HealthCare Roundtable e-News – June 24, 2020

CMS Proposal Would Allow for “Values-Based” Prescription Drug Arrangements

Last Wednesday (June 17), CMS proposed a rule to make it easier for insurers to negotiate deals around fluctuating drug prices based on how well the drugs work. CMS Administrator Seema Verma said the rule will grant insurers more control around drug spending without restricting drug use or negotiating rebates based on the number of drugs sold. Verma commented that drug companies have been quick to say best price reforms are needed before they can broadly use value-based payment deals, and the proposed rule will encourage them “to put their money where their mouth is.”

The rule would allow revisions to the average manufacturer price and best prices reporting beyond the current 36-month time limit for price revisions, but will also prohibit manufacturers from including the sale of authorized generics in the calculation of brand drug average manufacturer prices. Previously, companies had been known to use authorized generics to manipulate manufacturer prices and reduce brand drug rebates. (InsideHealthPolicy) More information on the proposal can be found here.

“This proposal doesn’t necessarily guarantee lower prices, but what it does do is provide a tool in the toolbox for plans to negotiate with manufacturers,” Verma said during a press call.

Advocates Push Congress to Consider Permanent Telehealth Changes After COVID-19

Telehealth market stakeholders are continuing to look to Congress to implement more permanent relaxed telehealth policies after the pandemic. The Trump administration has made an effort to ease various regulatory burdens throughout the COVID-19 crisis, and a May executive order called on agencies to explore which waivers to make permanent. But some have cautioned that moving too quickly might have a negative impact on beneficiaries, with CMS noting that some of the changes would require Congress to draft policy changes. (InsideHealthPolicy)

Sarah Lloyd Stevenson, director with Faegre Drinker Consulting confirmed that it is looking into steps that Congress can take as part of the effort; passing legislation to eliminate the originating site requirement, expanding qualifying providers, allowing rural health clinics and community health centers to be reimbursed as distant sites, removing state licensure requirements, and allow face-to-face end-stage renal disease evaluations via telehealth.

“All these providers have made the investment in building up their infrastructure, training their clinicians, treating their patients, making this part of their workflow. We shouldn’t turn it off, wait a year, and then turn some parts of it back on,” said Stevenson.

A spokesperson for Sen. Mark Warner (D-Va.), who had previously sponsored the CONNECT for Health Act to expand telehealth coverage under Medicare, said the senator is advocating for many of the telehealth changes created during the pandemic to become permanent. The spokesperson told InsideHealthPolicy that the pandemic has “made all too clear the importance of Congress ensuring the federal government is fully empowered to use telehealth technology when and where appropriate.”

MedPAC Sends Proposals for Lowering Part D Costs to Congress

Congressional Medicare advisers released a report last week recommending Congress cap seniors annual drug costs, make plans pay a larger share of seniors’ drug costs before the catastrophic phase, and increase drug companies’ share of costs in the catastrophic phase. In its report, MedPAC noted that “the magnitude of decreases in plans’ share of benefit liability raises significant concerns because it undermines key features of the Part D program: competing private entities that bear financial risk for their enrollees’ spending.”

The advisors propose eliminating the “coverage gap” for low-income subsidy beneficiaries and making insurers pay 75% of drug costs between the deductible and catastrophic with beneficiaries continuing to pay 25% of their costs after meeting deductibles. The report also included proposals to reduce Medicare’s share of seniors’ catastrophic costs from 80% to 20% in order to shift insurance risk from insurers to drug makers. (InsideHealthPolicy)

Additionally, the report recommends that lawmakers replace the Medicare Advantage quality bonus program with a program that would instead pool funds for rewards and penalties, shifting the focus more on beneficiaries’ quality of care by eliminating the star rating system. The report states that “the current quality bonus program (QBP) is overly complex, distributes financial rewards inequitably, and reports inaccurate information on quality.”

In regards to timing, MedPAC says that the proposed changes should be phased in and that HHS should allow plans to establish preferred and non-preferred tiers to reflect the higher benefit liability that plans will bear under the new benefit structure.

Federal Appeals Court Blocks Drug List Price Rule in TV Ads

On June 16, a federal appeals court blocked the Trump administration rule requiring pharmaceutical companies to include drug prices in their television advertisements. The court ruled in favor of a lower court decision to throw out CMS’ rule requiring that drug makers disclose their drug list prices, which had been part of the administration’s efforts to encourage more pricing transparency in the industry.

Judge Patricia Millett wrote that HHS “acted unreasonably in construing its regulatory authority to include the imposition of a sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs,” in the court’s opinion.

The District of Columbia Court of Appeals found that HHS does not have the authority to compel manufacturers to disclose list prices, noting that the list price “bears little resemblance” to what government programs like Medicare and Medicaid pay. Pharma companies Amgen, Merck, and Eli Lilly sued to stop the rule, which they said is outside of CMS’ authority and violates the First Amendment. (InsideHealthPolicy)