Feb 24, 2020
Washington Healthcare Update
This week in Washington: The House and Senate are back from recess.
Wednesday, February 26, 2020
House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies: “Department of Health and Human Services (HHS) Budget Request for FY 2021”
The Subcommittee on Labor, Health and Human Services, Education, and Related Agencies of the House Committee on Appropriations will hold a hearing to discuss HHS’s budget request for fiscal year 2021. Alex Azar, secretary of HHS, will serve as a witness.
Find more details on the hearings as they become available here.
House Committee on Energy and Commerce, Subcommittee on Health: “The Fiscal Year 2021 HHS Budget and Oversight of the Coronavirus Outbreak”
The Subcommittee on Health of the Committee on Energy and Commerce will hold a hearing on Wednesday, Feb. 26, 2020, at 1:30 p.m. in the John D. Dingell Room, 2123 of the Rayburn House Office Building. The hearing is entitled “The Fiscal Year 2021 HHS Budget and Oversight of the Coronavirus Outbreak.”
Tuesday, March 3, 2020
Senate Committee on Health, Education, Labor and Pensions (HELP): “An Emerging Disease Threat: How the U.S. Is Responding to COVID-19, the Novel Coronavirus”
The Senate Committee on Health, Education, Labor and Pensions (HELP) will hold a hearing to address the recent concerns surrounding the international spread of coronavirus.
Find more details on the hearing as they become available here.
Twelve Republican Senators Support Grassley-Wyden Drug Pricing Bill
As of Feb. 18, Senate Finance Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden’s (D-OR) bipartisan drug pricing legislation now has 12 Republican senators in support of the plan. Sen. Grassley said he needs support from at least 25 Republican senators to convince Senate Majority Leader Mitch McConnell (R-KY) to bring S. 2543 to the Senate floor for a vote. The senators who have said they support the legislation, however, have not officially cosponsored the legislation.
FDA, FTC Collaborate to End Biosimilars Misinformation and Increase Competition
On Feb. 3, the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) announced a collaboration to advance biosimilars adoption, discourage false or misleading communications about biosimilars and deter anticompetitive behaviors.
To begin, a public meeting will be held on March 9, 2020, for input on how to increase competition for biological products.
Find the statement here.
CMS: Comprehensive Care for Joint Replacement (CJR) Model Proposed Extension and
On Feb. 20, the Centers for Medicare and Medicaid Services (CMS) issued a rule that proposes a three-year extension and changes to the episode definition and pricing in the Comprehensive Care for Joint Replacement (CJR) Model. The Model, which is currently scheduled to end on Dec. 31, 2020, aims to reduce expenditures while preserving or enhancing quality of care by supporting better and more efficient care for beneficiaries undergoing the most common inpatient surgeries for Medicare beneficiaries: hip and knee replacements (also called lower extremity joint replacements or LEJR). This rule proposes to change certain aspects of the CJR Model, including incorporating outpatient hip and knee replacements into the episode of care definition, the target price calculation, the reconciliation process, the beneficiary notice requirements, gainsharing caps and the appeals process. Additionally, to allow time to evaluate the proposed changes, the rule proposes to extend the length of the CJR Model for an additional three years, through Dec. 31, 2023, for certain participant hospitals.
Find the proposal rule here.
CMS: Basic Health Program Funding Methodology Proposed Payment Notice for Program Year 2021
On Feb. 10, the Centers for Medicare and Medicaid Services (CMS) published the Basic Health Program proposed federal funding methodology for program year 2021. This document provides the methodology and data sources necessary to determine federal payment amounts for program year 2021 to states that elect to establish a Basic Health Program to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges.
Find the proposed rule here. Public comments are due by March 11, 2020.
CMS: 2021 Medicare Advantage and Part D Advance Notice Part II
On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) released Part II of the Calendar Year (CY) 2021 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS released Part I of the Advance Notice on Jan. 6, 2020. The notice is seeking comment on whether it should develop measures of generic and biosimilar utilization that could be used to calculate a plan’s star rating, so CMS could reward plans that encourage adoption of lower-cost products.
Find the notice here.
CMS will accept comments on all proposals in the Advance Notice through March 6, 2020, before publishing the final Rate Announcement by April 6, 2020.
CMS: Contract Year 2021 and 2022 Medicare Advantage and Part D
On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that updates Medicare Advantage (MA or Part C) and the Medicare prescription drug benefit (Part D) program. Medicare Part D plans will be allowed to offer two specialty tiers on their drug formularies starting in 2021. The proposed rule requires that one of the two specialty tiers be a “preferred” tier that offers lower cost sharing for beneficiaries. The maximum allowed cost sharing for the specialty tiers would be between 25 percent and 33 percent, depending on whether the plan includes a deductible.
Drugs that cost $670 a month or more must currently be placed on one specialty tier. Allowing two tier options should give health plans leverage to work with drug manufacturers to get prices lower if the manufacturer wants to price their product at a more accessible cost to patients compared with their competitors. The proposed rule also requires Part D plans to implement by Jan. 1, 2022, a tool that will provide beneficiaries with real-time details on the cost of drugs based on their plan coverage and alternatives.
Find the proposed rule here. The rule will be published in the Federal Register on Feb. 18, 2020.
CMS: 2021 Medicare Advantage Advance Notice Part I – Risk Adjustment
On Jan. 6, the Centers for Medicare and Medicaid Services (CMS) released Part I of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data.
Part 1 of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies proposes changes to the Part C risk adjustment model and the use of encounter data. Under the proposal, CMS proposes to calculate risk scores for 2021 by using the sum of 75 percent of the risk score calculated with the 2020 CMS-Hierarchical Condition Categories model and 25 percent of the risk score calculated with the 2017 version of the model. For 2020, CMS calculated risk scores using the sum of 50 percent of each model.
CMS also proposed changes to how it uses encounter data, or diagnostic information, in the risk adjustment calculation process. For 2021, CMS wants to calculate risk scores for Medicare Advantage plans by summing 75 percent of the encounter data-based risk score with 25 percent of the Risk Adjustment Processing System-based risk score. For 2020, CMS calculated risk scores using the sum of 50 percent of each type of data.
Find the proposed rule here. Public comments are due by March 6, 2020.
CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021
On Jan. 31, the Centers for Medicare and Medicaid Services (CMS) released the proposed annual Notice of Benefit and Payment Parameters Rule for 2021, also known as the proposed 2021 Payment Notice. This is the second year in a row that the proposed rule has been late.
CMS proposes to maintain the Federally Facilitated Exchange (FFE) user fee rate of 3.0 percent of premium, and the State-based Exchange on the Federal Platform (SBE-FP) user fee rate of 2.5 percent of premium based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities. Alternatively, CMS is considering and seeking comment on reducing the FFE and SBE-FP user fee rate below the 2020 plan year level to reflect estimates of premium increases and enrollment decreases for the 2021 plan year, as well as potential savings resulting from cost-saving measures implemented over the last several years in hopes of reducing the user fee burden on consumers and creating downward pressure on premiums.
CMS is proposing changes to the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost sharing in response to stakeholder feedback indicating Treatment of Drug Manufacturer Coupons. CMS is proposing to amend current Medical Loss Ratio (MLR) regulations to require issuers to deduct from incurred claims the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the issuer. CMS also proposes to clarify more generally that issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services. These changes would help lower premiums by helping ensure that consumers’ premiums reflect the full benefit of prescription drug rebates and are not artificially inflated by outsourcing expenses.
Find the proposed rule here.
FDA and HHS: Proposed Rule on Canadian Drug Importation Plan
On Dec. 18, the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS) released a draft guidance on the importation of certain prescription drug imports from Canada, leaving out many specialty medications and other therapies for chronic diseases that cost patients the most. The FDA seeks request for comment on two importation pathways. One would allow states to submit proposals to the FDA to allow the importation of small molecule brand-name medicines sold at retail pharmacies, typically ones that have rebates attached to them. The draft guidance for industry lets manufacturers import the same versions of FDA-approved drugs they now sell in foreign countries. Under this second pathway, drug manufacturers would use a new National Drug Code (NDC) and sell these drugs in the U.S. at a cheaper price.
Find the proposed rule here.
Find the guidance for industry here—comments are due by March 5, 2020.
FDA: Definition of the Term “Biological Product”
On Feb. 20, the Food and Drug Administration (FDA) issued a final definition of the term “biological product,” mirroring the 2019 spending bill in which Congress inserted language to reclassify “chemically synthesized polypeptides” as biological products instead of small molecule drugs. FDA announced that the new rule provides regulatory certainty by defining a protein as a polypeptide with a specific sequence.
Find the finalized rule here.
Find a comprehensive look at “Courts and Healthcare Policy in 2020” here.
SCOTUS Was to Decide Feb. 21 Whether to Review ACA Case
The Supreme Court has not yet announced whether it would hear Texas v. United States, the case claiming that the Affordable Care Act’s (ACA) individual mandate is unconstitutional and therefore the entire law may be unconstitutional, which was to be announced on Feb. 21. The Supreme Court already denied a request from defendants of the law to fast track the case.
GAO: VA Health Care - Veterans’ Use of Long-Term Care is Increasing, and VA Faces Challenges in Meeting the Demand
On Feb. 19, the Government Accountability Office (GAO) released a report on the Department of Veterans Affairs (VA) providing veterans’ long-term care, the demand for which increased 14 percent and VA’s expected spending went up 33 percent from FY 2014-2018. VA projects demand will continue to increase and spending will double by 2037. According to GAO, VA faces three key challenges to meeting long-term care needs: finding enough workers, providing care where geographically needed and providing specialty care.
Find GAO’s recommendation and full report here.
GAO: National Biodefense Strategy - Additional Efforts Would Enhance Likelihood of Effective Implementation
On Feb. 19, the Government Accountability Office (GAO) released a report on the National Biodefense Strategy, issued in 2018 along with guidance on how to implement it, spelling out the nation’s plan to address biological threats from diseases to biological weapons. Among other things, it calls for a joint effort by multiple agencies as well as private sector partners. The Biodefense Steering Committee includes the Secretary of Health and Human Services, as well as the Secretaries from the Departments of State, Defense, Agriculture and the Environmental Protection Agency; and the U.S. Attorney General.
GAO found there was no documented methodology or guidance for how data are to be analyzed to help the enterprise identify gaps and opportunities to leverage resources, including no guidance on how nonfederal capabilities are to be accounted for in the analysis. Agency officials were also unsure how decisions would be made, especially if addressing gaps or opportunities to leverage resources involved redirecting resources across agency boundaries. GAO found there are no clear, detailed processes, roles and responsibilities for joint decision-making.
Find GAO’s recommendations and the full report here.
If you have any questions, contact the following individuals at
Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate
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