TRP Health Policy Report

October 17, 2016

The Week in Review

In a week dominated by headlines about Donald Trump’s bawdy remarks and Hillary Clinton’s leaked emails, both candidates appear to be focused more on driving up the unfavorability of their opponents than driving a positive message in the campaign’s final weeks. Several Congressional Republicans rescinded their support for Trump last week, including Sens. Kelly Ayotte (R-NH) and John McCain (R-AZ), who are up for reelection in closely-watched races. Meanwhile, Speaker Paul Ryan (R-WI) told House Republicans on a conference call last Monday that he’s done defending Trump and will focus on maintaining his party’s House majority. While the first major poll (NBC/WSJ) released following last Sunday’s debate shows Clinton with a 10 percent lead nationally, the race will be won in a handful of battleground states – some of which are showing polling that is decidedly closer than at the national level. Keep an eye out for our thrice-weekly updates, ‘Today on the Trail,’ for a closer look at what’s happening on the campaign trail.

The Week Ahead

With Congress in recess until the Nov. 8 election, the focus will be on the campaign trail, where Hillary Clinton and Donald Trump are preparing for their third and final presidential debate. The candidates are set to meet at the University of Nevada in Las Vegas (UNLV) this Wednesday in a debate that will focus on debt and entitlements, immigration, the economy, the Supreme Court, foreign hot spots and the candidates’ fitness to be president

The House reconvenes for the lame duck session on Nov. 14 and the Senate returns on Nov. 15. Congress has until Dec. 9 to come up with a plan to avert a government shutdown. House and Senate GOP leaders will try to strike a deal with Democrats on a spending bill that funds the government through fiscal year 2017. GOP leaders have also said medical innovation legislation, a version of the so-called ‘21st Century Cures Act, could come up when Congress returns. 

Final MACRA Rule Released Friday

On Friday, the Centers for Medicare and Medicaid Services (CMS) released its highly anticipated rule finalizing requirements for implementing the Merit-Based Incentive Payment System (MIPS) and the Advanced Alternative Payment Model (APM) incentive payment provisions in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). These provisions are collectively referred to as the Quality Payment Program (QPP). MACRA’s QPP has wide-ranging effects on Medicare physician and other clinician payment and quality measurement.

The final rule deviates from the proposal in a few key ways. First, the rule creates a “transition year” during calendar year (CY) 2017 that significantly modifies the reporting requirements for the first year of the QPP. Second, to help ease the impact on small providers, CMS changed its patient and payment thresholds that subject a provider to the QPP to less than or equal to $30,000 in Medicare Part B claims or less than or equal to 100 Medicare patients. The draft rule had set the threshold at $10,000 a year. Furthermore, in the final rule, the agency adjusts the nominal financial risk standard for Advanced APMs, but preserves the requirement that such entities face downside risk. CMS also reduced the number of measures required for reporting under the Advancing Care Information and other MIPS categories, and established definitions and standards for Medical Homes to qualify as Advanced APMs.

Importantly, the agency heeded the concerns of small practices and Congress about the framework's impact on small practices and broadened its exclusion for providers who treat a low volume of Medicare patients from MIPS. An analysis by the American Medical Association found that about 16% of all MIPS-eligible clinicians would be exempt under the proposed version of the rule. The threshold in the final rule, however, would exclude 30 percent of physicians, according to the AMA analysis. Additionally, CMS said it would provide $100 million in technical assistance to clinicians participating in MIPS who are in small practices, rural areas and in areas with a shortage of health professionals.

CMS noted that more than 93% of Medicare Part B charges would still be subject to the incentive framework, which was devised to nudge physicians toward value-based care. The MACRA got rid of the “meaningful use” rule that the administration previously used to decide if providers should be rewarded for using electronic health records, but doctors will still be accountable for using health information technology under the “advancing care information” performance category in the rule that counts 25 percent towards a physician's overall score for the category, as was proposed initially. CMS, in the final rule, said it will move away from the “all or nothing” approach previously used in EHR incentive programs in an effort to be more flexible. The rule reduces the total number of required measures under the category to five from 11 in the proposed rule. All other measures will be optional for reporting, but reporting on the optional measures can earn physicians bonus points toward their overall score.

Between 592,000 and 642,000 clinicians, according to the rule, are expected to submit data for MIPS during the first performance year, which begins Jan. 1. The policies begin taking effect in CY 2017 for CY 2019 payment implications. The final rule has a comment period, with a deadline in 60 days.

AHA Proposes Rx-Price Control Reforms

In an effort to combat concern from hospitals over a “drug spending crisis,” the American Hospital Association (AHA) suggested a broad basket of reforms aimed at cutting price increases. The reforms touch on proposed FDA policies, including requiring drug manufacturers to submit comparative effectiveness data as part of the drug approval process and estimate what a drug could cost government programs like Medicare and Medicaid. Additionally, the AHA proposed that the Centers for Medicare & Medicaid Services (CMS) set up Medicare-negotiated value-based pay arrangements. A related study released last Tuesday, by the AHA and the Federation of American Hospitals that found inpatient hospital drug spending increased on average by more than 20 percent per year between 2013 and 2015. Along with the study, the AHA also posted on its website a number of policies the group says it has been working on for the past year to support increased competition and innovation, more transparency, pay for value, better access and aligned incentives.

The hospitals further proposed that CMS use its innovation center to test value-based pay models in Medicare, and identified indications-based pricing and risk-sharing agreements based on outcomes as possible models to consider. Greater multi-stakeholder participation in developing potential value-based payment models is also part of the list of reforms the AHA would like to see, in addition to varying patient cost-sharing for certain drugs based on value and developing prescriber education and clinical decision support tools, including prescriber monitoring programs. Furthermore, the AHA called for greater disclosure in drug pricing decisions and manufacturing, expanded CMS reporting on drug costs and spending to Medicaid and annual CMS reports for consumers and provider. AHA also proposed an inflation cap on Medicare drugs similar to the existing policy for Medicaid that calls for additional rebates on drugs when the Average Manufacturer Price for drugs increases faster than inflation, and proposed that CMS pilot test a new Part D pay model that reduces or eliminates reinsurance payments "while making appropriate adjustments to the direct subsidy rate."

Presidential Candidates Debate Health Care for First Time

In the second presidential debate, candidates Hillary Clinton and Donald Trump discussed health care reform for the first time. Clinton touted her previous work to expand healthcare for children and to encourage drug makers to develop pediatric medicines, while Trump stated he supports efforts to block grant Medicaid and replace the Affordable Care Act with a system that allows insurance companies to sell plans across state lines. He was also adamant that Clinton would push for a single-payer system if she wins, a position she opposed during the Affordable Care Act debate. Clinton, as well as many other Democrats, favors a public option, but has remained mum on whether she would support moving towards a single-payer system. Relying upon characteristic generalities, Trump focused his ire on the need to reverse recent insurance premium hikes by “repealing and replacing” the law, while Clinton defended the accomplishment of 20+ million newly covered Americans while acknowledging the need to makes improvements to strengthen it.

Two laws Hillary Clinton worked on in her previous time spent in government, the Children’s Health Insurance Program (CHIP) and Best Pharmaceuticals for Children Act (BPCA), happen to be up for reauthorization in 2017. Advocates for children worry that if Trump wins and Republican maintain control of Congress, they may demand cuts to Medicaid in return for funding CHIP.

Questions Remain over Justice Department, Mylan EpiPen Settlement

Conflicting statements from the Department of Justice and pharmaceutical company Mylan have left many with questions about the settlement between the Justice Department and Mylan over EpiPen Medicaid rebates. Senator Chuck Grassley (R-IA) is demanding more information about the unreleased $465 million settlement, specifically how much states are supposed to receive from the settlement and when and how the Centers for Medicare & Medicaid Services (CMS) warned Mylan that it misclassified EpiPen as a generic. There remain inconsistencies in information about CMS' notification to Mylan on the EpiPen misclassification and about Mylan's settlement with Justice. Mylan announced the $465 million settlement on its website Friday (Oct. 7), but the Justice Department released no information. A Justice Department spokesperson has been quoted as stating, “There is no executed settlement agreement.” A Mylan spokesperson said the Justice Department agreed to the deal, but offered no further explanation for the department's statement. Industry insiders following the settlement reported there is likely a hand-shake deal that hasn’t been formally approved.

According to Mylan's statement, the company admits no wrongdoing and is negotiating a so-called corporate integrity agreement with the HHS Office of the Inspector General. Also, the Securities and Exchange Commission is seeking “communications with the CMS and documents concerning Mylan products sold and related to the Medicaid Drug Rebate Program,” according to an SEC filing. Mylan says the settlement resolved all potential rebate liability claims by government agencies over the classification of EpiPen as a generic. Sen. Grassley has questioned, however, whether the reported deal fairly treats the states, and suggested that Mylan may have failed to pay more than $700 million to state Medicaid programs over the past five years, which amounts to much more than the $465 million for which Mylan said the Justice Department reportedly settled. Industry officials have said the Justice Department can only agree to the settlement amount for the federal share of Medicaid, so states may separately pursue cases against Mylan for their share. Indeed, National Association of Medicaid Directors Executive Director Matt Salo said Medicaid directors are looking into whether they may bring cases against Mylan over rebates.

Rep. DeLauro to Introduce Drug Pricing Bill

Representative Rose DeLauro(D-CT) announced at a speech in New Haven, CT last Wednesday that she is writing a new measure to “fight back” against rising drug prices and other pharmaceutical issues that have caused recent uproar. The bill, which tracks closely with a policy proposal outlined by presidential candidate Hillary Clinton, will work to create a new intergovernmental Price Review Board that could block drug and medical device price increases, and allow the board to collect data on drug and device pricing and manufacturing costs.  According to a press release from Rep. DeLauro’s office, the board would also be given the power to “take enforcement action against manufacturers that gouge customers with excessive prices.” The measure is “unlikely” to move forward anytime soon.