HealthCare Roundtable e-News – August 6, 2018

Senate Democrats to Force Vote, Oppose HHS Short-Term Plan Rule

Senate Democrats announced last week that they will soon introduce legislation in accordance with the Congressional Review Act to overturn Health and Human Services’ newly finalized rule expanding the scope of short-term, limited-duration health plans. HHS introduced the controversial short-term plan rule, anticipating the agency would be sued, by including a severability clause stating that if a court invalidated the extended 36-month duration of the short-term plans, the rest of the rule would still be enforced.

In a meeting with reporters, Azar avoided questions about potential legal challenges and suggested that the plans are very similar to the short-term plans under the Obama administration. HHS explains that it interprets “short-term, limited duration” as referring to two separate time blocks: the 36-month limit on coverage satisfies the “limited-duration” component of the term, whereas the 12-month limit on initial contracts satisfies the “short-term” component.

“We are now keeping that basic structure [of short-term plans under the Obama administration] but making it 12 months plus renewable to 36. The actual underlying dynamics of the short-term limited duration plans I don’t believe are altered from what President Obama did,” Azar said when asked about certain changes to the plans and the potential for litigation.

In response to the rule, the Association for Community Affiliated Plans argued that short-term plans should not be marketed as an alternative to the ACA. BlueCross BlueShield Association also condemned the newly announced plans for not providing enough information to consumers about the plans’ lack of overage.

“The focus should now be on providing robust protections for consumers, with full disclosure of what’s covered and what is not,” BCBSA Senior Vice President Justine Handelman said. “Steps also should be taken to prevent cherry-picking that separates the healthiest of customers from those with significant medical needs, raising the cost of comprehensive coverage for all who want the greater security it provides,” according to InsideHealthPolicy.

Senate Finance ranking Democrat Ron Wyden (OR), a frequent critic of short-term “junk insurance,” also denounced the administration’s move in putting patients’ needs second.

“By giving the green light to junk plans, Trump and his administration are once again siding with fraudsters, unscrupulous brokers and insurance companies over unsuspecting Americans that simply want affordable health care,” Wyden said. “This move is the lynchpin in Trump’s plan to turn back the clock to the days when Americans with pre-existing conditions were left out in the cold, and insurance companies could deny care at will or charge whatever they pleased.”

Senate Democrats announced on August 2nd that they will soon introduce legislation to overturn the Trump administration’s rule expanding the scope of short-term, limited-duration health plans by way of the Congressional Review Act, which allows Congress to overturn regulatory action taken by federal agencies with a majority vote in both the House and Senate within 60 legislative days of a rule being published in the Federal Register.

Multi-Sector Partnership Formed to Tackle Opioid Crisis

The National Academy of Medicine (NAM) and the Aspen Institute have launched a public-private partnership with more than 30 supporting organizations, and includes the academy’s president, Victor Dzau, HHS Assistant Secretary Brett Giroir, and Dr. Jonathan Perlin, president of clinical services and chief medical officer of HCA Healthcare. The group will establish a set of shared priorities, including addressing overprescribing of opioids, and develop solutions to address the opioid epidemic, according to a press release from NAM last week.

According to the press release, other goals of the collaborative include establishing working groups “to develop collective strategies in priority areas…such as education and training; prescribing guidelines and evidence standards; treatment and community approaches; communication, culture, and stigma; and research and data. Future activities will include meetings and workshops, expert publications, public engagement strategies, and the development of an information hub to share knowledge and best practices, among other efforts.”

Assistant Secretary Giroir, co-chair of the collaborative, notes that only through a “multi-sector collaboration” approach can the US tackle the opioid misuse epidemic, which he asserts is “the most pressing public health challenge of our time.”

CMS Issues Interim Final Rule Resuming Risk Adjustment Payments, Proposes Cuts to Outpatient Hospital Clinic Visits

Centers for Medicare and Medicaid Services (CMS) has been busy in recent weeks with proposals and interim initiatives, including two proposals to cut Medicare payments for clinic visits at hospital off-campus provider-based departments and to¬†extend Medicare reimbursement cuts for drugs purchased through the 340B discount program, as well as an interim final rule that resumes the Affordable Care Act’s risk adjustment collections and payments to insurers for the 2017 plan year.
The initial proposal to cut Medicare payments, which is embodied in the proposed 2019 outpatient hospital rule, would be considered an expansion for the agency’s push for site-neutral payment policies, which hospital groups have voiced their opposition for.

CMS’ proposal to extend reimbursement cuts purchased through the 340B discount program, which is also a part of the 2019 hospital outpatient pay rule, is considered by some to be not so surprising a move. However, the American Hospital Association and other groups allege that the agency “stepped up its assault on 340B hospitals.”

In addition to these proposals, CMS’ interim final rule will look to resume the ACA’s risk adjustment collections and payments to insurers for the 2017 plan year. Payments earlier this month were suspended after a New Mexico federal court ruled that the initial regulations did not properly explain the agency’s rationale for designing a budget-neutral system. The final rule reissues the risk-adjustment methodology previously established for the 2017 benefit year.

Crunching the Numbers: Allowing Drug Price Negotiation Could Save Medicare $2.8 Billion Per Year

As drug prices continue to rise, officials scramble to find ways to curb the cost hikes. And although Medicare currently isn’t allowed to negotiate drug prices, analysts have confirmed that by allowing the federal government to negotiate with drug makers, Medicare and its beneficiaries could save an estimated $2.8 billion in a single year for the top 20 most commonly prescribed medicines.

The report, which includes an analysis by Democrats on the Senate Homeland Security and Governmental Affairs Committee, shows that other government agencies that are permitted to negotiate with drug companies – such as the Department of Veterans Affairs and the Department of Defense – were able to secure pricing that rose at “significantly lower rates” than wholesale prices for the most widely prescribed brand-name drugs in Medicare Part D.

The Trump administration has yet to embrace giving Medicare direct negotiating power, as HHS Secretary Alex Azar noted back in May. The administration has based its position on a 2007 report from the nonpartisan Congressional Budget Office that found that negotiation wouldn’t generate any savings because private insurance plans already do negotiate. The only way direct negotiation could save money is if Medicare denies access to beneficiaries or sets prices “by government fiat,” stated Azar back in May.

HHS Proposes Elimination of Safe Harbor Protection for PBMs

HHS recently proposed a rule that would eliminate the safe harbor protection for drug industry rebates. The safe harbor provision has protected Pharmacy benefit managers (PBMs), the middlemen who negotiate prices with drug companies on behalf of health plans, from anti-kickback statutes, which prevent any company from paying off another to increase its business.

Analysts have argued that revisions to rules regarding rebates could be disruptive in a way that backfires on the Trump administration. In June, the Medicare trustees attributed a downward revision in Medicare per-capita and total Part D drug spending growth on rising PBM-negotiated manufacturer rebates. And without the safe harbor, PBMs could not negotiate a rebate with a drug company, and then make that drug available to customers through its formulary, without violating the law.

“If you eliminate the safe harbor, you can’t demand rebates, you’d have to simply lower the cost of drugs,” says antitrust attorney David Balto, a former policy director at the Federal Trade Commission. Balto claims the rule would severely shrink a major source of PBM profits and align incentives toward lowering list prices.

Although the timing for the proposed regulation could be released this month, it seems more realistic that the Trump administration would want to release a key component of its drug price reforms in September or October as voters prepare for midterm elections.