Life Science Compliance Update

January 29, 2018

MedPAC Proposes Changes to Medicare Part D for Biosimilars


In mid-January 2018, the Medicare Payment Advisory Commission (MedPAC) met to discuss Medicare payment adequacy and vote on 2019 Medicare payment update recommendations. The recommendations approved during this meeting will appear in the 2018 Report to Congress by the Commission.

One of the recommendations finalized by the Commission involved Medicare Part D, stating that Congress should change Part D’s coverage-gap discount program to require manufacturers of biosimilar products to pay the coverage-gap discount by including biosimilars in the definition of “applicable drugs” and exclude biosimilar manufacturers’ discounts in the coverage gap from enrollees’ true out-of-pocket spending.

Principle Policy Analysts Rachel Schmidt and Shinobu Suzuki reported that of the 58.6 million Medicare beneficiaries in 2017, 42.5 million were enrolled in Part D plans, and the program spent nearly $80 billion last year. They noted the coverage gap for Part D beneficiaries will continue to close over the next few years, but the brand manufacturer discount will remain. The analysts stated that key trends since the start of Part D included enrollment growth of six percent, although that number was higher for non-LIS (Low Income Subsidy) enrollees than LIS, and average monthly premiums were stable at around $31 per month. It was also reported that per capita Medicare reinsurance payments to plans have grown much faster than enrollee premiums at 13 percent since 2010.

Schmidt and Suzuki also stated that altering formulary designs to incorporate trends toward moderate tightening, the use of “price protection” rebates for manufacturers, the use of preferred cost-sharing pharmacies, pharmacy fees, and restrictions against specialty pharmacies were all strategies being used to manage Part D premiums. They said that the growth in brand prices more than offset the impact of generic use by beneficiaries, and nearly all the growth in spending for high-cost enrollees is due to higher prices. Ultimately, they said that the trend of growth of high-cost enrollees and rapid growth in Medicare’s payments for reinsurance will continue due to increasing focus on specialty drugs and biologics in the pipeline. They suggested removing the financial disincentive to use biosimilars to encourage price competition.

MedPAC staff suggested the policy change would remove distortion against biosimilars from plan incentives, and Medicare would pay more of its 74.5 percent subsidy through capitated payments rather than reinsurance. The savings from this policy change would be small initially, but has the potential to generate potentially larger savings over the long-run. The recommended policy is likely to encourage plans to place biosimilars on formularies, and fewer enrollees would reach the out-of-pocket threshold.

Commissioner Jack Hoadley stated that it was important that Congress enact the entire recommendation, as using only pieces of the suggested policy change could do more harm than good. He also suggested going further in future discussions to address pricing strategies of companies where plans are left with little to no leverage as well as rebate games and the overuse of the orphan drug class. Several commissioners agreed that more would need to be done to examine the “food chain” of pharmaceutical development to market, so that the commission could better understand how to tackle ever-rising drug costs.

January 26, 2018

MedPAC Commissioners Propose Replacing MIPS


During the January meeting of the Medicare Payment Advisory Commission (MedPAC), staff and Commissioners discussed the Merit-based Incentive Payment System (MIPS), among other hot topics. The commissioners proposed to eliminate the current Merit-based Incentive Payment System and in its place put a new voluntary value program in fee-for-service Medicare in which clinicians can elect to be measured as part of a voluntary group and clinicians in the voluntary groups can qualify for a value payment based on their group’s performance on a set of population-based measures.

Two commissioners did vote against the proposal, with several others expressing concern about developing a new voluntary program, but overall, the recommendation was approved.

During the staff presentation by Kate Bloniarz, Ariel Winter, and David Glass, the Commission’s concerns with MIPS from the December meeting were highlighted, especially the fact that MIPS does not meaningfully measure for quality and proves to be overly burdensome on physicians, outweighing the potential for savings. Kate Bloniarz explained that MIPS will not succeed in helping beneficiaries choose physicians or efficiently reward physicians based on value due to inadequate performance measuring metrics.

Therefore, the staff proposed that MIPS should be replaced by a new voluntary value program (VVP) that would require physicians to form, and be judged in, small groups based on a set of population health measures. While a VVP would automatically withhold two percent of every physician’s Medicare fee-for-service (FFS) payments, the staff explained there would be opportunity to earn back their payment based on performance. They went on to explain that benefits of a VVP would include a shift from clinician reporting to group level evaluation (and reward) based on patient satisfaction and outcome data. Bloniarz explained that a new VVP could also act as an “on-ramp” for physicians who wish to join an Advanced Alternative Payment Model (A-AMPs).

Commissioners voiced concern over the second recommendation regarding the elimination of MIPS and the implementation of a new VVP, with Commissioner Alice Combs and Commissioner David Nerenz voting against the recommendation. While it was widely agreed upon that MIPS was flawed and contained fundamental inequities that needed restructuring, some Commissioners were hesitant to accept the recommendation without additional adjustments.

Commissioner Kathy Buto raised the concern that socioeconomic disparities between patient bases could create a discrepancy between physician performance outcomes under VVPs. Commissioner Buto also expressed her concern that VVPs may be unattractive to those who cannot get in to an A-APM, making her hesitant to support completely eliminating MIPS. Commissioner Warner Thomas mentioned that the lack of support from the physician community to eliminate MIPS should serve as a reminder to the Commission that doing so may not be a necessity.

Commissioner Nerenz expressed concern that a VVP may not be truly voluntary, forcing physicians to form performance groups without any evidence to support that performance will be improved. In terms of beneficiary involvement, Commissioner Nerenz said that beneficiaries care less about VVP measures, and rely more on ‘’word-of-mouth” recommendation when selecting a health care physician.

On a related topic, all commissioners did vote to recommend that Congress increase the Calendar Year 2018 payment rates for physicians and other health professional services by the amount specified in current law.

November 07, 2017

MedPAC Discusses Part D Exceptions and Appeals Process


On October 6, 2017, the Medicare Payment Advisory Commission (MedPAC) met for its October meeting, where it discussed recent information about Medicare Part D exceptions and appeals. Also discussed were the potential benefits and obstacles to the adoption of electronic tools, such as real-time prescription benefit checks and electronic prior authorization that have the potential to reduce the need for the exceptions and appeals process.

MedPAC commissioners were supportive overall for the adoption of electronic tools to streamline efforts, but stopped short of making specific recommendations due to lack of reliable data.

MedPAC Senior Analyst Jennifer Poldulka outlined the exceptions and appeals process for Medicare Part D beneficiaries, noting that enrollees may request a formulary or tier exception for purchase of a specific drug. She said that plans are required to report data on transactions that are rejected at the point of sale and outcomes of the determination and redetermination appeal steps. Ms. Poldulka said that few pharmacy transactions are appealed to plans for coverage determinations or redetermination and that the plan decisions typically favor the enrollee, based on 2015 data.

It was noted that the most common Part D pharmacy transaction rejections happen when a drug is classified as a non-formulary drug. Ms. Poldulka found that only five percent of redeterminations were appealed to the Independent Review Entity (IRE), and that the IRE usually upholds plans’ redetermination decisions. However, Ms. Poldulka cautioned that not all Part D plan data must be reported, and that some data that is reported does not pass CMS data validation standards. She also mentioned that MedPAC found variations in reported pharmacy transaction rejections and determinations, redeterminations, and IRE outcomes.

MedPAC Research Assistant Emma Achola highlighted four electronic prescribing tools that can be used to help streamline the exceptions and appeals process:

(1) electronic prescribing (eRx);

(2) formulary look-up;

(3) real-time prescription benefit (RTPB) check and;

(4) electronic prior authorization (ePA).

Ms. Achola focused on ePA, noting that it is the most complete option, though there are “significant” obstacles with full adoption of ePA. She said that in order for ePA to operate efficiently, multiple actors within the healthcare system must effectively coordinate. She pointed out that the large number of electronic health record (EHR) and ePA vendors make data integration difficult. Additionally, she cautioned that clinicians may bear additional costs and must embrace practice pattern changes in order for an ePA model to succeed.

Commissioner Discussion

Commissioner Jack Hoadley of Georgetown University highlighted the need for a “good, effective” solution to the appeals process and that data limitations make it difficult to make sense of what the numbers actually mean. He was supportive of ePA, noting that he is encouraged by the technology and believes that it can be a “good route” to improving the exceptions and appeals process.

Commissioner Amy Bricker of Express Scripts called for a requirement centered around eRx. She noted that eRx gives the clinician more control and provides an effective solution for all parties involved. Ms. Bricker said that she is a big proponent of ePA, noting that it’s a “great” way to solve issues such as delays and physician workload, but that there would need to be an adequate incentive model for physicians to participate.

Commissioner Pat Wang of Healthfirst complimented the array of electronic tools that are available. She noted that the key issue is integration of planned formulary rules into EHRs so that the data is found on one platform, saying that the only way to get full adoption of ePA is to make it as easy as possible for the prescriber. She encouraged more discussion about the technology that currently exists within EHR vendors, and how it can be properly integrated into ePA.

Commissioner Dana Gelb Safran of Blue Cross Blue Shield of Massachusetts and Commissioner Kathy Buto both spoke to their support of ePA. Commissioner Craig Samitt of Anthem said that prior authorization is an area of “angst,” noting that it is a costly process for also supports ePA, but cautioned that finding a method to both mandate and incentivize these techniques raises issues. Mr. Samitt encouraged a broader conversation as to the best ways to advocate for eRx and ePA, questioning if there is an existing business model that captures this successfully.

Commissioner Rita Redberg of UCSF called the process for eRx “strenuous” and “not user friendly. She noted that it is likely that doctors would retire before they adjust their practices to account for technological disruption. Dr. Redberg also said that there are much bigger issues within prior authorization that are of concern to physicians and beneficiaries.


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