CMS Finalizes Changes to Advance Innovation, Restore Focus on Patients

Changes to the Medicare Physician Fee Schedule and Quality Payment Program will shift clinicians’ time from completing unnecessary paperwork to providing innovative, high-quality patient care

Today, the Centers for Medicare & Medicaid Services (CMS) finalized bold proposals that address provider burnout and provide clinicians immediate relief from excessive paperwork tied to outdated billing practices. The final 2019 Physician Fee Schedule (PFS) and the Quality Payment Program (QPP) rule released today also modernizes Medicare payment policies to promote access to virtual care, saving Medicare beneficiaries time and money while improving their access to high-quality services, no matter where they live. It makes changes to ease health information exchange through improved interoperability and updates QPP measures to focus on those that are most meaningful to positive outcomes. Today’s rule also updates some policies under Medicare’s accountable care organization (ACO) program that streamline quality measures to reduce burden and encourage better health outcomes, although broader reforms to Medicare’s ACO program were proposed in a separate rule. This rule is projected to save clinicians $87 million in reduced administrative costs in 2019 and $843 million over the next decade.

“The historic reforms CMS finalized today move us closer to a healthcare system that delivers better care for Americans at lower cost,” said Health and Human Services (HHS) Secretary Alex Azar. “Among other advances, improving how CMS pays for drugs and for physician visits will help deliver on two HHS priorities: bringing down the cost of prescription drugs and creating a value-based healthcare system that empowers patients and providers.” 

“Today’s rule finalizes dramatic improvements for clinicians and patients and reflects extensive input from the medical community,” said CMS Administrator Seema Verma. “Addressing clinician burnout is critical to keeping doctors in the workforce to meet the growing needs of America’s seniors. Today’s rule offers immediate relief from onerous requirements that contribute to burnout in the medical profession and detract from patient care. It also delays even more significant changes to give clinicians the time they need for implementation and provides time for us to continue to work with the medical community on this effort.”

Coding requirements for physician services known as “evaluation and management” (E&M) visits have not been updated in 20 years. This final rule addresses longstanding issues and also responds to concerns raised by commenters on the proposed rule. CMS is finalizing several burden-reduction proposals immediately (effective January 1, 2019), where commenters provided overwhelming support. In response to concerns raised on the proposal, the final rule includes revisions that preserve access to care for complex patients, equalize certain payments for primary and specialty care, and allow for continued stakeholder engagement by delaying implementation of E&M coding reforms until 2021.

For the first time this rule will also provide access to “virtual” care. Medicare will pay providers for new communication technology-based services, such as brief check-ins between patients and practitioners, and pay separately for evaluation of remote pre-recorded images and/or video. CMS is also expanding the list of Medicare-covered telehealth services. This will give seniors more choice and improved access to care.

In addition, the rule continues CMS’s work to deliver on President Trump’s commitment to lowering prescription drug costs. Effective January 1, 2019, payment amounts for new drugs under Part B will be reduced, decreasing the amount seniors have to pay out-of-pocket, especially for drugs with high launch prices.

CMS is also finalizing an overhaul of electronic health record (EHR) requirements in order to focus on promoting interoperability. Today’s rule finalized changes to help make EHR tools that actually support efficient care instead of hindering care. Final policies for Year 3 of the Quality Payment Program, part of the agency’s implementation of MACRA, will advance CMS’s Meaningful Measures initiative while reducing clinician burden, ensuring a focus on outcomes, and promoting interoperability. CMS also introduced an opt-in policy so that certain clinicians who see a low volume of Medicare patients can still participate in the Merit-based Incentive Payment System (MIPS) program if they choose to do so. In addition, CMS is providing the option for clinicians who are based at a healthcare facility to use facility-based scoring to reduce the burden of having to report separately from their facility.

To view the CY 2019 Physician Fee Schedule and Quality Payment Program final rule, please visit: https://www.federalregister.gov/public-inspection/

For a fact sheet on the CY 2019 Physician Fee Schedule final rule, please visit: https://www.cms.gov/newsroom/fact-sheets/final-policy-payment-and-quality-provisions-changes-medicare-physician-fee-schedule-calendar-year

For a fact sheet on the CY 2019 Quality Payment Program final rule, please visit: https://www.cms.gov/Medicare/Quality-Payment-Program/Quality-Payment-Program.html

For a chart on E&M payment amounts, please visit: https://www.cms.gov/sites/drupal/files/2018-11/11-1-2018%20EM%20Payment%20Chart-Updated.pdf

Trump Administration Drug-Pricing Proposal Includes Big Changes to Medicare Part B

Last week, the Department of Health & Human Services (HHS), the department of the federal government that oversees the Medicare program, previewed some changes it will be proposing for Medicare Part B prescription drug coverage. The administration claims these changes will lower the cost of Part B medications.

Most prescription drugs are covered under Medicare Part D, but a select number of drugs–usually ones that are administered by providers–are covered under Part B. These drugs tend to be very expensive and are generally used to treat serious conditions such as cancer, End-Stage Renal Disease, autoimmune disorders, or in the event of an organ transplant.

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As of October 1, 2018, total Medicare Advantage (MA) membership stood at over 21 million, representing approximately 34% of the 63.3 million Americans eligible for Medicare.  Medicare Advantage plans can either be acquired individually through direct purchase policies or through employer/group retiree programs, commonly known as Medicare Advantage Employer Group Waiver Plans (MA-EGWPs). Since the inception of Medicare Advantage in 2003, Individual MA policies have historically dominated the market as 17.1 million beneficiaries purchased MA plans as of October 1, 2018.  However, despite a decrease over the years in the number of private sector employers offering retiree health benefits, membership trends in MA-EGWPs have demonstrated notable enrollment growth, especially within the past two years.   

Since December 2017, employer-group Medicare Advantage enrollment has increased by over 443 thousand. In fact, over the past four years, group market enrollment has increased by approximately 1 million members, nearly a 125% increase in enrollment since December 2015. This brief provides insights about the current employer-group Medicare Advantage market and assesses membership trends over the past four years by carrier and state. 

Read the full article. Click Here

Friday, President Trump announced a U.S. Department of Health and Human Services (HHS) plan to test a new payment model that aims to substantially lower the cost of prescription drugs and biologics covered under the Medicare Part B program. The new model would, for the first time, base Medicare payment for Part B drugs on the typically lower prices paid in other countries.

Commonwealth Fund research shows that such bold payment models are needed to tackle high prescription drug prices in the U.S., and that paying international prices might move Medicare and beneficiaries’ drug spending in the right direction. If the proposal moves forward, a number of questions about how it will work need to be resolved, and it’s important to note that Part B spending accounts for just a small slice — 5 percent — of the total national drug bill.

Spending in Medicare Part B

Under Medicare Part B, physicians administer drugs in their offices, often to treat patients with cancer, immunological disorders such as rheumatoid arthritis, and age-related eye conditions like macular degeneration. Medicare’s current payment to physicians, which is based on the average U.S. sales price for these drugs and biologics, is 47 percent higher on average than prices paid by 16 industrialized countries for the same products, according to the administration’s analysis.

Beneficiaries’ cost-sharing is also high for Part B drugs; they pay 20 percent of the Medicare price for each dose. Commonwealth Fund research finds drug costs exacerbate struggles of Americans with serious illnesses, who can face financial ruin even if they have health coverage.

The outline of HHS’s proposed Part B rule, which would be released next spring, reflects an innovative attempt to lower drug spending:

• Medicare would pay private-sector vendors, such as wholesalers and pharmacy benefit managers, the international reference price called the “target price” for a select set of drugs in its testing areas.
• Vendors would then negotiate with manufacturers for the drugs and biologics (presumably at lower prices than the payment they receive from Medicare) and supply physicians and hospitals with products.
• Physicians and hospitals treating Medicare beneficiaries would be required to participate and could choose multiple vendors or change vendors. Medicare would replace its current administrative payment to physicians and hospitals with a flat fee. Currently, providers are paid a percentage of the drug price under Part B. Under the new proposal, they would no longer gain revenue from the price of a drug.
• Beneficiaries would pay lower copayments to the extent Medicare’s payments are lower.

Several unaddressed details of the Part B model will determine whether it will save Medicare money and lower what beneficiaries pay for their prescription drugs.

Certain features of Medicare and the pharmaceutical market may present stumbling blocks to achieving the model’s goals. For example, how will a target price enable vendors to negotiate with sole-source manufacturers who retain monopoly pricing power? What levers will vendors have in these circumstances? Could global pricing dynamics spur manufacturers to raise prices in other countries in order to raise the Medicare reference price? Answers to these and other questions raised by HHS could reveal limits of the model design.

Total U.S. Spending

Of course, Part B spending is a small portion of total Medicare drug spending, and the bulk of national drug spending falls outside of Medicare. Medicare Part D, for example, which covers drugs dispensed by retail pharmacies, accounts for a much larger share of total U.S. drug spending (27%). Medicare spending for the highest-cost drugs paid under Part D’s catastrophic benefit has grown at an average annual rate of 18 percent since 2007. That is faster than the 9.8 percent drug spending growth under Part B. Leaving Part D out of the proposal therefore leaves a lot of potential savings on the table.

Moreover, prescription drug costs paid by U.S. workers and employers would not be captured under the Part B model. These costs account for a large share of U.S. drug spending. Insurers estimate that prescription drugs now account for 33 percent of employer-paid health insurance premiums, mainly because of high and increasing prices for the same drugs covered by Part B. The Food and Drug Administration (FDA) has announced a series of steps to encourage more price competition from lower-priced products, such as generics and biosimilars. However, FDA actions will need to be coupled with bolder reforms to patent and exclusivity protections that impede U.S. payers from negotiating prices that approximate those achieved by peer countries.

A Broader Strategy

Rather than linking to prices abroad for a slice of U.S. consumers, HHS could pursue a broader strategy that adapts core elements of the international approach to drug pricing. Other developed countries aggregate purchasing power to gain leverage with drug companies, systematically assess the value of individual drugs to inform their purchasing decisions, and enter into a negotiation process with manufacturers that they can stand behind. Adapting these elements to the U.S. would take bold action, but if we did so we could create our own system — one that could achieve the lower drug costs that other countries are able to provide for their residents.

https://www.commonwealthfund.org/blog/2018/medicare-part-b-payment-prescription-drugs-international-prices

A telehealth consultation. Photo: BSIP/UIG via Getty Images

New proposed regulations, authorized by President Trump's budget deal from earlier this year, would open the door for Medicare Advantage companies to cover telehealth services for all enrollees starting in 2020.

The bottom line: This rule would give a leg up to the MA program, which is managed by the health insurance industry, since traditional Medicare strictly limits coverage of telehealth. The Congressional Budget Office has worried that telehealth visits will serve as add-on services to in-person clinic visits instead of acting as replacements, thus driving up Medicare spending.

CMS Proposes to Modernize Medicare Advantage, Expand Telehealth Access for Patients

Proposed rule would strengthen the popular system for private health insurance plans to provide Medicare coverage, increase plan flexibility to offer telehealth benefits, and improve coordination for dual-eligible beneficiaries 

In a proposed rule issued today, the Centers for Medicare & Medicaid Services (CMS) took action to build upon the Administration’s ongoing efforts to modernize the Medicare Advantage and Part D programs, which provide seniors with Medicare health and prescription drug coverage through private plans. The changes proposed today would allow plans to cover additional telehealth benefits and would make other much-needed updates, including for individuals who are eligible for Medicare Advantage special needs plans. 

“President Trump is committed to strengthening Medicare, and an increasing number of seniors are voting with their feet and choosing to receive their Medicare benefits through private plans in Medicare Advantage. Today’s proposed changes would give Medicare Advantage plans more flexibility to innovate in response to patients’ needs,” said CMS Administrator Seema Verma. “I am especially excited about proposed changes to allow additional telehealth benefits, which will promote access to care in a more convenient and cost-effective manner for patients.”

Medicare Open Enrollment for 2019 is currently underway and runs through December 7, 2018, so seniors can review their coverage options and decide how they would like to receive their Medicare benefits in 2019. CMS offered new flexibilities to Medicare Advantage plans starting in the 2019 plan year, and plans are making additional benefits available including adult day care services, in-home support services, and benefits tailored for patients with chronic diseases like diabetes. The average Medicare Advantage premium will decline by 6.1 percent, enrollment is projected to grow by 11.5 percent, and there will be approximately 600 more plans available across the country next year.

Today’s proposed changes for plan year 2020 would leverage new authorities provided to CMS in the Bipartisan Budget Act of 2018, which President Trump signed into law earlier this year. With respect to telehealth, the proposed changes would remove barriers and allow Medicare Advantage plans to offer “additional telehealth benefits” not otherwise available in Medicare to enrollees, starting in plan year 2020 as part of the government-funded “basic benefits.”

This proposal will allow Medicare Advantage plans broader flexibility in how coverage of telehealth benefits is paid to meet the needs of their enrollees. As Medicare beneficiaries become more tech savvy, CMS is working across the agency to promote beneficiary access to telehealth, but the Medicare fee-for-service program telehealth benefit is narrowly defined and includes restrictions on where beneficiaries receiving care via telehealth can be located. The proposed rule would give MA plans more flexibility to offer government-funded telehealth benefits to all their enrollees, whether they live in rural or urban areas. It would also allow greater ability for Medicare Advantage enrollees to receive telehealth from places like their homes, rather than requiring them to go to a health care facility to receive telehealth services. Plans would also have greater flexibility to offer clinically-appropriate telehealth benefits that are not otherwise available to Medicare beneficiaries.

Today’s proposed changes are a major step towards expanding access to telehealth services because the rule would eliminate barriers for private Medicare Advantage plans to cover such additional telehealth benefits under the MA plan. While MA plans have always been able to offer more telehealth services than are currently payable under original Medicare through supplemental benefits, this change in how such additional telehealth benefits are financed (that is, accounted for in payments to plans) makes it more likely that MA plans will offer them and that more enrollees will be able to use the benefits.

Additional changes proposed today would improve the quality of care for dually-enrolled beneficiaries in Medicare and Medicaid who participate in “Dual Eligible Special Needs Plans” or D-SNPs. These beneficiaries generally have complex health needs. Today’s proposed changes would unify appeals processes across Medicare and Medicaid to make it easier for enrollees in certain D-SNPs to navigate the system. The proposed rule would also require plans to more seamlessly integrate benefits across the two programs to promote coordination.

Today’s proposed rule also improves accountability and bolsters program integrity within the Medicare Advantage and Part D programs. The proposed changes would update the methodology for calculating Star Ratings, which provide information to consumers on plan quality. The new methodology would improve stability and predictability for plans, and would adjust how the ratings are set in the event of extreme and uncontrollable events such as hurricanes.

The proposed rule also includes critical updates with respect to program integrity. First, CMS is making revisions to an earlier regulation that made available to Part D sponsors and Medicare Advantage plans a list of precluded providers and prescribers that have engaged in behavior that bars their enrollment in Medicare. Under the earlier regulation, plans would be required to deny payment for any prescription, service, or item that is prescribed or furnished by an individual or entity on the Preclusion List.

Second, the proposed rule would take steps to help CMS recover improper payments made to Medicare Advantage organizations. CMS conducts Risk Adjustment Data Validation audits to confirm that diagnoses submitted by Medicare Advantage Organizations for risk adjusted payments are supported by medical record documentation. CMS recovers improper payments based on these audits. The proposed rule would strengthen CMS’s ability to return dollars to the Medicare Trust Funds as a result of these audits. If finalized, the proposed changes would result in an estimated $4.5 billion in savings to the Medicare Trust Funds over a ten year period, largely from the recovery of improper payments to Medicare Advantage plans through contract- level Risk Adjustment Data Validation audits. In addition, CMS released an analysis on the application of a Fee-For-Service adjuster in determining the Medicare Advantage payment recoveries. The analysis can be accessed at: https://www.cms.gov/Research-Statistics-Data-and- Systems/Monitoring-Programs/Medicare-Risk-Adjustment-Data-Validation- Program/Resources.html (the Fee-For-Service Adjuster executive summary and technical appendix are available in the “Downloads” section of the webpage).

For a fact sheet on the CY 2020 Medicare Advantage and Part D Flexibility Proposed Rule (CMS-4185-P), please visit: https://www.cms.gov/newsroom/fact-sheets/contract-year-cy-2020- medicare-advantage-and-part-d-flexibility-proposed-rule-cms-4185-p.

HHS Advances Payment Model to Lower
Drug Costs for Patients 

The International Pricing Index (IPI) Model would lower costs for physician-administered drugs by resetting Medicare payments based on international prices and introducing competition .

On Thursday, the U.S. Department of Health and Human Services, through the Centers for Medicare & Medicaid Services (CMS), announced and sought input on a new “International Pricing Index” (IPI) payment model to reduce what Americans pay for prescription drugs.

Under the IPI model, described in an Advance Notice of Proposed Rule making (ANPRM), Medicare’s payments for select physician-administered drugs would shift to a level more closely aligned with prices in other countries. Overall savings for American taxpayers and patients are projected to total $17.2 billion over five years.

“President Trump promised that he would bring down drug prices and put American patients first,” said HHS Secretary Alex Azar. “With this innovative approach, he is now proposing historic changes to how Medicare pays for some of the most expensive prescription drugs, securing for the American people a share of the price concessions that drug makers voluntarily give to other countries.”

The move from current payment levels to payment levels based on international prices would be phased in over a five-year period, would apply to 50 percent of the country, and would cover most drugs in Medicare Part B, which includes physician-administered medicines such as infusions. The model would correct existing incentives to prescribe higher-priced drugs and, for the first time, address disparities in prices between the United States and other countries. Since patient cost sharing is calculated based on Medicare’s payment amount, patients would see lower costs under the model.

Physicians currently purchase the drugs that they administer to patients and receive payment from Medicare for those drugs at an amount equal to the average sales price plus an “add-on” fee. The add-on is calculated as a percentage of the average sales price of the drug.

This creates several problems. First, the dollar amount of the add-on increases with the price of the drug, which encourages prescribing higher-cost drugs. Second, Medicare accepts sales prices for Part B drugs, with no negotiation. Together, this results in higher out-of-pocket costs that burden American seniors.

The pharmaceutical industry offers deep discounts abroad while taking advantage of the payment system in Medicare Part B which drives the cost in the U.S., even though Medicare is the world’s largest drug purchaser. The IPI model would take on this issue and pay vendors for Part B drugs at a level approaching international prices.

For the first time in Medicare, the IPI model would create a system in which private vendors procure drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare. Vendors would aggregate purchasing, seek volume-based discounts, and compete for providers’ business, thereby creating competition where none exists today.

Under the model, instead of the current percentage-based add-on payment, physicians and hospitals would receive a set payment amount for storing and handling drugs that would not be tied to drug prices. Therefore, the IPI model would remove the financial incentive to prescribe higher-cost drugs. The model also frees physicians from having to “buy and bill” high priced drugs, which creates financial risk that jeopardizes their practice and the ability to serve their community.

The agency is considering a randomized approach to determine which geographies in the country would participate in the model. 

The IPI model would achieve several goals: 

• Reduce costs for Medicare beneficiaries, and thereby increase adherence and access to prescription drugs.
• Introduce competition to the system of paying for physician-administered drugs by bringing in private-sector vendors.
• Reduce providers’ burden and the financial risk associated with managing drug inventories, so physicians can focus on patient care.
• Maintain financial stability for physicians while removing incentives for higher drug prices.
• Address the disparity in drug prices between the U.S. and other countries.
• Reduce costs to the American taxpayers and Medicare beneficiaries who fund these programs.

The ANPRM ensures an open and transparent approach with opportunity for public input. CMS will carefully review comments and is considering issuing a proposed rule for the IPI in the spring of 2019, with a potential model start in spring 2020.

For a policy brief on the ANPRM, please visit:

https://www.hhs.gov/about/leadership/secretary/priorities/drug-prices/ipi-policy-brief/index.html

For a fact sheet on the ANRPM, please visit: https://www.cms.gov/newsroom/fact-sheets/anprm-international-pricing-index-model-medicare-part-b-drugs

Comments on the ANPRM will be accepted until December 24, 2018 and may be submitted electronically through the CMS e-Regulation website at: https://www.cms.gov/Regulations-and-Guidance/Regulations-and-Policies/eRulemaking/index.html?redirect=/eRulemaking

The ANPRM can be downloaded at:  https://www.cms.gov/sites/drupal/files/2018-10/10-25-2018%20CMS-5528-ANPRM.PDF