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CMS Outlines Implementation of Medicare Drug Price Negotiations
Centers for Medicare & Medicaid (CMS) Administrator Chiquita Brooks-LaSure laid out the timeline for initial Medicare drug price negotiations on Wednesday, January 11. The Inflation Reduction Act directs the federal government to negotiate a subset of high-cost, name-brand drugs covered by Medicare without generic or biosimilar competition. This spring, CMS plans to publish initial guidance for the drug negotiation program, as well as three information collection requests for public comment related to the small biotech exception, data elements used in negotiations, and required information for counteroffers. CMS will publish the final guidance, exceptions request, and negotiation requirements in the summer, prior to the agency beginning negotiations with manufacturers.
According to Brooks-LaSure, CMS will publish the initial list of 10 Medicare Part D drugs selected for price negotiations by September 1, 2023. CMS expects to publish the established maximum fair price by September 1, 2024, and it will take effect in January 2026. CMS will select 15 more Part D drugs for negotiation in 2027, 15 more Part B or Part D drugs for 2028, and 20 more Part B or Part D drugs for each year after that. By 2029, Medicare will be able to negotiate 60 high-cost Part D drugs.
In October 2022, Health and Human Services Secretary (HHS) Xavier Becerra established the Medicare Drug Rebate and Negotiations Group, an entity within CMS tasked with implementing the negotiation program. This week, CMS released a memo with more details on implementation of the negotiation program.
CMMI Could Explore Value-Based Payments as Option to Lower Prices for Prescription Drugs
The Centers for Medicare & Medicaid Services (CMS)’ Innovation Center (CMMI) is considering (subscription required) testing the use of value-based payments for prescription drugs as one option to lower drug costs. In October, President Biden signed an executive order directing CMMI to develop a final report on methods to cut drug costs by January 12. Late last year, research in the JAMA Health Forum proposed value-based pricing as a reform that would allow Medicaid to examine existing clinical evidence for an accelerated approval drug and establish reimbursement rates accordingly. In July, the Medicare Payment Advisory Commission (MedPAC) advanced a value-based payment proposal, which these researchers believe Medicaid could replicate. The researchers recommend CMS should use CMMI’s authority to implement a program for value-based pricing but note that statutory changes would be better equipped to provide CMS with the funding and expertise to maintain the program. Though accelerated approval drugs account for 1 percent or less of Medicaid spending, Medicaid officials have expressed concern about paying for these drugs that have not been fully confirmed to work.
Court Rules the 340B Repayment Process is up to HHS
On January 10, the U.S. District Court for the District of Columbia ruled that HHS may determine how to repay hospitals enrolled in the 340B drug discount program after years of underpayments. This decision is the latest case in a legal dispute between hospitals that receive discounted drugs through the 340B program and the federal government related to Medicare payment formulas. In June 2022, the Supreme Court ruled that the Trump Administration’s cuts to payment rates for drugs hospitals acquired through the 340B drug discount program were illegal. The District Court noted in its ruling that CMS has multiple routes it can use to go about repaying 340B hospitals for the pay cuts that would avoid calculating individual claims and decided HHS should have the opportunity to produce the appropriate remedy for its underpayments.
NASHP Develops Model Legislation to Leverage Medicare-Negotiated Drug Prices
The National Academy for State Health Policy (NASHP) developed model legislation that would let states leverage the future negotiated Medicare prices to set upper-payment limits for drugs in commercial, employer, and state-sponsored health insurance. The Act to Reduce Prescription Drug Costs Using Reference-Based Pricing directs states to use the rates Medicare negotiates under a directive from the Inflation Reduction Act. The bill would apply to commercial and state health plans and ERISA plans that opt to participate in the policy, but would exclude Medicaid. It zeroes in on maximum fair price, the final negotiated price Medicare will reach for a drug after negotiating with the drug companies. The bill would apply the maximum fair price as the ceiling price for all purchases of the selected drugs and all reimbursements for claims for the selected drugs when they are dispensed, delivered or administered to a patient within a state. To avoid interference with interstate commerce laws, the bill would strictly focuses on the rates paid by purchasers in a state. The bill does not set prices or aim to dictate what drug companies are allowed to charge, but limits how much purchasers in a state can pay.
Administrative Action
- On Monday, January 9, the U.S. Department of Health and Human Services (HHS) awarded nearly $245 million in Bipartisan Safer Communities funding to support youth mental health and strengthen the mental health care workforce, including funding for school-based mental health programs. Mental health support has been a top priority for this Administration with President Biden signing the bipartisan legislation into law in June. HHS awarded $185.7 million from the Substance Abuse and Mental Health Services Administration (SAMHSA) funding. HHS also awarded nearly $60 million from the Health Resources and Services Administration (HRSA) funding to invest in making mental health a part of primary care training to help prepare primary care providers to support and treat the mental health needs of children and adolescents.
- On January 11, Xavier Becerra, Secretary of the Department of Health and Human Services, renewed the COVID-19 public health emergency (PHE), which began on January 27, 2020, for another 90 days, extending its affiliated waivers. The Trump and Biden administrations have renewed the COVID-19 declaration more than 10 times so far. The Biden administration has promised to give stakeholders 60 days’ notice before letting the COVID-19 PHE expire. Although some sectors have started winding down or making COVID-era waivers permanent, several others are set to expire with the PHE if Congress or states do not act. For instance, the prescription of controlled substances via telehealth and telehealth as an excepted benefit and nursing home COVID-19 waivers in 15 states are set to expire at the end of the PHE.
Congressional Action
The Republican Steering Committee chose Representative Jason Smith (R- MO) to chair the House Ways and Means Committee. Rep Smith is replacing former Rep Kevin Brady (R-TX) who retired from Congress at the end of the last term, beating out Reps. Vern Buchanan (R-FL), who was the early favorite, and Arian Smith (R-NE). In his statement released following his selection, Rep Smith outlined his policy agenda for the committee, which included utilizing the tax code to increase jobs, grow wages, and build financial and health care security for families, reasserting Congress’s oversight responsibility by investigating politically motivated leaks of taxpayer information by the Internal Revenue Service and rolling back efforts by the Biden Administration to use the agency to target the middle class, and unleashing American energy production that rebuilds America’s energy independence while lowering costs for consumers.
Medicare
- Last Tuesday, CMS awarded the first 200 of 1,000 Medicare-funded physician residency slots to bolster the healthcare workforce and fund additional positions in hospitals serving underserved communities. Approximately three-quarters of the new positions will be for primary care, including obstetrics and gynecology, and mental health specialties. The FY2022 Inpatient Prospective Payment System (IPPS) final rule established policies to implement the 1,000 residency slots, which will phase in over five years, to qualifying hospitals authorized by the Consolidated Appropriations Act, 2021. CMS awarded the first round of residency positions to 100 teaching hospitals across 30 states, Washington, D.C., and Puerto Rico. The residency positions are effective July 1, 2023.
- On December 14, 2022, CMS released their annual Medicare Advantage (MA) and Part D Proposed Rule for 2024 (fact sheet) which governs requirements for MA and Part D plans. Among its provisions, the rule includes stricter prior authorization requirements, increases beneficiary marketing protections, better incorporates health equity into Star Ratings, provider directories, and quality improvement programs, improves access to behavioral health, and expands access to the Medication Therapy Management (MTM) program. Healthsperien developed a comprehensive section-by-section summary of the rule, which can be found here.
Marketplace
CMS reports that about 15.9 million people have signed up for 2023 individual market health insurance coverage through the Marketplaces since the start of the 2023 Marketplace Open Enrollment Period (OEP) on November 1. This snapshot shows activity through January 7, 2023, for the 33 Marketplaces using HealthCare.gov and through December 31, 2022, for the 18 State-based Marketplaces (SMBs) in 17 states and the District of Columbia that are using their own enrollment platforms. The total plan selections include 3.1 million people who are new to the Marketplace and 12.8 million people who had active coverage in 2022, which represents a 13% increase from this time last year.
Research
- The American Academy of Pediatrics (AAP) published its first clinical practice guideline (CPG) outlining evidence-based evaluation and treatment of children and adolescents with overweight and obesity. Within the CPG, the AAP set ages at which kids and teens should be offered medical treatments such as drugs and surgery, in addition to intensive diet, exercise, and other behavioral and lifestyle interventions. In general, the group advises doctors to offer adolescents 12 and older who have obesity access to appropriate drugs and teens 13 and older with severe obesity referrals for weight-loss surgery. The guideline aims to reset the inaccurate view of obesity as a “personal problem,” and take into consideration that obesity is a complex, chronic disease.
- Doctors for America, a non-profit association of physicians and medical students published a press release calling for the Federal Food and Drug Administration (FDA) transparently address outstanding questions about the new Alzheimer’s treatment Iecanemab. FDA granted the drug accelerated approval earlier this month, which Doctors for America and other advocates have questioned due to irregularities in the review process and potential conflicts of interest. With the drug manufacturer recently applying for traditional approval, the non-profit is calling upon FDA to convene an independent advisory council to review clinical evidence of the drug’s efficacy, safety, and if FDA has addressed the conflict-of-interest concerns.