HealthCare Roundtable e-News – February 16, 2018

Chronic Care Legislation Passed as Part of Spending Bill

The spending bill passed by Congress on Feb. 9 included a bipartisan plan to overhaul chronic care treatment in Medicare.

As part of legislation that ended a government shutdown that lasted only a few hours, lawmakers passed the “Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act” (S. 870). The legislation would, among other things, expand certain telehealth and home care options; enhance options for the chronically ill within Medicare Advantage; increase payment accuracy for patients with chronic conditions; provide more flexibility to the beneficiary selection process in accountable care organizations, and allow more care coordination in ACOs. (Summary) Four other heath care proposals that similarly had support from members of both parties were also included in the spending plan.

“It is no surprise that this package of cost-effective, evidence-based proposals received broad bipartisan support,” Sen. Mark Warner, D-Va., said. “These commonsense fixes will streamline the way Medicare patients living with chronic conditions receive care, helping those with diabetes or renal disease access high-quality and affordable health care services.”

Warner, as a member of the Senate Finance Committee Chronic Care Working Group, helped to write the legislation, along with Finance Committee Chairman Orrin Hatch, R-Utah, Ranking Member Ron Wyden, D-Ore., and Sen. Johnny Isakson, R-Ga.

The proposal is based in part on the 327 comments the working group received regarding a December 2015 policy options paper. The Roundtable submitted comments in January 2016 stating that the options paper “reflects work and analysis that will further the goal of improving care for the millions of vulnerable Medicare beneficiaries managing multiple chronic conditions.”

CMS Proposes Changes to Medicare Advantage

The Centers for Medicare & Medicaid Services (CMS) has proposed increasing payments to Medicare Advantage plans in 2019 by an average of 1.84 percent.

Medicare Advantage offers managed care plans through private companies, which receive a fixed amount of money from the federal government per beneficiary each month. About 18 million people – roughly one-third of all Medicare beneficiaries – are in Medicare Advantage.

In addition to the planned 1.84 percent increase in payments, coding changes – adjustments that reflect differences in diagnosis coding between Medicare Advantage organizations and fee-for-service providers – are expected to boost payments by another 3.1 percent on average. (Fact sheet)

“We are focused on addressing the specific needs of beneficiaries and providing new flexibilities for Medicare Advantage plans to offer new health-related benefits,” CMS Administrator Seema Verma said.

CMS is also proposing a set of changes that the agency says will “increase flexibility in Medicare Advantage that will allow more options and new benefits to Medicare beneficiaries.” One proposed change would affect employer group waiver plans (EGWPs).

EGWPs are a type of Medicare Advantage plan used by state and local governments, unions and others to provide health care coverage to 3.2 million retirees. CMS has, for several years,been considering eliminating bidding by EGWPs, arguing that the plans have no incentive to be competitive and, as a result, regularly submit high bids. The agency is proposing to abandon the bidding process and move entirely to administratively-set rates in 2019. CMS noted, though, that it is “considering alternative policies for paying these Plans and is soliciting comment on the final approach.”

In 2017, CMS based payments to EGWPs on a combination of EGWP bids and individual market bids, rather than just bids, as was done in previous years. It had proposed using only individual market bids starting in 2018, but, “after reviewing comments” submitted regarding the proposal, it decided to continue to use the combination.

Public Sector HealthCare Roundtable members have previously expressed concern about the move away from EGWP bids, since this would prevent CMS from taking account of the unique characteristics of plans provided by the public sector and unions.

Comments will be accepted on the proposal through March 5.

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Biosimilars No Longer Excluded from Part D Coverage Gap Discount Program

Congress enhanced Medicare coverage of biosimilars in the spending bill it passed on Feb. 9.

Biologic drugs are highly advanced medicines derived from biological, rather than chemical, processes. They are among the most innovative of drug treatments and, as such, are also among the most expensive, potentially costing tens, even hundreds, of thousands of dollars each year for a single patient. Generic biopharmaceuticals, known as biosimilars, are expected to offer lower-cost alternatives, as generic versions of traditional drugs do.

One of the measures included in the spending package would enhance coverage for biosimilars under the Medicare Part D prescription drug benefit. Part D originally included a coverage gap – often referred to as a “donut hole” – in which beneficiaries were responsible for all costs beyond a certain point in a given year until they reached the threshold for “catastrophic” coverage. The coverage gap is being phased out and was scheduled to be eliminated in 2020, but Congress, in the spending bill, moved that up to 2019. In addition, lawmakers repealed language that excluded biosimilars from a program that provides discounts to beneficiaries who are in the coverage gap.

“Biosimilar medicines offer enormous potential to lower prescription drug costs for patients, the health care system and taxpayers, and we applaud policymakers for taking steps to improve access to them, especially for seniors,” Association for Accessible Medicines Senior Vice President of Policy Christine Simmon said.

Separately, lawmakers used the spending legislation to repeal the Medicare Independent Payment Advisory Board. That panel was created by the 2010 Patient Protection and Affordable Care Act to oversee Medicare spending and, if spending reached a certain level, to devise adjustments that would go into effect automatically unless Congress voted them down. Since the health care reform law was passed, Republicans have charged that the board would enable unelected officials to make decisions that would result in health care “rationing.” The most extreme critics called the board a “death panel” and insinuated – inaccurately – that it could make decisions that would directly deny care to certain Medicare beneficiaries.

With Medicare spending increases at historically low levels in recent years, not only has the board never met, its members have not even been appointed.

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Coalition of Hospitals May Start Manufacturing Generic Drugs

Hundreds of hospitals are reportedly considering working together to produce their own generic drugs.

While generic drugs usually cost significantly less than their brand-name counterparts, the prices of some generics have risen sharply in recent years. In response to these increases, the CEO of Intermountain Healthcare said on CNBC that about 450 hospitals could start manufacturing about 20 generic drugs on their own.

Marc Harrison said the group of hospitals might seek to fund the project with help from “philanthropists who are sick of this activity” by drug manufacturers who are “creating shortages and driving prices in an irrational fashion.”

“They create shortages and drive the prices up, and our patients can’t get a hold of the drugs we need,” Harrison said. “We, as a team, will do the opposite. We’ll make sure drugs are available in good quantities and reasonable prices.”

Harrison clarified that this plan would be a narrowly focused effort and that the participating hospitals would continue to acquire the vast majority of their drugs through normal channels.

“We’re only interested in those organizations that are creating shortages and driving drug prices up in an irrational fashion,” he said.
Harrison did not specify which drugs the hospitals would produce.

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