FTC Releases Statement on Rebates and Fees in Exchange for Excluding Lower-Drug Products
The Federal Trade Commission (FTC) announced it will strengthen enforcement efforts against illegal bribes and rebate schemes that prevent patient access to competing lower-cost drugs. The statement put drug companies and prescription drug middlemen on notice that paying rebates and fees to exclude competitors offering lower-cost drug alternatives can violate competition and consumer protection laws. The FTC outlined the legal authorities that may apply when dominant drug companies pay rebates and fees to middlemen to foreclose competition from less expensive generic and biosimilar alternatives. The Commission voted 5-0 to issue the policy statement. Chair Lina M. Khan and Commissioners Rebecca Kelly Slaughter, Christine S. Wilson, and Alvaro Bedoya released individual statements.
New Mexico Governor Creates Task Force on Drug Prices
New Mexico Governor Michelle Lujan Grisham (D) signed an executive order on Thursday to create a task force to consider policies for controlling drug prices. The task force comprises of the state’s insurance superintendent, a doctor, an independent pharmacist, a patient, and a health insurance representative. The group will advise Grisham on policies by reviewing legislative and administrative action taken in other states to control prices for both residents and the government. New Mexico is one of several states that allow wholesale imports of drugs from Canada, and the FDA is reviewing the state’s drug import plan. New Mexico has also capped the monthly out-of-pocket cost for insulin at $25.
- The Department of Health and Human Services Office of Civil Right (HHS OCR) issued guidance for health care providers and plans to conduct audio-only telehealth services in alignment with the Privacy, Security, and Breach Notification rules included in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This information is intended to clarify audio-only telehealth procedure for covered entities and improve public confidence that covered entities are protecting the privacy and security of their health information. Audio-only telehealth is an important tool for expanding access to health care for underserved populations, including those with limited financial means, certain disabilities, unreliable internet access, limited English proficiency, and others.
- The American Medical Association announced a new physician-led workforce recovery plan, intended to help the industry recover from several tough years of medical crises. AMA’s recovery plan aims to reform physician payment, and has five stated goals: supporting telehealth expansion, reforming Medicare payment, reversing physicians’ expanded scope of practice, overhauling prior authorization, and reducing physician burnout. Harmon also called upon Congress to increase the number of Medicare-funded graduate schools for medical students, and to approve funding for medical schools and residency programs at Historically Black Colleges and Universities.
The Senate Finance Committee released a bipartisan discussion draft of the youth mental health package they would like included as part of a larger mental health care package. The legislation would increase access to mental health care in public schools by updating and clarifying Medicaid guidance on what services the program will cover, and how health care providers can receive Medicaid payments for providing same-day service. The bill draft includes provisions which would eliminate barriers to coordinated care, support mental health care in schools, improve enforcement and oversight of Medicaid’s Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit, streamline enrollment for out-of-state providers in another state’s Medicaid program, and direct Medicaid to guide states on how they can cover treatment family care services for foster youth enrolled in Medicaid with intensive mental health needs.
- The Medicaid and CHIP Payment and Access Commission (MACPAC) released a letter to Centers for Medicare & Medicaid Services (CMS) offering comments on CMS Proposed Rule “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value- Based Purchasing Program for Federal Fiscal Year 2023; Request for Information on Revising the Requirements for Long-Term Care Facilities To Establish Mandatory Minimum Staffing Levels, 87 Fed. Reg. 22720” (originally released April 15, 2022). MACPAC acknowledges that Medicaid is the primary payer for many nursing home residents, and that Medicaid-covered beneficiaries generally reside in facilities with lower staffing rates than non-Medicaid patients. MACPAC’s letter encourages CMS to apply a health equity lens to its analyses of staffing guidelines and more directly meet the needs of Medicaid-covered nursing home residents.
- The Medicaid and CHIP Payment Access Commission (MACPAC) released its June 2022 Report to Congress on Medicaid and CHIP. The report contains six chapters on monitoring access to care, improving the oversight and transparency of directed payments, improving access to vaccines for adults enrolled in Medicaid, encouraging the use of the health information technology (IT) among behavioral health providers, requiring states to integrate care for people who are dually eligible for Medicaid and Medicare, and advancing health equity in Medicaid.
- Health Affairs published a report examining the results of Medicare’s Comprehensive End-Stage Renal Disease (ESRD) Care (CEC) Model after its first year of implementation. The paper examined whether this specialty-oriented Accountable Care Organization (ACO) model, the first of its kind for Medicare beneficiaries, had any effects on ESRD treatment cost and quality compared to primary care ACOs. The authors found a $126 decrease in Medicare spending per beneficiary, driven by a 5% reduction in hospitalizations and an 8% decrease in likelihood of readmission. The results of this paper suggest that other subpopulations, including other chronic disability or high need classifications, could benefit from a similarly designed ACO model.
- The Office of Inspector General (OIG) within the Department of Health and Human Services (HHS) conducted an audit covering $3.95 billion that Medicare and beneficiaries paid for evaluation and management (E&M) services at provider-based facilities in selected states. Based on the audit, OIG estimated a total of $1.6 billion in total savings to Medicare and beneficiaries if the physicians had been paid at the freestanding PFS non-facility rate and hospitals paid nothing under the Outpatient Prospective Payment System. Beneficiaries also would have made less co-pays and had a lower-cost share. OIG recommended CMS pursue legislative or regulatory changes to lower costs for Medicare programs and beneficiaries by equalizing payments between provider-based facilities and freestanding facilities for E&M services.
- Medicare Payment Advisory Commission (MedPAC) released its June 2022 Report to the Congress on Medicare and the Health Care Delivery System. The report contains seven chapters on an approach to streamline and harmonize Medicare’s portfolio of alternative payment models, vulnerable Medicare beneficiaries’ access to care, supporting safety-net providers, addressing high prices of drugs covered under Medicare Part B, improving the accuracy of Medicare Advantage payments by limiting the influence of outliers in CMS’s risk-adjustment model, aligning fee-for-service payment rates across ambulatory settings, and segmentation in the stand-alone Part D plan market.
The Supreme Court rendered a unanimous decision saying that the federal government improperly lowered drug reimbursement payments to hospitals and clinics that serve low-income communities. In American Hospital Association v. Becerra, the court ruled that “absent a survey of hospitals’ acquisition costs’ the Department of Health and Human Services “may not vary the reimbursement rates for 340B hospitals. HHS’s 2018 and 2019 reimbursement rates for 340B hospitals were therefore contrary to the statute and unlawful.” The government argued that the hospitals and clinics, because of their special status serving low-income communities, are able to buy the drugs at a deep discount. Therefore reimbursing the hospitals, called 340B hospitals, at the same rate as other hospitals that pay more created an incentive for the hospitals to overprescribe the drugs or prescribe more expensive drugs.