Life Science Compliance Update

September 02, 2016

CMS Releases New Prescription Drug Cost Data


On August 18, 2016, the Centers for Medicare and Medicaid Services (CMS) released new prescription drug data, physician-level data on prescriptions for drugs paid for by Medicare Part D in 2014. This new data set “describes the specific medications prescribed for 38 million Medicare Part D enrollees, who represent about 70 percent of all Medicare beneficiaries.” This is the second annual release of the data.

According to Niall Brennan, CMS Chief Data Officer, “With this data release, patients, researchers and providers can access valuable information about the Medicare prescription drug program. Today’s release joins a series of actions the Administration is taking to improve transparency around government data, including the cost of prescription drugs.”

The 2014 data set contains information from over one million distinct health care providers who collectively prescribed roughly $121 billion in prescription drugs that were paid for under the Medicare Part D program, a seventeen percent increase from the 2013 data set numbers. This falls more or less in line with a March 2016 Health and Human Services (HHS) report, which provided a detailed analysis of prescription drug spending trends and noted that the overall prescription drug spending in the United States rose by 12.6 percent from 2013 to 2014.

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In 2014, Lisinopril, Levothyroxine Sodium, and Amlodipine Besylate were the three drugs with the highest claim count. Rounding out that top ten list were Hydrocodone-Acetaminophen, Omeprazole, Metformin HCI, and Gabapentin.

Interestingly, none of the drugs in the top ten list by claim count were in the top ten drugs by costs. At the top of that list were: Sovaldi ($3.1 billion), Nexium ($2.66 billion), and Crestor ($2.54 billion). Also on that list were Abilify ($2.53 billion), Lantus SoloSTAR ($2 billion), and Revlimid ($1.67 billion).

The data set was created by using information submitted by Medicare Advantage Prescription drug plans, as well as stand-alone Prescription Drug Plans. Now that there are two years of data, analyses of trends from 2013 to 2014 will be possible, as well as “a wide array of analyses that compare prescribing habits for specific providers, brand versus generic drug prescribing rates, and state- and local-level differences in drug utilization and costs.

The 2014 data set also includes new aggregated information on opioids, antibiotics, antipsychotics, and high-risk medications among the elderly. Additionally, a prescriber enrollment status field has been added to indicate whether the prescriber is enrolled, not enrolled, or has opted out of the Medicare program.

This new data adds to the current trove of information previously released on services and procedures provided to Medicare beneficiaries. According to CMS, “[t]his public data release is part of the Administration’s broader strategy to improve the health care system by paying practitioners for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.” 

August 31, 2016

FDA and CMS Call for Nationwide Changes


Recently, CMS Administrator Andy Slavitt and FDA Commissioner Dr. Robert Califf wrote a joint letter to Gary Beatty, Chair of the Accredited Standards Committee X12 (ASC X12), asking that the organization add unique device identifiers (UDIs) for implantable medical devices on claims form. They argue that such a move would improve post-market surveillance and provide for better value-based reimbursement based on device performance.

Manufacturers and distributors are currently implementing UDIs and electronic health records (EHRs) are being tweaked to permit providers to record UDIs, but insurance claims forms have been the holdout. Some industry representatives believe that the changes to insurance claims forms would be costly because the technology to support the changes is not there.

The joint letter addresses the group that sets standards for sharing data gathered and used by the insurance – and other – industries. ASC X12 will release the next version of the insurance claims form for public comment in December 2016. That template is set to be released in 2021. The next update is not scheduled for another ten years.

Slavitt and Califf note that UDIs in claims forms have cost benefits because they would be able to help providers and payers calculate and compare total spending and outcomes and provide better data to track manufacturer rebates owed to the payer or provider. They acknowledge that including UDI will be a complex process and will require a change in workflow and systems for providers and billing companies, but that they are committed to a plan that minimizes impact on state Medicaid agencies, health plans, small physician practices and rural hospitals.

The day after the sending letter, Andy Slavitt tweeted, reiterating his stance:

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Health and Human Services (HHS) supports the idea “if sufficient funding and resources are provided to make the necessary Medicare claims processing system changes.”

Previously, CMS pushed back against adding UDIs to claims forms because of technical hurdles and high costs involving in overhauling the form. In Spring 2015, former Medicare Administrator Marilyn Tavenner noted that putting the UDI into electronic health records or device registries kept by companies should be sufficient to promote safety.

CMS’ Office of Inspector General stated that UDIs could save the agency money and offer valuable insights into population health. Other proponents of UDIs say they could more quickly identify dangerous devices, some of which (under the current system) have not been flagged until they hurt patients.

The letter also reflects the FDA’s current push to improve device evaluation and surveillance, as outlined in an editorial co-written by Dr. Califf.  Califf notes that a “key dilemma for device regulation is how to ensure timely access while also providing evidence to guide safe and appropriate use.” Presently, when a device receives approval for the United States market, “residual uncertainty about benefit and risk is typically addressed through postmarket evaluation,” as premarket studies do not typically reflect how a device will be used in practice.

However, Califf goes on to note, “current approaches to postmarket evaluation have limitations. Even though the FDA can require device makers to perform postmarket studies, patients have few incentives to enroll in a study once a device is marketed, and many FDA-mandated postmarket studies for devices have been delayed, scaled back, or never finished.”

Califf also seems frustrated that reporting of adverse events and device malfunctions depends on clinicians identifying and reporting a possible association, and therefore, it is likely that underreporting is common.

Califf calls for a “strategic approach to linking and using clinically based data sources, such as registries, electronic health records (EHRs), and claims data,” which could potentially “reduce the burdens of obtaining appropriate evidence across the life cycle of a device.” He believes that by “leveraging clinical data and applying advanced analytics and flexible regulatory approaches tailored to the unique data needs and innovation cycles of specific device types, a more comprehensive and accurate framework could be created for assessing the risks and benefits of devices.”

August 26, 2016

Rocky Start to CMS ACO Program


Three of the 21 participants in CMS’ newest accountable care organizations program, the Next Generation ACOs, have withdrawn since the start of the year. Heritage California ACO in Northridge, Calif., River Health ACO in Harrisburg, Pa., and WakeMed Key Community Care in Raleigh, N.C. now leave the program with 18 ACOs. This model allows ACOs to assume higher risk for a promise of a higher reward than the Pioneer Model and Medicare Shared Savings Program.

Leaving New Model

The Next Generation ACO model uses a new benchmarking methodology that incorporates one year of historical costs as well as regional and national costs and an organization’s quality score. This is seen by many as an improved benchmarking methodology. As reported by Healthcare Finance, RiverHealth ACO released a statement: "While RiverHealth ACO managed the rate of increase in costs to below the national average, projections do not indicate that the ACO would be able to meet the current target set by CMS”.

Also reported, WakeMed Key Community Care also cited the difficult financial metrics. The ACO is a joint venture between WakeMed Health and Hospitals and Key IPA. WakeMed Key Community Care's Board of Managers made a business decision to withdraw from the Next Generation ACO program for 2016 after evaluating financial and operational metrics, according to the provider. "Though we were committed to the program, developments in Q1 led the board to reconsider the Next Generation participation decision," WakeMed Key Community Care said by statement according to the report.

State of other ACO Models

As reported by Leavitt Partners, the most popular of Medicare’s models, the MSSP, gained 100 new participants this year, increasing the total to 434 covering 7.7 million lives. Of those 434 MSSP ACOs, 22 have risk-bearing arrangements, including six in Track 2 and 16 in the new Track 3. Although CMS announced 100 new ACOs, the MSSP had 404 active ACOs in 2015, giving this new cohort a net increase of only 30. Eight MSSP ACOs moved to the Next Generation model and are accounted for, but further analysis will be needed in order to conclude how many ACOs merged with others vs actually leaving the program. CMS also announced that 147 MSSP ACOs chose to renew, continuing their participation in the program.

ACOs’ Future

A recent study indicates that ACOs may unintentionally create further disparities in healthcare. According to the report, physicians who participate in ACOs are more likely to practice in affluent areas. The study found an inverse relationship between ACO participation and the percentage of the population a physician served that was black, living in poverty, uninsured or disabled or had less than a high school education. This means patients who are already more vulnerable have less access to the benefits of ACOs.

Additionally, in 2015, 45% of Medicare ACOs costed more money than the government originally predicted based on historic patient costs. It was reported that 196 ACOs saved money last year, while 157 cost more than expected. Regardless, ACOs continue to be a major part of CMS’ policy agenda to move into value-based healthcare reimbursement. MACRA’s regulatory changes will encourage physicians to join ACOs, especially those with enough risk (and meeting other requirements) to be an Advanced APM. Other ACOs will attest to the new Merit-Based Incentive Payment Program (MIPS).

While until recently little has been known about the effect of Medicare ACOs on overall spending, and whether they have been able to reduce the use of high-cost care settings such as hospital stays and emergency department visits, new evidence suggests some modest gains. This is especially true when it comes to treating patients with multiple conditions who are responsible for the greatest proportion of spending.


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