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The challenges of contracting for value, not volume in prescription drugs
NATIONAL HARBOR, MD. – Paying for value over volume is being seen as a key part of driving down the cost of prescription drugs. But setting up value-based contracts can be a challenge.
“In Utah, we thought we would be an appropriate laboratory to try and figure out, ‘Is there a way that we can do this different?’ ” Diana Brixner, PhD, of the University of Utah, Salt Lake City, said at the annual meeting of the Academy of Managed Care Pharmacy. “How can we be creative and have alternatives to high-deductible plans in Utah through value-based–type programs?”
The state considered three different options, she noted. The first option was value-based drug coverage, which pays for only those drugs that are deemed valuable by an independent source. Uptake on these types of contracts has been slow, Dr. Brixner noted, particularly as patient advocates have argued that some drugs may not be cost effective but are still the best choice for certain patients. In those cases, value-based drug coverage has the potential to hinder access.
“There are certainly still different areas and issues that need to be worked out, but in concept, this could potentially help the solution of getting more affordable care to patients,” Dr. Brixner said.
The second option is outcomes-based contracting, which involves working with manufacturers to determine appropriate disease states with vetted outcomes measures and building pharmacy contracts around them.
“We are very optimistic about the potential for outcomes-based contracting as well,” Dr. Brixner said.
CVS has looked into zero copays for preventive medicines, Dr. Brixner said. She added that studies have shown the potential for millions in savings from these kinds of arrangements.
But there are concerns with all of these designs. Drug manufacturers, for instance, have concerns about getting accurate data to determine the payment parameters. Another concern from the manufacturer side is the inability to discuss information about off-label drug use that could be important to negotiating a value-based contract.
For payers, a key concern is making sure there are measurable outcomes, as well as appropriate risk sharing.
In the end, different conditions lend themselves to different types of value-based contracting, Dr. Brixner said. For example, multiple sclerosis is better suited to a value-based drug coverage contract, while rheumatoid arthritis fits better in an outcomes-based contracting design.
Kenneth Schaecher, MD, associate chief medical officer of the University of Utah Health Plan, highlighted some of the challenges of value-based care from a payer perspective, including determining outcomes to use in contracts.
“One of the challenges that we get is trying to decide what is a measure that is important to both the health plans and the patients and the providers,” he said. “If the measure is not reflective of an outcome relative to those, it is going to be very hard to impact it” through a value-based contract. He noted that patient-reported outcomes do not work well in value-based contracts.
The timeliness of the data can also present a challenge, especially when factoring in member turnover from health plans.
But there are examples of success, he noted. Dr. Schaecher highlighted a few examples, including an outcomes-based contract between Cigna and Merck for Januvia and Janumet, which included higher discounts for improvements in hemoglobin A1c across the insured population. Additional discounts were offered if adherence improved. And if both outcomes and adherence improved, Cigna would move the drugs to formulary tiers with lower copays.
NATIONAL HARBOR, MD. – Paying for value over volume is being seen as a key part of driving down the cost of prescription drugs. But setting up value-based contracts can be a challenge.
“In Utah, we thought we would be an appropriate laboratory to try and figure out, ‘Is there a way that we can do this different?’ ” Diana Brixner, PhD, of the University of Utah, Salt Lake City, said at the annual meeting of the Academy of Managed Care Pharmacy. “How can we be creative and have alternatives to high-deductible plans in Utah through value-based–type programs?”
The state considered three different options, she noted. The first option was value-based drug coverage, which pays for only those drugs that are deemed valuable by an independent source. Uptake on these types of contracts has been slow, Dr. Brixner noted, particularly as patient advocates have argued that some drugs may not be cost effective but are still the best choice for certain patients. In those cases, value-based drug coverage has the potential to hinder access.
“There are certainly still different areas and issues that need to be worked out, but in concept, this could potentially help the solution of getting more affordable care to patients,” Dr. Brixner said.
The second option is outcomes-based contracting, which involves working with manufacturers to determine appropriate disease states with vetted outcomes measures and building pharmacy contracts around them.
“We are very optimistic about the potential for outcomes-based contracting as well,” Dr. Brixner said.
CVS has looked into zero copays for preventive medicines, Dr. Brixner said. She added that studies have shown the potential for millions in savings from these kinds of arrangements.
But there are concerns with all of these designs. Drug manufacturers, for instance, have concerns about getting accurate data to determine the payment parameters. Another concern from the manufacturer side is the inability to discuss information about off-label drug use that could be important to negotiating a value-based contract.
For payers, a key concern is making sure there are measurable outcomes, as well as appropriate risk sharing.
In the end, different conditions lend themselves to different types of value-based contracting, Dr. Brixner said. For example, multiple sclerosis is better suited to a value-based drug coverage contract, while rheumatoid arthritis fits better in an outcomes-based contracting design.
Kenneth Schaecher, MD, associate chief medical officer of the University of Utah Health Plan, highlighted some of the challenges of value-based care from a payer perspective, including determining outcomes to use in contracts.
“One of the challenges that we get is trying to decide what is a measure that is important to both the health plans and the patients and the providers,” he said. “If the measure is not reflective of an outcome relative to those, it is going to be very hard to impact it” through a value-based contract. He noted that patient-reported outcomes do not work well in value-based contracts.
The timeliness of the data can also present a challenge, especially when factoring in member turnover from health plans.
But there are examples of success, he noted. Dr. Schaecher highlighted a few examples, including an outcomes-based contract between Cigna and Merck for Januvia and Janumet, which included higher discounts for improvements in hemoglobin A1c across the insured population. Additional discounts were offered if adherence improved. And if both outcomes and adherence improved, Cigna would move the drugs to formulary tiers with lower copays.
NATIONAL HARBOR, MD. – Paying for value over volume is being seen as a key part of driving down the cost of prescription drugs. But setting up value-based contracts can be a challenge.
“In Utah, we thought we would be an appropriate laboratory to try and figure out, ‘Is there a way that we can do this different?’ ” Diana Brixner, PhD, of the University of Utah, Salt Lake City, said at the annual meeting of the Academy of Managed Care Pharmacy. “How can we be creative and have alternatives to high-deductible plans in Utah through value-based–type programs?”
The state considered three different options, she noted. The first option was value-based drug coverage, which pays for only those drugs that are deemed valuable by an independent source. Uptake on these types of contracts has been slow, Dr. Brixner noted, particularly as patient advocates have argued that some drugs may not be cost effective but are still the best choice for certain patients. In those cases, value-based drug coverage has the potential to hinder access.
“There are certainly still different areas and issues that need to be worked out, but in concept, this could potentially help the solution of getting more affordable care to patients,” Dr. Brixner said.
The second option is outcomes-based contracting, which involves working with manufacturers to determine appropriate disease states with vetted outcomes measures and building pharmacy contracts around them.
“We are very optimistic about the potential for outcomes-based contracting as well,” Dr. Brixner said.
CVS has looked into zero copays for preventive medicines, Dr. Brixner said. She added that studies have shown the potential for millions in savings from these kinds of arrangements.
But there are concerns with all of these designs. Drug manufacturers, for instance, have concerns about getting accurate data to determine the payment parameters. Another concern from the manufacturer side is the inability to discuss information about off-label drug use that could be important to negotiating a value-based contract.
For payers, a key concern is making sure there are measurable outcomes, as well as appropriate risk sharing.
In the end, different conditions lend themselves to different types of value-based contracting, Dr. Brixner said. For example, multiple sclerosis is better suited to a value-based drug coverage contract, while rheumatoid arthritis fits better in an outcomes-based contracting design.
Kenneth Schaecher, MD, associate chief medical officer of the University of Utah Health Plan, highlighted some of the challenges of value-based care from a payer perspective, including determining outcomes to use in contracts.
“One of the challenges that we get is trying to decide what is a measure that is important to both the health plans and the patients and the providers,” he said. “If the measure is not reflective of an outcome relative to those, it is going to be very hard to impact it” through a value-based contract. He noted that patient-reported outcomes do not work well in value-based contracts.
The timeliness of the data can also present a challenge, especially when factoring in member turnover from health plans.
But there are examples of success, he noted. Dr. Schaecher highlighted a few examples, including an outcomes-based contract between Cigna and Merck for Januvia and Janumet, which included higher discounts for improvements in hemoglobin A1c across the insured population. Additional discounts were offered if adherence improved. And if both outcomes and adherence improved, Cigna would move the drugs to formulary tiers with lower copays.
REPORTING FROM AMCP NEXUS 2019
Get ready for changes in polypharmacy quality ratings
NATIONAL HARBOR, MD. – and managed care organizations should start preparing now for the shift.
Panelists at an Oct. 30 session at the annual meeting of the Academy of Managed Care Pharmacy presented strategies for addressing the three areas of polypharmacy that will be tracked in the new rating system, which will replace the current high-risk medication measurement that is being retired this year.
Anticholinergic medications
The first area presented by the panelists was polypharmacy use of multiple anticholinergic medications in older adults (Poly-ACH). The new quality measure will examine the percentage of members aged 65 years or older who are using two or more anticholinergic medications concurrently.
“We know that anticholinergic burden increases the risk of cognitive decline in particular, but it’s also associated with a higher risk of falls, an increased number of hospitalizations, and [diminished] physical function,” said Marti Groeneweg, PharmD, supervisor of clinical pharmacy services at Kaiser Permanente.
Dr. Groeneweg noted that, in addition to using multiple drugs in this class, patients can also benefit from a decrease in the dosage of their drugs, so that should also be considered in managing the medication of beneficiaries.
She highlighted a program Kaiser Permanente started in the Northwest United States to reduce the concurrent use of these drugs. The program targeted tricyclic antidepressants – nortriptyline, in particular.
The company instituted a multipronged approach that included provider detailing of the risks of using multiple drugs and how they could taper schedules, as well as providing them with other supporting resources and a list of safer, alternative drugs. It also reached out to patients to educate them about the risks of their medications and why it was important for them to taper their medications. The third part of the approach was to use the EHR to provide doctors with the best-available information at the point of prescribing. And finally, there was a pharmacist review process put in place for more complex cases.
Dr. Groeneweg emphasized that this information was incorporated into existing programs.
The intervention, which is fairly new, has not been in place long enough to know exactly how well it is working, but early indicators suggest “we are on the right track,” she said, noting that to date there has been a decrease of 28% in the number of tricyclic antidepressant prescriptions per 1,000 Medicare members per month.
CNS medications
The second area the panelists addressed was the polypharmacy use of multiple CNS-active medications in older adults (Poly-CNS).
Rainelle Gaddy, PharmD, Rx clinical programs pharmacy lead at Humana Pharmacy Solutions, , noted that the clinical rationale for this measure was the “increased risk of falls and fractures when these medications are taken concurrently.”
She pointed out that taking one or more of the CNS medications can result in a 1.5-fold increase in the risk for falls, and that risk increases to 2.5-fold if two or more drugs are taken. In addition, a high-dose of these medications can lead to a threefold increase in risk of recurrent falls.
Dr. Gaddy highlighted a number of interventions that could be implemented when the managed care organization is not integrated in the way Kaiser Permanente is.
“Pharmacists can pay a pivotal role [in helping] patients who are receiving these Poly-CNS medications because they are able to interact and talk through the actual patient picture for all their medications ... because pharmacists have always been seen as being a trusted source,” she said.
Dr. Gaddy added that health plans can take a more direct role in reaching out to patients, for example, through telephone outreach, as well as direct mail, email, and newsletters.
“We want to make sure that members have as much information as possible,” she said.
She added that it is very important to include physicians and other prescribers in this process through faxes and information included in EHRs.
Opioids and benzodiazepines
The final measure highlighted during the session was the one measuring the concurrent use of opioids and benzodiazepines.
Dr. Gaddy noted that taking the two concurrently is associated with a fourfold increase in risk of opioid overdose and death, compared with opioid use without a benzodiazepine.
She noted that a black box warning on the risks of concurrent use was added to both opioids and benzodiazepines in August 2016 and that resulted in a 10% decrease in the concurrent use.
“This new measure is intended to ensure that the downward trend continues. CMS has indicated as such,” Dr. Gaddy said.
Most of the intervention strategies she highlighted were similar to those for the Poly-CNS category, including the use of medication therapy management programs and targeted interventions, telephone outreach to members, and provider detailing and outreach.
“Provider detailing is really key,” Dr. Gaddy said. “On any given day, it’s so easy for physicians to see 30 patients. The great thing about the provider detailing is that you are able to give the provider a ‘packet’ of their members, you can identify and/or aid in showing them the risk assessment associated with members taking these medications, and then equip them with pocket guides and [materials so they can] streamline the medications.”
NATIONAL HARBOR, MD. – and managed care organizations should start preparing now for the shift.
Panelists at an Oct. 30 session at the annual meeting of the Academy of Managed Care Pharmacy presented strategies for addressing the three areas of polypharmacy that will be tracked in the new rating system, which will replace the current high-risk medication measurement that is being retired this year.
Anticholinergic medications
The first area presented by the panelists was polypharmacy use of multiple anticholinergic medications in older adults (Poly-ACH). The new quality measure will examine the percentage of members aged 65 years or older who are using two or more anticholinergic medications concurrently.
“We know that anticholinergic burden increases the risk of cognitive decline in particular, but it’s also associated with a higher risk of falls, an increased number of hospitalizations, and [diminished] physical function,” said Marti Groeneweg, PharmD, supervisor of clinical pharmacy services at Kaiser Permanente.
Dr. Groeneweg noted that, in addition to using multiple drugs in this class, patients can also benefit from a decrease in the dosage of their drugs, so that should also be considered in managing the medication of beneficiaries.
She highlighted a program Kaiser Permanente started in the Northwest United States to reduce the concurrent use of these drugs. The program targeted tricyclic antidepressants – nortriptyline, in particular.
The company instituted a multipronged approach that included provider detailing of the risks of using multiple drugs and how they could taper schedules, as well as providing them with other supporting resources and a list of safer, alternative drugs. It also reached out to patients to educate them about the risks of their medications and why it was important for them to taper their medications. The third part of the approach was to use the EHR to provide doctors with the best-available information at the point of prescribing. And finally, there was a pharmacist review process put in place for more complex cases.
Dr. Groeneweg emphasized that this information was incorporated into existing programs.
The intervention, which is fairly new, has not been in place long enough to know exactly how well it is working, but early indicators suggest “we are on the right track,” she said, noting that to date there has been a decrease of 28% in the number of tricyclic antidepressant prescriptions per 1,000 Medicare members per month.
CNS medications
The second area the panelists addressed was the polypharmacy use of multiple CNS-active medications in older adults (Poly-CNS).
Rainelle Gaddy, PharmD, Rx clinical programs pharmacy lead at Humana Pharmacy Solutions, , noted that the clinical rationale for this measure was the “increased risk of falls and fractures when these medications are taken concurrently.”
She pointed out that taking one or more of the CNS medications can result in a 1.5-fold increase in the risk for falls, and that risk increases to 2.5-fold if two or more drugs are taken. In addition, a high-dose of these medications can lead to a threefold increase in risk of recurrent falls.
Dr. Gaddy highlighted a number of interventions that could be implemented when the managed care organization is not integrated in the way Kaiser Permanente is.
“Pharmacists can pay a pivotal role [in helping] patients who are receiving these Poly-CNS medications because they are able to interact and talk through the actual patient picture for all their medications ... because pharmacists have always been seen as being a trusted source,” she said.
Dr. Gaddy added that health plans can take a more direct role in reaching out to patients, for example, through telephone outreach, as well as direct mail, email, and newsletters.
“We want to make sure that members have as much information as possible,” she said.
She added that it is very important to include physicians and other prescribers in this process through faxes and information included in EHRs.
Opioids and benzodiazepines
The final measure highlighted during the session was the one measuring the concurrent use of opioids and benzodiazepines.
Dr. Gaddy noted that taking the two concurrently is associated with a fourfold increase in risk of opioid overdose and death, compared with opioid use without a benzodiazepine.
She noted that a black box warning on the risks of concurrent use was added to both opioids and benzodiazepines in August 2016 and that resulted in a 10% decrease in the concurrent use.
“This new measure is intended to ensure that the downward trend continues. CMS has indicated as such,” Dr. Gaddy said.
Most of the intervention strategies she highlighted were similar to those for the Poly-CNS category, including the use of medication therapy management programs and targeted interventions, telephone outreach to members, and provider detailing and outreach.
“Provider detailing is really key,” Dr. Gaddy said. “On any given day, it’s so easy for physicians to see 30 patients. The great thing about the provider detailing is that you are able to give the provider a ‘packet’ of their members, you can identify and/or aid in showing them the risk assessment associated with members taking these medications, and then equip them with pocket guides and [materials so they can] streamline the medications.”
NATIONAL HARBOR, MD. – and managed care organizations should start preparing now for the shift.
Panelists at an Oct. 30 session at the annual meeting of the Academy of Managed Care Pharmacy presented strategies for addressing the three areas of polypharmacy that will be tracked in the new rating system, which will replace the current high-risk medication measurement that is being retired this year.
Anticholinergic medications
The first area presented by the panelists was polypharmacy use of multiple anticholinergic medications in older adults (Poly-ACH). The new quality measure will examine the percentage of members aged 65 years or older who are using two or more anticholinergic medications concurrently.
“We know that anticholinergic burden increases the risk of cognitive decline in particular, but it’s also associated with a higher risk of falls, an increased number of hospitalizations, and [diminished] physical function,” said Marti Groeneweg, PharmD, supervisor of clinical pharmacy services at Kaiser Permanente.
Dr. Groeneweg noted that, in addition to using multiple drugs in this class, patients can also benefit from a decrease in the dosage of their drugs, so that should also be considered in managing the medication of beneficiaries.
She highlighted a program Kaiser Permanente started in the Northwest United States to reduce the concurrent use of these drugs. The program targeted tricyclic antidepressants – nortriptyline, in particular.
The company instituted a multipronged approach that included provider detailing of the risks of using multiple drugs and how they could taper schedules, as well as providing them with other supporting resources and a list of safer, alternative drugs. It also reached out to patients to educate them about the risks of their medications and why it was important for them to taper their medications. The third part of the approach was to use the EHR to provide doctors with the best-available information at the point of prescribing. And finally, there was a pharmacist review process put in place for more complex cases.
Dr. Groeneweg emphasized that this information was incorporated into existing programs.
The intervention, which is fairly new, has not been in place long enough to know exactly how well it is working, but early indicators suggest “we are on the right track,” she said, noting that to date there has been a decrease of 28% in the number of tricyclic antidepressant prescriptions per 1,000 Medicare members per month.
CNS medications
The second area the panelists addressed was the polypharmacy use of multiple CNS-active medications in older adults (Poly-CNS).
Rainelle Gaddy, PharmD, Rx clinical programs pharmacy lead at Humana Pharmacy Solutions, , noted that the clinical rationale for this measure was the “increased risk of falls and fractures when these medications are taken concurrently.”
She pointed out that taking one or more of the CNS medications can result in a 1.5-fold increase in the risk for falls, and that risk increases to 2.5-fold if two or more drugs are taken. In addition, a high-dose of these medications can lead to a threefold increase in risk of recurrent falls.
Dr. Gaddy highlighted a number of interventions that could be implemented when the managed care organization is not integrated in the way Kaiser Permanente is.
“Pharmacists can pay a pivotal role [in helping] patients who are receiving these Poly-CNS medications because they are able to interact and talk through the actual patient picture for all their medications ... because pharmacists have always been seen as being a trusted source,” she said.
Dr. Gaddy added that health plans can take a more direct role in reaching out to patients, for example, through telephone outreach, as well as direct mail, email, and newsletters.
“We want to make sure that members have as much information as possible,” she said.
She added that it is very important to include physicians and other prescribers in this process through faxes and information included in EHRs.
Opioids and benzodiazepines
The final measure highlighted during the session was the one measuring the concurrent use of opioids and benzodiazepines.
Dr. Gaddy noted that taking the two concurrently is associated with a fourfold increase in risk of opioid overdose and death, compared with opioid use without a benzodiazepine.
She noted that a black box warning on the risks of concurrent use was added to both opioids and benzodiazepines in August 2016 and that resulted in a 10% decrease in the concurrent use.
“This new measure is intended to ensure that the downward trend continues. CMS has indicated as such,” Dr. Gaddy said.
Most of the intervention strategies she highlighted were similar to those for the Poly-CNS category, including the use of medication therapy management programs and targeted interventions, telephone outreach to members, and provider detailing and outreach.
“Provider detailing is really key,” Dr. Gaddy said. “On any given day, it’s so easy for physicians to see 30 patients. The great thing about the provider detailing is that you are able to give the provider a ‘packet’ of their members, you can identify and/or aid in showing them the risk assessment associated with members taking these medications, and then equip them with pocket guides and [materials so they can] streamline the medications.”
REPORTING FROM AMCP NEXUS 2019
Expect some congressional action on drug prices, but not major reform
NATIONAL HARBOR, MD – Congress is considering two separate, comprehensive proposals to address the escalating cost of drug prices, but neither is expected to make it to the President’s desk.
The more likely scenario is that parts of these bills aimed at reforming the Medicare Part D prescription drug program could be added on to a must-pass budget bill before the end of 2019, according to Ross Margulies, senior associate in the Washington office of the law firm Foley Hoag.
A bill championed by House Speaker Nancy Pelosi (D-Calif.), H.R. 3, is considered dead on arrival in the Senate since Senate Majority Leader Mitch McConnell (R-Ky.) has stated that the upper chamber will not take it up, Mr. Margulies said at the annual meeting of the Academy of Managed Care Pharmacy.
Despite this, the House is expected to move on H.R. 3 in mid-November. The bill has gone through three committee markups, and each have amended its language. The final bill language has not been released yet.
Meanwhile in the Senate, the Prescription Drug Pricing Reduction Act (S. 2543) enjoys some bipartisan support, but Mr. Margulies questioned whether there was enough to pass it.
But there are some provisions in both pieces of legislation that have bipartisan support and could ultimately be passed though other legislative vehicles, he said.
One proposal that is common to both bills is a cap on out-of-pocket spending by Part D beneficiaries, though the bills differ on how high to set the cap. The House bill caps annual beneficiary spending at $2,000, while the Senate proposal caps it at $3,600.
The lack of a cap “has increasingly raised some issues over the years as we have seen more and more specialty drugs come on the market that push individuals into the catastrophic phase in that first or second phase of that first or second refill,” Mr. Margulies said.
Another area that is garnering bipartisan support is reforming the structure of Medicare Part D.
Mr. Margulies noted that generally the Part D program has enjoyed bipartisan and consumer support and there “hasn’t been a major restructuring of the Part D benefit since its creation more than a decade ago.”
“I really think this is an area where Congress is in a bipartisan way very focused,” he added.
The redesign proposals in the two bills would fundamentally change how the catastrophic phase is covered. The out-of-pocket limits would eliminate beneficiary cost sharing in this phase, currently set at 5% of list price with no cap on spending, and dramatically reduce the government’s financial exposure during this phase.
Currently, the federal government covers 80% of the cost of drugs for beneficiaries in catastrophic coverage, and the plan sponsors cover the remaining 15%. The House and Senate plans both reduce government coverage to 20%. Under the House proposal, drug plans would be responsible for 50% while manufacturers would cover the remaining 30%. The Senate bill proposes a split of 60% for plans and 20% for manufacturers.
“Under either of these proposals, manufacturers with the highest-priced specialty drugs are probably going to fare the worst because you have that new open-ended liability in the catastrophic phase,” Mr. Margulies said.
On the plan side, “plans will face increased pressure to control costs/utilization,” he added.
These proposals could encourage manufacturers to reduce list prices and drug plans to more aggressively negotiate rebates and discounts.
One element of H.R. 3 that is not a part of the Senate bill is the requirement that the secretary of the Department of Health & Human Services negotiate drug prices for a certain number of high-cost drugs each year. Those negotiations would be backstopped by an international pricing index, with the aim of bringing the prices paid in the United States much closer to the lower prices paid internationally.
H.R. 3 also includes a hefty excise tax for manufacturers who either don’t participate in the negotiations or fail to offer price reductions that are within a specified percentage of the international pricing index.
Mr. Margulies noted that Speaker Pelosi was hoping to get White House endorsement on the drug negotiation provision, since it is similar to regulations proposed by HHS earlier this year, but impeachment proceedings have derailed any chance of getting that endorsement.
Mr. Margulies made no financial disclosures related to his presentation.
NATIONAL HARBOR, MD – Congress is considering two separate, comprehensive proposals to address the escalating cost of drug prices, but neither is expected to make it to the President’s desk.
The more likely scenario is that parts of these bills aimed at reforming the Medicare Part D prescription drug program could be added on to a must-pass budget bill before the end of 2019, according to Ross Margulies, senior associate in the Washington office of the law firm Foley Hoag.
A bill championed by House Speaker Nancy Pelosi (D-Calif.), H.R. 3, is considered dead on arrival in the Senate since Senate Majority Leader Mitch McConnell (R-Ky.) has stated that the upper chamber will not take it up, Mr. Margulies said at the annual meeting of the Academy of Managed Care Pharmacy.
Despite this, the House is expected to move on H.R. 3 in mid-November. The bill has gone through three committee markups, and each have amended its language. The final bill language has not been released yet.
Meanwhile in the Senate, the Prescription Drug Pricing Reduction Act (S. 2543) enjoys some bipartisan support, but Mr. Margulies questioned whether there was enough to pass it.
But there are some provisions in both pieces of legislation that have bipartisan support and could ultimately be passed though other legislative vehicles, he said.
One proposal that is common to both bills is a cap on out-of-pocket spending by Part D beneficiaries, though the bills differ on how high to set the cap. The House bill caps annual beneficiary spending at $2,000, while the Senate proposal caps it at $3,600.
The lack of a cap “has increasingly raised some issues over the years as we have seen more and more specialty drugs come on the market that push individuals into the catastrophic phase in that first or second phase of that first or second refill,” Mr. Margulies said.
Another area that is garnering bipartisan support is reforming the structure of Medicare Part D.
Mr. Margulies noted that generally the Part D program has enjoyed bipartisan and consumer support and there “hasn’t been a major restructuring of the Part D benefit since its creation more than a decade ago.”
“I really think this is an area where Congress is in a bipartisan way very focused,” he added.
The redesign proposals in the two bills would fundamentally change how the catastrophic phase is covered. The out-of-pocket limits would eliminate beneficiary cost sharing in this phase, currently set at 5% of list price with no cap on spending, and dramatically reduce the government’s financial exposure during this phase.
Currently, the federal government covers 80% of the cost of drugs for beneficiaries in catastrophic coverage, and the plan sponsors cover the remaining 15%. The House and Senate plans both reduce government coverage to 20%. Under the House proposal, drug plans would be responsible for 50% while manufacturers would cover the remaining 30%. The Senate bill proposes a split of 60% for plans and 20% for manufacturers.
“Under either of these proposals, manufacturers with the highest-priced specialty drugs are probably going to fare the worst because you have that new open-ended liability in the catastrophic phase,” Mr. Margulies said.
On the plan side, “plans will face increased pressure to control costs/utilization,” he added.
These proposals could encourage manufacturers to reduce list prices and drug plans to more aggressively negotiate rebates and discounts.
One element of H.R. 3 that is not a part of the Senate bill is the requirement that the secretary of the Department of Health & Human Services negotiate drug prices for a certain number of high-cost drugs each year. Those negotiations would be backstopped by an international pricing index, with the aim of bringing the prices paid in the United States much closer to the lower prices paid internationally.
H.R. 3 also includes a hefty excise tax for manufacturers who either don’t participate in the negotiations or fail to offer price reductions that are within a specified percentage of the international pricing index.
Mr. Margulies noted that Speaker Pelosi was hoping to get White House endorsement on the drug negotiation provision, since it is similar to regulations proposed by HHS earlier this year, but impeachment proceedings have derailed any chance of getting that endorsement.
Mr. Margulies made no financial disclosures related to his presentation.
NATIONAL HARBOR, MD – Congress is considering two separate, comprehensive proposals to address the escalating cost of drug prices, but neither is expected to make it to the President’s desk.
The more likely scenario is that parts of these bills aimed at reforming the Medicare Part D prescription drug program could be added on to a must-pass budget bill before the end of 2019, according to Ross Margulies, senior associate in the Washington office of the law firm Foley Hoag.
A bill championed by House Speaker Nancy Pelosi (D-Calif.), H.R. 3, is considered dead on arrival in the Senate since Senate Majority Leader Mitch McConnell (R-Ky.) has stated that the upper chamber will not take it up, Mr. Margulies said at the annual meeting of the Academy of Managed Care Pharmacy.
Despite this, the House is expected to move on H.R. 3 in mid-November. The bill has gone through three committee markups, and each have amended its language. The final bill language has not been released yet.
Meanwhile in the Senate, the Prescription Drug Pricing Reduction Act (S. 2543) enjoys some bipartisan support, but Mr. Margulies questioned whether there was enough to pass it.
But there are some provisions in both pieces of legislation that have bipartisan support and could ultimately be passed though other legislative vehicles, he said.
One proposal that is common to both bills is a cap on out-of-pocket spending by Part D beneficiaries, though the bills differ on how high to set the cap. The House bill caps annual beneficiary spending at $2,000, while the Senate proposal caps it at $3,600.
The lack of a cap “has increasingly raised some issues over the years as we have seen more and more specialty drugs come on the market that push individuals into the catastrophic phase in that first or second phase of that first or second refill,” Mr. Margulies said.
Another area that is garnering bipartisan support is reforming the structure of Medicare Part D.
Mr. Margulies noted that generally the Part D program has enjoyed bipartisan and consumer support and there “hasn’t been a major restructuring of the Part D benefit since its creation more than a decade ago.”
“I really think this is an area where Congress is in a bipartisan way very focused,” he added.
The redesign proposals in the two bills would fundamentally change how the catastrophic phase is covered. The out-of-pocket limits would eliminate beneficiary cost sharing in this phase, currently set at 5% of list price with no cap on spending, and dramatically reduce the government’s financial exposure during this phase.
Currently, the federal government covers 80% of the cost of drugs for beneficiaries in catastrophic coverage, and the plan sponsors cover the remaining 15%. The House and Senate plans both reduce government coverage to 20%. Under the House proposal, drug plans would be responsible for 50% while manufacturers would cover the remaining 30%. The Senate bill proposes a split of 60% for plans and 20% for manufacturers.
“Under either of these proposals, manufacturers with the highest-priced specialty drugs are probably going to fare the worst because you have that new open-ended liability in the catastrophic phase,” Mr. Margulies said.
On the plan side, “plans will face increased pressure to control costs/utilization,” he added.
These proposals could encourage manufacturers to reduce list prices and drug plans to more aggressively negotiate rebates and discounts.
One element of H.R. 3 that is not a part of the Senate bill is the requirement that the secretary of the Department of Health & Human Services negotiate drug prices for a certain number of high-cost drugs each year. Those negotiations would be backstopped by an international pricing index, with the aim of bringing the prices paid in the United States much closer to the lower prices paid internationally.
H.R. 3 also includes a hefty excise tax for manufacturers who either don’t participate in the negotiations or fail to offer price reductions that are within a specified percentage of the international pricing index.
Mr. Margulies noted that Speaker Pelosi was hoping to get White House endorsement on the drug negotiation provision, since it is similar to regulations proposed by HHS earlier this year, but impeachment proceedings have derailed any chance of getting that endorsement.
Mr. Margulies made no financial disclosures related to his presentation.
REPORTING FROM AMCP NEXUS 2019
Net prices of drugs rising four-times faster than inflation
NATIONAL HARBOR, MD. – The net prices of drugs are increasing four times faster than the rate of inflation, despite being offset 43% from list prices.
List prices increased by 232% from 2007 to 2018 (12% per year) and net prices increased 133% during that same time period. For Medicaid, the gross-to-net discount increased from 40% in 2007 to 68% in 2018. For all other payers, the increase was 22%-50% during that same period, Inmaculada Hernandez, PharmD, and colleagues reported at annual meeting of the Academy of Managed Care Pharmacy.
The investigators also found a wide variation on discounts across therapeutic classes. For example, list price for drugs in the multiple sclerosis category increased 407% over the study period while net price increased 221%. Insulins came in second in terms of gross price increases (337%) but saw only net prices increases by 83% due to increasing discounts, according to Dr. Hernandez, assistant professor of pharmacy and therapeutics at the University of Pittsburgh.
List prices for noninsulin diabetes treatments tripled during the observation period, but net prices went up only 24%. List price increases were lowest in the antineoplastic class, averaging 135%, though there were only 34% in rebates to offset the list price, resulting in an average net price increase of 89%.
Research was based on pricing data supplied by investment firm SSR Health for branded products and U.S. sales reported by publicly traded companies. The National Heart, Lung, and Blood Institute sponsored the study.
SOURCE: Hernandez I et a. AMCP Nexus, poster U2.
NATIONAL HARBOR, MD. – The net prices of drugs are increasing four times faster than the rate of inflation, despite being offset 43% from list prices.
List prices increased by 232% from 2007 to 2018 (12% per year) and net prices increased 133% during that same time period. For Medicaid, the gross-to-net discount increased from 40% in 2007 to 68% in 2018. For all other payers, the increase was 22%-50% during that same period, Inmaculada Hernandez, PharmD, and colleagues reported at annual meeting of the Academy of Managed Care Pharmacy.
The investigators also found a wide variation on discounts across therapeutic classes. For example, list price for drugs in the multiple sclerosis category increased 407% over the study period while net price increased 221%. Insulins came in second in terms of gross price increases (337%) but saw only net prices increases by 83% due to increasing discounts, according to Dr. Hernandez, assistant professor of pharmacy and therapeutics at the University of Pittsburgh.
List prices for noninsulin diabetes treatments tripled during the observation period, but net prices went up only 24%. List price increases were lowest in the antineoplastic class, averaging 135%, though there were only 34% in rebates to offset the list price, resulting in an average net price increase of 89%.
Research was based on pricing data supplied by investment firm SSR Health for branded products and U.S. sales reported by publicly traded companies. The National Heart, Lung, and Blood Institute sponsored the study.
SOURCE: Hernandez I et a. AMCP Nexus, poster U2.
NATIONAL HARBOR, MD. – The net prices of drugs are increasing four times faster than the rate of inflation, despite being offset 43% from list prices.
List prices increased by 232% from 2007 to 2018 (12% per year) and net prices increased 133% during that same time period. For Medicaid, the gross-to-net discount increased from 40% in 2007 to 68% in 2018. For all other payers, the increase was 22%-50% during that same period, Inmaculada Hernandez, PharmD, and colleagues reported at annual meeting of the Academy of Managed Care Pharmacy.
The investigators also found a wide variation on discounts across therapeutic classes. For example, list price for drugs in the multiple sclerosis category increased 407% over the study period while net price increased 221%. Insulins came in second in terms of gross price increases (337%) but saw only net prices increases by 83% due to increasing discounts, according to Dr. Hernandez, assistant professor of pharmacy and therapeutics at the University of Pittsburgh.
List prices for noninsulin diabetes treatments tripled during the observation period, but net prices went up only 24%. List price increases were lowest in the antineoplastic class, averaging 135%, though there were only 34% in rebates to offset the list price, resulting in an average net price increase of 89%.
Research was based on pricing data supplied by investment firm SSR Health for branded products and U.S. sales reported by publicly traded companies. The National Heart, Lung, and Blood Institute sponsored the study.
SOURCE: Hernandez I et a. AMCP Nexus, poster U2.
REPORTING FROM AMCP NEXUS 2019
ICD-10 codes for EVALI released
The Centers for Disease Control and Prevention has issued coding guidance to help track e-cigarette, or vaping, product use–associated lung injury (EVALI).
The purpose of the coding guidelines “is to provide official diagnosis coding guidance for healthcare encounters related to the 2019 health care encounters and deaths related to” EVALI, CDC stated in a document detailing the coding update. The document was posted on the CDC website. The guidance is consistent with current clinical knowledge about e-cigarette, or vaping, related disorders.
CDC noted in the document that the guidance “is intended to be used in conjunction with current ICD-10-CM classification,” and the codes provided “are intended to provide e-cigarette, or vaping, product use coding guidance only.”
The codes are intended to track a number of areas related to EVALI, including lung-related complications, poisoning and toxicity, and substance use, abuse, and dependence.
The following conditions associated with EVALI are covered in the new coding guidance:
- Bronchitis and pneumonitis caused by chemicals, gases, and fumes.
- Bronchitis and pneumonitis caused by chemicals, gases, fumes, and vapors; includes chemical pneumonitis.
- Pneumonitis caused by inhalation of oils and essences; includes lipoid pneumonia.
- Acute respiratory distress syndrome.
- Pulmonary eosinophilia, not elsewhere classified.
- Acute interstitial pneumonitis.
The document notes that the coding guidance has been approved by the National Center for Health Statistics, the American Health Information Management Association, the American Hospital Association, and the Centers for Medicare & Medicaid Services.
The Centers for Disease Control and Prevention has issued coding guidance to help track e-cigarette, or vaping, product use–associated lung injury (EVALI).
The purpose of the coding guidelines “is to provide official diagnosis coding guidance for healthcare encounters related to the 2019 health care encounters and deaths related to” EVALI, CDC stated in a document detailing the coding update. The document was posted on the CDC website. The guidance is consistent with current clinical knowledge about e-cigarette, or vaping, related disorders.
CDC noted in the document that the guidance “is intended to be used in conjunction with current ICD-10-CM classification,” and the codes provided “are intended to provide e-cigarette, or vaping, product use coding guidance only.”
The codes are intended to track a number of areas related to EVALI, including lung-related complications, poisoning and toxicity, and substance use, abuse, and dependence.
The following conditions associated with EVALI are covered in the new coding guidance:
- Bronchitis and pneumonitis caused by chemicals, gases, and fumes.
- Bronchitis and pneumonitis caused by chemicals, gases, fumes, and vapors; includes chemical pneumonitis.
- Pneumonitis caused by inhalation of oils and essences; includes lipoid pneumonia.
- Acute respiratory distress syndrome.
- Pulmonary eosinophilia, not elsewhere classified.
- Acute interstitial pneumonitis.
The document notes that the coding guidance has been approved by the National Center for Health Statistics, the American Health Information Management Association, the American Hospital Association, and the Centers for Medicare & Medicaid Services.
The Centers for Disease Control and Prevention has issued coding guidance to help track e-cigarette, or vaping, product use–associated lung injury (EVALI).
The purpose of the coding guidelines “is to provide official diagnosis coding guidance for healthcare encounters related to the 2019 health care encounters and deaths related to” EVALI, CDC stated in a document detailing the coding update. The document was posted on the CDC website. The guidance is consistent with current clinical knowledge about e-cigarette, or vaping, related disorders.
CDC noted in the document that the guidance “is intended to be used in conjunction with current ICD-10-CM classification,” and the codes provided “are intended to provide e-cigarette, or vaping, product use coding guidance only.”
The codes are intended to track a number of areas related to EVALI, including lung-related complications, poisoning and toxicity, and substance use, abuse, and dependence.
The following conditions associated with EVALI are covered in the new coding guidance:
- Bronchitis and pneumonitis caused by chemicals, gases, and fumes.
- Bronchitis and pneumonitis caused by chemicals, gases, fumes, and vapors; includes chemical pneumonitis.
- Pneumonitis caused by inhalation of oils and essences; includes lipoid pneumonia.
- Acute respiratory distress syndrome.
- Pulmonary eosinophilia, not elsewhere classified.
- Acute interstitial pneumonitis.
The document notes that the coding guidance has been approved by the National Center for Health Statistics, the American Health Information Management Association, the American Hospital Association, and the Centers for Medicare & Medicaid Services.
CMS has plan if ACA overturned in court; Verma silent on details
The Trump administration apparently plans to ensure Americans have access to health insurance in the event that the Affordable Care Act is struck down – but officials refuse to share that plan.
“The president has made clear that we will have a plan in action to make sure that Americans have access to affordable coverage” if or when courts negate the ACA, Seema Verma, administrator of the Centers for Medicare & Medicaid Services said Oct. 23 at a House Ways and Means Health Subcommittee hearing. “We do not have that today. There are many Americans today, they are not getting a subsidy. They can’t afford insurance today.”
When asked specifically about the provision to guarantee coverage for those with preexisting conditions, Ms. Verma replied that the president “has made clear that we will do everything we can to ensure that Americans with preexisting conditions maintain the protection that they have today.”
When pressed for details, Ms. Verma dodged the question, first by attempting to tell an anecdote about “a 55-year-old couple making $66,000 a year ...” before getting cut off. When the question was reiterated by Health Subcommittee Chair Diana DeGette (D-Colo.), Ms. Verma replied, “I am not going get into any specifics of a plan.”
Committee Chair Frank Pallone (D-N.J.) said it was “deceptive” that Ms. Verma would not provide any details and openly questioned whether a plan actually existed.
The hearing followed a partisan pattern.
Republican subcommittee members asked questions that allowed Ms Verma to highlight some of the actions taken by the CMS under her watch, such as lowering premiums for exchange plans, increasing the number of available plans and decreasing the number of states that had only one plan option available in the exchange, and other items that are focused on lowering the cost of health care.
“We’re trying to focus on actions that lower the cost of care for Americans,” she said. “If we do that, more people will be able to afford health care.”
Under questioning by panel Democrats, Ms. Verma took a more adversarial tone and tended to deflect rather than answer questions.
When pressed about Medicaid work requirement and the disruption in health care coverage they are causing, Ms. Verma had no answer, instead trying to talking about “community engagement requirements” before being cut off.
Ms. Verma also refused to address the coverage requirements, or lack thereof, of short-term, limited duration plans, which have been expanded under the Trump administration.
When asked whether plans could deny claims based on preexisting conditions, could implement coverage caps, charge more based on age or gender, or ignore other consumer protections in the ACA, she consistently defaulted to a comment that it “depends” on the plan and what they offer, without coming out and simply acknowledging that these plans have it within their power to ignore any and all consumer protections held within the Affordable Care Act.
“None of the actions that we have taken do anything to undermine the protections for people with preexisting conditions,” she said.
“Your testimony is not actually truthful to us today,” Rep. Ann Kuster (D-N.H.) replied.
The Trump administration apparently plans to ensure Americans have access to health insurance in the event that the Affordable Care Act is struck down – but officials refuse to share that plan.
“The president has made clear that we will have a plan in action to make sure that Americans have access to affordable coverage” if or when courts negate the ACA, Seema Verma, administrator of the Centers for Medicare & Medicaid Services said Oct. 23 at a House Ways and Means Health Subcommittee hearing. “We do not have that today. There are many Americans today, they are not getting a subsidy. They can’t afford insurance today.”
When asked specifically about the provision to guarantee coverage for those with preexisting conditions, Ms. Verma replied that the president “has made clear that we will do everything we can to ensure that Americans with preexisting conditions maintain the protection that they have today.”
When pressed for details, Ms. Verma dodged the question, first by attempting to tell an anecdote about “a 55-year-old couple making $66,000 a year ...” before getting cut off. When the question was reiterated by Health Subcommittee Chair Diana DeGette (D-Colo.), Ms. Verma replied, “I am not going get into any specifics of a plan.”
Committee Chair Frank Pallone (D-N.J.) said it was “deceptive” that Ms. Verma would not provide any details and openly questioned whether a plan actually existed.
The hearing followed a partisan pattern.
Republican subcommittee members asked questions that allowed Ms Verma to highlight some of the actions taken by the CMS under her watch, such as lowering premiums for exchange plans, increasing the number of available plans and decreasing the number of states that had only one plan option available in the exchange, and other items that are focused on lowering the cost of health care.
“We’re trying to focus on actions that lower the cost of care for Americans,” she said. “If we do that, more people will be able to afford health care.”
Under questioning by panel Democrats, Ms. Verma took a more adversarial tone and tended to deflect rather than answer questions.
When pressed about Medicaid work requirement and the disruption in health care coverage they are causing, Ms. Verma had no answer, instead trying to talking about “community engagement requirements” before being cut off.
Ms. Verma also refused to address the coverage requirements, or lack thereof, of short-term, limited duration plans, which have been expanded under the Trump administration.
When asked whether plans could deny claims based on preexisting conditions, could implement coverage caps, charge more based on age or gender, or ignore other consumer protections in the ACA, she consistently defaulted to a comment that it “depends” on the plan and what they offer, without coming out and simply acknowledging that these plans have it within their power to ignore any and all consumer protections held within the Affordable Care Act.
“None of the actions that we have taken do anything to undermine the protections for people with preexisting conditions,” she said.
“Your testimony is not actually truthful to us today,” Rep. Ann Kuster (D-N.H.) replied.
The Trump administration apparently plans to ensure Americans have access to health insurance in the event that the Affordable Care Act is struck down – but officials refuse to share that plan.
“The president has made clear that we will have a plan in action to make sure that Americans have access to affordable coverage” if or when courts negate the ACA, Seema Verma, administrator of the Centers for Medicare & Medicaid Services said Oct. 23 at a House Ways and Means Health Subcommittee hearing. “We do not have that today. There are many Americans today, they are not getting a subsidy. They can’t afford insurance today.”
When asked specifically about the provision to guarantee coverage for those with preexisting conditions, Ms. Verma replied that the president “has made clear that we will do everything we can to ensure that Americans with preexisting conditions maintain the protection that they have today.”
When pressed for details, Ms. Verma dodged the question, first by attempting to tell an anecdote about “a 55-year-old couple making $66,000 a year ...” before getting cut off. When the question was reiterated by Health Subcommittee Chair Diana DeGette (D-Colo.), Ms. Verma replied, “I am not going get into any specifics of a plan.”
Committee Chair Frank Pallone (D-N.J.) said it was “deceptive” that Ms. Verma would not provide any details and openly questioned whether a plan actually existed.
The hearing followed a partisan pattern.
Republican subcommittee members asked questions that allowed Ms Verma to highlight some of the actions taken by the CMS under her watch, such as lowering premiums for exchange plans, increasing the number of available plans and decreasing the number of states that had only one plan option available in the exchange, and other items that are focused on lowering the cost of health care.
“We’re trying to focus on actions that lower the cost of care for Americans,” she said. “If we do that, more people will be able to afford health care.”
Under questioning by panel Democrats, Ms. Verma took a more adversarial tone and tended to deflect rather than answer questions.
When pressed about Medicaid work requirement and the disruption in health care coverage they are causing, Ms. Verma had no answer, instead trying to talking about “community engagement requirements” before being cut off.
Ms. Verma also refused to address the coverage requirements, or lack thereof, of short-term, limited duration plans, which have been expanded under the Trump administration.
When asked whether plans could deny claims based on preexisting conditions, could implement coverage caps, charge more based on age or gender, or ignore other consumer protections in the ACA, she consistently defaulted to a comment that it “depends” on the plan and what they offer, without coming out and simply acknowledging that these plans have it within their power to ignore any and all consumer protections held within the Affordable Care Act.
“None of the actions that we have taken do anything to undermine the protections for people with preexisting conditions,” she said.
“Your testimony is not actually truthful to us today,” Rep. Ann Kuster (D-N.H.) replied.
REPORTING FROM a HOUSE ENERGY AND COMMERCE HEALTH SUBCOMMITTEE HEARING
Pelosi drug pricing bill passes Ways and Means on party line vote
The House Ways and Means Committee is the latest to pass H.R. 3, a bill aimed at driving the price of prescription drugs down.
During an Oct. 22, 2019, markup of the bill, Republican members criticized committee leadership for abandoning bipartisan efforts to reign in drug prices in favor of a partisan bill that so far gained no support from the minority party. H.R. 3 was passed by the Ways and Means Committee on a 24-17 party line vote.
Both “Democrats and Republicans support lowering drug prices, cracking down on overpriced drugs, giving patients more power to choose affordable medicines, and removing the wrong incentives in federal health programs that reward bad actors for raising prices,” Committee Ranking Member Kevin Brady (R-Tex.) said in his opening statement. In fact, at the request of Committee Chairman Richard Neal (D-Mass.), “both parties in this committee were working together toward that important goal. At least until Speaker Nancy Pelosi (D-Calif.) trashed the bipartisan work and forced through a secretly written, deeply controversial, and highly partisan drug bill to cure political illnesses rather than real ones.”
H.R. 3, recently renamed the Elijah E. Cummings Lower Drug Costs Now Act of 2019, would give the secretary of the Department of Health & Human Services the ability to negotiate drug prices for Medicare Part D (something explicitly banned under current law), implement an excise tax on drugs that see price hikes above the rate of inflation, cap out-of-pocket expenditures annually for Medicare Part D beneficiaries at $2,000, and use an international pricing index to help bring prices for drugs sold in the United States more in line with the lower prices in foreign countries.
But panel Democrats praised the bill as a step forward in helping to lower the cost of prescription drugs.
“H.R. 3 levels the playing field for U.S. consumers who, on average, pay four times more than patients in other countries for the exact same drugs,” Chairman Neal said in a statement following the passage.
He highlighted specifically the provision that caps out-of-pocket expenses in Part D and the HHS’ negotiating power, noting that “more people will be able to afford the drugs they need that they may have previously forgone due to high costs. With more Americans taking the medicines they’re prescribed, families will be healthier, and premiums will go down.”
Republican committee members argued that these same provisions would stifle innovation and ultimately would reduce access to medicine. Most attempts at altering the provisions through amendments were met with strict party line rejection.
The House Ways and Means Committee is the latest to pass H.R. 3, a bill aimed at driving the price of prescription drugs down.
During an Oct. 22, 2019, markup of the bill, Republican members criticized committee leadership for abandoning bipartisan efforts to reign in drug prices in favor of a partisan bill that so far gained no support from the minority party. H.R. 3 was passed by the Ways and Means Committee on a 24-17 party line vote.
Both “Democrats and Republicans support lowering drug prices, cracking down on overpriced drugs, giving patients more power to choose affordable medicines, and removing the wrong incentives in federal health programs that reward bad actors for raising prices,” Committee Ranking Member Kevin Brady (R-Tex.) said in his opening statement. In fact, at the request of Committee Chairman Richard Neal (D-Mass.), “both parties in this committee were working together toward that important goal. At least until Speaker Nancy Pelosi (D-Calif.) trashed the bipartisan work and forced through a secretly written, deeply controversial, and highly partisan drug bill to cure political illnesses rather than real ones.”
H.R. 3, recently renamed the Elijah E. Cummings Lower Drug Costs Now Act of 2019, would give the secretary of the Department of Health & Human Services the ability to negotiate drug prices for Medicare Part D (something explicitly banned under current law), implement an excise tax on drugs that see price hikes above the rate of inflation, cap out-of-pocket expenditures annually for Medicare Part D beneficiaries at $2,000, and use an international pricing index to help bring prices for drugs sold in the United States more in line with the lower prices in foreign countries.
But panel Democrats praised the bill as a step forward in helping to lower the cost of prescription drugs.
“H.R. 3 levels the playing field for U.S. consumers who, on average, pay four times more than patients in other countries for the exact same drugs,” Chairman Neal said in a statement following the passage.
He highlighted specifically the provision that caps out-of-pocket expenses in Part D and the HHS’ negotiating power, noting that “more people will be able to afford the drugs they need that they may have previously forgone due to high costs. With more Americans taking the medicines they’re prescribed, families will be healthier, and premiums will go down.”
Republican committee members argued that these same provisions would stifle innovation and ultimately would reduce access to medicine. Most attempts at altering the provisions through amendments were met with strict party line rejection.
The House Ways and Means Committee is the latest to pass H.R. 3, a bill aimed at driving the price of prescription drugs down.
During an Oct. 22, 2019, markup of the bill, Republican members criticized committee leadership for abandoning bipartisan efforts to reign in drug prices in favor of a partisan bill that so far gained no support from the minority party. H.R. 3 was passed by the Ways and Means Committee on a 24-17 party line vote.
Both “Democrats and Republicans support lowering drug prices, cracking down on overpriced drugs, giving patients more power to choose affordable medicines, and removing the wrong incentives in federal health programs that reward bad actors for raising prices,” Committee Ranking Member Kevin Brady (R-Tex.) said in his opening statement. In fact, at the request of Committee Chairman Richard Neal (D-Mass.), “both parties in this committee were working together toward that important goal. At least until Speaker Nancy Pelosi (D-Calif.) trashed the bipartisan work and forced through a secretly written, deeply controversial, and highly partisan drug bill to cure political illnesses rather than real ones.”
H.R. 3, recently renamed the Elijah E. Cummings Lower Drug Costs Now Act of 2019, would give the secretary of the Department of Health & Human Services the ability to negotiate drug prices for Medicare Part D (something explicitly banned under current law), implement an excise tax on drugs that see price hikes above the rate of inflation, cap out-of-pocket expenditures annually for Medicare Part D beneficiaries at $2,000, and use an international pricing index to help bring prices for drugs sold in the United States more in line with the lower prices in foreign countries.
But panel Democrats praised the bill as a step forward in helping to lower the cost of prescription drugs.
“H.R. 3 levels the playing field for U.S. consumers who, on average, pay four times more than patients in other countries for the exact same drugs,” Chairman Neal said in a statement following the passage.
He highlighted specifically the provision that caps out-of-pocket expenses in Part D and the HHS’ negotiating power, noting that “more people will be able to afford the drugs they need that they may have previously forgone due to high costs. With more Americans taking the medicines they’re prescribed, families will be healthier, and premiums will go down.”
Republican committee members argued that these same provisions would stifle innovation and ultimately would reduce access to medicine. Most attempts at altering the provisions through amendments were met with strict party line rejection.
Policy help needed as rheumatology drug prices continue to rise
Rheumatology drugs, like most drugs, are seeing significant price hikes in recent years and, according to a new analysis, those hikes account for the majority of growth in spending.
From 2012 to 2016, annual spending on public-payer claims for 10 biologic disease-modifying antirheumatic drugs (bDMARDs) more than doubled (from $3.8 billion to $8.6 billion), with median drug price increases of 51% in the Medicare Part D prescription drug plans (mean, 54%) and 8% within Medicare Part B drugs administered within the physician office (mean, 21%).
“The prominent bDMARD drug cost increases observed in this study, which were substantially greater under Part D than Part B, even when accounting for rebates, represent a growing burden to taxpayers and beneficiaries,” first author Natalie McCormick, PhD, a research fellow at Massachusetts General Hospital, Boston, and colleagues wrote in Arthritis & Rheumatology.
“The magnitude of these increases is independent from any assessment of value,” the authors continued.
Dr. McCormick and colleagues highlighted the limited effect that rebates negotiated by pharmacy benefit managers (PBMs) for Part D have on patient out-of-pocket costs.
Negotiations “may not necessarily result in lower price increases since pharmacy benefit managers, who negotiate on behalf of Part D plans, retain a percentage of the negotiated rebates as compensation, and higher list prices can achieve higher rebates,” they stated. “While these rebates accrue to insurance plans and pharmacy benefit managers, they do not directly impact Part D beneficiaries’ out-of-pocket costs, which are driven by prerebate prices. Thus, many patients end up paying higher out-of-pocket costs when the list price increases, creating financial barriers to use and adherence.”
They further noted that, for most Part D drugs individually, “drug prices accounted for approximately 50% or more of the increase in spending. Adalimumab and etanercept, two of the oldest bDMARDs, were prescribed to the largest number of Part D beneficiaries (more than 47,000 in 2016) and had the biggest 5-year price increases: 84% and 88%, respectively (72% and 75% respectively, accounting for rebates).”
It is not surprising that the analysis found that prices are rising and are a driving force in spending.
“We know that high launch prices of a new drug is an important consideration for patient access,” Jeromie Ballreich, PhD, a health economist at Johns Hopkins University, Baltimore, said in an interview. “But we also know that a number of these drugs, particularly Humira and Enbrel, have been on the market for a while. They have experienced a tremendous price increase over the past 10 years plus. That’s exactly what the authors found. So that is really not surprising. Analysis of drug spending changes over the time [shows that] it is indeed price increases that really have been driving increases in drug spending.”
Angus Worthing, MD, a rheumatologist at Arthritis & Rheumatism Associates in Washington, D.C., and current chair of the American College of Rheumatology’s Government Affairs Committee, said that the faster price hikes in Part D stood out in the analysis and the role PBMs played in it.
“I was a little surprised at just how much more PBMs were responsible for higher inflation, compared to the part B system,” he said in an interview. “In the McCormick article, drug prices went up 45% after rebates in the Part D space, but only 21% in the Part B space, and we had seen hints that drug prices were going up faster, we just didn’t know just how much faster, so more than double the increase is more than I expected, and it is very concerning to look at that and realize that PBMs are more than doubling an already high inflation rate in drug prices.”
He suggested that part of the rise in Part D bDMARD prices observed in the study might be because of the application of step therapy in Part D.
“In Medicare specifically, step therapy is allowed in Part D but not in Part B – except in Medicare Advantage plans starting in 2019 – and this important difference between Part B and Part D explains how Part D rebates, linked with step therapy, may be the main reason that bDMARD prices rose more in Part D compared to the open formulary system in Medicare Part B,” Dr. Worthing wrote in an editorial on Dr. McCormick’s study.
The Pharmaceutical Care Management Association, the lobby group representing PBMs, declined an interview request, but challenged the analysis’ portrayal of the role of PBMs in an email. It pointed to a Government Accountability Organization report from July 2019 that found that Part D rebates helped offset spending by about 20% and that PBM compensation was primarily derived from administrative fees and not from maintaining a portion of rebates that the PBM negotiated on behalf of the plan.
Dr. Worthing said in an interview that these bDMARD price hikes are causing access issues, particularly in Medicare where beneficiaries cannot take advantage of manufacturer programs, such as discount cards and copay coupons, and potentially face coinsurance payments based on the list price and not the net-of-rebate price.
From a policy standpoint, he advocated for a cap on out-of-pocket spending for Medicare Part D drugs, which is a feature of legislation (H.R. 3, Lower Drug Costs Now Act of 2019) that is moving through the House of Representatives, most recently passing the House Ways and Means Committee in a party-line vote of 24-17, with 1 Democrat not voting.
Dr. Worthing’s editorial covers a few other policy options, including more financial transparency in the role PBMs play in the drug supply chain, the elimination of rebates in favor of a flat fee for PBMs or requiring all rebates on drugs to be passed through to Part D beneficiaries, penalties on manufacturers for price increases that exceed inflation, and usage of a price index based on what foreign countries pay for the same drug.
Many of the suggestions from Dr. Worthing’s editorial are in H.R. 3 and face an uphill battle to get through the Senate.
Dr. Worthing said that tackling the rebate issue by removing incentives for manufacturers to raise prices in order to offer higher rebates and changing step-therapy rules are things Congress could probably get accomplished as it heads into an election year, but there is a chance it could be even more comprehensive.
“With such an important issue like high drug prices, it probably benefits both parties, and everybody facing an election will be able to go back to their constituents and say, ‘Look we got something done. I was part of this,’ and there is a better chance they will do it if they hear about it from their constituents,” he said.
Dr. Ballreich was less optimistic that H.R. 3 is going to be able to survive.
“The interesting thing with this bill is that a number of pieces of it have been endorsed by President Trump, and the question is, [is] that a meaningful endorsement? Is the Trump administration going to want to use the this plan as a win for him, as a win for showing potential voters that he can work in a bipartisan way, [that] he could take on ‘big drug companies’ – all those successful soundbites? Can then Trump use his power to push this bill through the Senate? I think that is a question mark,” he said, noting that it could take a lot of political capital to counter the powerful industry lobby. Ultimately, he expects that, if drug pricing does make it to the White House, it will go through some changes from where H.R. 3 is right now.
“I don’t think it will pass in its current iteration,” he said.
Each author of Dr. McCormick’s report had funding from different sources, though the funders had no role in the design and conduct of the study. No other disclosures were made.
SOURCES: McCormick N et al. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/ART.41138; Worthing A. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/art.41135.
Rheumatology drugs, like most drugs, are seeing significant price hikes in recent years and, according to a new analysis, those hikes account for the majority of growth in spending.
From 2012 to 2016, annual spending on public-payer claims for 10 biologic disease-modifying antirheumatic drugs (bDMARDs) more than doubled (from $3.8 billion to $8.6 billion), with median drug price increases of 51% in the Medicare Part D prescription drug plans (mean, 54%) and 8% within Medicare Part B drugs administered within the physician office (mean, 21%).
“The prominent bDMARD drug cost increases observed in this study, which were substantially greater under Part D than Part B, even when accounting for rebates, represent a growing burden to taxpayers and beneficiaries,” first author Natalie McCormick, PhD, a research fellow at Massachusetts General Hospital, Boston, and colleagues wrote in Arthritis & Rheumatology.
“The magnitude of these increases is independent from any assessment of value,” the authors continued.
Dr. McCormick and colleagues highlighted the limited effect that rebates negotiated by pharmacy benefit managers (PBMs) for Part D have on patient out-of-pocket costs.
Negotiations “may not necessarily result in lower price increases since pharmacy benefit managers, who negotiate on behalf of Part D plans, retain a percentage of the negotiated rebates as compensation, and higher list prices can achieve higher rebates,” they stated. “While these rebates accrue to insurance plans and pharmacy benefit managers, they do not directly impact Part D beneficiaries’ out-of-pocket costs, which are driven by prerebate prices. Thus, many patients end up paying higher out-of-pocket costs when the list price increases, creating financial barriers to use and adherence.”
They further noted that, for most Part D drugs individually, “drug prices accounted for approximately 50% or more of the increase in spending. Adalimumab and etanercept, two of the oldest bDMARDs, were prescribed to the largest number of Part D beneficiaries (more than 47,000 in 2016) and had the biggest 5-year price increases: 84% and 88%, respectively (72% and 75% respectively, accounting for rebates).”
It is not surprising that the analysis found that prices are rising and are a driving force in spending.
“We know that high launch prices of a new drug is an important consideration for patient access,” Jeromie Ballreich, PhD, a health economist at Johns Hopkins University, Baltimore, said in an interview. “But we also know that a number of these drugs, particularly Humira and Enbrel, have been on the market for a while. They have experienced a tremendous price increase over the past 10 years plus. That’s exactly what the authors found. So that is really not surprising. Analysis of drug spending changes over the time [shows that] it is indeed price increases that really have been driving increases in drug spending.”
Angus Worthing, MD, a rheumatologist at Arthritis & Rheumatism Associates in Washington, D.C., and current chair of the American College of Rheumatology’s Government Affairs Committee, said that the faster price hikes in Part D stood out in the analysis and the role PBMs played in it.
“I was a little surprised at just how much more PBMs were responsible for higher inflation, compared to the part B system,” he said in an interview. “In the McCormick article, drug prices went up 45% after rebates in the Part D space, but only 21% in the Part B space, and we had seen hints that drug prices were going up faster, we just didn’t know just how much faster, so more than double the increase is more than I expected, and it is very concerning to look at that and realize that PBMs are more than doubling an already high inflation rate in drug prices.”
He suggested that part of the rise in Part D bDMARD prices observed in the study might be because of the application of step therapy in Part D.
“In Medicare specifically, step therapy is allowed in Part D but not in Part B – except in Medicare Advantage plans starting in 2019 – and this important difference between Part B and Part D explains how Part D rebates, linked with step therapy, may be the main reason that bDMARD prices rose more in Part D compared to the open formulary system in Medicare Part B,” Dr. Worthing wrote in an editorial on Dr. McCormick’s study.
The Pharmaceutical Care Management Association, the lobby group representing PBMs, declined an interview request, but challenged the analysis’ portrayal of the role of PBMs in an email. It pointed to a Government Accountability Organization report from July 2019 that found that Part D rebates helped offset spending by about 20% and that PBM compensation was primarily derived from administrative fees and not from maintaining a portion of rebates that the PBM negotiated on behalf of the plan.
Dr. Worthing said in an interview that these bDMARD price hikes are causing access issues, particularly in Medicare where beneficiaries cannot take advantage of manufacturer programs, such as discount cards and copay coupons, and potentially face coinsurance payments based on the list price and not the net-of-rebate price.
From a policy standpoint, he advocated for a cap on out-of-pocket spending for Medicare Part D drugs, which is a feature of legislation (H.R. 3, Lower Drug Costs Now Act of 2019) that is moving through the House of Representatives, most recently passing the House Ways and Means Committee in a party-line vote of 24-17, with 1 Democrat not voting.
Dr. Worthing’s editorial covers a few other policy options, including more financial transparency in the role PBMs play in the drug supply chain, the elimination of rebates in favor of a flat fee for PBMs or requiring all rebates on drugs to be passed through to Part D beneficiaries, penalties on manufacturers for price increases that exceed inflation, and usage of a price index based on what foreign countries pay for the same drug.
Many of the suggestions from Dr. Worthing’s editorial are in H.R. 3 and face an uphill battle to get through the Senate.
Dr. Worthing said that tackling the rebate issue by removing incentives for manufacturers to raise prices in order to offer higher rebates and changing step-therapy rules are things Congress could probably get accomplished as it heads into an election year, but there is a chance it could be even more comprehensive.
“With such an important issue like high drug prices, it probably benefits both parties, and everybody facing an election will be able to go back to their constituents and say, ‘Look we got something done. I was part of this,’ and there is a better chance they will do it if they hear about it from their constituents,” he said.
Dr. Ballreich was less optimistic that H.R. 3 is going to be able to survive.
“The interesting thing with this bill is that a number of pieces of it have been endorsed by President Trump, and the question is, [is] that a meaningful endorsement? Is the Trump administration going to want to use the this plan as a win for him, as a win for showing potential voters that he can work in a bipartisan way, [that] he could take on ‘big drug companies’ – all those successful soundbites? Can then Trump use his power to push this bill through the Senate? I think that is a question mark,” he said, noting that it could take a lot of political capital to counter the powerful industry lobby. Ultimately, he expects that, if drug pricing does make it to the White House, it will go through some changes from where H.R. 3 is right now.
“I don’t think it will pass in its current iteration,” he said.
Each author of Dr. McCormick’s report had funding from different sources, though the funders had no role in the design and conduct of the study. No other disclosures were made.
SOURCES: McCormick N et al. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/ART.41138; Worthing A. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/art.41135.
Rheumatology drugs, like most drugs, are seeing significant price hikes in recent years and, according to a new analysis, those hikes account for the majority of growth in spending.
From 2012 to 2016, annual spending on public-payer claims for 10 biologic disease-modifying antirheumatic drugs (bDMARDs) more than doubled (from $3.8 billion to $8.6 billion), with median drug price increases of 51% in the Medicare Part D prescription drug plans (mean, 54%) and 8% within Medicare Part B drugs administered within the physician office (mean, 21%).
“The prominent bDMARD drug cost increases observed in this study, which were substantially greater under Part D than Part B, even when accounting for rebates, represent a growing burden to taxpayers and beneficiaries,” first author Natalie McCormick, PhD, a research fellow at Massachusetts General Hospital, Boston, and colleagues wrote in Arthritis & Rheumatology.
“The magnitude of these increases is independent from any assessment of value,” the authors continued.
Dr. McCormick and colleagues highlighted the limited effect that rebates negotiated by pharmacy benefit managers (PBMs) for Part D have on patient out-of-pocket costs.
Negotiations “may not necessarily result in lower price increases since pharmacy benefit managers, who negotiate on behalf of Part D plans, retain a percentage of the negotiated rebates as compensation, and higher list prices can achieve higher rebates,” they stated. “While these rebates accrue to insurance plans and pharmacy benefit managers, they do not directly impact Part D beneficiaries’ out-of-pocket costs, which are driven by prerebate prices. Thus, many patients end up paying higher out-of-pocket costs when the list price increases, creating financial barriers to use and adherence.”
They further noted that, for most Part D drugs individually, “drug prices accounted for approximately 50% or more of the increase in spending. Adalimumab and etanercept, two of the oldest bDMARDs, were prescribed to the largest number of Part D beneficiaries (more than 47,000 in 2016) and had the biggest 5-year price increases: 84% and 88%, respectively (72% and 75% respectively, accounting for rebates).”
It is not surprising that the analysis found that prices are rising and are a driving force in spending.
“We know that high launch prices of a new drug is an important consideration for patient access,” Jeromie Ballreich, PhD, a health economist at Johns Hopkins University, Baltimore, said in an interview. “But we also know that a number of these drugs, particularly Humira and Enbrel, have been on the market for a while. They have experienced a tremendous price increase over the past 10 years plus. That’s exactly what the authors found. So that is really not surprising. Analysis of drug spending changes over the time [shows that] it is indeed price increases that really have been driving increases in drug spending.”
Angus Worthing, MD, a rheumatologist at Arthritis & Rheumatism Associates in Washington, D.C., and current chair of the American College of Rheumatology’s Government Affairs Committee, said that the faster price hikes in Part D stood out in the analysis and the role PBMs played in it.
“I was a little surprised at just how much more PBMs were responsible for higher inflation, compared to the part B system,” he said in an interview. “In the McCormick article, drug prices went up 45% after rebates in the Part D space, but only 21% in the Part B space, and we had seen hints that drug prices were going up faster, we just didn’t know just how much faster, so more than double the increase is more than I expected, and it is very concerning to look at that and realize that PBMs are more than doubling an already high inflation rate in drug prices.”
He suggested that part of the rise in Part D bDMARD prices observed in the study might be because of the application of step therapy in Part D.
“In Medicare specifically, step therapy is allowed in Part D but not in Part B – except in Medicare Advantage plans starting in 2019 – and this important difference between Part B and Part D explains how Part D rebates, linked with step therapy, may be the main reason that bDMARD prices rose more in Part D compared to the open formulary system in Medicare Part B,” Dr. Worthing wrote in an editorial on Dr. McCormick’s study.
The Pharmaceutical Care Management Association, the lobby group representing PBMs, declined an interview request, but challenged the analysis’ portrayal of the role of PBMs in an email. It pointed to a Government Accountability Organization report from July 2019 that found that Part D rebates helped offset spending by about 20% and that PBM compensation was primarily derived from administrative fees and not from maintaining a portion of rebates that the PBM negotiated on behalf of the plan.
Dr. Worthing said in an interview that these bDMARD price hikes are causing access issues, particularly in Medicare where beneficiaries cannot take advantage of manufacturer programs, such as discount cards and copay coupons, and potentially face coinsurance payments based on the list price and not the net-of-rebate price.
From a policy standpoint, he advocated for a cap on out-of-pocket spending for Medicare Part D drugs, which is a feature of legislation (H.R. 3, Lower Drug Costs Now Act of 2019) that is moving through the House of Representatives, most recently passing the House Ways and Means Committee in a party-line vote of 24-17, with 1 Democrat not voting.
Dr. Worthing’s editorial covers a few other policy options, including more financial transparency in the role PBMs play in the drug supply chain, the elimination of rebates in favor of a flat fee for PBMs or requiring all rebates on drugs to be passed through to Part D beneficiaries, penalties on manufacturers for price increases that exceed inflation, and usage of a price index based on what foreign countries pay for the same drug.
Many of the suggestions from Dr. Worthing’s editorial are in H.R. 3 and face an uphill battle to get through the Senate.
Dr. Worthing said that tackling the rebate issue by removing incentives for manufacturers to raise prices in order to offer higher rebates and changing step-therapy rules are things Congress could probably get accomplished as it heads into an election year, but there is a chance it could be even more comprehensive.
“With such an important issue like high drug prices, it probably benefits both parties, and everybody facing an election will be able to go back to their constituents and say, ‘Look we got something done. I was part of this,’ and there is a better chance they will do it if they hear about it from their constituents,” he said.
Dr. Ballreich was less optimistic that H.R. 3 is going to be able to survive.
“The interesting thing with this bill is that a number of pieces of it have been endorsed by President Trump, and the question is, [is] that a meaningful endorsement? Is the Trump administration going to want to use the this plan as a win for him, as a win for showing potential voters that he can work in a bipartisan way, [that] he could take on ‘big drug companies’ – all those successful soundbites? Can then Trump use his power to push this bill through the Senate? I think that is a question mark,” he said, noting that it could take a lot of political capital to counter the powerful industry lobby. Ultimately, he expects that, if drug pricing does make it to the White House, it will go through some changes from where H.R. 3 is right now.
“I don’t think it will pass in its current iteration,” he said.
Each author of Dr. McCormick’s report had funding from different sources, though the funders had no role in the design and conduct of the study. No other disclosures were made.
SOURCES: McCormick N et al. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/ART.41138; Worthing A. Arthritis Rheumatol. 2019 Oct 14. doi: 10.1002/art.41135.
FROM ARTHRITIS & RHEUMATOLOGY
GAO calls out HHS’ poor oversight of administrative costs of Medicaid work requirements
The Centers for Medicare & Medicaid Services needs to be doing a better job overseeing the administrative costs associated with the implementation of work requirements in Medicaid, the Government Accountability Office said in a new report.
The government watchdog found two key weaknesses in CMS’s oversight of the administrative costs of the Medicaid demonstration projects related to work requirements for Medicaid.
First, the GAO report notes that no consideration of the administrative costs of the work requirements is given during the administration of the approval process.
The GAO reports that, of five states’ approvals, the estimated administrative costs range from the low end of $6.1 million for New Hampshire (with 50,000 beneficiaries subject to the work requirement) to $271.6 million for Kentucky (with 620,000 beneficiaries subject to the work requirement). Indiana, with 420,000 beneficiaries subject to work requirements, has an estimated cost of $35.1 million.
A significant portion of Kentucky’s funding was for a the development of a new information technology system to help track work requirements.
“GAO found that CMS does not require states to provide projections of administrative costs when requesting demonstration approvals,” the report states. “Thus, the cost of administering demonstrations, including those with work requirements, is not transparent to the public or included in CMS’s assessment of whether a demonstration is budget neutral – that is, that federal spending will be no higher under the demonstration than it would have been without it.”
The GAO also reported that, by not requiring cost estimates, it also fails to meet the demonstration objective of transparency, something that goes hand in hand with budget neutrality.
The second weakness identified by GAO is that current procedures “may be insufficient to ensure that costs are allowable and matched at the correct rate.” Three of the five states examined in the report had received CMS approval for federal funds for administrative costs that were either not allowable for matching or were matched at higher rates than appropriate, based on CMS guidance.
The government watchdog noted that CMS did implement “procedures that may provide additional information on demonstrations’ administrative costs. ... However, it is unclear whether these efforts will result in data that improves CMS’s oversight.”
The GAO made three recommendations in the report. First, the CMS should require states to submit public projections of administrative costs when seeking approval for demonstration projects. Second, the administrative costs should be a part of the calculation for assessing the budget neutrality of demonstration project applications. Finally, CMS should do a better job assessing the risk that federal funds are being used to cover administrative costs that are not allowable and should improve oversight procedures as needed.
The GAO report included the Department of Health & Human Services’s response to the recommendations. To the first, the agency said that “its experience suggests that demonstration administrative costs will be a relatively small portion of total costs and therefore HHS believes making information about these costs available would provide stakeholders little to no value.”
Similarly, to the second recommendation, HHS countered that the information would provide little to no value given that administrative costs represent a relatively small portion of the total demonstration costs.
To the final recommendation on the need for better risk assessment, HHS said its existing approach “is appropriate for the low level of risk that administrative expenditures represent. ... CMS officials told us that they had not assessed wither current procedures sufficiently address risks posed by administrative costs for work requirements and had no plans to do so.”
The Centers for Medicare & Medicaid Services needs to be doing a better job overseeing the administrative costs associated with the implementation of work requirements in Medicaid, the Government Accountability Office said in a new report.
The government watchdog found two key weaknesses in CMS’s oversight of the administrative costs of the Medicaid demonstration projects related to work requirements for Medicaid.
First, the GAO report notes that no consideration of the administrative costs of the work requirements is given during the administration of the approval process.
The GAO reports that, of five states’ approvals, the estimated administrative costs range from the low end of $6.1 million for New Hampshire (with 50,000 beneficiaries subject to the work requirement) to $271.6 million for Kentucky (with 620,000 beneficiaries subject to the work requirement). Indiana, with 420,000 beneficiaries subject to work requirements, has an estimated cost of $35.1 million.
A significant portion of Kentucky’s funding was for a the development of a new information technology system to help track work requirements.
“GAO found that CMS does not require states to provide projections of administrative costs when requesting demonstration approvals,” the report states. “Thus, the cost of administering demonstrations, including those with work requirements, is not transparent to the public or included in CMS’s assessment of whether a demonstration is budget neutral – that is, that federal spending will be no higher under the demonstration than it would have been without it.”
The GAO also reported that, by not requiring cost estimates, it also fails to meet the demonstration objective of transparency, something that goes hand in hand with budget neutrality.
The second weakness identified by GAO is that current procedures “may be insufficient to ensure that costs are allowable and matched at the correct rate.” Three of the five states examined in the report had received CMS approval for federal funds for administrative costs that were either not allowable for matching or were matched at higher rates than appropriate, based on CMS guidance.
The government watchdog noted that CMS did implement “procedures that may provide additional information on demonstrations’ administrative costs. ... However, it is unclear whether these efforts will result in data that improves CMS’s oversight.”
The GAO made three recommendations in the report. First, the CMS should require states to submit public projections of administrative costs when seeking approval for demonstration projects. Second, the administrative costs should be a part of the calculation for assessing the budget neutrality of demonstration project applications. Finally, CMS should do a better job assessing the risk that federal funds are being used to cover administrative costs that are not allowable and should improve oversight procedures as needed.
The GAO report included the Department of Health & Human Services’s response to the recommendations. To the first, the agency said that “its experience suggests that demonstration administrative costs will be a relatively small portion of total costs and therefore HHS believes making information about these costs available would provide stakeholders little to no value.”
Similarly, to the second recommendation, HHS countered that the information would provide little to no value given that administrative costs represent a relatively small portion of the total demonstration costs.
To the final recommendation on the need for better risk assessment, HHS said its existing approach “is appropriate for the low level of risk that administrative expenditures represent. ... CMS officials told us that they had not assessed wither current procedures sufficiently address risks posed by administrative costs for work requirements and had no plans to do so.”
The Centers for Medicare & Medicaid Services needs to be doing a better job overseeing the administrative costs associated with the implementation of work requirements in Medicaid, the Government Accountability Office said in a new report.
The government watchdog found two key weaknesses in CMS’s oversight of the administrative costs of the Medicaid demonstration projects related to work requirements for Medicaid.
First, the GAO report notes that no consideration of the administrative costs of the work requirements is given during the administration of the approval process.
The GAO reports that, of five states’ approvals, the estimated administrative costs range from the low end of $6.1 million for New Hampshire (with 50,000 beneficiaries subject to the work requirement) to $271.6 million for Kentucky (with 620,000 beneficiaries subject to the work requirement). Indiana, with 420,000 beneficiaries subject to work requirements, has an estimated cost of $35.1 million.
A significant portion of Kentucky’s funding was for a the development of a new information technology system to help track work requirements.
“GAO found that CMS does not require states to provide projections of administrative costs when requesting demonstration approvals,” the report states. “Thus, the cost of administering demonstrations, including those with work requirements, is not transparent to the public or included in CMS’s assessment of whether a demonstration is budget neutral – that is, that federal spending will be no higher under the demonstration than it would have been without it.”
The GAO also reported that, by not requiring cost estimates, it also fails to meet the demonstration objective of transparency, something that goes hand in hand with budget neutrality.
The second weakness identified by GAO is that current procedures “may be insufficient to ensure that costs are allowable and matched at the correct rate.” Three of the five states examined in the report had received CMS approval for federal funds for administrative costs that were either not allowable for matching or were matched at higher rates than appropriate, based on CMS guidance.
The government watchdog noted that CMS did implement “procedures that may provide additional information on demonstrations’ administrative costs. ... However, it is unclear whether these efforts will result in data that improves CMS’s oversight.”
The GAO made three recommendations in the report. First, the CMS should require states to submit public projections of administrative costs when seeking approval for demonstration projects. Second, the administrative costs should be a part of the calculation for assessing the budget neutrality of demonstration project applications. Finally, CMS should do a better job assessing the risk that federal funds are being used to cover administrative costs that are not allowable and should improve oversight procedures as needed.
The GAO report included the Department of Health & Human Services’s response to the recommendations. To the first, the agency said that “its experience suggests that demonstration administrative costs will be a relatively small portion of total costs and therefore HHS believes making information about these costs available would provide stakeholders little to no value.”
Similarly, to the second recommendation, HHS countered that the information would provide little to no value given that administrative costs represent a relatively small portion of the total demonstration costs.
To the final recommendation on the need for better risk assessment, HHS said its existing approach “is appropriate for the low level of risk that administrative expenditures represent. ... CMS officials told us that they had not assessed wither current procedures sufficiently address risks posed by administrative costs for work requirements and had no plans to do so.”
Inspector General: NIH must improve conflict of interest reviews
the Department of Health & Human Services’ Office of Inspector General reported.
In highlighting the improvement in a September 2019 report, “NIH has made strides in reviewing financial conflicts of interest in extramural research, but could do more,” the OIG noted that, in the past 10 years, “NIH has strengthened its reporting requirements and developed an online system for collecting, reviewing, and storing financial conflicts of interest (FCOIs) that institutions report. These changes resulted in improvements in how NIH tracks and reviews FCOIs that institutions report.”
That being said, OIG also highlighted some ongoing issues with NIH’s FCOI oversight.
“Across the three NIH Institutes and Centers (ICs) that we reviewed, staff differed in the level of scrutiny they applied to their review of FCOIs,” the report states.
For example, the report notes that 15 of the 25 ICs have written procedures related to FCOI reviews and the documentation shared by the three ICs showed different levels of detail and instruction.
“Only one of the three guidance documents provided IC staff with specific criteria aimed at standardizing the review of FCOIs,” the report stated. Two of the three ICs also reported using external resources to aid in the review.
Review times also varied significantly, with two of the three ICs reporting that they spend generally 5-30 minutes per review, while the third said staff spends several hours on reviews.
The OIG also reported that “NIH lacks quality assurance procedures in its review process. Specifically, NIH central management and the three ICs that we reviewed do not perform any systematic analyses or even ad hoc checks to determine whether staff accurately and consistently review reported FCOIs, and OIG found a small number of inconsistencies in the FCOI data that institutions reported, which might highlight the need for more oversight of the review process.”
The report notes that there is a process in place to provide oversight of ICs’ review of reported FCOIs, but there is no longer sufficient staff to continue this oversight.
The “OER [Office of Extramural Research] now relies on IC staff to seek guidance when needed and does not conduct regular oversight of the ICs. Similarly, none of the three ICs we reviewed perform quality checks to ensure the thoroughness or consistency of review by program officials. Staff members from one IC stated that while they do not conduct quality checks, the IC provides new program officials more guidance during their first few reviews.”
The HHS watchdog also noted that NIH cannot identify whether FCOIs involve foreign entities even though investigators must disclose financial interests from foreign investments.
“The HHS regulations on FCOI do not require institutions to designate whether FCOIs involve foreign entities, and NIH reported that it has no plans to expand these regulations to include such a requirement,” the OIG reported.
The OIG recommended that NIH perform periodic quality assurance reviews of FCOI information to ensure adequacy of oversight and suggested it use “information regarding foreign affiliations and support that it collects during the pre-award process to decide whether to revise its FCOI review process to address concerns regarding foreign influence.”
SOURCE: Murrin S. Office of Inspector General. 2019 Sep 25. OEI-03-19-00150.
the Department of Health & Human Services’ Office of Inspector General reported.
In highlighting the improvement in a September 2019 report, “NIH has made strides in reviewing financial conflicts of interest in extramural research, but could do more,” the OIG noted that, in the past 10 years, “NIH has strengthened its reporting requirements and developed an online system for collecting, reviewing, and storing financial conflicts of interest (FCOIs) that institutions report. These changes resulted in improvements in how NIH tracks and reviews FCOIs that institutions report.”
That being said, OIG also highlighted some ongoing issues with NIH’s FCOI oversight.
“Across the three NIH Institutes and Centers (ICs) that we reviewed, staff differed in the level of scrutiny they applied to their review of FCOIs,” the report states.
For example, the report notes that 15 of the 25 ICs have written procedures related to FCOI reviews and the documentation shared by the three ICs showed different levels of detail and instruction.
“Only one of the three guidance documents provided IC staff with specific criteria aimed at standardizing the review of FCOIs,” the report stated. Two of the three ICs also reported using external resources to aid in the review.
Review times also varied significantly, with two of the three ICs reporting that they spend generally 5-30 minutes per review, while the third said staff spends several hours on reviews.
The OIG also reported that “NIH lacks quality assurance procedures in its review process. Specifically, NIH central management and the three ICs that we reviewed do not perform any systematic analyses or even ad hoc checks to determine whether staff accurately and consistently review reported FCOIs, and OIG found a small number of inconsistencies in the FCOI data that institutions reported, which might highlight the need for more oversight of the review process.”
The report notes that there is a process in place to provide oversight of ICs’ review of reported FCOIs, but there is no longer sufficient staff to continue this oversight.
The “OER [Office of Extramural Research] now relies on IC staff to seek guidance when needed and does not conduct regular oversight of the ICs. Similarly, none of the three ICs we reviewed perform quality checks to ensure the thoroughness or consistency of review by program officials. Staff members from one IC stated that while they do not conduct quality checks, the IC provides new program officials more guidance during their first few reviews.”
The HHS watchdog also noted that NIH cannot identify whether FCOIs involve foreign entities even though investigators must disclose financial interests from foreign investments.
“The HHS regulations on FCOI do not require institutions to designate whether FCOIs involve foreign entities, and NIH reported that it has no plans to expand these regulations to include such a requirement,” the OIG reported.
The OIG recommended that NIH perform periodic quality assurance reviews of FCOI information to ensure adequacy of oversight and suggested it use “information regarding foreign affiliations and support that it collects during the pre-award process to decide whether to revise its FCOI review process to address concerns regarding foreign influence.”
SOURCE: Murrin S. Office of Inspector General. 2019 Sep 25. OEI-03-19-00150.
the Department of Health & Human Services’ Office of Inspector General reported.
In highlighting the improvement in a September 2019 report, “NIH has made strides in reviewing financial conflicts of interest in extramural research, but could do more,” the OIG noted that, in the past 10 years, “NIH has strengthened its reporting requirements and developed an online system for collecting, reviewing, and storing financial conflicts of interest (FCOIs) that institutions report. These changes resulted in improvements in how NIH tracks and reviews FCOIs that institutions report.”
That being said, OIG also highlighted some ongoing issues with NIH’s FCOI oversight.
“Across the three NIH Institutes and Centers (ICs) that we reviewed, staff differed in the level of scrutiny they applied to their review of FCOIs,” the report states.
For example, the report notes that 15 of the 25 ICs have written procedures related to FCOI reviews and the documentation shared by the three ICs showed different levels of detail and instruction.
“Only one of the three guidance documents provided IC staff with specific criteria aimed at standardizing the review of FCOIs,” the report stated. Two of the three ICs also reported using external resources to aid in the review.
Review times also varied significantly, with two of the three ICs reporting that they spend generally 5-30 minutes per review, while the third said staff spends several hours on reviews.
The OIG also reported that “NIH lacks quality assurance procedures in its review process. Specifically, NIH central management and the three ICs that we reviewed do not perform any systematic analyses or even ad hoc checks to determine whether staff accurately and consistently review reported FCOIs, and OIG found a small number of inconsistencies in the FCOI data that institutions reported, which might highlight the need for more oversight of the review process.”
The report notes that there is a process in place to provide oversight of ICs’ review of reported FCOIs, but there is no longer sufficient staff to continue this oversight.
The “OER [Office of Extramural Research] now relies on IC staff to seek guidance when needed and does not conduct regular oversight of the ICs. Similarly, none of the three ICs we reviewed perform quality checks to ensure the thoroughness or consistency of review by program officials. Staff members from one IC stated that while they do not conduct quality checks, the IC provides new program officials more guidance during their first few reviews.”
The HHS watchdog also noted that NIH cannot identify whether FCOIs involve foreign entities even though investigators must disclose financial interests from foreign investments.
“The HHS regulations on FCOI do not require institutions to designate whether FCOIs involve foreign entities, and NIH reported that it has no plans to expand these regulations to include such a requirement,” the OIG reported.
The OIG recommended that NIH perform periodic quality assurance reviews of FCOI information to ensure adequacy of oversight and suggested it use “information regarding foreign affiliations and support that it collects during the pre-award process to decide whether to revise its FCOI review process to address concerns regarding foreign influence.”
SOURCE: Murrin S. Office of Inspector General. 2019 Sep 25. OEI-03-19-00150.