Expanded definition of primarily health-related benefits alters the Medicare Advantage marketplace

In April 2018, the Centers for Medicare and Medicaid Services (CMS) published a revised definition of “primarily health related” (PHR) benefits as applicable to Medicare Advantage (MA) organizations. CMS expanded the definition of a primarily health-related service starting in calendar year (CY) 2019 as one that is “… used to diagnose, compensate for physical impairments, acts to ameliorate the functional/psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization.” These services are often used by individuals with chronic conditions in need of long-term services and support (LTSS). Many of these services are the same ones that private long-term care (LTC) insurance covers and reimburses.

CMS’s April 27, 2018, guidance letter presented nine possible supplemental benefits that could be offered starting in CY 2019 under the expanded “primarily health-related” definition. Many plans are offering some of these supplemental benefits in 2019. Six of the nine supplemental benefits mentioned in the memorandum are:

1. Adult day care services
2. Home-based palliative care
3. In-home support services
4. Support for caregivers
5. Medically approved non-opioid pain management
6. Standalone memory fitness

In addition to CMS’s list of nine potential new benefits under the revised PHR definition, there are additional “other supplemental benefits” for 2019 that appear to qualify under the expanded PHR definition:

1. Activity tracker/fitness tracker
2. Alzheimer/dementia bracelet: Wandering support service
3. Backup support for medical equipment
4. Housekeeping
5. Non-skilled home health
6. Personal care/personal care services/personal home care
7. Restorative care benefit
8. Social worker line
9. Therapeutic massage
10. Vial of Life program

In this article, Milliman’s Pedro Alcocer, Robert Eaton, and Pamela Laboy address in more depth how the MA marketplace responded in 2019 to CMS’s expanded definition of primarily health-related benefits, including which supplemental benefits plans are offering and where these benefits are offered.

What are the risks and potential solutions associated with gene and cell therapies?

Gene therapies, CAR T-cell therapies, and other innovative therapies are beginning to enter the market and are making waves with their record-setting prices. These therapies are curing, extending life, or providing increased quality of life to patients who—in many cases—had exhausted all other options. From the patient’s perspective, it is clear that the drug is worth it. But from the payer’s perspective, there are risks and benefits to be taken into consideration.

There are only a handful of gene and cell therapies approved for use in the United States today, and they are currently indicated for rare diseases. However, there are a large number of these therapies currently in development worldwide. The aggregate effect of these therapies entering the market impacts both small and large insurers, and will increase the need for viable solutions to mitigate their risks and uncertainties.

Some gene and cell therapies differ from most traditional treatments in that they have limited administration periods, but have the potential for ongoing clinical benefits. There are four key uncertainties related these therapies from the payer’s perspective: initial performance, durability and efficacy, cost offsets, and price. Understanding these risks will influence how a payer perceives the value of the therapy.

Because gene and cell therapies are a fairly new paradigm of treatment, there is considerable uncertainty around their efficacy and long-term durability. From the financial perspective, the drug itself is likely to have a substantial price tag, but there are additional financial risks.

In this paper, Milliman’s Anne Jackson and Jessica Naber discuss in more detail the sources of uncertainty regarding gene and cell therapies. They also discuss what will affect appropriate solutions for mitigating these risks.

Proposed rule may change prescription drug rebates

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) recently issued a proposed rule it believes “may curb list price increases, reduce financial burdens on beneficiaries, lower or increase Federal expenditures, improve transparency, and reduce the likelihood that rebates would serve to inappropriately induce business payable by Medicare Part D and Medicaid MCOs [managed care organizations].”

HHS OIG proposes changes to the Anti-Kickback Statute (AKS) safe harbors to ban rebate arrangements it believes are harmful, while protecting discount and service arrangements it believes are beneficial. The proposal applies to both Medicare Advantage and Managed Medicaid.

The broad AKS prohibits payments to induce or reward the referral of business reimbursable under any of the federal healthcare programs. Since the inclusion of remuneration under the AKS in 1977, HHS OIG has established various safe harbors to protect what it deems certain non-abusive business arrangements, while encouraging beneficial or innocuous arrangements.

The discount safe harbor currently allows the payment of rebates by manufacturers to payers, which are often offered in exchange for favorable formulary status. In most cases, Current Manufacturer Rebates—rebates offered by prescription drug manufacturers to pharmacy benefit managers (PBMs) and health plans—are expressed as a percentage of list price, so as list prices increase, the dollar value of rebates also increases. Additionally, price protection rebates, which are a form of manufacturer rebates designed to limit the impact of list price increases on payers, have also become more common and represent an increasingly large share of Current Manufacturer Rebates.

Between 2010 and 2015, the amount of all forms of rebates received by Medicare Part D sponsors and their PBMs increased nearly 24% annually, much faster than the overall growth in gross drug costs in that same time period. The Centers for Medicare and Medicaid Services (CMS) Office of the Actuary projects rebates of all forms to comprise nearly 27% of Medicare Part D gross drug costs in 2020.

Some of the proposed change to the AKS safe harbors include:

• Removing safe harbor protection for prescription drug manufacturer rebates to plan sponsors under Medicare Part D and Medicaid MCOs as well as PBMs under contract with them
• Adding safe harbor protection for certain price reductions offered by prescription drug manufacturers to Part D plans and Medicaid MCOs that are reflected at the point of sale to the beneficiary
• Adding safe harbor protection for fixed fees that prescription drug manufacturers pay to PBMs for services rendered to the manufacturers that meet specified criteria

Beyond Part D plan bids, the proposals, if finalized, are far-reaching and represent significant changes from the status quo. Health plans, PBMs, retail pharmacies, prescription drug wholesalers, and any number of entities that serve these organizations will, in some cases, need to re-orient entire business models and restructure back-end operations to manage the new paradigm. For them, implementation on January 1, 2020, may appear an impossible task; however, given this administration’s focus on lowering prescription drug costs, the impossible may indeed become reality.

In this article, Milliman’s Maggie Alston, Carol Bazell, and David Mike write about how these proposed changes could affect Part D stakeholders.

Connecting the dots between social determinants and healthcare utilization

Growing recognition that social determinants are significant drivers of health and healthcare utilization patterns has increased the desire to better understand and identify these issues as well as to develop actionable steps at both the population and member levels. There has been a growing focus on developing the ability to identify the presence of social vulnerabilities among population health entities, Medicaid state agencies, risk-taking provider organizations such as accountable care organizations, and any entity with a vested interest in the reduction of healthcare spending. It is not unusual for health actuaries to get involved in this discussion. Milliman’s Ksenia Whittal provides some perspective in this article.

This article was published in the December 2018/January 2019 issue of The Actuary.

Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

General information letter correcting mistake contributions to HSAs released
The Internal Revenue Service (IRS) released a general information letter (2018-0033) correcting mistaken contributions to health savings accounts (HSAs). According to the letter, Notice 2008-59 does not specifically address other situations in which contributions to an employee’s HSA are the result of the employer’s or trustee’s administrative or process errors, but the notice also was not intended to provide an exclusive set of circumstances in which an employer may request the return of contributed amounts. Rather, if there is clear documentary evidence demonstrating that there was an administrative or process error, an employer may request that the financial institution return the amounts to the employer, with any correction putting the parties in the same position that they would have been in had the error not occurred. Employers should maintain documentation to support their assertion that a mistaken contribution occurred.

To read the entire letter, click here.

Opioid use disorder considerations for employers

Opioid use, misuse, and overdose are serious health problems in the United States, and the impact on employers cannot be ignored. According to a 2017 report from the National Safety Council, 10% to 12% of employees are under the influence of drugs while at work, and 70% of employers reported negative effects from opioid use within their employee population.

Opioid use and abuse among workers has several significant effects on U.S. employers, including reduced economic growth, increased operating costs, lower quality, and decreased productivity. Anecdotal reports in the U.S. indicate that employers are not only having difficulty finding skilled workers, but also workers who have the necessary skills and can pass a drug test.

Less than 20% of human resources staff say they are well prepared to deal with the personnel issues related to opioid use and misuse. This readiness gap is driven by the absence of appropriate policies, insurance, and benefits that are not structured to address addiction, lack of processes to support workers in recovery, and missing procedures to support managers and supervisors as they address opioid-related job performance issues.

How can employers prepare for and address this challenge? Employer involvement with staff opioid use covers new ground, requiring the thoughtful development of programs and areas of emphasis.

In this article, Milliman’s Barbara Culley and Christine Castle present an overview of the challenges facing employers, discuss opioid use and misuse effects in the workplace, review data to inform program development, and explore actions employers can take to tackle this growing program.