive Plan for Addressing High Drug Prices.
The executive order came a week after HHS established a new office responsible for negotiating drug prices through the Medicare program, as authorized by the IRA. The Medicare Drug Rebate and Negotiations Group, which will be located within the Center for Medicare, will begin negotiating with pharmaceutical manufacturers for certain Part B and Part D drugs in 2023. As outlined in an official document, “[this work] will require identifying negotiation-eligible drugs, entering into agreements with manufacturers, collecting extensive data from manufacturers and other sources, calculating ceiling and maximum fair prices, negotiating prices with manufacturers, re-negotiating prices as necessary and publishing the results of the negotiation.”
HHS Secretary Xavier Becerra also raised the potential of utilizing “march-in” rights to further reduce the price of drugs. Authorized by a 1980 law but never invoked before, “march-in” rights empower the federal government to take over the patent of a drug and license it to other manufacturers. While Secretary made it clear that “march-in” rights were on the table, no final decision on whether to exercise them is expected soon.
Due to rising inflation, lower healthcare costs have become more difficult to achieve. According to a new report from the Federal Reserve Bank of Dallas, the rate of healthcare inflation is projected to nearly double between mid-2022 and mid-2023 as insurance companies factor surging labor costs into their calculations.
To read President Biden’s Executive Order on Lowering Prescription Drug Costs for Americans, CLICK HERE.
To read a White House fact sheet on the executive order, CLICK HERE.
To read ASPE’s Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in the American Economy, CLICK HERE.
To read HHS’ proposal for the Establishment of the Medicare Drug Rebate and Negotiations Group within the Center for Medicare, CLICK HERE.
To read the Federal Reserve Bank of Dallas’ report on inflation, CLICK HERE.
New Research Shows Impact of MIPS, OCM on Oncology Practices
Two new studies released this month highlight the impact the Oncology Care Model (OCM) and the Merit-Based Incentive Payment System (MIPS) are having on the nation’s oncologists and their patients.
A recent study published in the Journal of the American Medical Association (JAMA) found that participating in the OCM does not deter novel therapy use. In the study of 2,839 patients eligible to receive a novel cancer therapy, researchers found that patients under the OCM were not less likely to receive newer treatments. The results also indicated that patient receipt of novel therapies has been increasing in both OCM and non-OCM practices, though novel therapy for second-line treatment of advanced lung cancer was higher for patients treated at OCM-participating practices compared to non-participating practices.
Underscoring persistent equity issues, however, there was an indication that Black patients were much less likely to receive a novel therapy. According to the study authors, “The association between payment models and disparities in access to care needs to be incorporated into evaluation of the OCM’s successor model as well as assessments to identify why the payment model has such an association.”
Additionally, a new study released at the 2022 ASCO Quality Care Symposium found that CMS is increasing the weight that it gives cost in its Merit-Based Incentive Payment System (MIPS) score, which may reduce reimbursements for oncologists. The study calculated projected MIPS scores using the 2022 scoring methodology on 2018 data to demonstrate the impact of the payment adjustment for 163,150 (97%) non-oncologists and 5,509 (3%) oncologists. The change resulted in a roughly 5-point decrease in the mean composite score for oncologists, which translates into more penalties and almost half as many bonuses.
Comparing the oncologist and non-oncologist cohorts, the authors concluded that the change would lead to a disproportionate increase in the number of oncologists receiving negative payment adjustments as a result of the higher proportional cost of cancer care.
To read the JAMA study, CLICK HERE.
To read the ASCO study, CLICK HERE.
CMS will Begin Paying Default Rate for 340B Drugs
On October 13, the Centers for Medicare & Medicaid Services (CMS) announced it would revise its methodology for paying 340B hospitals for outpatient drugs and reprocess claims it paid to contractors on or before September 28, 2022. In its Medicare Learning Network (MLN) Connects newsletter, CMS announced it would revert to the default rate for 340B-acquired drugs. In general, the default rate is the Average Sales Price (ASP) plus 6%.
The policy change comes in response to a recent ruling from a federal court, which vacated the differential payment rates for 340B-acquired drugs in the Calendar Year 2022 Outpatient Prospective Payment System (OPPS) final rule. While CMS had wanted to restore the default rate starting in 2023 in order to comply with a June 2022 Supreme Court ruling that found CMS’ cuts to 340B payments were unlawful, the U.S. Court of Appeals for the District of Columbia Circuit ordered CMS to begin paying the default rate immediately.
After the ruling, hospital groups, including the American Hospital Association (AHA), praised the court for halting CMS’ 340B cuts and urged the agency to work quickly to reimburse hospitals that were impacted.
To read CMS’ announcement in its Medicare Learning Network (MLN) Connects newsletter, CLICK HERE.
To read the September 28 U.S. District Court ruling, CLICK HERE.
To read an AHA press release on the ruling, CLICK HERE.
New AMA Analysis Examines Vertical Integration Between Health Insurers and PBMs
According to a new analysis by the American Medical Association (AMA), there is limited competition in local markets across the country where pharmacy benefit managers (PBMs) provide services to commercial health insurers. The analysis identifies variations in market shares and competition among PBMs at the state and municipal levels.
The report also outlines national and local market insight on five different PBM services performed for insurers, including rebate negotiation, retail network management, claim adjudication, formulary management, and benefit design. According to the analysis, benefit design and formulary management are largely conducted by insurers in-house (40% of the national market), while rebate negotiation, retail network management, and claims adjudication are largely completed by PBMs.
Nationally, nearly 70% of individuals with commercial drug coverage are insured by a health insurer that is vertically integrated with a PBM. On the state and local levels, vertical integration between insurers and premiums was found to be lower but still significant, with 63% at the state level and 65% at the local level. However, there is wide variation across states and local markets, with some states having almost no vertical integration while others are almost entirely vertically integrated.
Nationally, the analysis found that a select group of PBMs dominate market share for the three PBM services most used by insurers:
- The ten largest PBMs had a collective share of 97%.
- The four largest PBMs had a collective share of roughly 66%.
- Six PBMs are used exclusively by one insurer or a set of Blue Cross Blue Shield affiliates.
The report also warns that vertically integrated insurers may not allow non-vertically integrated insurer competitors to access their PBM services or increase costs of PBM services, which could ultimately result in higher costs for patients.
To read the AMA analysis, CLICK HERE.
To read the AMA press release, CLICK HERE.
Biden Administration Extends COVID-19 Public Health Emergency through January 11
On October 13, the Biden administration announced it would extend the COVID-19 public health emergency through January 11, 2023, as experts predict a spike in cases this winter, possibly driven by new variants.
Since first enacted in January 2020 and extended nearly a dozen times, the COVID-19 public health emergency has enabled the emergency authorization of COVID vaccines, testing, and treatments for free. It also expanded Medicaid coverage to millions, many of whom will risk losing coverage once the emergency ends. In addition, it expanded telehealth access for Medicare beneficiaries, enabling doctors to collect the same rates for those visits and encouraging health networks to adopt telehealth technology.
Since the beginning of this year, some Republicans have pressed the administration to end the public health emergency. In order to ease the transition and help healthcare stakeholders prepare for the end of pandemic flexibilities, the Biden administration has previously said that it would provide 60 days advance notice of when it plans to let the COVID-19 public health emergency expire.
To read the renewal of determination that a public health emergency exists, CLICK HERE.
To learn more about the announcement, CLICK HERE.