Health Policy Weekly 02 25 22

February 25, 2022

Health Policy Weekly

The Cat in the Hat says we probably overspent on that.

Feb. 25, 2022

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Editor’s note

Good news: COVID-19 has left the top of the fold for the news. Bad news: What replaces it. It did get my 11-year-old to leave the Sports section of the newspaper for the front page but it seems like a bad deal. All this to say, health news has been a little quiet and we are going to take a week off. See you here on March 11.

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The Cat in the Hat says we probably overspent on that.
OIG reports excessive Medicare payment

Last week, the Health and Human Services (HHS) Office of Inspector General (OIG) issued the results of its quarterly comparison of average sales prices (ASPs) with average manufacturer prices (AMPs) for Medicare Part B drugs. OIG is statutorily required to notify the HHS Secretary if a drug’s ASP exceeds the AMP by more than 5%.

Initially the HHS Secretary was directed to substitute the price for a lower calculated rate. Through regulation, the Centers for Medicare & Medicaid Services (CMS) took over the price-substitution policy. CMS indicated it would only make a substitution when the price of the ASP for a drug exceeded the AMP by 5% in the 2 previous quarters or 3 of the previous 4 quarters. Under the policy, CMS may ignore the ASP and substitute the lesser of either the widely available market price or 103% of the AMP as the ASP-based reimbursement amount.

For the third quarter of 2021, OIG found:

8 drug codes met CMS’s price-substitution criteria
6 additional drug codes exceeded the 5% threshold. However, the Food and Drug Administration (FDA) identified these drugs as being in short supply, and therefore a price substitution would not be implemented
Another 14 drug codes had ASPs that exceeded the AMPs by at least 5% in the third quarter of 2021, but these drug codes did not meet other CMS price-substitution criteria

CMS will consider whether to pursue price substitution for the 8 Part B drugs. Price-substitution data will be available in the ASP pricing file on CMS’s website in October.

In a break from practice, OIG also informed CMS that the ASPs used to set the Part B payment amount for ADUHELM (aducanumab) in the first quarter of 2022 exceeded the widely available market price by more than 5%. OIG rarely (if ever) identifies drugs that meet CMS’s price-substitution criteria. OIG committed to providing CMS with early alerts when it identifies similar instances of quarterly price increases for Part B drugs.

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Legislative update

Legislative bytes

Rep. Michael Burgess (R-TX) introduced legislation to establish a minimum amount of price concessions for insulin to be passed through to beneficiaries at the point-of-sale under Medicare Part D.

COVID-19 update

COVID-19 bulletin

The White House notified Congress it will continue the national public health emergency declaration beyond March 1, 2022. Timing remains open-ended.
The FDA is reportedly deliberating whether to approve a second COVID-19 booster.
CMS released new codes for the monoclonal antibody bebtelovimab from Eli Lilly for the treatment of mild to moderate COVID-19.

Regulatory Update

If I ran the zoo, PA would be something we wouldn’t have to do

This month, the American Medical Association (AMA) released results of a survey of 1,004 practicing physicians to understand the impact of prior authorization (PA). Despite the intended use as a cost-saving measure, the feedback indicated that PAs may delay necessary care and lead to a less productive workforce. For employers, the nation’s largest purchasers of health insurance plans, PA requirements may result in missed workdays and higher costs.

Additional survey findings include:

91% of physicians perceived PA to have a negative impact on clinical outcomes
93% of physicians reported PA led to care delays, and 82% of physicians reported PA can lead to treatment abandonment
88% of providers experienced burnout related to PA
34% of physicians reported PA contributing to a serious adverse event (such as death, hospitalization, or disability) for their patients

The AMA continues to advocate for reforms to PA

If we had single payer, would it be Yertle the Turtle or more Lorax-like?

On Wednesday, the Congressional Budget Office (CBO) published a working paper assessing the economic implications of single-payer healthcare systems, which would replace private health insurance and Medicare. The paper follows a series of publications by CBO from a few years ago on the cost and financing implications of single-payer proposals introduced in Congress, such as Medicare-for-All.

The paper covers 5 scenarios for single-payer, with each option providing coverage for a range of medical services, including services provided by hospitals, physicians, and other healthcare providers, as well as for prescription drugs. Each scenario would use a fee-for-service approach and allow the federal government to set payment rates, including for prescription drugs. In the scenarios, which differ in payment rates, prices for prescription drugs would be lower than what Medicare would pay under current law. Out-of-pocket (OOP) costs for retail prescription drugs would also be lower.

A few general findings in the working paper:

Utilization of healthcare services would rise under all 5 single-payer options
Greater insurance coverage is correlated with improved health outcomes and reduced mortality
Productivity enhancements, brought on by lower payment rates to providers would increase gross domestic product (GDP)
Reduction in health insurance premiums and OOP expenses would generate a positive wealth effect that would allow for more time on activities other than paid work and maintain the same standard of living
Long-term services and supports benefits would further reduce OOP spending

While single-payer efforts have stalled in Congress, around 20 blue states continue to discuss related legislation. Single-payer efforts have failed in California, Colorado, Massachusetts, and Vermont due, in part, from needing to raise taxes to unprecedented levels.

Information buffet (AKA, other stuff that caught our attention)

Michigan Governor Gretchen Whitmer (D) signed 3 drug-pricing bills into law. The legislation:
- Prohibits pharmacy benefit managers (PBMs) from practicing “spread pricing”
- Restricts the use of “gag clauses” by PBMs
- Prohibits a PBM or health plan from requiring a patient to pay a copay that is higher than the selling cost of their drug
- Allows pharmacists to provide the current selling price of a drug the pharmacy dispenses or comparative current selling prices of generic and brand name drugs it dispenses without being asked
- Prohibits a health plan or PBM from reimbursing a 340B entity for pharmacy-dispensed drugs or provider-administered drugs at a rate lower than that paid for the same drug to pharmacies that were not 340B entities
Xcenda published the latest issue of HTA Quarterly for Spring 2022. The issue covers the new European Union Health Technology Assessment regulation, the United Kingdom's Innovative Licensing and Access Pathway, and the drug reimbursement environment in Canada.
On March 2, The Hill is hosting a virtual event to discuss the latest innovation in Alzheimer’s disease detection and treatment and how underserved groups can be given equitable access to care, education, and clinical trials.
February 11, 2022, marked the official release of the International Classification of Disease, 11th Revision (ICD-11) (2022) for worldwide implementation. The 11th revision of ICD contains over 17,000 unique codes with more than 120,00 codable terms. A key component of this iteration is that it is completely digital. To date, the US has not announced transition plans for ICD-11.
A group of mental health organizations urged Congressional leaders to delay the in-person requirement as a prerequisite for coverage of a telehealth service. The in-person requirement would go into effect immediately upon expiration of the public health emergency declaration, which has been extended by President Biden.
The National Bureau of Economic Research published a working white paper finding drug copayment coupons defray consumers’ out-of-pocket costs at the point of purchase while raising negotiated prices by 8%. Findings of the paper indicate copayment coupons may result in just under $1 billion in increased US spending annually.
A survey in the Journal of the American Medical Association shows broad support for greater transparency at the FDA. Nearly 9 of 10 participants support disclosure by the FDA of the reasons medications are not approved, and approximately 80% favor more information on the reasons medications receive expedited review.

Heard on the street

“We've seen early evidence that providers in population-based payments and alternative payment models were more resilient [through the pandemic]…

“That resilience allowed them to continue to provide access to patients, such as through telehealth.

“So, we have new evidence on the value of value-based payment and value-based care from the pandemic, and we want to use this experience to accelerate our work to drive accountable care.”

– During the Association for Accessible Medicines’ Access! annual meeting, February 15-16; Purva Rawal, PhD, senior advisor and chief strategy officer, Center for Medicare and Medicaid Innovation.