Life Science Compliance Update

February 20, 2018

The Congressional Budget Deal's Effect on Health Care

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In early February, Congress passed a massive bipartisan budget deal to fund the government through March 23, 2018, suspend the debt ceiling until 2019, raise budget caps by nearly $300 billion over two years, and fund various parts of the government.

Naturally, passage of the budget agreement means that quite a few health care priorities made their way into the law. For example, several health care “extenders” were reauthorized, community health centers (CHCs) were funded, cuts to safety net hospitals were delayed, as were cuts to the CHRONIC Care Act and the Part B Improvement Act, while revisions to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) were made.

Then, the deal reached in the Senate added $6 billion in funding to address opioid and mental health treatment, $4 billion for VA hospitals, and $2 billion in new funding for research at the National Institutes of Health (NIH). The Senate deal also extend funding for the Children’s Health Insurance Plan (CHIP) by an additional four years — a ten-year extension when combined with the six-year reauthorization secured last month.

Interestingly, the agreement also permanently repeals Medicare’s moribund Independent Payment Advisory Board (IPAB), while also making adjustments to the prescription drug “donut hole” that will require pharmaceutical companies to provide steeper discounts for seniors in the coverage gap.

IPAB Repealed

Before it could go into effect, Congress included the repeal of the unpopular Affordable Care Act (ACA) Independent Payment Advisory Board (IPAB), which would have been responsible for identifying potential Medicare savings to Congress. Congressional representatives of both parties had disdain for IPAB because it had the ability to limit Congress’ power over its recommendations. While Medicare spending has yet to hit the designated threshold that would have triggered the creation of the panel, the most recent Medicare trustees report estimated that it may have been enacted as soon as 2021.

The repeal of IPAB is likely to benefit drug makers and private Medicare plans as without the repeal, the Board would have been precluded from rationing care, increasing beneficiary spending, or cutting payments to hospitals and hospices.

The Donut Hole is Closed

The bill increased the discounts that drug companies pay to beneficiaries whose drug costs fall into the coverage gap of Part D, from the current 50 percent level to 70 percent. This change is estimated to save the federal government $10 billion over the course of a decade but is expected to cost drug companies close to $40 billion over that same decade.

Part D plan sponsors, on the other hand, had a decrease in their liability from the 25 percent they were expected to pay to begin in 2020 all the way down to 5 percent. The hole will remain the same for patients – 25 percent.

Changes to MACRA

The Medicare Access and CHIP Reauthorization Act (MACRA) had several changes made to it by way of the budget deal, including excluding the cost of Part B drugs from the calculation of doctor pay, delaying the use of cost measures in doctor performance scores, giving CMS three more years to transition to the performance threshold, and allowing the Physician-Focused Payment Model Technical Advisory Committee (PTAC) weigh in earlier on the payment models that providers design.

Physician advocate groups had been lobbying for the ability to exclude the cost of drugs they administer from the calculation of their Merit-Based Incentive Payment System (MIPS) scores because they were concerned that specialty therapies do not always have consistent coverage in reimbursement. In addition to listening to the concerns on that front, lawmakers also allowed CMS the flexibility to determine the weight of the cost performance category between 10 percent to 30 percent for three years.

12th International Pharmaceutical and Medical Device Compliance Congress

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This May, the 12th International Pharmaceutical and Medical Device Compliance Congress will take place in Vienna, Austria, at the Hotel Savoyen, from the 14th through the 16th.

Keynote speakers for this conference include: Nicola Bedlington, Secretary General, European Patients Forum (EPF), Former Director, European Disability Forum, Brussels, Belgium; Jan Oliver Huber, General Secretary, Association of the Austrian Pharmaceutical Industry (PHARMIG), Vienna, Austria; Camilla de Silva, Joint Head of Bribery and Corruption, Serious Fraud Office, London, UK; and George “Ren” McEachern, CFE, CAMS, Managing Director, Exiger, Former Supervisory Special Agent, International Corruption Squad, US Federal Bureau of Investigation, Washington, D.C.

Co-Chairs of the event include: Dante Beccaria (Sanofi, Paris, France); Stephen Nguyn Duc (Rungis, France); Suzanne Durdevic, LLM (Boston Scientific International, Paris, France); Dominique Laymand, Esq. (Ipsen, Paris, France); and Roeland Van Aelst (Johnson & Johnson, Brussels, Belgium).

The event was just announced on February 8, 2018, and a call for proposals has been sent out. If you are interested in submitting a proposal, you may do so here.

To register for this conference, click here, or call (800) 503-8171. Standard conference registration is €1,795 (est. $2,198.05) through March 16, 2018; €1,995 (est. $2,442.96) through Friday, April 13, 2018; and €2,195 (est. $2,687.87) after Friday, April 13, 2018.

February 19, 2018

Trump Administration Releases Budget Proposal Calls for Changes to Open Payments and Increased Funding for Fighting Fraud and Abuse

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The Trump Administration recently released its fiscal year (FY) 2019 budget proposal, including extensive health policy provisions.

The budget proposal features numerous program integrity provisions. For instance, the budget calls for: a $45 million increase in Health Care Fraud and Abuse Control funding; expanded prior authorization requirements for high utilization practitioners of radiation therapy, therapy services, advanced imaging, and anatomic pathology services; expansion of the items of DME, prosthetics and orthotics that are subject to prior authorization; a demonstration to test the use of a benefits manager for serial/refill DME claims; a requirement that clearinghouses and billing agents enroll in Medicare; and the addition of the National Provider Identifier of covered recipients on the public Open Payments website.

The budget proposal also snuck in some proposed changes to Open Payments, including altering the Open Payments reporting and publication cycle, and publishing the National Provider Identifier for covered recipients in the Open Payments Program, as ways to address fraud and abuse in Medicare.  

The budget also includes proposals to streamline Medicare program rules for providers and suppliers, including: relaxing Medicare meaningful use program requirements for hospitals and physicians, simplifying Merit-based Incentive Payment System (MIPS) rules and Advanced Alternative Payment Model (APM) bonus rules for physicians, and various reforms to the Medicare appeals process.

The budget also proposes a new exception to the physician self-referral law for arrangements that arise due to participation in Advanced APMs. Furthermore, several provisions are intended to boost accountable care organizations (ACOs), including a proposal to allow ACOs to pay beneficiaries for a primary care visit.

Trump continues to attempt a “repeal and replace” method to the Affordable Care Act (ACA). This year’s budget calls for a “Market-Based Health Care Grant Program” (similar to the pending Graham-Cassidy-Heller-Johnson legislation) as an initial step to help states stabilize their insurance markets during a transition period. The second step would then repeal the ACA’s Medicaid expansion and significantly restructure Medicaid by allowing states to choose between a per capita cap or a block grant.

Another area of emphasis in this year’s budget proposal is reducing prescription drug prices, although there is debate regarding the potential effectiveness of the Administration’s approach. Among other things, the budget would:

  • “Modernize” the Medicare Part D benefit by requiring Part D sponsors to apply at least one-third of total rebates and price concessions at the point of sale and eliminating cost sharing for generic drugs for low-income, among others.
  • Establish new standards for hospitals to receive redistributed savings resulting from reduced payment for outpatient drugs purchased through the 340B discount drug program, based on the hospital’s level of uncompensated care.
  • Reduce Medicaid drug spending by establishing a Medicaid demonstration to test coverage and financing reforms that build on private sector best practices,  requiring state Medicaid to cover all FDA-approved Medication Assisted Treatments for opioid use disorder, and establishing minimum standards for Medicaid drug utilization review programs.

This budget proposal is separate from the two-year budget deal passed by Congress in early February, which is complicating efforts made by the White House to reorder federal priorities.

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