Medicare, Medicaid and Commercial Coverage & Reimbursement

On February 15, 2024, the Centers for Medicare and Medicaid Services (CMS) released the Medicare Prescription Payment Plan Draft Part Two Guidance (Part Two Guidance) as part of the Inflation Reduction Act’s (IRA) efforts to tackle high prescription drug costs. The Medicare Prescription Payment Part Plan (the Program), which was previously referred to as the “OOP Smoothing Program”, was established as part of the IRA and requires Part D plans (PDPs) to offer their members an option to pay for out-of-pocket (OOP) prescription drug costs in monthly capped payments, as opposed to all at once, at a pharmacy. Meaning, for members who opt-in to the Program, they will pay $0 at the pharmacy and the PDP must pay the pharmacy the full cost-sharing amount of the drug and then bill the member the amount of the cost-sharing over the remainder of the calendar year.

Most of the recent focus around the implementation of the Inflation Reduction Act (IRA) by the press and the industry has been on the Medicare Drug Price Negotiation Program and its potential impact on manufacturers. But the Centers for Medicare & Medicaid Services (CMS) has been regularly releasing guidance regarding IRA-related changes that Part D plan sponsors had to implement for 2023 and in future years. CMS recently released guidance (Part One Guidance) on the Maximum Monthly Cap on Cost-Sharing Payments Program or the Medicare Prescription Payment Plan Program (previously referred to as the “OOP Smoothing Program”). The Medicare Prescription Payment Plan Program (the Program) will require Part D plans (PDPs) to make significant operational and system changes to meet its requirements. Many questions remain regarding the Program.

Health care providers furnishing dementia care should take note of a new payment model announced by the Centers for Medicare & Medicaid Services on July 31, 2023, called Guiding an Improved Dementia Experience (GUIDE). GUIDE is designed to improve dementia care, reduce strain on unpaid caregivers, and help people with dementia remain in their homes and communities. Providers participating in GUIDE receive monthly per-beneficiary per-month payments, can bill for respite care services, and are eligible for one-time payments to support infrastructure.

On March 22, 2023, the Centers for Medicare & Medicaid Services (CMS) issued updated guidance for home dialysis services performed in a skilled nursing facility or nursing home (the Updated Guidance). CMS first issued guidance addressing home dialysis services provided to nursing home residents on April 17, 2018 (the Original Guidance). The Updated Guidance incorporates responses to comments, questions, and feedback received during the ensuing five years from state survey agencies, dialysis providers, and other stakeholders, and current models of home dialysis care of a nursing home resident.

The U.S. Department of Health and Human’s Services (HHS) Health Resources and Services Administration’s (HRSA) long-awaited administrative dispute resolution (ADR) final rule went into effect last week, on January 13, 2021. The ADR regulations, which have lingered in HHS since 2010, arrive amid increasing tensions and a flood of 340B-related litigation between covered entities, manufacturers, and HHS.

CMS recently issued a proposed rule that would grant breakthrough medical devices Medicare coverage immediately upon FDA approval. The rule also proposes to codify a new definition of “reasonable and necessary” for Medicare national coverage determinations that takes into account commercial insurance coverage of items and services. It is unclear how broadly this new "reasonable and necessary" definition will apply if the proposed rule is finalized.

Last week, CMS announced the finalized End-Stage Renal Disease (ESRD) Treatment Choices Model (ETC Model), which will test whether incentivizing home dialysis and kidney transplantation will reduce Medicare expenditures while maintaining or improving the quality of care furnished to beneficiaries with ESRD. This post summarizes how participants are selected, the specific payment changes, and the overall timeline.

This week, the Friday surprise came courtesy of the D.C. Court of Appeals. In a long-awaited split decision, the court ruled that the U.S. Department of Health and Human Services (HHS) acted lawfully when it reduced Medicare Part B reimbursement to hospitals for 340B drugs by nearly 30%. The reduction in Part B reimbursement was originally proposed in the 2018 Outpatient Prospective Payment Services (OPPS) rule. HHS estimated it would reduce total Part B spending by $1.6 billion annually, and save Medicare beneficiaries millions in copayments. Covered entities sued to overturn the rate cut, and litigation has been ongoing since the rate cut was implemented in early 2018.

The Centers for Medicare & Medicaid Services (CMS) has taken another step to further the adoption of value-based purchasing within the health care industry. (Readers may recall the Department of Health & Human Services’ two proposed rules – one from CMS and another from the Office of Inspector General – issued late last year, aimed at reducing barriers to value-based arrangements, which we discussed here.) CMS released its new proposed rule to “support state flexibility to enter into innovative value-based purchasing arrangements (VBPs) with manufacturers, and to provide manufacturers with regulatory support to enter into VBPs with payers, including Medicaid.”

On Monday, April 27, Representatives Diana DeGette (D-CO) and Fred Upton (R-MI) announced the next steps for 21st Century Cures 2.0 (Cures 2.0), legislation that will build on the original 21st Century Cures Act enacted in December 2016 (Cures 1.0). While Cures 1.0 aimed to speed up the process of bringing new treatments to market, Cures 2.0 is generally envisioned to emphasize public health and streamlined care delivery, particularly in light of the COVID-19 pandemic. Elements envisioned to be in Cures 2.0 were outlined in a recently published concept paper that we discuss in this post.

Like many states, Massachusetts is considering drug pricing transparency legislation. The legislation would require pharmaceutical manufacturers to disclose certain pricing information.  Governor Charlie Baker has proposed legislation which would expand upon current reporting requirements for drug manufacturers in Massachusetts, and the Massachusetts Senate passed legislation which includes drug price transparency requirements and increased regulatory oversight of the pharmaceutical industry in Massachusetts. 

On December 16, 2019, a nationwide coalition of hospitals sued HHS to block implementation of the 340B rate cuts contained in the 2020 Hospital Outpatient Prospective Payment System (“OPPS”) Final Rule. As detailed in our prior blog post, the 2020 OPPS Final Rule reduces by nearly 30% the Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B Program. The final rule purports to continue the reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. For a detailed walk-through of the 2020 OPPS Final Rule and litigation up to this point, please see our prior three blog posts here, here, and here. 

On November 15, 2019, the Centers for Medicare & Medicaid Services ("CMS") finalized changes to the Open Payments Program as part of the CY 2020 Physician Fee Schedule Final Rule. Perhaps most importantly, CMS broadened the list of Covered Recipients. Starting for data collection for CY 2021, manufacturers will be required to track and report payments and transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. CMS also added three new nature of payment categories – debt forgiveness, long-term medical supply or device loan, and acquisitions. CMS also consolidated the two payment categories for continuing education programs – accredited/certified and unaccredited/non-certified – into one payment category for all continuing education programs. Lastly, in a move expected to impose a substantial burden on medical device manufacturers, CMS added a reporting requirement for the ‘device identifier’ component of the unique device identifier for devices and medical supplies.

The Centers for Medicare and Medicaid Services (CMS) recently published the 2020 Hospital Outpatient Prospective Payment System (OPPS) rule, which finalizes a proposed reduction in Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B drug discount program. Through the final rule, CMS purports to continue Medicare reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. That ruling, and a Court-imposed stay of the cuts, are the subject of a just-argued appeal.  For a detailed walk-through of the litigation up to this point, please see our prior blog post.

GAO recently released a report analyzing the use of pharmacy benefit managers (“PBMs”) and efforts to manage drug spending and use in the Medicare Part D program. Importantly, the report found that use of PBMs reduced Part D spending in 2016 by 20%, from $145 billion to $116 billon, through drug price rebates.

The proposed 2020 Outpatient Prospective Payment (OPPS) rule was published on August 9, 2019.  Buried in the 819 pages of proposed changes and justifications, CMS took another swing at cutting Medicare Part B reimbursement rates for 340B drugs.   CMS opened its discussion of 340B provisions in the 2020 OPPS proposed rule by first stating it was keeping in effect the 340B reimbursement cut first implemented though the 2018 OPPS rule. The 2018 OPPS rule slashed most hospitals’ Part B reimbursement for 340B drugs from Average Sales Price (ASP) plus 6% down to ASP less 22.5%, a reduction of almost 30%.

Earlier this month, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued its 2019 “Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top Unimplemented Recommendations.” The OIG releases a version of this report each year outlining its top 25 unimplemented recommendations to reduce fraud, waste, and abuse (“FWA”) among HHS programs. This blog post focuses on those recommendations specific to Medicare Part C and Part D for 2019.

Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR), Chairman and Ranking Member (respectively) of the Senate Finance Committee, have fired the latest shot in Congress’s ongoing battle against high drug prices. Last week, the Senators introduced their much-anticipated proposal to lower drug prices: a chairman’s mark called the Prescription Drug Pricing Reduction Act (PDPRA) of 2019.

Earlier this month, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) released two reports regarding its concerns and recommendations related to quality of care at hospice facilities. These reports follow a portfolio report that the OIG released last summer regarding significant vulnerabilities in the Medicare hospice benefit. In these reports, the OIG outlines several quality of care issues and recommends several ways that CMS should strengthen safeguards, all of which may further increase enforcement in an already heavily scrutinized area.

On July 11, 2019, the Centers for Medicare and Medicaid Services (CMS) issued its Home Health Prospective Payment System proposed rule for 2020. The proposed rule implements a previously finalized reimbursement methodology for Home Health Agencies (HHAs) called the Patient-Driven Groupings Model (PDGM). The proposal reflects CMS’s continued efforts to shift towards value-based payment models in the Medicare program.