Health Law & Policy Matters

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CMS Call Letter: Medicare Advantage Contracting Considerations

Posted in Payors & PBMs, Reimbursement

As a final addition to our series on the 2016 Draft Call Letter, we highlight some of the MA contracting issues raised by the Centers for Medicaid and Medicare Services (“CMS”). Specifically, CMS (1) recommends Medicare Advantage Organization (“MAO”) contract consolidation, (2) MA application changes related to MAOs operating contracts that may not meet minimum enrollment standards, and (3) a two-year prohibition for terminated or non-renewed contracts.

Contract Consolidation

CMS used the Call Letter to encourage MAOs operating more than one contract of the same product type under the same legal entity to consolidate the contracts under a single contract for CY 2016.  Note though, that MAOs are not permitted to consolidate contracts of different product types.

MAOs seeking to consolidate multiple contracts under the same legal entity should submit a formal request that follows the specific guidance provided via an HPMS memorandum dated February 6, 2015 and includes the following:

  1. How the MAO came to operate more than one contract of the same plan type;
  2. The contract(s) to be consolidated and the contract ID into which the MAO wishes to consolidate the contract(s);
  3. The service area covered by the contracts;
  4. The plan types under the contracts; and
  5. Any pending applications under the contracts.

Requests to consolidate contracts for CY 2016 must be received by April 15, 2015 and MAOs can expect to be notified regarding the approval or denial of consolidation requests by May 2015. Continue Reading

Mother Nature Axes 340B Hearing, But Written Testimony Survives

Posted in Payors & PBMs, Pharma & Medical Devices, Pharmacies

Mother Nature claimed another victim this week.  The U.S. House of Representatives Energy and Commerce Subcommittee on Health was scheduled to hold a hearing on March 5, 2015 – Examining the 340B Drug Pricing Program But with another winter storm aimed at Washington, the hearing was cancelled.  The cancellation came after witnesses had submitted their written testimony to subcommittee staff.

The submissions came from Diana Espinosa, Deputy Administer of HRSA; Debbie Draper, Director of Health Care at the GAO; and Anne Maxwell, Assistant Inspector General for Evaluations and Inspections, HHS-OIG. Several common themes appeared in the HRSA and GAO testimony:

  1. The explosive growth in the 340B program continues. In July 2011 there were 7,000 340B contract pharmacies; as of January 2015 there were 36,000.  In 2005 there were 591 hospitals enrolled as participating covered entities; in 2011 there were 1,673, and as of January 2015 there were 2,170.  HRSA estimates that as of FY 2013, $7.5 billion was spent by covered entities to purchase 340B drugs, representing a savings of $3.8 billion.
  2. In response to the GAO’s 2011 report critical of HRSA’s 340B oversight, HRSA implemented two of GAO’s recommendations: (i) instituting audits of covered entities, and (ii) clarifying non-discrimination policies. But two other GAO recommendations: (i) clarifying hospital eligibility requirements, and (ii) clarifying the definition of a 340B “patient” have yet to be acted on by HRSA.
  3. HRSA planned to address the two unimplemented recommendations in an omnibus regulation that it had intended to issue in June 2014. But confirming prior speculation, the HRSA testimony admits that last summer’s federal court ruling striking HRSA’s orphan drug rule is what caused HRSA to pull back the omnibus regulation and reexamine its regulatory authority.

Continue Reading

CMS Call Letter: Provisions Related to Dual Eligible and Low Income Subsidy Individuals

Posted in Payors & PBMs, Pharma & Medical Devices, Reimbursement

For the last of our series on the 2016 Draft Call Letter, we focus on the provisions impacting plans serving Medicare-Medicaid, or dual eligible, enrollees. As we have previously posted, the Centers for Medicare & Medicaid Services (CMS) has struggled with how to provide high quality, seamless care to dual eligible individuals. Through the 2016 Draft Call Letter, CMS further attempts to ease administrative burdens and provide incentives for plans to better integrate Medicare and Medicaid services. Specifically, the 2016 Draft Call Letter i) proposes changes to the Star Ratings program to reduce the weight of certain measures whose outcome may be impacted by dual status; ii) introduces a potential integrated Star Ratings system for Medicare-Medicaid Plans (MMPs); and iii) requests comments on providing certain administrative flexibilities to allow Dual Eligible Special Needs Plans (D-SNPs) to better integrate services. The Draft Call Letter also provides the annual updates to Low Income Subsidy (LIS) costsharing amounts and the Fully Integrated Dual Eligible (FIDE) Special Needs Plans (SNP) frailty adjustments.

Star Ratings Weights

The most notable provisions of the 2016 Call Letter impacting plans providing care to dual eligible individuals are those related to the Star Ratings program, which we covered in-depth in Monday’s post. As we discussed, this fall CMS released a Request for Information soliciting research showing that plans with a high proportion of dual eligible or LIS enrollees are disadvantaged under the Star Ratings program. CMS released many of the submissions last week, as well as its internal research and analyses. From this research, CMS found that, although there is no evidence to “definitely” identify low-income status as driving the differences in Star Ratings, there may be a correlation between dual/LIS status and the outcomes of a subset of measures. Specifically, after examining 19 of the 46 Parts C and D Star Rating measures, CMS found that LIS/dual status had an impact on the outcome of nine of those measures. For seven of the nine, CMS is proposing to reduce the weight of the measure by half. The measures include: breast cancer screening, colorectal cancer screening, diabetes care – blood sugar controlled, osteoporosis management in women who had a fracture, rheumatoid arthritis management, reducing the risk of falling, and medication adherence for hypertension (for Part D Plans (PDPs) only). This adjustment is proposed for all plans, regardless of a contract’s percentage of dual and/or LIS enrollees.

Please refer to Monday’s post for additional information on these and other proposed changes to the Star Ratings program. Continue Reading

MA Risk Adjustment in the 2016 Call Letter and … in Health Care Fraud Charges

Posted in Fraud & Abuse, Health Care Reform, Payors & PBMs, Physicians, Reimbursement, State & Federal Audits, Investigations & Litigation

In past Call Letters, CMS has proposed and finalized significant changes to the Medicare Advantage risk adjustment system including, recalibrations, deletions and additions of diagnoses codes, and questioning of the value of in-house health risk assessments. This year’s Call Letter did not include any major changes to risk adjustment, but nevertheless the Call Letter  includes important risk adjustment information for MA plans.

First, for 2016, CMS has proposed to fully transition to use of the clinically revised CMS-HCC model introduced in 2014. This could have a significant impact on some plans’ overall risk scores, but many plans have likely been tracking their data in the clinically revised model in anticipation of this change. Alongside this change, CMS proposes to calculate each risk score using two scores, one from RAPS accounting for 90% of the score and one from EDS accounting for 10% of the score.

Second, CMS is asking for comments on proposed methods for calculating the MA coding pattern adjustment. CMS believes that MA enrollees are on average no different than Medicare fee-for-services (“FFS”) beneficiaries and therefore, beginning in 2017, is considering establishing a method to ensure that aggregate payments to MA plans are no greater than those that would have been made under the adjusted average per capita costs payment system used prior to 2000, which was prior to risk adjustment. Plans should carefully consider how this proposed methodology would affect their aggregate reimbursement and consider submitting comments to CMS. Continue Reading

CMS Call Letter: Pharmacy Network Implications

Posted in Payors & PBMs, Pharma & Medical Devices, Pharmacies

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.

  1. CMS will publish information on preferred pharmacy network access levels for each plan offering a preferred cost-sharing benefit structure.
  2. 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

Highlights From the FTC – DOJ Workshop Examining Health Care Competition

Posted in Accountable Care Organizations, Antitrust, Health Care Reform, Hospitals & Health Systems, Mergers, Acquisitions & Other Transactions, Payors & PBMs, Physicians

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.

In Case You Missed It: Health Care Enforcement in 2015 Webinar

Posted in Fraud & Abuse, Hospitals & Health Systems, Payors & PBMs, Pharma & Medical Devices, Pharmacies, Physicians, State & Federal Audits, Investigations & Litigation

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:

  1. 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.
  2. 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.
  3. 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.

Webinar Video

Webinar Video

Webinar PDF

Webinar PDF

CMS Call Letter: Changes to and Implications of Star Ratings

Posted in Health Care Reform, Payors & PBMs, Reimbursement

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

Supreme Court Rejects Antitrust Immunity for North Carolina Dental Board

Posted in Antitrust

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.

CMS Releases 2016 Draft Call Letter

Posted in Payors & PBMs, Pharma & Medical Devices, Pharmacies, Reimbursement

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