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Medicare Drug Price Negotiation Program and Drug Pricing Reform: Eligible Drugs to Know and Understanding What’s Next

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), which contains prescription drug pricing reform provisions. The three main Medicare prescription drug pricing reform provisions included are as follows:

  • Drug Price Negotiations: Allows the federal government to negotiate for a select number of vaccines and/or drugs
  • Inflation-Based Rebates: Mandates that manufacturers pay a rebate to the federal government when the list prices of Part B or Part D drugs grow at a faster rate than the inflation rate
  • Part D Benefit Redesign: Implements an out-of-pocket maximum for beneficiaries at $2,000 and redistributes liability among manufacturers, health plans, patients and the federal government across phases of the Part D benefit starting in 2024.

Leveraging data from the Centers for Medicare and Medicaid Services’ (CMS’s) Medicare Drug Spending Dashboard and FDA databases, McDermott+Consulting has identified the potential list of drugs subject to negotiations.

This information is particularly valuable for pharmaceutical companies, health plans, patients, pharmacies and other stakeholders as they evaluate and consider the implications of this legislation. In less than one year, on September 1, 2023, the Health and Humans Services (HHS) Secretary will publish the first list of selected drugs subject to drug price negotiations. Understanding the statutorily mandated negotiations framework, timeline and potential drugs that may be included is critical to support stakeholders’ efforts to obtain optimal outcomes.

This report describes the drug price negotiation program, an implementation timeline for drug price reforms from the IRA and information on which drugs are likely to be first subject to price negotiation.

Download the report.




GAO Releases Report on Telehealth

On September 26, the US Government Accountability Office (GAO) released a report titled “Medicare Telehealth: Actions Needed to Strengthen Oversight and Help Providers Educate Patients on Privacy and Security Risks.” The 75-page report describes the utilization of Medicare telehealth services under current pandemic-related waivers, the Centers for Medicare & Medicaid Services (CMS) efforts to identify and monitor risks posed by the current waivers, and a change made by the US Department of Health and Human Services (HHS) Office for Civil Rights (OCR) to the enforcement of regulations governing patients’ protected health information during the COVID-19 public health emergency (PHE).

GAO made four recommendations—three directed to CMS and one directed to OCR—aimed at remedying the issues set forth in the report:

  • CMS should develop an additional billing modifier or clarify its guidance regarding billing of audio-only office visits to allow the agency to fully track these visits.
  • CMS should require providers to use available site of service codes to indicate when Medicare telehealth services are delivered to beneficiaries in their homes.
  • CMS should comprehensively assess the quality of Medicare services, including audio-only services, delivered using telehealth during the PHE.
  • OCR should provide additional education, outreach or other assistance to providers to help them explain the privacy and security risks to patients in plain language when using video telehealth platforms to provide telehealth services.

Among its utilization findings, the GAO report found that the use of telehealth services increased from about five million services pre-waiver (April to December 2019) to more than 53 million services post-waiver (April to December 2020) and that, post-waiver, 5% of providers delivered more than 40% of telehealth services, and 5% of beneficiaries accounted for almost 40% of telehealth utilization.

The report noted that CMS lacks complete data on the use of audio-only technology and telehealth visits furnished in patients’ homes, because there is no billing mechanism for providers to identify all instances of audio-only visits, and because providers are not required to use available codes to identify visits furnished in homes. The GAO report also noted that OCR did not advise providers about specific language to use or give direction on explaining risks to patients, with respect to OCR’s March 2020 policy that it would not impose penalties against providers for noncompliance with privacy and security requirements in connection with the good faith provision of telehealth during the PHE.

This GAO report comes on the heels of a recent report from the HHS Office of Inspector General that found little evidence of waste and fraud related to Medicare telehealth services during the first year of the pandemic. These reports are part of a broader push by Congress and the Biden administration to examine current telehealth flexibilities and determine how to extend them beyond the COVID-19 PHE.




Monkeypox in the Workplace: Key Considerations for Employers

With much about the potential impact and scope of monkeypox still unknown, employers should consider taking proactive steps now, as may be appropriate for their workforce, to enhance and reinforce the safety protocols already in place from the COVID-19 pandemic. In this Employee Relations Law Journal article, McDermott’s Michelle S. Strowhiro, Lindsay Ditlow and Priya Singh offer three key considerations for employers with respect to monkeypox.

Access the article.




Texas Judge Rules Against ACA Preventive Care Provisions

On September 7, 2022, a US district court judge for the Northern District of Texas issued a ruling that preventive care provisions in the Affordable Care Act (ACA) requiring private insurance plans to cover drugs that prevent HIV infection at no cost to patients violate religious rights.

The ACA requires that private insurers cover certain preventive health services, including STD screenings and HIV pre-exposure prophylaxis (PrEP) prevention drugs. In his ruling, the judge found that that the rights of the employers that brought suit have been violated under the Religious Freedom Restoration Act by the requirement that they sponsor health insurance that covers sexual health services such as PrEP drugs that help prevent the spread of HIV.

It is not yet clear whether enforcement will occur immediately and whether coverage requirements will be blocked for just those who brought suit, for everyone in Texas or nationwide. The US Department of Health and Human (HHS) is expected to appeal the ruling.




Growing Antitrust Scrutiny of Healthcare Mergers: What Healthcare Executives Need to Know

How can healthcare executives navigate the growing antitrust scrutiny of healthcare mergers, and what are some of the key issues facing executives in the current regulatory environment? In this conversation with The Chartis Group, McDermott Partner Katharine O’Connor discusses the legal considerations for healthcare executives seeking to navigate mergers.

Access the article.




How Employers, Insurers Are Coping with Abortion After Dobbs

The US Supreme Court’s ruling overturning Roe v. Wade has created more complexity to the country’s patchwork of abortion laws. In this Managed Healthcare Executive article, McDermott’s Sarah Raaii offers perspective about how insurers are navigating healthcare plans state-by-state.

Access the article.




CMS Announces 2023 Medicare Premiums and Deductibles

On September 27, 2022, the Centers for Medicare & Medicaid Services (CMS) released 2023 premiums, deductibles and coinsurance amounts for Medicare Parts A and B, and the Medicare Part D income-related monthly adjustment amounts.

In 2023, the standard monthly premium for Medicare Part B enrollees will be $164.90, a decrease of $5.20 (from $170.10) in 2022, and the deductible for all Medicare Part B beneficiaries will be $226, a decrease of $7 (from $233) in 2022. The decreases stem from a decline in the price of an Alzheimer’s drug and limitations on its usage, as the Alzheimer’s drug was the main factor for the spike in monthly Part B premiums in 2022, according to CMS.

For Part A, the inpatient hospital deductible (which beneficiaries pay if admitted to the hospital) will be $1,600 in 2023, an increase of $44 from $1,556 in 2022.

For Part D, where higher income beneficiaries’ monthly premiums are adjusted based on income, CMS set forth the 2023 monthly adjustment amounts, beginning with beneficiaries with less than $97,000 in modified adjusted gross income (no monthly Part D adjustment) and incrementally increasing to a $76.40 monthly premium adjustment for those whose modified adjusted gross income is greater than $500,000.

Medicare open enrollment for 2023 begins on October 15 and ends on December 7.




CY 2023 Physician Fee Schedule Proposed Rule

On July 7, 2022, the Centers for Medicare & Medicaid Services (CMS) released the CY 2023 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B Proposed Rule, which was published in the Federal Register on July 29, 2022.

The proposed rule includes proposals related to Medicare physician payment and the Quality Payment Program. Physicians face proposed cuts of more than 4% under the proposed fee schedule, along with significant proposed changes to accountable care organizations. The proposed rule also includes the following proposals:

  • Launch the Merit-based Incentive Payment System (MIPS) Value Pathways as a voluntary option to the MIPS in 2023.
  • Permanently maintain certain services added to the telehealth list during the PHE; maintain certain services added as covered telehealth services but not given permanent or Category 3 status until 151 days post-PHE and add several codes as Category 3 telehealth codes, which are slated to remain covered until the end of CY 2023.
  • Delay the in-person requirements for telehealth services furnished for purposes of diagnosis, evaluation or treatment of a mental health disorder until the 152nd day after the PHE ends.
  • Expand access to, and address shortages of, behavioral services and health providers by allowing licensed professional counselors and licensed marriage and family therapists to bill Medicare under general supervision, and create a new billing code for general behavioral health integration services for clinical psychologists and clinical social workers when they are the focal point of integration; and
  • Implement initiatives promoting health equity.

For additional analysis of the CY 2023 Medicare Physician Fee Schedule proposed rule, see McDermott+Consulting’s article.




How the Overturning of Roe v. Wade May Affect US Employer Benefits Plans

The US Supreme Court’s decision to overturn Roe v. Wade has led to a flurry of confusion and questions from employers. In this Benefits Canada article, McDermott’s Sarah Raaii explains how some states are imposing criminal penalties for anyone who assists with abortion within their borders.

“If a court determines state abortion restrictions are generally applicable criminal laws, then potentially, ERISA (Employee Retirement Income Security Act) plans can be subject to criminal penalties if they provide abortion services, including travel benefits,” Raaii said.

Access the article.




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