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Our Take: CMS gears up for fiscal year 2020

Aug 05, 2019

The Centers for Medicare & Medicaid Services unveiled a torrent of initiatives last Monday. Realizing that most of our readers aren’t health policy wonks, we’ll touch on the highlights and provide links for those of you who want more details.

As part of the annual update to the hospital outpatient prospective payment system (OPPS), CMS proposed a rule that would require hospitals to disclose not only their “standard” charges (i.e., list prices) for all services they provide but also their payer-specific negotiated prices. The information would have to be made available online or in writing, upon request, starting Jan. 1, 2020.

In addition, hospitals would have to disclose their payer-negotiated prices for “shoppable” services — such as imaging and lab tests, outpatient visits, and certain bundled services — in a “consumer-friendly manner.” 

According to a CMS fact sheet, hospitals would need to display a minimum of 300 common shoppable services, and pricing would have to be updated annually. Noncompliant hospitals could be fined up to $300 per day. 

As expected, groups representing health plans and hospitals condemned the proposal. 

  • Rick Pollack, CEO of the American Hospital Association, said the proposed rule “misses the mark, exceeds the administration’s legal authority, and should be abandoned.”
  • Bruce Siegel, CEO of America’s Essential Hospitals, said it would “create a heavy administrative burden for hospitals and undermine their ability to negotiate equitable payment, while giving consumers little actionable information with which to make informed care decisions.”
  • Matt Eyles, CEO of America’s Health Insurance Plans, pointed out that “multiple experts, including the Federal Trade Commission, agree that disclosing privately negotiated rates will make it harder to bargain for lower rates, creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.”
Incidentally, Larry Levitt, EVP for health policy at the Kaiser Family Foundation, pointed out on Twitter that the Trump administration is trying to use authority granted by the Affordable Care Act to force hospitals to disclose their prices, all the while fighting in court to have the entire ACA “thrown out.”

Also as part of the OPPS update, CMS released a proposed payment rule for ambulatory surgical centers (ASCs) that would expand the number of services they can offer. These would include total knee replacements and three additional coronary intervention procedures.

To help “promote site-neutrality … and encourage the migration of services from the hospital setting to the lower-cost ASC setting,” the proposed rule would increase payments for surgical centers by 2.7% and hospitals by 3.2%.

It would also continue a nearly 30% cut in payments for drugs covered under the 340B drug discount program.

Separately, CMS released the proposed physician fee schedule (PFS) for fiscal year 2020. According to another CMS fact sheet, the proposed changes include increasing payments for clinicians across all specialties for evaluation and management (E/M) services provided during office and outpatient visits, and giving physician assistants “greater flexibility to practice more broadly … in accordance with state law and state scope of practice.” 

The proposed PFS also includes changes to improve the Quality Payment Program, including a new system that would make it easier for clinicians to participate in the Merit-based Incentive Payment System (MIPS). The MIPS Value Pathways (MVPs) would begin in the 2021 performance period and would have clinicians report on “a smaller set of measures that are specialty-specific, outcome-based, and more closely aligned” with new alternative payment models.

Comments on the aforementioned proposed rules are being accepted through Sept. 27. 

Other final and proposed rules CMS announced last Monday include payment and policy changes for Medicare inpatient rehab facilities, payment and policy changes for Medicare skilled nursing facilities, a hospice payment rate update, payment and reporting updates for inpatient psychiatric facilities, and a rule for end-stage renal disease and durable medical equipment prosthetics, orthotics, and supplies

What else you need to know
Pfizer signed a definitive agreement last Monday to merge its Upjohn division with Mylan. (Upjohn is Pfizer’s off-patent branded and generic drugs business.) The new entity will be based in the U.S.; Pfizer shareholders will own 57% and Mylan shareholders will own the rest, according to a press statement. The boards of both companies approved the merger. Mylan’s chairman, Robert Coury, will be executive chair of the new company; Mylan’s president, Rajiv Malik, will be president of the combined entity; and Michael Goettler, currently the group president of Upjohn, will be CEO. Heather Bresch, Mylan’s CEO, will retire. If Mylan’s shareholders give their approval and the usual closing conditions are met, the all-stock transaction is expected to close by mid-2020. The new company, which will most likely end up manufacturing EpiPen, as well as drugs with expired or soon-to-expire patents — including Lipitor, Lyrica, and Viagra — will have an estimated annual revenue of $19 billion to $20 billion. 

HHS is working on a plan to allow the legal importation of prescription drugs, the agency said last Wednesday in a press release. The Safe Importation Action Plan outlines two potential pathways to accomplish this: 1) authorizing state-based demonstration projects to allow the importation of cheaper Canadian drugs that comply with FDA parameters; this would not apply to biologics, injectables, inhaled products, and certain other drugs, and 2) having the FDA provide guidance to manufacturers so they can import medications intended for foreign markets; provided the drugs are the same as the U.S. version, drugmakers could market them under a separate National Drug Code. HHS Secretary Alex Azar explained that this would provide a different distribution channel and would “potentially [allow manufacturers] to offer a lower price than what their current distribution contracts require.” Big pharma, HHS, and the FDA have generally opposed the idea of prescription drug importation in the past — as has Azar. Although Azar and acting FDA Commissioner Ned Sharpless are now open to the possibility, PhRMA was quick to speak out against it yet again. HHS has not established a timeline for issuing formal proposals.

CMS denied Utah’s request for partial Medicaid expansion. The agency said in a press release that it will no longer approve states’ requests to access enhanced federal funding for partial expansions because that “would invite continued reliance on a broken and unsustainable Obamacare system.” The Affordable Care Act expands Medicaid to adults earning up to 138% of the federal poverty level (FPL) and the federal government funds 90% of the expansion costs — if a state chooses to adopt the full expansion. Last November, Utah voters approved a ballot measure for full expansion, but the state’s Republican leaders instead passed and authorized legislation that extended Medicaid only to adults with incomes up to 100% of the FPL and restricted enrollment in other ways. In March, CMS approved a version of Utah’s plan as a “bridge” to full expansion, and the state began expanded enrollment on April 1. Idaho and Georgia are probably having second thoughts about their own plans for partial expansion.

Cigna and Memorial Sloan Kettering (MSK) signed a value-based agreement for a new program for patients undergoing chemotherapy at MSK who are covered by an employer-sponsored Cigna plan. The program,  announced last week, will offer patients care coordination by an oncology certified registered nurse, as well as case management services. MSK will share savings with Cigna if designated cost and quality targets are met. Participating MSK providers will receive an upfront care coordination fee and could be eligible to share in the savings.

Philadelphia’s Temple University will sell its Fox Chase Cancer Center to Thomas Jefferson University, along with its interest in Health Partners Plan. In a post on its website, Temple noted that the universities expect to reach a definitive agreement, including a final sale price, in the weeks ahead. The boards of trustees for both universities have given their consent.

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