HealthCare Roundtable e-News – July 30, 2019

Save the Date:

Roundtable Announces Webinar on Drug Pricing 

Given the amount of recent legislative and regulatory activity regarding a variety of issues relative to drug pricing, the Roundtable has scheduled a webinar for members and friends for Tuesday, August 6th at 4:00 PM (EDT).

The upcoming Congressional summer recess provides an opportunity for us to step back and review recent legislative and regulatory activity regarding critical Roundtable priorities. The webinar will include a discussion of the bipartisan drug pricing bill advanced today by the Senate Finance Committee and other pending House and Senate proposals. In addition, we’ll discuss what we expect to see when Congress reconvenes in September.

Click here to register for this timely and informative webinar.

Trump, CMS Propose Rules Requiring Hospitals to Disclose Negotiated Rates

On Monday (Jul. 29), the Trump administration  issued a series of proposed rules requiring hospitals to post payer-specific negotiated rates, according to the Center for Medicare and Medicaid Services (CMS). The proposed rules intend to help make patients more aware of hospital service costs and would also reduce the amount of time physicians spend on “high-value care” over administrative work.

In a call with the press, CMS Administrator Seema Verma shared that one of the proposed rules follows President Donald Trump’s June executive order that directed Health and Human Services to increase price and quality transparency in healthcare. As part of the set of rules, the CMS would require gross charges and payer-negotiatedprices to be shared and posted online. Verma stated that by making the prices online and shareable, it would be easier for patients to do an “apples-to-apples comparison” on hospital prices.

In response to the rules, hospital groups have shared their concerns with CMS, noting that in revealing negotiated rates, the amount of competition across the industry would decrease. The groups stated that, as a result, lower paid providers could potentially ask for the same rates of other local hospitals regardless of higher rankings. Rick Pollack, CEO of American Hospital Association, stated that requiring hospitals to post negotiated rates “could seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.” (Modern HealthCare)

White House to Likely to Issue Executive Order to Lower Medicare Drug Prices

The White House is preparing an executive order to cut drug prices on most branded prescriptions accessible through Medicare Part D and other government programs. While President Trump has yet to comment on the initiative, industry sources say the order is one of a few recent considerations for the administration, which has been aiming to lower drug prices in Medicare Part D for patients needing take-home prescriptions.

In addition to the executive order, which is expected in the next few weeks, sources say the President is also considering adjusting pricing controls that affect the Tricare health plan for military personnel and the Department of Veterans Affairs to help lower costs.

In 2016, the U.S. government spent close to $100 billion on prescription drugs in Medicare Part D. President Trump would likely postpone the executive order if Senate Finance Leaders are able to bring their highly-anticipated, bipartisan version of legislation aiming to lower drug costs to the floor for a vote.

Senate Will Wait to Vote on Bipartisan Health Legislation Until September

In a joint statement last week, the Senate Health Committee Chair Lamar Alexander (R-Tenn.) and ranking member Sen. Patty Murray (D-Wash.) announced that there would not be enough time before August recess for the committee to vote on their bipartisan health legislation this month. The committee hopes to vote on the package, which includes surprise billing protections and anti-competitive provisions, come September. The package will likely be combined with legislation to address drug pricing in the Fall.

“We are engaged in very productive conversations about this legislation with our colleagues in the Senate and the House, and will continue to work during August and into September to move this legislation forward,” they said in the statement.

Several hospital groups have cited their concerns over some measures of the package; in particular, the surprise billing provision preventing massive, “surprise” payments to out-of-network physicians, which the groups argue could ultimately cut hospital payment rates for doctors and nurses. Alexander has reportedly been in talks to review this provision and help address the groups’ concerns.

Utah Governor’s Request for Partial Medicaid Funding Rejected by Trump Administration

Last week, the White House rejected a request from the state of Utah for federal funding to partially expand Medicaid. Earlier this year, Governor Gary Herbert (R) had authorized a limited Medicaid expansion plan and had filed a formal request for partial funding, which the Trump administration rejected as part of its stance on preventing adjustments to the Affordable Care Act (ACA) that could aid its longevity.

“A number of states have asked [the Centers for Medicare and Medicaid Services] for permission to cover only a portion of the adult expansion group and still access the enhanced federal funding available through ACA. Unfortunately, this would invite continued reliance on a broken and unsustainable ObamaCare system,” a spokesperson for the Centers for Medicare and Medicaid Services (CMS) said.

In a joint statement, Gov. Herbert and state policymakers had acknowledged that the state was disappointed in the administration’s decision, but reassured residents that those currently relying on Medicaid under the new expansion “are still covered under the expansion that was activated on April 1, 2019.”

Drug Makers Would Likely Pay More Part D Costs Under Senate Finance Plan

Drug makers would pay a significantly larger share of costs in Medicare Part D under the Senate Finance Committee’s new drug-pricing plan, according to Senate Finance Chair Chuck Grassley’s (R-IA) office. Companies that sell expensive drugs would bear the brunt of the shift, while makers of mid-range drugs like insulin could benefit. (InsideHealthPolicy)

The legislative language being written around the drug-pricing plan passed by the Finance Committee last week would make drug companies pay 20% of costs in the catastrophic phase of Part D, well above the industries’ break-even point, Grassley’s office told IDP.

The Finance Committee’s bipartisan drug-pricing bill includes a major restructuring of the Medicare Part D drug benefit. The coverage gap, where drug makers pay 70% discounts, would be eliminated. Instead, pharmaceutical companies would pay 20% of costs in the catastrophic phase where they currently have no liability. Even though the raw percentage is lower, the change means drug makers’ costs will be significantly higher.

Drug makers’ break-even point would have been 14% of catastrophic costs, Grassley’s office said. Instead, the Finance bill would have them take on 20% of costs.

Pharmaceutical companies also would pay for discounts on a greater quantity of drugs because their catastrophic liability would apply to beneficiaries who receive a low-income subsidy. Drug makers do not pay discounts for these beneficiaries under the current system.

“There are concerns that this change will have disproportionate impact on particular therapeutic areas with heavy prescribing to low-income subsidy and dual-eligible individuals,” Cornyn said.

Though plans would take on the lion’s share of catastrophic liability, the government would still pay a substantial amount of catastrophic costs. Government payments would shift from reinsurance payments to premium subsidies.

Insurance industry sources said they are confident that if drug makers take on 20% of catastrophic costs, plans would be able to keep premiums stable for beneficiaries. (InsideHealthPolicy)