Life Science Compliance Update

February 20, 2018

The Congressional Budget Deal's Effect on Health Care


In early February, Congress passed a massive bipartisan budget deal to fund the government through March 23, 2018, suspend the debt ceiling until 2019, raise budget caps by nearly $300 billion over two years, and fund various parts of the government.

Naturally, passage of the budget agreement means that quite a few health care priorities made their way into the law. For example, several health care “extenders” were reauthorized, community health centers (CHCs) were funded, cuts to safety net hospitals were delayed, as were cuts to the CHRONIC Care Act and the Part B Improvement Act, while revisions to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) were made.

Then, the deal reached in the Senate added $6 billion in funding to address opioid and mental health treatment, $4 billion for VA hospitals, and $2 billion in new funding for research at the National Institutes of Health (NIH). The Senate deal also extend funding for the Children’s Health Insurance Plan (CHIP) by an additional four years — a ten-year extension when combined with the six-year reauthorization secured last month.

Interestingly, the agreement also permanently repeals Medicare’s moribund Independent Payment Advisory Board (IPAB), while also making adjustments to the prescription drug “donut hole” that will require pharmaceutical companies to provide steeper discounts for seniors in the coverage gap.

IPAB Repealed

Before it could go into effect, Congress included the repeal of the unpopular Affordable Care Act (ACA) Independent Payment Advisory Board (IPAB), which would have been responsible for identifying potential Medicare savings to Congress. Congressional representatives of both parties had disdain for IPAB because it had the ability to limit Congress’ power over its recommendations. While Medicare spending has yet to hit the designated threshold that would have triggered the creation of the panel, the most recent Medicare trustees report estimated that it may have been enacted as soon as 2021.

The repeal of IPAB is likely to benefit drug makers and private Medicare plans as without the repeal, the Board would have been precluded from rationing care, increasing beneficiary spending, or cutting payments to hospitals and hospices.

The Donut Hole is Closed

The bill increased the discounts that drug companies pay to beneficiaries whose drug costs fall into the coverage gap of Part D, from the current 50 percent level to 70 percent. This change is estimated to save the federal government $10 billion over the course of a decade but is expected to cost drug companies close to $40 billion over that same decade.

Part D plan sponsors, on the other hand, had a decrease in their liability from the 25 percent they were expected to pay to begin in 2020 all the way down to 5 percent. The hole will remain the same for patients – 25 percent.

Changes to MACRA

The Medicare Access and CHIP Reauthorization Act (MACRA) had several changes made to it by way of the budget deal, including excluding the cost of Part B drugs from the calculation of doctor pay, delaying the use of cost measures in doctor performance scores, giving CMS three more years to transition to the performance threshold, and allowing the Physician-Focused Payment Model Technical Advisory Committee (PTAC) weigh in earlier on the payment models that providers design.

Physician advocate groups had been lobbying for the ability to exclude the cost of drugs they administer from the calculation of their Merit-Based Incentive Payment System (MIPS) scores because they were concerned that specialty therapies do not always have consistent coverage in reimbursement. In addition to listening to the concerns on that front, lawmakers also allowed CMS the flexibility to determine the weight of the cost performance category between 10 percent to 30 percent for three years.

February 15, 2018

House Holds Hearing on Opioid Crisis


On January 17, 2018, the House Ways and Means Subcommittee on Oversight held a hearing entitled “The Opioid Crisis: The Current Landscape and CMS Actions to Prevent Opioid Misuse.” The hearing focused on efforts by the Centers for Medicare and Medicaid Services (CMS) to utilize data to identify high risk individuals in the Medicare Part D program who are likely to abuse opioids. The hearing also examined the extent of the problem as well as the tools and programs CMS has used to protect individuals with substance abuse issues and to prevent physicians from over-prescribing.

The Committee heard testimony from a three-person panel, all of whom shared progress reports regarding steps the agency has taken to address different aspects of the opioid crisis. Discussion at the hearing largely focused on the desire to pass bipartisan legislation to address the opioid crisis as well as to determine best practices to identify over-prescribers and reduce instances of fraud.

Opening Statements

Chairwoman Lynn Jenkins opened the hearing by highlighting statistics regarding rising opioid related overdose death rates in her home state of Kansas. She went on to state that the “immense cost opioids impose on society” have caused a loss of productivity and put undue burden on the U.S. economic system. To lessen this burden, Jenkins stressed the importance to provide Medicare, specifically private Part D plan sponsors, the tools they need to ensure that opioids are provided only when medically necessary.

Full Committee Ranking Member Richard Neal mainly focused on the effect the opioid epidemic has on Medicare beneficiaries and negative impact on labor participation rates around the country. In the face of a looming expiration of the Administration’s public health emergency declaration, Neal voiced his frustration that there has not been “positive action” taken to find a solution to opioid overuse.

Witness Testimony

Gary L. Cantrell, Deputy Inspector General for Investigations at the Department of Health and Human Services (HHS), highlighted the work at the Office of the Inspector General (OIG) in restricting vulnerable beneficiaries’ access to drugs by identifying and apprehending physicians and pharmacies who inappropriately or unnecessarily prescribe opioids. He explained that opioid related fraud encompasses a broad range of criminal activity that the OIG, in tandem with state and federal law enforcement officials, has focused on recently.

Elizabeth H. Curda, Director of Health Care at the Government Accountability Office (GAO), explained how CMS developed a “misuse” strategy to oversee opioid prescribing in the Medicare program. She explained that CMS relies on private insurers – known as plan sponsors – to be alerted of “high-risk” beneficiaries, or beneficiaries receiving opioid prescriptions from four or more prescribers. After a high-risk beneficiary is identified, she said, plan sponsors are alerted, identify a plan of action, and respond to CMS within thirty days of the alert.

Kimberly Brandt, Principal Deputy Administrator for Operations at CMS, explained how CMS oversees efforts from Medicare Part D sponsors to work with prescribing physicians in an attempt to identify improper opioid utilization. Brandt explained that this is done by using utilization monitoring systems to identify high-risk beneficiaries and then alerting pharmacies of the patient’s status.

Committee Discussion

Tracking High-Risk Beneficiaries

Chairwoman Jenkins voiced her concern that CMS only tracks a small portion of the at-risk population when attempting to determine high-risk beneficiaries. Ms. Curda agreed and noted that beneficiaries who are receiving large doses of opioids should be tracked, regardless how many doctors or pharmacies they have visited. It was suggested that current monitoring by CMS is insufficient, with nearly three-quarters of a million beneficiaries receiving high-level doses of opioids being overlooked and at risk for falling victim to addiction or overdose death.


Fraud in Treatment Programs

Representatives Pat Meehan and Carlos Curbelo expressed interest in the most common health care fraud schemes surrounding the opioid crisis. Mr. Cantrell explained that the most common fraud schemes are seen in “sober houses” where addicts go to receive treatment. Patients are often farmed out to corrupt doctors to receive lab testing and other expensive and unnecessary treatments, he explained. He said there have also been cases of individuals selling expensive medications back to pharmacies or on the black market, and unethical prescribers who receive kickbacks from pharmacies as a reward for prescribing certain addictive drugs. Mr. Cantrell attributed this to a lack of resources for law enforcement officials to address every fraud case that comes through the system.

Potential Legislative Solutions

Throughout the hearing, members on both sides of the aisle promoted bipartisan legislation to address the opioid epidemic. Representative Judy Chu advocated for Ensuring Access to Quality Sober Living Act of 2017 (H.R. 4684), a bill she sponsored in hopes to develop a set of best practices for sober living communities. Chu also highlighted details of the Acupuncture for Heroes and Seniors Act of 2017 (H.R. 2839), a bill she sponsored in an effort to advocate for alternative treatment options, particularly acupuncture, to be covered through Medicare.

Meanwhile, Representative David Schweikert spoke in support of the Comprehensive Opioid Abuse Reduction Act of 2016, which was signed into law in 2016. He claimed the bill would act as a mechanism to standardize the prior authorization process and promote the use of pharmaceuticals with less addictive tendencies.

February 06, 2018

Senator Cassidy Introduces Legislation on 340B Program


Recently, Louisiana Senator Bill Cassidy introduced the Helping Ensuring Low-income Patients have Access to Care and Treatment, (the “HELP Act”).

The legislation would close loopholes in the United States Department of Health and Human Services’ (HHS) 340B program and hold hospitals accountable for passing on prescription drug discounts to patients.

The HELP Act would increase transparency and strengthen the reporting requirements to prevent abuse and ensure that 340B discounts are being used efficiently and to lower drug costs. The bill would prohibit any new enrollments in the 340B program for at least two years and would require the HHS secretary to issue new reporting requirements for current program participants.

The legislation includes the following pieces:

  • A temporary halt on the expansion of the 340B program for disproportionate share hospitals (including hospital outpatient facilities)
  • Clearer eligibility standards for hospitals and their offsite outpatient facilities
  • Public data reporting that highlights key metrics like patient mix and the amount of charity care provided by non-rural hospitals
  • New GAO and OIG reports on key areas, including reports on charity care rates at physician offices purchased by hospitals
  • A claims modifier, which will make it easier to identify and prevent duplicate discounting

However, there are several exceptions to pieces of the legislation. For example, critical access hospitals, rural referral centers, sole community hospitals, grantees and PPS-exempt children’s or cancer hospitals would still be allowed to enroll in the 340B program. Further, the bill exempts grantees along with rural and critical access hospitals from most of the bill’s new reporting requirements.

“The 340B program is an important resource for hospitals serving low-income areas,” said Senator Cassidy, who is a practicing physician. “But too often the program’s discounts are used to pad hospitals’ bottom lines instead of helping disadvantaged patients afford their treatments. This bill will increase transparency and accountability and help ensure these discounts reach patients.”

PhRMA Response

On January 17, 2018, Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl issued a statement in support of the HELP Act.

PhRMA welcomes the introduction of legislation by Senator Bill Cassidy to review and fix the 340B program. As stated in the recently released House Energy and Commerce Committee report, there are a number of flaws with the 340B program that must be addressed, including more oversight to ensure the program is meeting its intent of helping vulnerable and uninsured patients. If passed, this legislation will enable Congress and the Health Resources and Services Administration to take additional, much-needed action to get the 340B program back on track.

We saw increased attention on the 340B program throughout 2017 from the Hill and the Administration, and it is encouraging to see continued focus in 2018. There has long been bipartisan support for fixing 340B, including recently introduced bipartisan legislation in the House, and PhRMA looks forward to working with all stakeholders to keep this momentum going.


Preview | Powered by FeedBlitz


February 2018
Sun Mon Tue Wed Thu Fri Sat
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28