The Centers for Medicare and Medicaid Services (CMS) recently announced a new policy affecting Medicare Advantage plans, specifically those Medicare Advantage beneficiaries who rely on prescription drugs from Medicare Parts B and D. This new CMS guidance effective, January 1, 2019, permits MA plans to use “step therapy” for Part B drugs as part of a patient-centered care coordination program. Simply put, step therapy would require physicians to write prescriptions for a less expensive alternative drug and see if it succeeds or fails before writing for some additional expensive medications. In what will likely end up resulting in unnecessary costs and delays many providers including national oncology organizations have publicly criticized the guidance as removing patient and physician choice and harming individualized treatment.
Not surprisingly, the PBM lobbying group, Pharmaceutical Care Management Association (PCMA), has publicly favored the guidance. The big three PBMs have common ownership with MA Plans. The new rule will allow Part D plans the ability to cross-manage drug decisions across Part B and Part D. Instead of a physician choosing what drug to prescribe, the PBM would decide through Step Therapy. Under the previous CMS rule, PBMs had little control over Part B drugs—that was the domain of physicians. The new rule will embolden the PBMs’ ability to control dispensing with step therapy; will enable PBMs to control formulary design, thus allowing them to secure even greater “rebates” from manufacturers and better spread pricing. PCMA called for this rule change in its July 16, 2018 Statement to Secretary Azar regarding the American Patients First: Blueprint to Lower Drug. Unfortunately, the consequence of this rule will be to increase the list price of drugs and patient copayment, particularly for those suffering from serious disease states.
The issue for the industry now is how to deal with the possibility of higher out of pocket costs, uncertain patient outcomes and unnecessary interference with the doctor patient relationship. The first piece of advice for Part B and Part D providers is to be vigilant in your response to the increasingly utilized Request for Information (RFI). The Request for Information is a method that agencies extend to interested stakeholders to identify issues of concern to the industry that could be technical in nature. It is strongly encouraged that you reach out to agencies offering RFIs such as this would could help avoid policy changes that hurt patient care and provider autonomy.
Over the last 12 months, CMS has increasing relied on the issuing of Requests for Information (RFIs). An RFI is part of the rulemaking process wherein an agency, such as CMS, proposes a rule or policy that it is looking to either add or change. Proposed rule announcements are usually followed by a “comment period”, public workshops/hearings, a final comment period and then a final rule with effective date. The RFI process provides opportunities for industry stakeholders, including national associations, to comment on the technical aspects of a proposal. However, the Administration is using agencies like CMS to distribute RFIs as a way for the industry to guide the conversation on what should be included. This could provide your organization with another way to influence policy.
It is clear that the pace of federal and state government policy making in the healthcare and life sciences spaces has quickened and continues to raise the stakes for market participants. Frier Levitt Government Affairs, LLC, along with legal insight from Frier Levitt, LLC, helps physician dispensers and specialty pharmacies navigate market and policy changes and helps provide the necessary tools to stay ahead. Contact us today.
The Office for Civil Rights (OCR) has issued a Request for Information (RFI) seeking input from the public on ways to modify the Health Insurance Portability and Accountability Act (HIPAA). OCR intends to use the public’s comments to remove regulatory obstacles and decrease regulatory burdens in order to facilitate efficient care coordination and case management to promote value-based health care while preserving the privacy and security of protected health information.
Covered entities and business associates often defer thorough HIPAA compliance due to the onerous requirements and/or limited administrative resources required to develop and enforce a comprehensive policy and procedure manual. However, this places these companies at significant risk. OCR’s HIPAA enforcement has, and will likely continue, to rise.
This proposal offers providers an opportunity for physicians, hospitals and healthcare stakeholders to submit feedback to OCR highlighting certain obstacles they may face due to HIPAA regulations that do not meaningfully contribute to the privacy and security of protected health information.
The deadline for the comment period ends February 12, 2019. If you are a healthcare stakeholder and would like to participate, contact Frier Levitt Government Affairs today. We have several strategies to help you or your organization engage in this process and have your voice heard.
2018 was a key year for further shedding light on Pharmacy Benefit Manager (PBM) business practices. As state budgets continue to be squeezed and patient populations require more specialty care, state Medicaid Directors have an opportunity to pull back the curtain on PBMs and realize additional ways that your state can benefit from transparency.
An important lesson can be learned from Ohio’s 2018 successes. In a report to the Ohio Joint Medicaid Oversight Committee, the Ohio Auditor gave an overview of the audit of the state’s Medicaid program and its dealings with PBMs.
The report found:
∙ The “spread”- difference in dollar amount between what Plans pay to PBMs and what PBM pay to pharmacies- has been growing and hit its peak in the fourth quarter of 2017
∙ An overwhelming portion of PBM spread is occurring on generic drugs
∙ Spread pricing totals varied wildly from region to region
∙ There is a disconnect between the Medicaid drug spend and what PBMs reimburse to pharmacies
∙ Data confirms a high number of pharmacy closures amid reimbursement cuts
∙ Spread totals were highest on specialty drugs, which are typically dispensed at PBM-owned pharmacies
The Ohio audit report concludes that PBMs enjoyed an 8.8% spread on Medicaid beneficiary claims, yielding PBM profits in excess of $250MM—that’s just in Ohio state Medicaid. Ohio decided that it would no longer permit PBM spread pricing and now requires PBMs to have pass through model contracts.
Frier Levitt Government Affairs, LLC (FLGA) and Frier Levitt, LLC, have extensive experience working with Medicaid Directors and other stakeholders to provide money saving solutions against PBMs. For Medicaid Directors witnessing population growth, we can help unravel savings from complex PBM contracts and relationships. We can assist your state in reviewing your Medicaid contracts to determine if you are paying too high for negotiated items. We can also provide you with substantial education on the PBM business model with the goal of saving your program much needed resources. Contact us today to put an end to questions and confusion and start requiring accountability from your PBM.
The Centers for Medicare & Medicaid Services (CMS) has released “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses,” a proposed rule to amend the Prescription Drug Benefit Program (Part D) regulations to support health and drug plans’ negotiation for lower drug prices and reduce out-of-pocket costs for enrollees. One important component is a proposal to change the definition of “negotiated price.” Currently, the term must include all pharmacy price concessions except those contingent amounts that cannot be “reasonably determined” at the point of sale. This small exception is what has led PBMs to manipulate Medicare bidding and to the explosion of DIR Fees in the pharmacy space.
CMS is proposing a change to the definition of “negotiated price” to eliminate this exception and instead adopt a new definition were the term would mean the lowest amount a pharmacy could receive as reimbursement for a covered Part D drug under its contract with the Part D plan sponsor or the sponsor’s PBM.
Independent pharmacies, especially those dispensing high-cost medication such as specialty pharmacies, have paid substantial money back to PBMs and plan sponsors in the form of percentage-based DIR Fees. The government has only now begun to analyze the impact that DIR fees have had on the Medicare Part D marketplace, including pharmacies, Medicare beneficiaries and the Government. CMS is ready to change regulations that have created PBM and plan sponsors’ incentives that have “distorted” CMS’s intentions and original definition of “negotiated price.” CMS is asking for stakeholders to comment by January 25, 2019 on the proposed rule changes. The proposed changes could remove these distorted incentives and undue some of the negative consequences that have been caused by DIR Fees. This potential impact is highlighted by some of CMS’ own commentary in its proposed rule, including:
- DIR fees “[p]erformance-based pharmacy price concessions, net of all pharmacy incentive payments, increase, on average, nearly 225 percent per year between 2012 and 2017 and now comprise the second largest category of DIR received by sponsors and PBMs, behind only manufacturer rebates.”
- Less than 1 percent of plans have passed through any price concessions to beneficiaries at the point of sale.
- “When pharmacy price concessions are not reflected in the price of a drug at the point of sale, beneficiaries might see lower premiums, but they do not benefit through a reduction in the amount they must pay in cost-sharing, and thus, end up paying a larger share of the actual cost of a drug.”
- “[P]harmacy price concession applied as DIR can lower plan premiums and increase plan revenues, result in cost-shifting to beneficiaries and the government, and reduce consumer and government knowledge about the true costs of prescription drugs.”
- If a Part D plan sponsor’s actual drug costs are within +/- 5 percent of the drug costs estimated in its bid, the plan assumes all of the risk or reward. CMS’s own analysis show “that in recent years the DIR amounts that Part D sponsors and their PBMs actually receive have consistently exceeded bid-projected amounts, by as much as three percent as a share of gross drug costs.” The three percent increase in estimated DIR revenue is kept 100% by Part D plan sponsors without the requirement to pass any of that “savings” to the government, beneficiaries or health care providers such as the pharmacies that acquire and dispense the medication in accordance with prescriber instructions.
Why You Should Comment:
Opportunities to comment directly on DIR are rare. Last year, CMS issued a Medicare Part D Final Rule and declined to discuss DIR. Providers are in danger of closing or are being forced to drastically alter their business models. CMS has stated in this proposal that the current application of DIR by PBMs was an unintended consequence.
Frier Levitt Government Affairs (FLGA) helps pharmacy industry stakeholders, including independent pharmacies, specialty pharmacies, state and national pharmacy associations, and in-office dispensers, comment on proposed regulations. FLGA understands the nuances around DIR fees and has strategies that can help successfully communicate pharmacy stakeholders’ positions on DIR Fees and other issues to CMS.
The deadline to submit Comments is January 25, 2019, so it is important that you contact Frier Levitt Government Affairs today to make sure your voice is heard.