As part of our continuing series on CMS’s 2016 Call Letter, we take a closer look at the provisions in the Call Letter affecting PBM and plan sponsor pharmacy networks. In the Call Letter, CMS raises concerns about preferred pharmacy networks and maximum allowable cost (MAC) pricing, and also provides clarifying guidance on mail order pharmacy auto-ship policies.
Preferred Pharmacy Networks
Preferred pharmacy networks create financial incentives for members to utilize preferred pharmacies where their out-of-pocket costs will be lower and where their plan sponsor receives reduced pricing. Preferred pharmacy networks have experienced significant growth in the past few years and have been the subject of criticism. In 2014, CMS proposed regulations that would have significantly limited the benefits of preferred networks. However, in the wake of sharp criticism from industry stakeholders, CMS withdrew its proposed regulation of preferred networks.
In response to complaints that plan sponsors have not provided enrollees with reasonable access to preferred cost-sharing pharmacies, CMS engaged a contractor to study the issue and found that some beneficiaries residing in all types of geographic areas, but particularly in urban areas, face limited or no access to preferred pharmacy networks. While CMS does not propose to establish access standards for preferred pharmacy networks, it does intend to take a two-pronged approach to ensure that plan marketing materials are not misleading with respect to the availability of preferred pharmacies.
- CMS will publish information on preferred pharmacy network access levels for each plan offering a preferred cost-sharing benefit structure.
- During bid review and negotiation, CMS will work with plans whose preferred networks are outliers (i.e., bottom 10th percentile compared to all Part D plans in a given geographic type) to either increase access or prevent marketing of such networks in areas where the benefit is not meaningfully available.
CMS indicates it will continue to monitor access levels and may consider broadening its outlier review. Continue Reading
Last week, the Federal Trade Commission and the Department of Justice co-hosted the second installment of their public workshop series, “Examining Health Care Competition.” The agencies’ goal for the workshop was to identify and examine the potential competitive implications of strategies currently used by providers and payors seeking to reduce costs and improve quality.
In an Alert, Farrah Short of Mintz Levin’s antitrust practice has summarized the workshop’s discussions, which were informed by distinguished panelists from academia, government, and the private sector and focused on a broad range of policy positions. Click here to read the full Alert.
The agencies are accepting public comments in response to the workshop until April 30, 2015.
Earlier this month, Mintz Levin’s Hope Foster and Bridget Rohde hosted a webinar entitled “Health Care Enforcement in 2015: A Look Back on 2014 and Forecasting the Year Ahead.” A video recording of the webinar, along with an accompanying PDF, can be found below.
The webinar provides a detailed look back on the health care enforcement efforts of 2014, by focusing on three core areas:
- Criminal Prosecutions. The webinar addresses the high priority that DOJ officials are giving to their health care enforcement efforts, highlighted by U.S. Attorney Loretta E. Lynch underscoring the importance and effectiveness of DOJ’s Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) and the Medicare Fraud Strike Force (“Strike Force”). Hope and Bridget identify and discuss four notable characteristics of the 2014 Strike Force prosecutions: the geographic breadth of the prosecutions, the variety of the providers and medical professionals targeted, the types of charged crimes (including both fraud and financial crimes), and the wide-ranging penalties that have included stiff sentences and hefty fines. For example, the presenters discuss the case of ArthroCare Corporation, a medical device manufacturer, in which the DOJ was able to obtain 20 year and 10 year prison sentences against the CEO and CFO, respectively.
- Joint Civil and Criminal Matters. Hope and Bridget discuss notable criminal and civil resolutions, including a massive civil and criminal action against Endo Health Solutions, Inc., and its subsidiary Endo Pharmaceuticals, Inc. (collectively, “Endo”). In response to criminal and civil allegations related to Endo’s off-label promotion of its drug Lidoderm, Endo paid $193 million and entered into a corporate integrity agreement.
- Civil Enforcement. The webinar also focuses on the continued role of the False Claims Act as the government’s primary civil remedy, with recoveries totaling $2.3 billion in 2014. Also discussed is the extraordinary increase in the number of whistleblowers coming forward as qui tam relators.
After discussing the three areas above, the presenters provide insight into the likely trends of health care enforcement in 2015.
In its February 20, 2015 Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter, CMS addressed a variety of issues relating to its Star Ratings system. The three most notable being (1) changes and new considerations in the Star Ratings system, (2) an announcement of the quality bonus payment percentage, and (3) the establishment of the timeline under which plans will receive notification that their contracts will be terminated as a result of having three consecutive years of star ratings below three stars. The topics themselves demonstrate that the information in the Call Letter sets the stage for plans to be very big winners or very big losers.
Changes to the System
The most noteworthy announcement related to Star Ratings in the Call Letter is CMS’s discussion of whether plans with a high percentage of dual eligibles and/or low income subsidy (LIS) enrollees are disadvantaged by the current Start Ratings system when compared to plans that do not serve a large duals or LIS population. CMS had previously released a Request for Information that gave interested parties the opportunity to provide analysis and research that demonstrated that dual status negatively impacts Parts C and D quality measures. CMS received multiple comments from a variety of entities relating to this topic and conducted its own extensive research, and while it seems to still be questioning the causal link, has proposed to reduce the weight of six Part C measures and one Part D measure for all plans. The affected Part C measures are: breast cancer screening, colorectal cancer screening, diabetes care – blood sugar controlled, osteoporosis management in women who had a fracture, rheumatoid arthritis management, and reducing the risk of falling. The affected Part D only (not MA-PD) measure is medication adherence for hypertension. CMS recognized that after additional research, it may be appropriate in the long term to adjust Star Ratings where scientific evidence supports that certain measures are impacted by factors including comorbidities, disability, or duals/LIS status. CMS also announced that it is considering developing an integrated Star Ratings system for the Financial Alignment Initiative Medicare-Medicaid Plans (MMPs).
Like last year, CMS included a detailed discussion of changes that will be made to certain measures that comprise the Star Ratings system. Significantly, as proposed in the 2015 Call Letter, CMS has decided to remove pre-determined 4-star measure thresholds for the 2016 Star Ratings. This change impacts 22 Part C and 5 Part D measures. CMS explained that it has seen plans achieve greater improvements in measures without pre-determined 4-star thresholds and believes that the thresholds can sometimes skew ratings when plans are close to the threshold but fall on different sides of the line.
Some of the measures that are being added, returning, or adjusted include the following categories: MTM completion rate for comprehensive medication reviews (Part D), breast cancer screening, beneficiary access and performance problems (Parts C and D), controlling blood pressure (Part C), timely decisions about appeals (Part C), all-cause readmissions (Part C), complaints about plans (Parts C and D), and certain medication adherence measures relating to diabetes medications, hypertension, and cholesterol. The Call Letter also lists measures that are being retired or temporarily removed. Continue Reading
On February 25, 2015, in a 6-3 decision authored by Justice Kennedy, the Supreme Court upheld the Federal Trade Commission’s decision finding that the North Carolina Board of Dental Examiners, although a state agency, was not exempt from federal antitrust laws when it sent 47 official cease-and-desist letters to non-dentist teeth whitening service providers.
Mintz Levin’s Bruce Sokler and Helen Kim have prepared an Alert that reviews the Supreme Court’s reasoning in North Carolina State Board of Dental Examiners vs. FTC, which makes it clear that unless state agencies or boards made up of market participants are acting under the direct supervision of the state, their anticompetitive activities are not protected. Click here to read the full Alert.
Last week, the Centers for Medicare & Medicaid (CMS) released its 2016 Advance Rate Notice and draft Call Letter (2016 Call Letter) for the Medicare Advantage (MA) and Medicare Part D programs. The 2016 Call Letter outlines proposed changes to the Part C risk adjustment and Part D payment methodologies, as well as policy modifications for calendar year 2016. With the final 2016 Call Letter to be released April 6, 2015, CMS is providing interested stakeholders until next Friday, March 6th to provide comments.
Starting on Monday, we will offer a 5-part series analyzing several key provisions of the 2016 Call Letter that could have a significant impact on plans, PBMs, pharmacies, and providers in the coming year. This series will cover the following provisions of the 2016 Draft Call Letter: (i) Star Ratings; (ii) PBM and Pharmacy Issues; (iii) Risk Adjustment; (iv) D-SNPs, MMPs, and Low-Income Subsidy Issues; and (v) MA Contracting Issues. Continue Reading
ML Strategies has posted its weekly Health Care Update. This publication provides timely information on the Affordable Care Act implementation and other federal regulatory initiatives, and covers other updates affecting the health care industry.
With less than one week until arguments in King v. Burwell, the IRS is in the spotlight as lawmakers deliberate potential outcomes if the Supreme Court does not uphold the constitutionality of federal tax subsidies for individuals in states that did not create their own health care exchanges. This comes on the heels of Secretary Burwell’s announcement that about 11.4 million consumers selected a plan or re-enrolled through the health insurance exchanges since the beginning of this year’s Open Enrollment under the Affordable Care Act.
The update also highlights the public health workshop held this week by the DOJ and FTC, examining competition and reviewing provider frameworks and network organization, along with changes in payment models. As we mentioned here yesterday, Mintz Levin’s Dionne Lomax took part in a closing roundtable at the workshop. Stay tuned to this blog for takeaways from the two-day event.
Click here to read this week’s full Health Care Update.
The U.S.’s pursuit of lower health care costs and higher quality health care services has included the incentivizing of new organizational structures and payment models that trigger long standing concerns about maintaining competition in the health care system. As a result of these developments, the Federal Trade Commission and the U.S. Department of Justice is hosting its second “Examining Health Care Competition” public workshop. The workshop could not be more timely: earlier this month, the Ninth Circuit Court of Appeals affirmed a district court’s ruling that the merger of St. Luke’s Health Systems, Ltd. and Saltzer Medical Group violated Section 7 of the Clayton Act, agreeing with the district court that the anticompetitive effects outweighed the potential efficiencies of the merger.
The workshop began yesterday and continues through this evening. It will be exploring five main themes:
- early observations regarding accountable care organizations;
- alternatives to traditional fee-for-service payment models;
- trends in provider consolidation;
- trends in provider network and benefit design strategies; and
- early observations regarding health insurance exchanges.
Mintz Levin’s Dionne Lomax will be participating as a panelist in tonight’s Summation Roundtable in which the various panelists will discuss the antitrust implications of evolving provider and payment models. Today’s workshop events, including Dionne’s panel at 5:30pm tonight, can be streamed live from the FTC’s website. Video of both days as well as transcripts of the entire event will also be available.
Last week, the Florida Senate Health Policy Committee removed language from proposed telehealth legislation that would require Medicaid reimbursement for telemedicine services at the same rates as face-to-face examinations. Disagreements over compensation for telemedicine services were a major sticking point and a key reason a telemedicine bill did not pass the Florida Legislature last year. The revised bill defines telehealth as the use of synchronous or asynchronous telecommunications to perform services that include, but are not limited to:
- Patient assessment;
- Transfer of medical data; and,
- Provision of patient and professional health related education.
Explicitly excluded from the definition of telehealth are audio-only transmissions, email messages, or facsimile transmissions. A telehealth provider is prohibited from solely using telehealth to prescribe lenses, spectacles, eyeglasses, contact lenses, or other optical devices or prescribe based solely on the use of a computer-controlled device such as an autorefractor. Additionally, controlled substances may not be prescribed through telehealth for chronic non-malignant pain, but a physician may use telehealth to order a controlled substance for an inpatient admitted to a licensed hospital or to a hospice patient.
The bill also clarifies that all health care practitioners as defined under Section 456.001 of the Florida Statutes as well as naturopaths, nursing home administrators, radiological personnel, EMTs and certified paramedics may provide services via telehealth. Consistent with the telemedicine regulations promulgated by the Florida Board of Medicine last year, the bill provides that the standard of care for services delivered via telehealth must be comparable to in-person health care services. Telehealth providers must also maintain patient records that are comparable to the records that must be maintained for in-person services.
The Centers for Medicare & Medicaid Services (CMS) recently announced a one-year delay in finalizing the long-awaited and closely watched rule addressing the 60-day deadline to return Medicare and Medicaid overpayments (the “60-day rule”). In its notice, CMS acknowledged that it must address “significant policy and operational issues” before finalizing a workable 60-day rule. As a result of “exceptional circumstances” (including more than 400 public comments), “internal stakeholder feedback,” and ongoing collaboration with both the Office of Inspector General for the Department of Health and Human Services and the Department of Justice, CMS will publish the final 60-day rule more than three years after it published the proposed rule.
As background, the 60-day rule will implement Section 6402(d) of the Affordable Care Act (ACA), which created section 1128J(d) of the Social Security Act requiring a person or entity who has received an overpayment to report and return the overpayment to the appropriate entity by the later of: (1) 60 days after the date on which the overpayment was identified; or (2) the date any corresponding cost report is due (if applicable). Significantly, the ACA also made retaining an overpayment past the 60-day deadline an “obligation” under the False Claims Act’s (FCA) “reverse” false claim provision and therefore the basis of FCA liability. As a result, the contours of the final 60-day rule will have a substantial bearing on the scope of FCA liability.
CMS published a proposed rule three years ago on February 16, 2012, which my colleague Karen Lovitch discussed in detail in a blog post. One central, thorny issue that may be causing the delay in finalizing the 60-day rule is how to define when an overpayment has been “identified” and the 60-day clock starts to run. The proposed rule defined the term “identified,” but left many questions unanswered. According to the proposed rule, an overpayment is “identified” if the provider or supplier has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment. This definition is consistent with the definition of “knowledge” under the FCA but may be difficult to apply in practice.