Health Policy Report (7/11)July 11, 2022
Senate Democrats are bracing for a busy July work period as leadership presses forward on a revival of the budget reconciliation process. After releasing an updated version of the drug pricing title last week, additional pieces of the new filibuster-proof bill are expected to be released in the coming days and weeks ahead so that the Parliamentarian can begin the “Byrd bath” review to ensure compliance with the Senate’s budgetary rules. These policies include tax hikes on high-income earners to shore up the solvency of Medicare and extending the Affordable Care Act (ACA) premium subsidies, as well as other climate, energy, and tax proposals. According to intel from Capitol Hill, Senate Majority Leader Chuck Schumer (D-NY) is hopeful to get the updated bill on the floor ahead of the August break. However, it remains to be seen whether the deal can garner the support of the entire Democratic caucus in both chambers.
The Senate returns first today to begin the July work period. While Democrats work on their reconciliation bill, floor activity in the upper chamber is likely going to focus on clearing several of President Joe Biden’s pending nominations, including Michael Barr to be Vice Chair of Supervision at the Federal Reserve. Additionally, the Senate is poised to consider the nomination of Steven Dettelbach to be Director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), but it is unclear whether he gets confirmed this week due to the absence of Sen. Pat Leahy (D-VT), who is reportedly out of commission while he recovers from a broken hip. Meanwhile, the House will return tomorrow to begin consideration of the fiscal year (FY) 2023 National Defense Authorization Act (NDAA). Debate on the annual defense authorization bill is expected to consume most of this week, as nearly 1,200 amendments have been filed to the underlying bill.
Senate Unveils Updated Reconciliation Drug Pricing Provisions
On Wednesday, Majority Leader Chuck Schumer (D-NY) and Finance Committee Chair Ron Wyden (D-OR) released an updated version of the Democrats’ drug pricing legislation (TRP analysis; CBO score; summary of changes), signaling a marked step forward for Democrats in reviving the budget reconciliation process with the goal of circumventing GOP opposition and passing elements of President Joe Biden’s economic agenda. Under the revised legislation, Medicare Part D beneficiary catastrophic spending would be capped before 2024, implementation of the Trump-era rebate rule would be explicitly prohibited, and inflationary rebates would be implemented, among other items. Notably, the updated bill excludes a provision that would have instituted a $35 monthly cap on insulin copays included in previous versions of the legislation, including the House-passed “Build Back Better” (BBB) legislation (text; TRP analysis) and previous Senate BBB bill text.
The legislation makes several changes to the Medicare drug price negotiation provisions. The newly released package would change the initial price applicability year to 2026 rather than 2025 as proposed in prior versions of the legislation, and the proposed initial year of negotiation is now 2023 rather than 2024. Additionally, bill text provides that Part D drugs are eligible for negotiation beginning in 2026; however, Part B drugs will not be eligible until 2028. For the purposes of negotiation, insulin is no longer treated as a separate class as it was in the prior iteration of the provision. The legislative package additionally includes a new provision for the non-duplication of 340B covered entities and would allow the Secretary of the Department of Health and Human Services (HHS) to delay the negotiation of a biologic drug for up to two years provided a biosimilar demonstrates “high likelihood” of entering the market before the negotiated price would take effect. Notably, the legislation would appropriate $3 billion — a marked increase from the $300 million proposed by the House — for fiscal year (FY) 2022 until expended to carry out drug price negotiation provisions.
New Data Indicates Insurer Price Transparency Compliance
Starting on Friday, July 1, some health insurers were required to begin making their in- and out-of-network rates available to the public. The Trump-era rule went into effect in January of 2022, though the Biden administration delayed CMS enforcement due to difficulties that insurers faced in converting files into a machine-readable format. The Coverage in Transparency regulation (TRP analysis) was accompanied by a price transparency rule directed at hospitals, both of which were lobbied against heavily by payers and hospital groups. While only about 14 percent of hospitals are complying with their prescribed transparency regulations — resulting in CMS enforcement actions — health insurers appear to be acting in line with their prescribed transparency changes.
Additional facets of the payer transparency provisions will not kick into effect until 2023 and 2024, including provisions requiring plans to publicize personal pricing information to enrollees. Plans will also be required to disclose negotiated rates and pricing history for prescription drugs, though enforcement of that provision will depend on future rulemaking. Notably, pharmacy benefit managers (PBM) and the U.S. Chamber of Commerce sued the Department of Health and Human Services (HHS) over this future requirement regarding drug pricing transparency, though the cases were dismissed.
CMS Proposes Revisions to Physician Fee Schedule, Part B Policies for 2023
The Centers for Medicare and Medicaid Services (CMS) proposed its calendar year (CY) 2023 updates to the Medicare Physician Fee Schedule (PFS) (TRP analysis; proposed rule; fact sheet on Shared Savings Program proposals; fact sheet on Quality Payment Program proposals; press release). Since 1992, CMS has used the PFS to update reimbursement for physician and supplier services within the Medicare program annually, and payments are based on the relative resources typically used to furnish the service. This major proposed rule proposes to update the CY 2023 PFS conversion factor to $33.08, a decrease of $1.53 from the CY 2022 PFS conversion factor of $34.61.
Additionally, the proposed rule would extend certain Medicare telehealth flexibilities adopted during the public health emergency (PHE) for 151 days after its expiration. Notably, if finalized, this proposed rule would expand access to substance use disorder (SUD) treatment by allowing Medicare to cover opioid use disorder (OUD) services furnished by opioid treatment programs (OTP) and by utilizing telehealth services and mobile components to reach underserved areas. In light of the Biden administration and Congress’ focus on mental health care over the course of the past year, CMS is proposing to expand access to mental health services by allowing Medicare to directly reimburse certain practitioners including, but not limited to, marriage and family therapists, licensed professional counselors, certified peer recovery specialists, and addiction counselors.
Patient Groups Ramp Up Pressure on FTC PBM Study
Last month, the Federal Trade Commission (FTC) committed to studying pharmacy benefit manager (PBM) practices and their role in the drug pricing supply chain. Now, chronically ill patient groups are lining up to criticize PBMs. These stakeholders argue that the FTC should consider patient experiences, as well as negotiation data from manufacturers and pharmacies, in its probe. Patient groups assert that including such data will provide insight into how formulary changes and prior authorization impact the drug pricing landscape. Notably, drug pricing analysts explain that data from PBMs will be insufficient in understanding the entire scope of their practices. Determining the impact of formulary changes and prior authorization policies should consider patients’ changing conditions, patient groups argue. These groups suggest that the FTC’s investigation look into complaints filed by patients and physicians regarding adverse events due to formulary and prior authorization practices.