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Our Take: Trump’s executive order, CMS’ proposed payment rules offer hope to rural areas

Aug 10, 2020

President Trump signed an executive order last Monday directing the Department of Health and Human Services (HHS) to come up with strategies to improve health outcomes for residents in rural areas, and to permanently extend changes that have increased Medicare beneficiaries’ access to telehealth services during the public health emergency (PHE). Hours later, CMS released its proposed changes in the Physician Fee Schedule (PFS) for 2021, some of which coincide with those directives and others set forth in the executive order.

As part of the directive to improve rural health care, the executive order tasks HHS with reducing providers’ regulatory burdens and launching a new payment model that will establish predictable payments for providers and encourage them to transition to value-based care. Further, HHS and the Department of Agriculture, in conjunction with the Federal Communications Commission, are to develop a plan to increase broadband connectivity for better access to telehealth in rural areas.

In the last few months, CMS has added 135 services that can be reimbursed when delivered using telehealth. A CMS fact sheet for the proposed PFS changes shows that telehealth services listed under nine HCPCS codes will become permanent — including certain evaluation and management services and certain services conducted during home visits. In addition, services listed under 13 other HCPCS codes — including some for home visits and emergency department visits — will be covered through the calendar year in which the PHE ends; CMS could later decide to make those permanent as well.

The American Medical Association (AMA) noted in a statement that, because of a budget neutrality requirement, the additional spending resulting from payment increases in the proposed PFS would necessitate lowering the Medicare conversion factor used to calculate reimbursement rates by approximately 11%. In general, primary care providers, including nurse practitioners, stand to benefit, but some specialty providers, such as physical and occupational therapists, would see significant cuts in reimbursement. Surgeons also would see their reimbursement rates slashed by 6% to 9%. The AMA said it “strongly urges Congress to waive Medicare’s budget neutrality requirement for the office visit and other payment increases.”

The proposed PFS also includes changes to the Merit-based Incentive Payment System, the Quality Payment Program, and the Medicare Shared Savings Program. Of note, for the 2020 performance year, CMS is seeking to modify how quality is benchmarked by changing how shared savings and shared losses are determined and is seeking comment on an alternative scoring methodology that would help protect providers in “extreme and uncontrollable circumstances” like the pandemic.

On Tuesday, CMS released its proposed changes for 2021 for the Hospital Outpatient Prospective Payment System and the Ambulatory Surgical Center Payment System.

One notable change is the proposed elimination of the inpatient-only list over the next three years, starting with about 300 musculoskeletal-related services in 2021. CMS also proposed adding 11 procedures that Medicare would pay for when performed at an ambulatory surgical center (ASC). Payment rates for hospital outpatient departments and ASCs would increase by 2.6% under the proposed rule.

Another notable change is the proposed 28.7% net rate reduction in payments for drugs and biologicals that hospitals acquire through the 340B program. CMS has been embroiled in a legal battle with hospital groups over its 340B rate cut, but an appeals court ruled recently that the agency has the authority to implement the reduced rate.

Our Take:
While many of these measures would greatly benefit patients and providers, it’s going to be a while before they can be implemented.

The executive order gives HHS 30 to 60 days to come up with a strategy or to report on recommendations for the various directives, and both of CMS’ proposed rules include a 60-day period for public comment before they can be finalized. Moreover, Congress would need to be involved before broader expansion to telehealth rules, such as reimbursement for home health agencies, could occur. Then comes the hard work of actually putting the processes in place.

Still, measures that would eventually give residents in rural areas more access to the health care they need are steps in the right direction. So are measures that would alleviate the administrative burden on providers and more adequately compensate them for their time and services — especially providers in smaller practices that are reeling from the effects of the pandemic.

With tens of thousands of new COVID-19 cases emerging daily and rural areas experiencing significant surges, it feels like every day counts. It’s hard to predict what things will look like two months from now, much less by the time changes can be made and have an effect. We’ll hope for the best.

What else you need to know
Thirty-four state attorneys general wrote a letter to the FDA, HHS, and the National Institutes of Health asking the agencies to permit other companies to manufacture Gilead Science’s remdesivir, which is currently the only drug approved as a treatment for COVID-19; the goal, they said, is to ensure there’s an adequate supply and to lower the price Gilead is charging ($520 per vial for privately insured patients and those with Medicare or Medicaid coverage; a course of treatment consists of six doses). Since Gilead received millions in taxpayer money to further develop remdesivir, the AGs are asking the health agencies to exercise their “march-in” rights under the Bayh-Doyle Act, which allows the government to retain patent rights developed with federal funds. Under that law, federal agencies can license a patent to a third party if the patent holder (e.g., Gilead) fails to establish a reasonable price or fails to reasonably alleviate consumers’ health or safety needs.

In theletter, the AGs said they believe it’s clear that Gilead has failed on both counts. As an alternative, the AGs asked the agencies to assign the march-in rights to individual states. In acompany statement, Gilead said the AGs’ letter “is premised on multiple factual inaccuracies,” and that the regulatory actions the AGs requested are “unauthorized under these circumstances” and “will do nothing to speed access to remdesivir.”

Teladoc Health signed a definitive merger agreement with Livongo, the companies announcedlast Wednesday. The deal is valued at $18.5 billion; Livongo shareholders will receive 0.59 share of Teladoc stock plus $11.33 per share. Based in Purchase, N.Y., Teladoc is a leading provider of telehealth services. According to a press release, Teladoc saw its second-quarter revenue increase 85% from the same period a year ago, to $241 million, as virtual visits increased 203% to 2.8 million. Mountain View, Calif.-based Livongo is a digital chronic disease management company that went public a year ago. Livongo just reported second-quarter revenue of $91.9 million, up 125% from the same quarter of last year. The combined company is expected to record $1.3 billion in revenue this year, an estimated 85% increase compared with last year. The boards of both companies unanimously approved the deal, which is expected to close by the end of the year, pending regulatory and shareholder approval.

CVS Health reporteda profit of $2.98 billion for the second quarter, reflecting a year-over-year increase of nearly 55%. Reported revenue for the period was $65.3 billion, a 3% increase compared with the same period in 2019. While lower foot traffic in CVS stores led to a decrease in retail sales and prescriptions, CVS Health’s quarterly revenue from its payer segment — which includes Aetna — was up more than 6% compared with last year’s second quarter, at $18.5 billion. Substantial growth in Medicare Advantage and Medicaid memberships, along with the sharp decline in elective surgeries, contributed to the increase, though membership in commercial plans took a dive as a result of ongoing unemployment.

Johnson & Johnson (J&J) could receive more than $1 billion in a deal with the federal government to provide 100 million doses of its investigational SARS-CoV-2 vaccine if it is OK’d for use. J&J’s Janssen Pharmaceutical Companies signed an agreement with the Biomedical Advanced Research and Development Authority (BARDA) to provide the vaccine “at a global not-for-profit basis for emergency pandemic use,” J&J stated in a news release, with an options for the federal government to purchase an additional 200 doses under a subsequent agreement. J&J was allotted $456 million in government funding to support research, development, and manufacturing scale-up efforts for the experimental vaccine, which the company announcedrecently has entered human trials in the U.S. and Belgium.

Horizon Healthcare Services and Prime Therapeutics are partnering with Amazon’s PillPack to make it easier for Horizon members who take multiple medications to fill and manage their prescriptions. Horizon is New Jersey’s largest health insurer; Prime Therapeutics is Horizon’s pharmacy benefit manager. Horizon members who choose the services available through PillPack can opt for “user-friendly multi-dose packages,” get estimated out-of-pocket cost information before having their prescriptions filled, and decide how and when their medicines are delivered, Prime Therapeutics said in apress statement.

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