HHS regulations with lasting impact on prices and reimbursement of medical services and technologies

The Trump Administration’s grandiose health care plans did not materialize, such as the promised repeal and replacement of the Affordable Care Act, a promising revision of the prescription drug reimbursement system, and a schedule international price targets for Medicare Part B drugs (administered by a physician). Nonetheless, the Azar Secretary’s Department of Health and Human Services (HHS) and the Verma Administrator Centers for Medicare and Medicaid Services (CMS) have implemented a number of high-profile regulations that could lead to lasting impact on prices and reimbursement of medical services and technologies.

For more than a decade, policymakers have called for the health care system to move toward prices based on the value of medical services and technologies. Nevertheless, the shift from a size to a value-based pricing system has taken place at a snail’s pace, particularly in the pharmaceutical and machinery sectors. A number of barriers have prevented pricing based on the implementation of value; among others, Medicaid’s preferred pricing rule, lack of billing and price transparency, and complex and often obsolete and reimbursable pricing of medical devices and diagnostics.

The HHS Department has addressed these issues – with CMS at the forefront of much of the effort – and has created a series of regulatory changes.

Best Medicaid Price

At the end of December 2020, CMS issued a final rule change to change Medicaid’s best price regulation to the modern era of value-based pricing. Instead of just allowing one optimal price for each drug covered by Medicaid, CMS allows for arrangements where there can be more than one price for a drug.

In 1990, Congress established the Medicaid drug reimbursement program. In exchange for promising that their drugs will be reimbursed by Medicaid, pharmaceutical manufacturers have to make refunds to states. Since 1990, the Medicaid statutory rebate ensures that states receive discounts for brand-name drugs of 23.1% of the average manufacturer’s price (AMP), or the difference between the AMP and the “best price”. , ”Whatever is greater. Here, the best price is defined as the lowest price available from any wholesaler, retailer, or supplier, except for specific government programs, such as the Veterans Affairs Department program. .

Optimal pricing conditions can hamper the efforts of manufacturers and payers to seek value-based contractual arrangements. Osbarr is a manufacturer offering a money back guarantee to a payer in case the treatment it sells is not effective. This means that a Medicaid optimal price of zero dollars could result if the treatment did not work, which in turn would require the drug to be provided free of charge to all Medicaid programs. state.

The CMS rule aims to enable value-based product contracts between payers and drug dealers, which so far have taken up little acceptance, due in part to the best price control barrier. The new rule, which could take effect as early as March 1, 2021, allows manufacturers to report a number of “best prices” for a cure if the prices are tied to a single price adjustment based on value or more. In particular, in determining their best price on a product, manufacturers can “offer the discounts proportionately under a price-based price adjustment, based on actual patient products over the total dollar value of the drugs. given to all patients under that arrangement. “On the other hand, manufacturers can report an optimal price range, depending on the different discounts included in the price adjustment. based on value.

Critics of the regulatory change have urged CMS to “protect and strengthen the statutory rebates that drug manufacturers pay to Medicaid. “In particular, there is concern that the changes would mean the removal of optimal price discounts, crucial to ensuring that prescription drugs are accessible to the Medicaid program.

While CMS says the intention is to lower contractual agreements based on the value of drug prices, the government admits this is uncertain. In fact, value-based contractual arrangements may not be aimed at lowering prices. They are more cunning than that; they are about aligning price and value.

In announcing the regulatory change, CMS Administrator Seema Verma has made it clear that the new rule needs to be viewed as a tool that will enable value-based pricing adjustments. These tools will move us away from our usual drug price conversations – which are usually based on quantity. [towards] … Negotiation of outcomes. ”

Transparency prices

Since the inception of the Trump Administration, the establishment of price transparency has been a cornerstone of HHS Department’s set of strategic initiatives to improve health care market activity.

In October 2020, HHS finalized a rule on health insurance price clarity. The rule requires most private health insurers to start posting their bargaining rates by 2022. Secretary Azar said the rule applies to health plans that cover around 200 million Americans will soon have “real-time access to bargaining price and cost-sharing information, starting with a list of the top 500 health care services purchased in 2023.” In 2024, the rule will apply to all health care items and services.

In addition to the shopping tool, the provisions of the rule include requiring health plans to make pricing information publicly available through three data files beginning January 1, 2022. The first file calculating intranet prices for each item and service and across all healthcare. providers. The second file lists prices for out-of-network healthcare providers. Finally, the third file posts intranet prices for all prescription drugs, in addition to their historical net prices, which outlines discounts and other discounts received by health plans and store benefit managers. -medicine.

And, on January 1 this year, a new CMS rule was implemented requiring hospitals to publish the prices (estimates) they will negotiate with insurers for at least 300 “purchase” medical procedures. Prior to that, these prices had been property. Prices (estimates) of these items must now be provided in an easy – to – read format, so that patients can look around for what they see as the best value.

Medicare coverage of innovative technology

On January 12, 2021 CMS terminated the Medicare Innovative Technology Coverage (MCIT) rule that seeks to eliminate the loophole between Food and Drug Administration (FDA) licensing for medical devices marked with “breach” status. ”, And a CMS license based on a“ reasonable ”and“ necessary ”decision for the purpose of Medicare coverage decisions.

The MCIT rule provides immediate Medicare coverage for all FDA-approved devices as a “breach” for the first four-year period. During this time, manufacturers are expected to develop strong global evidence. They can submit this data to CMS before the end of the four years to ensure full and continuous coverage of their medical devices.

Critics of the MCIT rule have argued that, in the absence of evidence of the impact of breakers on real-world products, it may not be eligible to offer automated coverage following FDA approval. It also restricts those who pay levers as prices can be set independently of added value.

However, CMS may have been trying to rectify a situation where many diagnostics and tools have had many price and reimbursement challenges over the years; more than prescription drugs. For molecular judgment, for example, cost – based reimbursement or code stacking – increasing the cost of each individual step required to perform a particular test – has limited manufacturers’ ability to limit prices by value. .

In recent years, not only has CMS agreed to broadcast and pay for a large number of diagnostics and innovative medical devices, such as continuous glucose monitors for diabetics, it has also reimbursed rates strengthen for outcomes that are considered high value. For example, CMS has provided a Medicare add-on payment for equipment and supplies that can be used at home for the treatment of dialysis on patients with End-of-Term Disease.

According to Past CMS Administrator Seema Verma, “The actions taken by CMS over the past four years will reshape healthcare for future generations and transform health care for all American patients. . They represent a real turning point and will have a lasting impact. ”

It remains to be seen how amazing these measures are. Nevertheless, under the stewardship of Azar and Verma, HHS and CMS have pursued an ambitious policy agenda regarding transparency, drug prices, and medical device reimbursement, one that the Biden Administration is unlikely to abandon. .