This week, in their “Future of the Affordable Care Act” series on our Employment Matters blog, my colleagues Alden Bianchi and Edward Lenz provided an analysis of the major provisions of the American Health Care Act (“AHCA”).

Introduced on March 6, 2017, the AHCA is the first concrete legislative proposal detailing the initial provisions designed to repeal and replace the Affordable Care Act.  As Alden and Ed discuss, the bill currently is the subject of widespread media scrutiny and intense criticism.  The bill is not final and will likely face numerous changes, including the last minute proposals changes of the past 48 hours.  The March 6th version offers an outline of Republican priorities in the regulation of health and health care financing, which include a strong bias in favor of market-based solutions and aversion to most (but not all) government intervention in the health care markets.

Check out their full analysis on The Future of the Affordable Care Act Week 7: The American Health Care Act, here. Continue Reading Future of the Affordable Care Act and the American Health Care Act

Last week, Senate Finance Committee Ranking Member Ron Wyden (D- Ore.) introduced the “Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act of 2017.”  As its name suggests, it seeks to require parties (e.g., PBMs) that contract with pharmaceutical manufacturers for drug rebates to be more transparent regarding the rebates they receive on behalf of their health plan clients, specifically Part D plans and qualified health benefit plans that participate on ACA Exchanges (“Exchange Plans”). The Act would: (1) require the Secretary of the Department of Health & Human Services (HHS) to make available on its website the PBM transparency data submitted by PBMs that contract with Part D Sponsors or Exchange Plans, (2) require the Secretary of HHS to adopt a minimum percentage of drug rebates that a PBM would need to pass through to its Part D or Exchange Plan clients, and (3) amend the definition of negotiated price under the Part D program to change what price concessions would have to be reflected at the point-of-sale.  This post focuses on the first two changes.  The third change will be addressed in a separate post. Continue Reading Wyden’s C-THRU Act – Publicizing PBM Rebate Data

As the healthcare industry moves towards value-based purchasing, pay-for-performance, and other payment reform models, industry leaders have identified federal fraud and abuse laws as a barrier to full implementation of such models.  Last month, the Health Care Leadership Council released a White Paper entitled “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (“Stark”) Law to Foster Integrated Care Delivery and Payment Models” (“HCL White Paper”), identifying current fraud and abuse laws as impeding transformation of the healthcare system.  Pharmaceutical and device manufacturers have also taken advantage of the OIG’s Solicitation of New Safe Harbors and Special Fraud Alerts (“OIG Solicitation”) to advocate for more flexible fraud and abuse laws with respect to value-based arrangements. Continue Reading Pharmaceutical Manufacturers and Healthcare Leaders cite Fraud and Abuse Laws as Obstacle to Value-Based Arrangements

In a February 24th blog post, we described Medicaid block grants and per capita caps in terms of A x B = C to demonstrate how those payment policies work.  ‘A’ is the amount a state is paid per beneficiary, ‘B’ is the number of beneficiaries in a given state, and ‘C’ is the total state payment from the federal government.  We have since been asked by numerous providers to describe the nuts and bolts of how a per capita cap, the current Medicaid financing structure in the proposed American Health Care Act, would work.  For the Medicaid provider, the nuts and bolts of how they are paid would change very little while the amount they are paid might change a lot.  Continue Reading Provider Payments Under a Medicaid Per Capita Cap

Last week, the Medicare Payment Advisory Commission (the “Commission”) debated a package of policy reforms that would change the way Medicare reimburses physicians for Medicare Part B drugs. In the midst of calls to lower drug prices, the Commission has been developing its Part B reform package over the last two years and now, finally, appears poised to move forward with a vote at next month’s meeting.

Medicare Part B drugs are a multi-billion dollar benefit and typically include higher cost specialty drugs that are administered in a physician’s office on an outpatient basis. Drugs covered under Medicare Part B are reimbursed through a so-called “buy and bill” approach. That is, the physician buys the drugs and bills Medicare for their use. Medicare pays the provider the average sales price (“ASP”) of the drug plus a markup of 6% of the ASP.  The 6% markup is generally considered compensation to physicians for the storage, handling, and other administrative costs associated with these specialty drugs. Continue Reading Medicare Advisors Debate Part B Drug Payment Reforms

As we’ve previously discussed on Health Law and Policy Matters, agencies within the Department of Health and Human Services (DHHS) pushed through several final rules towards the end of the Obama Administration (see here and here). However, since taking office, President Trump has followed through on his campaign promise to significantly roll back Federal regulations and has taken several actions aimed at slowing and reversing agency regulatory processes, including processes at the DHHS sub-agencies CMS and FDA. These executive actions are creating a climate of uncertainty for regulated industries and their stakeholders. Continue Reading Trump Executive Orders Create Uncertainty for Health Care & Pharmaceutical Industries

On March 6, House Republicans revealed The American Health Care Act. It is their plan to repeal and replace the Affordable Care Act. The bill changes the structure of Medicaid financing from the Federal Medical Assistance Percentages (FMAP) system, in which states and the federal government each pay a percentage of Medicaid funding, to a per capita system.

Under current law, states get paid by the federal government for their Medicaid programs based on the amount of services they provide.  As we stated in a previous post, that has created an incentive for states to use supplemental payment streams to maximize per service revenue.  Under a per capita cap, states will be paid based on population.  They get paid for every person on their Medicaid rolls regardless of the amount of services the individuals use.  Therefore, states will now have an incentive to maximize their rolls.

This creates what we will call “The Walking Dead problem.” Continue Reading The Walking Dead in Medicaid

money_388130419Currently, state Medicaid programs have flexibility in developing payment policies, including utilizing supplemental payments and non-federal supplemental payment mechanisms. Supplemental payments pay providers above what they receive for an individual service through Medicaid provider rates.  Supplemental payments include disproportionate share hospital (DSH) and upper payment limit (UPL) payments and are a critical funding source for many safety net providers. States can fund the non-federal share of these payments through intergovernmental transfers, provider taxes, and certified public expenditures.

However, there is limited transparency and data available on supplemental payments. As a result, states can use these funding structures to increase their total federal Medicaid match. The total percentage of federal funding for each state’s Medicaid program is often referred to as the effective Federal Medical Assistance Percentage (FMAP). However, due to data limitations on supplemental payments, we do not know what any state’s effective FMAP actually is.

The American Health Care Act is the House Republican bill to repeal and replace the Affordable Care Act. Its details became available March 6th. This bill changes the structure of Medicaid supplemental payments, with the exception of DSH payments. States’ reaction to the bill will tell us more about Medicaid supplemental payments than we’ve ever known, and whether the financing system in the proposed bill will provide equivalent federal funding. Continue Reading Medicaid Supplemental Payments under The American Health Care Act

Medicaid expansion in the Affordable Care Act (ACA) required coverage of individuals with incomes from 0% of the federal poverty level (FPL) through 133% of the FPL.  The requirement to cover this group was overturned in NFIB v. Sebelius.  As a result, it is now up to states to determine whether they will offer Medicaid coverage to these individuals.  This new category of eligible Medicaid beneficiaries is often referred to as childless adults.

A number of Republicans, both governors and those in Congress, have taken to using the term “able-bodied” to refer to this group.  If you are able-boded, the theory goes, the Medicaid program should reasonably expect you to work. As a result, some Medicaid expansion and Medicaid reform proposals have included work requirements as an eligibility criteria for Medicaid. We can expect this topic to continue to be raised as we get deeper into ACA reform. Continue Reading Who Are the Medicaid Able-Bodied?

6350-Pharma-Summit-blog-buttonThe pharmacy industry continues to be under scrutiny from all angles.  As legislative, agency, and enforcement priorities take shape under the new administration, the industry is faced with what seems like daily developments in terms of policy updates, legislation, and potential regulation.  Our 2017 Pharmacy Industry Summit will bring together stakeholders and thought leaders from across the industry to discuss legal and policy challenges facing manufacturers, PBMs, payors, pharmacies, and providers and to assess the various swirling initiatives and their potential impact on the industry.

The Summit will be held on April 5-6 at the Mintz Levin Washington, DC office.  Event details can be found here.

Session topics will include:

  • A Keynote Address from Mark Merritt, President and CEO of The Pharmaceutical Care Management Association (PCMA)
  • An update on the current state of Affordable Care Act Reform
  • Drug Pricing Debate and the Evolving Role of Pharmacy Industry Players
  • State Issues Affecting the Pharmaceutical Industry
  • Congressional Staffer Panel
  • Value-Based and Innovative Contracting and Reimbursement
  • FDA’s Impact on the Supply Chain – Evolving Policies and Changing Priorities
  • Government Enforcement and the Pharmaceutical Industry

We hope you can join us! Please register by March 29, 2017.