Study Finds Medicare ‘DIR Fee’ Legislation Would Save Government Billions: Eliminating retroactive pharmacy payment reductions — or post point-of-sale pharmacy “DIR fees” — in Medicare Part D would save the federal government $3.4 billion over 10 years, according to a Wakely Consulting Group study released today by NCPA. The report evaluates the impact of enacting the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (H.R. 1038/S. 413), which prohibits retroactive pharmacy payment reductions on “clean claims” (those without any defect, impropriety or fraud) in Medicare Part D.
Among the key findings of the study:
- The elimination of retroactive pharmacy payment reductions (a portion of DIR, or direct and indirect remuneration), and instead shifting them to equivalent point-of-sale price concessions, would save the federal government $3.4 billion in Part D payments made to plan sponsors between 2018 and 2027.
- CMS would spend less on federal reinsurance and low-income cost-sharing subsidies. The presence of additional discounts would contribute to lower total drug costs at the point-of-sale. This would decrease the federal government subsidy of low-income cost-sharing amounts while keeping low-income patient pay amounts relatively steady.
- The decrease in total drug cost at point-of-sale would also lower the amount of claim dollars in the catastrophic phase of the Part D benefit, because claims and amounts accumulating toward the true out-of-pocket catastrophic threshold would be lower.
PBMs have erroneously claimed that making any changes to DIR fees will drive up costs, both for the government and beneficiaries. However, the Wakely analysis, which included scenario testing of key assumptions, makes clear that eliminating retroactive pharmacy DIR fees would reduce overall prescription drug costs for the government, and patients would see savings at the pharmacy counter. Wakely Consultants calculated that any minor increase in beneficiary premiums would be largely offset by out-of-pocket savings at the pharmacy counter. In sum, taking into account both lower patient copays or cost-sharing and slightly increased premiums, beneficiaries may see an increase in net costs of 0.15 percent per year or a 1.5 percent increase in net costs over the course of 10 years.
Senate Ends Attempt at ACA Repeal: Senate Republicans scrapped efforts to consider legislation authored by Sens. Lindsay Graham (R-S.C.) and Bill Cassidy (R-La.) to repeal the Affordable Care Act (ACA), putting an end, for now, to the GOP’s seven-year campaign promise to dismantle the health care law. The decision was reached earlier last week after it became clear the plan would fail with several Republican Senators opposing the legislation.
HHS Secretary Price Resigns: Health and Human Services Secretary Tom Price resigned this week after taking private and military jets at taxpayer expense while heading the agency. President Trump designated HHS Deputy Assistant Secretary Don Wright of Virginia as acting secretary. Those rumored as possible successors are current CMS Administrator Seema Verma and FDA Commissioner Scott Gottlieb.
Republicans Turn to Tax Reform: The White House and congressional leaders rolled out the framework of their plan to overhaul the tax code. The “Unified Framework for Fixing Our Broken Tax Code” (“Framework”) from the so-called Big Six – i.e., Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, House Speaker Paul Ryan (R-WI), House Ways and Means Committee Chairman Kevin Brady (R-TX), Senate Majority Leader Mitch McConnell (R-KY), and Senate Finance Committee Chairman Orrin Hatch (R-UT) –sketched out the basic structure for tax reform legislation that is expected to be considered by Congress over the coming months. Several provisions of the plan are beneficial to NCPA members:
- “Tax Rate Structure for Small Businesses”: The Framework sets “the maximum rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%.” The Framework “contemplates that the committees will adopt measures to prevent the re-characterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate.”
- “Death and Generation-Skipping Transfer Taxes”: The Framework “repeals the death tax and the generation-skipping transfer tax.”
- “‘Expensing’ of Capital Investments”: The Framework permits immediate expensing of “the cost of new investments in depreciable assets other than structures made after September 27, 2017, for at least five years.” Additionally, the Framework states that the “committee may continue to work to enhance unprecedented expensing for business investments, especially to provide relief for small businesses.”
While these provisions are a positive step, this is the beginning of a long process where several details will need to be addressed through the legislative process for such a major undertaking. NCPA will remain engaged with the Administration and Congress to ensure that meaningful reform includes small business concerns.
Senate Passes Chronic Care Bill: A bill to improve care for chronically ill Medicare beneficiaries through an assortment of changes passed the Senate Sept. 26.
The CHRONIC Care Act (S. 870) takes a broad approach to tackling high spending for chronic conditions. Changes are spread across fee-for-service Medicare, Medicare Advantage, and accountable care organizations. The bill’s provisions include extending and expanding an Affordable Care Act home care program, called Independence at Home, and would allow beneficiaries receiving home dialysis to get assessments through telehealth services. Some provisions of the bill have been included in individual House bills, but no House committees have prepared similar legislation. Of importance to NCPA members, the legislation requires a study on medication synchronization, among other provisions. We have weighed in on the legislation and will continue to track its progress.
Premiums for Medicare Advantage and Part D Drug Plans to Decrease Slightly: The average monthly premium for a Medicare Advantage plan will be $30 in 2018, a 6-percent decline from this year. CMS expects 20.4 million Medicare beneficiaries — just over a third of all enrollees — to choose private plans for next year.
The number of Medicare Advantage plans available nationwide will increase from about 2,700 to more than 3,100. The average premium for prescription drug coverage in 2018 will be $33.50 — down from $34.70 this year. It’s the first time that premiums have declined since 2012. Medicare open enrollment runs from Oct. 15 to Dec. 7.
CMS to Extend Open Enrollment Periods: CMS will extend both Medicare and Obamacare open enrollment periods for people affected by Hurricanes Harvey, Irma and Maria. People who live in counties declared disaster areas by FEMA can now enroll in federal health plans until the end of the year. CMS had already extended re-enrollment deadlines and waived co-pays for Medicaid and CHIP beneficiaries in hurricane affected areas, but this year has sharply cut the Obamacare open enrollment period.
USP Delays Chapter <800> Until December 1, 2019: USP announced Friday their intent to postpone the official date of General Chapter <800> Hazardous Drugs – Handling in Healthcare Settings. The announcement has implications for both USP <800> and USP <797> Pharmaceutical Compounding – Sterile Preparations. The intent of the USP Expert Committee is to align Chapters <800> and <797>, providing a unified approach to compounding. The next revision to General Chapter <797> is anticipated to be published in September/October 2018 for a second round of public comment. Both USP General Chapter <797> and USP General Chapter <800> are anticipated to become official on December 1, 2019. Sections of the revised <797> may have longer implementation dates that will allow time for adoption of the standard. NCPA welcomes this delay and will continue to work to educate State Boards of Pharmacy, who have full oversight of USP, about the impacts to community pharmacies and patients.
FDA Releases Outsourcing Facility Product Report: FDA Commissioner Scott Gottlieb released an outsourcing facility product report that provides a list of the compounded drugs that pharmacies registered as outsourcing facilities (503Bs) have produced. FDA is making the list public “to help the medical community in their efforts to identify and access specific compounded drug products from facilities that are required to follow current good manufacturing practice standards.” The FDA Commissioner has also stated in a recent article that “FDA would release draft guidance in the next two months reflecting its intention to adjust its enforcement priorities [for outsourcing facilities] based on the size of registered compounders and the riskiness of their products.” FDA views this upcoming draft “503B-lite” guidance as a potential incentive to get more pharmacies compounding under 503A to register as 503Bs. NCPA will continue to provide FDA with compounds that are needed and cannot always be provided by 503B outsourcing facilities.
