Life Science Compliance Update

February 21, 2017

CMS Releases Report to Congress on CMMI

Patrick-Conway-MD

The Centers for Medicare and Medicaid Services (CMS) released a new report to Congress prepared by the CMS Innovation Center (CMMI) highlighting its achievements since its start in 2010 and laying out plans for implementation of future models. In conjunction with the report to Congress, Dr. Patrick Conway, Acting CMS Principal Deputy Administrator, published a blog post on the CMS website, highlighting the CMMI.

According to both the report and the blog post:

  • Over 30 new payment models have been launched over the past six years;
  • Investments in electronic medical records and a data and analytics infrastructure are sparking a new set of innovative companies;
  • The CMS Innovation Center’s portfolio of models has attracted participation from a broad array of health care providers, states, payers, and other partners. An estimated 18 million individuals, including CMS beneficiaries and individuals with private insurance included in multi-payer models, have been impacted by, have received care, or will soon be receiving care furnished by more than 207,000 health care providers participating in CMS Innovation Center payment and service delivery models and initiatives. These models are delivering care to people in every state across the nation;
  • Medicare exceeded – earlier than predicted – the goal to tie more than 30 percent of fee-for-service payments by the end of 2016 through alternative payment models to quality and cost metrics. Medicare is on pace to reach 50 percent by the end of 2018.

The future is also bright for CMMI, as there are several initiatives on the horizon, including:

  • The Medicare Diabetes Prevention Program expanded model, set to begin in 2018, will pay for services to prevent the onset of diabetes to all eligible Medicare beneficiaries, improving their health and that of the Medicare program both now and in the future. It is estimated that Medicare spent $42 billion in 2016 on fee-for-service, non-dual eligible, over age 65 beneficiaries with diabetes.
  • Three new payment models—the Acute Myocardial Infarction Model, the Coronary Artery Bypass Graft Model, and the Cardiac Rehabilitation Incentive Payment Model—will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation.
  • Through the Comprehensive Primary Care Plus Model, primary care doctors can care for their patients the way they think will deliver the best outcomes, and they’ll get paid for achieving results and improving care.
  • One new payment model—the Surgical Hip and Femur Fracture Treatment Model—will support clinicians in providing care to patients who undergo surgery after a hip or femur fracture beyond hip replacement. In addition, updates have been finalized to the Comprehensive Care for Joint Replacement Model, which began in April 2016.
  • The Accountable Health Communities Model, beginning in 2017, will test whether increased awareness of and access to services addressing health-related social needs will impact total health care costs and improve health and quality of care for Medicare and Medicaid beneficiaries in selected communities.
  • Thirty-eight states and territories are engaged in the State Innovation Models initiative where they are testing their own best ideas to improve health, quality of care, and lower costs. Additionally, Vermont and Maryland have entered into global payment arrangements to improve care for the whole state’s population.

CMMI has recently announced more than five new or re-opened opportunities for clinicians to join Advanced Alternative Payment Models. CMS expects 125,000 to 250,000 clinicians to be participating in Advanced Alternative Payment Models by 2018. CMMI and CMS will continue to develop new payment models, guided by the following core principles: Supporting innovative payment and service delivery models with strong potential to improve health care quality and lower costs; engaging with and listening to consumers, providers, and other stakeholders allowing for open and transparent dialogue, including through the appropriate use of notice-and-comment rulemaking and ombudsmen; and evaluating results based on appropriately scoped and sized demonstrations and advancing best practices based on their impact on quality and cost.

February 17, 2017

MedPAC Reviews Part D Spending Trends

Medicare-Part-D

On January 12, 2017, during the second session of Medicare Payment Advisory Commission’s (MedPAC’s) January meeting, MedPAC Commissioners evaluated current data concerning trends in Medicare Part D spending and discussed future direction for studies regarding updating the program to reflect current markets. The Commissioners reviewed information about the numbers of stand-alone and Medicare Advantage (MA) prescription drug plans participating in Part D for 2017 and the types of benefit designs they offer, including the number of plans with no premium available to individuals receiving the low-income subsidy (LIS).

While no formal vote was held, the Commission endorsed the recommendations for spring discussion topics and advised that the overall Part D program be reviewed for modern relevance and efficiency. Several Commissioners raised concerns that the program details, created in 2003, were no longer relevant to the current market.

Staff Presentation

Several analysts presented key trends in Part D program spending, drug prices, and strategies plan sponsors use to manage spending. According to staff analysts, in 2016, seventy-two percent (41 million of 57 million Medicare beneficiaries), were enrolled in Part D plans, and another three percent received retiree drug subsidies. The analysts also noted that sixty percent of all Part D enrollees had Prescription Drug Plans (PDPs) in 2016, compared to the forty percent that had Medicare Advantage Prescription Drug (MA-PD) Plans. While there will be sixteen percent fewer PDPs offered in 2017, the analysts assured everyone that broad choice will still exist for beneficiaries – there will be eighteen to twenty-four plan choices in each region.

The analysts also noted that Part D is seeing consistent growth. While premiums have remained stable between $29 and $31 from 2009 to 2016, enrollment has grown at an average of six percent each year, rising from 24 billion beneficiaries in 2007 to 41 million in 2016. The rate of growth has been higher among non-LIS enrollees than among LIS enrollees.

The analysts identified manufacturer rebates and specialty pharmacies as two essential strategies to manage Part D premiums. Specialty drugs are accounting for greater shares of drug spending, and manufacturers are using limited networks of specialty pharmacies that do not fall under covered plan pharmacy networks.

Direct and indirect remuneration (DIR) was also discussed, and how it has grown, doubling in drug classes with competing therapies since the start of the program. The increase in brand prices more than offsets the effects of generic use. Incentives for plans to put higher-price, high-rebate drugs on formularies is growing due to the generous eighty percent reinsurance rate set by CMS’s formula. In June, the Commission recommended that this rate be lowered to twenty percent, due to reinsurance growing faster than any other category of Medicare spending.

Commissioner Discussion

The Commissioners expressed an “urgent” need to reevaluate the Part D program’s applicability to the modern healthcare system. Commissioner Amy Bricker introduced the notion that the current program does not allow plans to be competitive with the commercial market, thereby crippling their ability to manage rising drug costs. She suggested the ability to make mid-year changes to plan formularies as one example of additional flexibility for plans. She also suggested that more plans would embrace taking on the risk of investing in sole source products if they had more flexibility to manage their benefits, similar to commercial markets.

Commissioner Jack Hoadley, suggested that more transparency between plans and beneficiaries would make extra flexibility for plans viable. He noted that if beneficiaries understand why the changes are being made to their plans, and how they can appeal to retain their old structures, there is likely to be more trust. He proposed that the Commission work together to come up with ideas as to how to better engage plans and beneficiaries, because the current system does not do much to encourage communication. He also asked that the star ratings tool be reworked to better reflect beneficiary experience with specific plans.

Commission Chairman Jay Crosson summed up the discussion with two themes, both of which most Commissioners felt need “urgent action”: (1) is the Part D program pharmaceutically “appropriate”? and (2) is there a need for the program to be updated to better reflect the challenges of the current marketplace. Lastly, Chairman Crosson recommended that the Commission explore incorporating value-based payment methodologies in future discussions.

December 20, 2016

CMS Scraps Part B Demo

Medicare-part-b

On Thursday, December 15, 2016, the Centers for Medicare & Medicaid Services decided not to go forward with the agency’s controversial Part B payment proposal, noting that “there was a great deal of support from some,” but there were “a number of stakeholders” who “expressed strong concerns about the model.” The spokesman continued, “While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time. We appreciate the robust dialogue with our stakeholders on this important topic and value the feedback on this proposal and other CMMI [Center for Medicare & Medicaid Innovation] models.”

Medicare Part B pays for drugs that are administered in a physician's office or hospital outpatient department. Currently, Medicare pays the physician the drug's average sales price (ASP) plus a 6% add-on payment. But CMS officials argued that because of that payment structure, physicians may be incentivized to choose a higher-priced drug.

The proposed demonstration project, outlined in a proposed rule, would have reduced the add-on payment to 2.5%, but also added a flat fee of $16.80 per drug per day. The flat fee would be updated at the beginning of each year. According to CMS, “the proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending.”

Positive Feedback

The decision saw mostly positive feedback from industry and medical professionals.

Sharad Lakhanpal, MBBS, MD, president of the American College of Rheumatology applauded the decision, “We thank CMS for listening to the rheumatology community’s concerns about the negative and disproportionate impact this proposal would have on our Medicare patients living with rheumatic diseases by not moving forward with this [project]. This positive outcome will help ensure Medicare beneficiaries living with rheumatic diseases are able to continue receiving the therapies they need to manage their chronic conditions and avoid pain and disability.”

Ted Okon, executive director of the Community Oncology Alliance, released a statement, saying, “Cancer patients and their providers across the country can breathe a sigh of relief now that the Part B experiment on cancer care is finally dead. It was encouraging to have such strong support from Congress to end this proposed model that was, at best, an overreach by CMS, created with no stakeholder input.”

The American Medical Association (AMA) also expressed pleasure with the decision, with AMA president Andrew Gurman, MD, releasing a statement, “This is a model for how Washington should – but often doesn’t – work. When CMMI made the recommendation to make changes to Medicare Part B, CMMI and CMS officials welcomed feedback. The AMA and others explained how the proposal would hurt patient care. CMMI then re-evaluated its original proposal, resulting in the announcement that CMS would not go forward with these changes. We are grateful that CMS came to the right decision after listening to stakeholders.”

Dr. Gurman also added, “The Innovation Center can be a valuable tool in developing innovative health care payment and service delivery models. We look forward to continue working with it as Washington grapples with ways to implement MACRA [the Medicare Access and CHIP Reauthorization Act] and to reform healthcare payment systems.

Negative Feedback

Not everyone was happy with the CMS decision, however, including the Medicare Rights Center. “Some inside the beltway will call this a victory,” said Joe Baker, president of the Medicare Rights Center. “But let’s be 100% clear – people with Medicare are not the winners here. Our helpline counselors will continue taking calls from distraught seniors and people with disabilities who simply cannot afford soaring prescription drug prices. The new Administration, Congress, and many decision-makers in Washington would do well to live a day in the lives of these callers.”

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