Tara
O'Neill Hayes August 23, 2018
The
Centers for Medicare and Medicaid Services (CMS) has published a flurry of new
proposed and final rules this summer regarding payment rates and policies
affecting Medicare providers, Medicare Advantage (MA) and Part D plan sponsors,
and beneficiaries. The following offers a summary of some of the most
noteworthy changes, most of which seek to provide greater flexibility to plan
sponsors to offer Medicare patients greater choice in benefits and to reduce
beneficiary costs.
Final
Rules and Guidance Documents
Loosening
the Uniformity Rules in Medicare Advantage
In April
of this year, CMS finalized a rule that will provide Medicare Advantage plans greater
authority to tailor their supplemental benefits to the unique needs of their
patients.[1] Current
law requires that MA plans provide uniform benefits at a uniform premium to all
enrollees in a specific plan, which had previously been interpreted to include
uniform cost-sharing. CMS is now interpreting the law in a way that allows MA
plans, for enrollees that meet specific medical criteria, to reduce
cost-sharing for certain benefits, to offer certain supplemental benefits, and
to provide lower deductibles—as long as all similarly situated enrollees are
treated the same and that such tailored benefits are for services medically
related to the shared medical condition. For example, loosening the program’s
uniformity requirements will allow plans to offer diabetic patients reduced
cost-sharing for endocrinologist visits or more frequent foot exams. CMS reiterates
that this rule change does not in any way change the program’s
non-discrimination rules, and MA plans may not restrict access to or condition
the coverage of a good or service based on health-status related factors.
This rule
change supplements new authorities that the recently passed Bipartisan Budget
Act of 2018 (BBA) provided. The BBA included the CHRONIC Care Act and expanded
the current value-based insurance design demonstration (VBID) that the CMS
Innovation Center is conducting. The CHRONIC Care Act authorizes CMS to waive
the uniformity requirement beginning in 2020 specifically for supplemental
benefits offered to chronically ill patients. These benefits will not be
required to be medical benefits, and may include services such as meal delivery,
installation of handrails or wheelchair ramps at a patient’s home, or providing
transportation to doctors’ appointments via ride-hailing companies. The BBA
will expand the MA VBID demonstration to all 50 states in 2020. VBID plans are
designed to promote the use of health care services with the highest value—the
best outcomes at the lowest cost—by, for example, reducing patient cost-sharing
for those services.[2]
Eliminating
“Meaningful Difference” Requirements in MA and Part D
Today,
each MA and Part D prescription drug plan that a plan
sponsor offers in a given county is required to be meaningfully different from
the sponsor’s other plans. The “meaningful difference” standard applies to
out-of-pocket (OOP) costs and formulary structures.[3] This
provision seeks to balance the desire to have numerous plan options available
while limiting the confusion that may arise from having too many options. This
requirement, however, also limits the ability of plan sponsors to offer
innovative benefit designs tailored to different groups of beneficiaries with
different needs.
In the
final MA and Part D rule for 2019, CMS has eliminated this requirement for MA
plans[4] and
Part D Enhanced Alternative (EA) benefit design plans (relative to other EA
plans offered by the same plan sponsor).[5] The
elimination of this requirement should allow for more plan options with subtle
yet significant differences. Such differences for MA plans may include
different provider networks, premiums, inclusion or exclusion of Part B premium
buy-down, and different estimated out-of-pocket costs. Part D EA plans will still
be required to be meaningfully different from basic Part D plans, but plan
sponsors will no longer have to show that a meaningful difference exists
between each of their own EA plans. Differences for Part D EA plans may now
include OOP cost designs with similar actuarial values but differences in how
and when beneficiaries must pay; for example, one plan may have a high
deductible but low coinsurance rates whereas another has higher coinsurance
rates but no deductible.
Reducing
Part D Beneficiaries’ Out-of-Pocket Costs
Also
included in the final MA and Part D rule for 2019 were several provisions to
reduce beneficiaries’ OOP drug costs.[6] Part
D plans will now be able to substitute a generic drug in place of a brand-name
drug as soon as it becomes available, which typically reduces significantly
beneficiaries’ cost-sharing liability. For purposes of the Low-Income Subsidy
(LIS) program, where LIS beneficiaries’ OOP costs are fixed dollar amounts
depending on whether a drug is a brand-name or generic, biosimilar products
will now be treated as generic drugs, which will also reduce LIS beneficiaries’
cost-sharing as well as the federal government’s costs. CMS also modified rules
regarding the tiering exceptions process in place for beneficiaries who are
unable to take a lower-cost alternative drug due to safety or efficacy
concerns. The exceptions process allows beneficiaries to request an exception
from the cost-sharing amount they are supposed to pay for the drug they are
taking and instead pay the lesser cost-sharing amount for the lower-cost drug
on a lower tier on the formulary. Part D plans will no longer be allowed to
exclude dedicated generic tiers from the tiering exceptions process, and
beneficiaries granted an exception must be given the cost-sharing amount for
the lowest tier on which an alternative drug is available.
Recognizing
Medicare Advantage Plans as Advanced APMs
In 2015,
Congress passed the Medicare and CHIP Reauthorization Act (MACRA), which
established a new payment system for Medicare providers. This new payment
system requires providers either 1) participate in Advanced Alternative Payment Models (AAPMs)
and be eligible for a bonus payment, or 2) report quality and payment data
under the Merit-based Incentive Payment System (MIPS)
and be subject to financial bonuses or penalties depending on their outcomes
relative to other providers.
On June
29, CMS announced that it would move forward with a demonstration project—the
Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI)—that will
allow certain MA plans to be considered AAPMs for purposes of the new
requirements established by MACRA.[7] This
classification will allow physicians participating in MA plans that require
providers to take on a certain amount of financial risk to be potentially
exempt from the MIPS reporting requirements and allow them to earn a bonus
under the AAPM payment system. This change is a welcome incentive for
physicians to continue participating in MA plans, particularly given the
evidence that beneficiaries with chronic conditions have better health outcomes
and lower costs if they are enrolled in MA rather than traditional Medicare,
even though MA enrollees have a higher proportion of clinical and social risk
factors.[8]
Allowing
Step-therapy in Part B
On August
7, CMS provided MA plans greater flexibility in their benefit design and
coverage of certain medicines. MA plans will now be able to impose step therapy
requirements as a way to manage utilization of physician-administered drugs
covered under the Medicare Part B benefit.[9] Step
therapy is a utilization management tool in which patients are first required
to try one treatment option before an insurer will cover a more expensive
option; with respect to prescription drug coverage, this typically means first
trying a generic or biosimilar medicine before a brand-name drug will be
covered. It is hoped that this expanded authority will enable insurers to
promote the use of higher-value medicines and to negotiate better discounts for
drugs.
Specifically,
CMS rescinded a memo from September 2012 that stated MA plans were not allowed
to impose additional requirements (such as step therapy) that would hinder
access to Part B drugs or services.[10] Additionally,
joint MA-Part D plans will have new authority to cross-manage Part B and Part D
drugs by allowing drugs covered under one benefit to be the first step of a
treatment plan before allowing use of a drug covered by the other benefit. Any
step therapy requirement must be coupled with drug-management and
care-coordination services, and the beneficiary must receive at least half of
the savings generated from reduced drug costs. These requirements are intended
to encourage patient participation, which is essential to realizing better health
management and medication adherence.
Although
beneficiaries will still be able to request an exception to the step therapy
requirement and appeal a denial, some patient advocacy groups are concerned
that these tools could delay access to medications that a patient may need.
Proposed
Changes Not Yet Finalized
Site-Neutral
Payments for Physician Services in FFS
In a
proposed rule published on July 25, CMS announced its intention to implement a
site-neutral payment policy for services provided to fee-for-service (FFS)
Medicare beneficiaries. Currently, Medicare pays different prices depending on
where the same service is rendered, whether at an outpatient clinic owned by a
hospital or in a physician’s office or ambulatory surgical center.[11] The
result will be about a 60 percent reduction in the reimbursement rates for
hospital-owned outpatient clinics.[12] If
these changes are finalized, beneficiaries and taxpayers will stop overpaying
for services simply because they are provided at a clinic owned by a hospital,
saving Medicare patients an estimated $150 million in 2019.[13] Just
as with CMS’s decision to reduce reimbursements for drugs eligible for the 340B
discount, non-Medicare patients and private insurers will also
benefit long-term as this change will similarly lessen the incentive for
hospitals to acquire physician practices, which drives up health care prices
for all payers. (On that note, CMS has also proposed other changes to 340B that
should reduce costs: extending its reduced reimbursement policy for 340B drugs
to those provided at off-campus hospitals sites, while simultaneously modifying
the calculation of the average sales price (ASP) for non-passthrough
biosimilars such that it is calculated solely based on the biosimilar’s ASP rather than its
reference product’s.)
Resurrecting
the Competitive Acquisition Program for Part B Drugs
In the
same proposed rule that proposed site-neutral payments, CMS included a request
for information (RFI) regarding the Competitive Acquisition Program (CAP).[14] The
CAP program was created in 2006 as an alternative means for providing coverage
of drugs under Medicare Part B. Currently, when a physician administers a drug
to a Medicare patient, these drugs are covered under the Part B benefit and
physicians are paid 106 percent of the average sales price (ASP) of the drug.
This payment structure encourages doctors to acquire the drug at the cheapest
possible price. One wrinkle in this incentive structure, though, is the 6
percent add-on: Because the 6-percent add-on increases as the drug’s price
increases, this add-on can actually encourage the use of higher-priced drugs,
increasing the cost for both Medicare and beneficiaries. The CAP program was
created to mitigate this unintended consequence by removing physicians’
financial interest in the administered drug. Instead of buying drugs
themselves, physicians would acquire drugs for their patients through private
vendors who would negotiate the price of the drug on their behalf and then bill
Medicare. The program struggled to gain traction and low provider participation
caused it to fade from existence after just two years. To learn from the
program’s past failures, CMS is seeking information on ways to reinstitute the
program successfully as a new tool for negotiating lower drug prices.
Requiring
Manufacturer Rebates and Price Concessions at the Point of Sale
CMS
similarly requested public feedback on a potential change to the way Part D
plan sponsors handle drug rebates that are provided after the point of sale
(POS).[15] The
net price for prescription drugs is increasingly being determined by numerous
rebates, discounts, and fees paid by or to drug manufacturers, pharmacy benefit
managers (PBMs), insurers, and pharmacists after a patient has already picked
up and paid their share of a drug’s cost. In Medicare Part D, these post-POS
rebates are typically classified as direct and indirect remuneration (DIR).
CMS has noted that the value of DIR in Part D has been growing steadily, at an
average annual rate of 14 percent per beneficiary per month between 2010 and
2015.[16] Because
these rebates—which are often greatest for the highest-cost drugs, typically
taken by the sickest patients—are paid after the patient has already paid their
co-insurance, the beneficiaries typically do not benefit from the lower final
price. As such, CMS is considering requiring Part D plans to pass on a portion
of the estimated amount of the rebates at the POS to reduce beneficiaries’
cost-sharing.
The Part
D plans note that these discounts are instead used to reduce premiums, and
argue that this policy change would lead to higher premiums for all
beneficiaries. While this contention is true, it is estimated that the premium
increase would be quite small, while the reduced OOP costs for beneficiaries
taking high-priced drugs could be quite significant.[17] This
change would restore an important insurance system design. The current
system—by using the rebates provided by high-cost drugs to reduce everyone’s
premiums—results in the patients in poorer health subsidizing the healthier
patients; this policy change would reverse that and make the insurance program
work the way it should.
Increasing
Risk-Sharing in Medicare ACOs
Most
recently, CMS issued a proposed rule that would reform the current structure
and incentives of Medicare’s various Accountable Care Organization (ACO)
payment models within the Shared Savings Program.[18] These
payment models have served, even before MACRA, as one of the primary ways in
which CMS is working to reform the traditional Medicare reimbursement model so
that providers are paid based on the value, rather than the number, of services
they provide. The current service-volume focused model has led to the term
“fee-for-service” (FFS).
The most
fundamental aspect of the reforms just proposed (referred to as “Pathways to
Success”) is the emphasis on transitioning ACOs into two-sided risk models in
which they will not only be able to share in any savings generated but will
also be responsible for a share of any costs incurred above a pre-determined
benchmark. It is only when ACOs take on enough financial risk that they will
qualify as AAPMs under MACRA.
Currently,
the Medicare Shared Savings Program (MSSP) offers three tracks, with the first
one not requiring participating ACOs to take on any shared financial risk, and
the second and third requiring them to assume some. Not surprisingly, 80
percent of ACOs have enrolled and remained in Track
1, and some are generating losses, entirely at the expense of the Medicare
program, while simultaneously benefitting from waivers of certain federal
requirements as a result of their participation in the program. CMS believes
these arrangements may be encouraging consolidation among providers and
limiting competition, which significantly drives up health care prices.[19] On
the other hand, those ACOs that have joined Tracks 2 and 3 and face financial
liability for increased spending have produced significant savings and improved
the quality of care provided. Given these findings, CMS is increasingly anxious
to accelerate the move toward placing more financial risk on the providers.
The
Pathways to Success design, the transition to which will begin in July 2019,
will limit the number of tracks to two: a BASIC track (with five levels) where
the risk will initially be zero but will gradually increase such that
participating ACOs will eventually qualify as AAPMs, and an ENHANCED track,
based on the existing MSSP Track 3.[20] The
ENHANCED track provides participating ACOs the greatest opportunity for
financial reward (and equal opportunity for financial loss) as well as
additional tools, such as expanded coverage of telehealth services, and
flexibility, such as a waiver to the rule that requires beneficiaries to spend
three days in an inpatient hospital prior to being admitted to a skilled
nursing facility.[21] While
only high-revenue, experienced ACOs will initially be required to enter the
ENHANCED track, eventually all ACOs will be.
Conclusion
CMS’s
goal is to transform the health care payment system, particularly through the
Medicare program, to the extent that it can through the regulatory process. The
reforms proposed or being implemented by CMS, though somewhat incremental,
should increase patient choice, realign incentives, and gradually reduce costs
for both beneficiaries and taxpayers. The details of these initiatives will
determine if they strike a fair balance between implementing downward price
pressure for the taxpayer-funded program, and maintaining effective patient
access to physicians and medications. Further, because of the size of the
Medicare program, it often sets the path for the rest of the health care
system. Thus, the changes being implemented by CMS are likely to have a broader
impact beyond just the Medicare program and its beneficiaries.
[3] https://www.law.cornell.edu/cfr/text/42/423.265 (The
regulatory language uses the phrase “substantial differences” rather than
“meaningful” and the statutory language does not appear to use either word in
this context, but the industry stakeholders and CMS itself use “meaningful
difference” when referring to this requirement, and thus AAF does as well for
the sake of consistency.)
[6] https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-policy-changes-and-updates-medicare-advantage-and-prescription-drug-benefit-program
[7] https://www.cms.gov/newsroom/press-releases/cms-advances-demonstration-waive-mips-requirements-clinicians-certain-risk-medicare-advantage-plans
[8] https://bettermedicarealliance.org/sites/default/files/2018-07/BMA_Avalere_MA_vs_FFS_Medicare_Report_0.pdf
[9] https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/MA_Step_Therapy_HPMS_Memo_8_7_2018.pdf
[13] https://www.cms.gov/newsroom/press-releases/cms-empowers-patients-and-ensures-site-neutral-payment-proposed-rule
[19] https://docs.house.gov/meetings/IF/IF02/20180214/106855/HHRG-115-IF02-Wstate-GaynorM-20180214.pdf
[20] The CMS rule and fact sheet capitalizes
BASIC and ENHANCED, and given that these are programs in the health care
industry, there seemed to be an extremely high probability that some ridiculous
acronym existed, but it has been confirmed that these are in fact not acronyms.
[21] https://www.cms.gov/newsroom/fact-sheets/proposed-pathways-success-medicare-shared-savings-program
https://www.americanactionforum.org/insight/keeping-up-with-the-new-medicare-rules/#ixzz5P6fmQN00
Follow: @AAF on Twitter
Follow: @AAF on Twitter
No comments:
Post a Comment