Tag Archives: Regs and guidance

Regulatory roundup

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

Executive Order protecting and improving Medicare issued

President Donald Trump signed an Executive Order stating it would improve private Medicare plans for seniors. The Executive Order is expected to bolster Medicare Advantage, offer more affordable plan options, encourage wider use of telehealth services, promote wellness benefits, and bring payments in Medicare fee-for-service programs in line with payments for Medicare Advantage.

To learn more, click here.

Opportunity for states to participate in a wellness program demonstration project

The Centers for Medicare and Medicaid Services (CMS), in consultation with the U.S. Departments of Labor (DOL) and the Treasury, announced an opportunity for states to apply to participate in a wellness program demonstration project. Participating states may implement nondiscriminatory health-contingent wellness programs in the individual market, as described in section 2705(l) of the Public Health Service Act (PHS Act).

For more information, click here.

An overview of the Prescription Drug Pricing Reduction Act

The Prescription Drug Pricing Reduction Act (PDPRA) of 2019 proposes changes to the Medicare Part D program that could impact all stakeholders beginning as early as 2021. The Senate Finance Committee approved a draft of this Act on July 25, 2019. The key provisions affecting Part D include:

1. Redesigning the Part D benefit, including eliminating the current coverage gap phase, establishing an out-of-pocket maximum for beneficiary cost sharing, and splitting the cost of catastrophic phase claims between plan sponsors, the federal government, and drug manufacturers.

2. Requiring drug manufacturers to pay a rebate directly to the federal government if prices for certain Part D drugs increase faster than inflation.

3. Mandating public disclosure of aggregate rebates, discounts, and other pharmacy benefit manager (PBM) contract provisions.

In this article, Milliman consultants provide an overview of these provisions and the potential effects on Part D stakeholders. The PDPRA also proposes changes to the Medicare Part B and Medicaid programs. However, the authors only focus on the proposed changes relating to Medicare Part D.

Regulatory roundup

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

House approves “Cadillac” tax repeal

The U.S. House of Representatives voted to repeal the “Cadillac” tax on “high-cost” employer health plans from the Patient Protection and Affordable Care Act (ACA). The application of the 40% tax on employer-sponsored health plans costing more than an estimated $11,200/$30,100 for individuals/families in 2022 (when the tax would be in effect under current law) has been delayed several times since its 2018 initial application date.

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House panel advances legislation to stop surprised medical bills

The U.S. House’s Energy and Commerce Committee approved a bill (H.R. 2328) that includes provisions to address “surprise” medical bills that patients encounter when healthcare providers charge for services or items that insurers will not cover or when they receive care from an out-of-network provider at an otherwise in-network facility. The bill protects patients from surprise bills in emergency situations, patients who didn’t specifically choose to see an out-of-network physician for scheduled care, and patients in situations where no in-network provider is available to treat them.

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IRS expands list of preventive care for HDHP participants

The Internal Revenue Service (IRS) added care for a range of chronic conditions to the list of preventive care benefits that may be provided by a high-deductible health plan (HDHP). Notice 2019-45 lists the new types of medical care that may be treated as preventive care for this purpose.

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Guidance for Medicaid managed care MLR calculations

In May 2019, the Centers for Medicare and Medicaid Services (CMS) released an Informational Bulletin clarifying how payments to subcontracted vendors should be accounted for in the medical loss ratio (MLR) calculation required by 42 CFR §438.8 as established by the Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule published in May 2016. In the May 2019 bulletin, CMS focuses on the responsibilities of a subcontractor in providing data and the proper accounting of subcontractor payments for purposes of MLR reporting. The provisions outlined in the May 2019 bulletin apply to all subcontractor relationships, but CMS specifically highlights pharmacy benefit manager (PBM) arrangements that may include “spread pricing” and rebate retention.

The final rule requires states to complete MLR reporting for the first contract period beginning on or after July 1, 2017. It is anticipated that many state Medicaid programs will be providing MLR data for CMS for the first reporting period during calendar year 2019, so states should clearly articulate this guidance to contracted managed care plans and modify data collection processes and vehicles to collect the necessary detail to meet CMS requirements.

The final rule also stipulates that a managed care plan must ensure that its subcontractors fully comply with all terms and conditions of its contract with a state and must comply with all applicable Medicaid law and regulations. One area in which managed care plans commonly use subcontractors is in the delivery of pharmacy benefits. PBMs maintain and develop pharmacy networks, negotiate rebates with drug manufacturers, and perform other activities that support managed care plans’ obligations under contracts with states. In this paper, Milliman’s Paul Houchens, Ian McCulla, and Amber Kerstiens discuss reporting requirements for PBMs and other third-party vendors under this new CMS guidance.

Challenges for providers taking on Medicare Part D risk

In January 2019, the Centers for Medicare and Medicaid Services (CMS) released Part II of the 2020 Advance Notice and Draft Call Letter, which contains the proposed methodological changes for the 2020 Medicare Advantage (MA) capitation rates along with Part C and Part D payment policies.

In the letter, CMS issued a request for comments on the potential use of risk-based arrangements for pharmacy benefits in contracts between MA plans and contracted providers. CMS noted that risk-based arrangements in contracting for pharmacy benefits may be another tool to drive down the cost of Part B drugs in MA and Part D drugs for MA and Part D plans. CMS requested information on the barriers, feasibility, benefits, and drawbacks for these types of arrangements between MA plans and contracted providers.

As part of its August 2018 proposed rule, CMS asked how accountable care organizations and Part D sponsors in the Medicare Shared Savings Program “could structure the financial terms of these arrangements to reward Part D sponsors’ contributions towards achieving program goals.” There was also a request for information in that rule regarding “barriers to developing these relationships.”

In this article, Milliman’s Matt Kramer, Simon Moody, and Michael Hunter provide a summary of the key issues providers need to consider before taking on Part D risk, an increasingly common ask from MA organizations, and highlight some of the complexities and common barriers observed when advising provider clients on their strategies for Part D risk.

Analyzing midyear drug list price reductions

In February, the U.S. Department of Health and Human Services issued a proposed rule that would eliminate the current safe harbor to the Anti-Kickback Statute, which allows manufacturers to provide rebates to plans and pharmacy benefit managers, and creates a new safe harbor that would force the rebates to be passed through to the point of sale.

Some manufacturers have preemptively decreased list prices on popular brand drugs. List price reductions can be effectuated in several ways, including the launch of an authorized generic, the release of a new package for an existing identical product, or a complete reduction in list price on an existing product. The structure of the Medicare Part D program produces interesting, and sometimes counterintuitive, financial outcomes when list prices are decreased and rebates are eliminated. Plan sponsors will want to consider these outcomes during bid preparation and when estimating Part D payment settlements.

In this paper, Milliman’s David Mike, Matthew Hayes, and Stephen Amend analyze the impact of midyear drug list price reductions coupled with a reduction in rebates resulting in identical net price. Their analysis addresses the impact to Part D plans, Part D beneficiaries, the federal government, and pharmaceutical manufacturer payments to plans through rebates and the coverage gap discount program.