legislation & regulation

Study Could Help Policymakers Set Fair Reimbursement Rate for Ground Ambulances

Ground ambulance services are exempt from the federal ban on balance billing, also known as surprise billing, and a new study published in the journal Health Affairs found that privately owned ambulances are more likely to balance bill than their public sector counterparts. The study’s findings will doubtless be considered by a new federal panel convened to recommend solutions to the complexities of ground ambulance balance billing, which could shape potential legislation to fix the problem in the current Congress — legislation that could find the federal government setting rates for ambulance reimbursement.

A key reason that ground ambulance services were not included in the No Surprises Act (NSA) — the 2020 law that bans medical balance billing — is the ownership structure of ambulance services. About 60% of ground ambulance providers are funded by local governments as part of their fire departments or as a quasi-utility, according to Loren Adler, a coauthor of the study and an economist and associate director of the USC-Brookings Schaeffer Initiative for Health Policy. That arrangement is somewhat unique in the U.S. health care system.

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As CMS Finalizes RADV Rule, Prior Audits Shed Light on Payment Errors, High-Risk Codes

In a highly anticipated final rule on the Medicare Advantage Risk Adjustment Data Validation program, CMS on Jan. 30 said it would extrapolate RADV audit findings starting with the 2018 payment year. Notably, CMS will not extrapolate RADV audit findings for payment years 2011 through 2017 as it had previously proposed. Currently, CMS reviews a small sample of patient medical records to compare them with billing codes sent to the federal government. Under the final rule, CMS will extrapolate the error rate found in the sample to the entire plan. Additionally, the rule finalized a plan to not apply a “fee-for-service adjuster” to its audit methodology. Using the new methodology, CMS officials said the agency expected to recover $479 million in overpayments from 2018 alone, and an extra $4.7 billion from 2023 through 2032.

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Insurer Groups Object, but Analysts View RADV Rule Headwinds as ‘Manageable’

Although health insurance trade groups slammed a final rule that will cause the government to claw back billions of dollars’ worth of overpayments to Medicare Advantage organizations (MAOs), some equities analysts pointed out that the regulation was not as bad as it could have been. What remains unclear, however, is whether the industry will challenge the rule in court.

“Our high-level takeaway is that, while some components of the rule run counter to the industry’s requirements, the absolute impact that CMS is forecasting is manageable within the context of a program that will soon approach $400 [billion],” Credit Suisse’s A.J. Rice advised investors. In fact, CMS estimates that payment clawbacks under the rule will amount to $4.7 billion through 2032, or $470 million annually over 10 years, he noted. “This would represent roughly 0.1% of annual program spend.”

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Economy, IRA, Pharma Competition May Impact Industry in 2023

The pharmaceutical industry likely will continue to battle challenges posed by a variety of factors in 2023, including global economic issues, competition and the Inflation Reduction Act (IRA). The biosimilars space in particular is expected to undergo a change as the world’s top selling drug, AbbVie Inc.’s Humira (adalimumab), finally faces competition from a number of companies. But industry experts tell AIS Health, a division of MMIT, that they expect a number of positive developments in the space in 2023.

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New Law Could Make Accelerated Approval Stricter, If FDA Enforces It

The FDA’s accelerated approval pathway will see major changes following December’s passage of the Consolidated Appropriations Act, 2023 (2023 CAA), the latest version of the annual legislation that funds the federal government. Experts say that the changes should force drugmakers to be more diligent about proving the clinical value of their early-stage pharmaceuticals — as long as the FDA uses its enforcement powers.

Stakeholders across the health care system have criticized the FDA’s approach to accelerated approval in recent years. The agency’s critics say that it has taken a lax approach, granting accelerated approval to drugs of dubious clinical value, which ultimately costs the health care system billions. In particular, the FDA’s move to grant accelerated approval to Biogen Inc.’s Alzheimer’s drug Aduhelm (aducanumab) faced criticism from researchers, medical practitioners, health systems and insurers. In addition, a recent congressional report documented ethical lapses by agency employees during the accelerated approval process for Aduhelm, and the HHS Office of Inspector General is currently investigating the agency’s decision.

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Medicare Enrollees May Still Face Affordability Issues After Part D Benefit Redesign

About 800,000 Medicare beneficiaries in 2024 and 200,000 in 2025 could see their out-of-pocket (OOP) medication costs exceed 10% of their annual income, even with the Part D drug benefit reforms passed via the Inflation Reduction Act (IRA), according to an Avalere analysis.

The IRA will establish a beneficiary OOP cap at the catastrophic threshold, which is estimated to be $3,233 in 2024. Avalere estimated that 1.5 million Part D enrollees without low-income subsidies (LIS) are projected to reach OOP drug spending levels above the catastrophic threshold in 2024. Among them, about 18% of beneficiaries will reach the catastrophic phase in the first three months. Greater shares of beneficiaries who are younger than 65 years old or who are Hispanic will face affordability challenges compared to the average non-LIS enrollees. The analysis also suggested that non-LIS enrollees taking asthma drugs, blood thinners, immunology therapies, cancer treatments and HIV drugs are more likely to reach the OOP cap in 2024.

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With Final RADV Rule Out, MAOs Are Advised to Clean Up Risk Adjustment Practices

Medicare Advantage organizations may not have gotten the outcome they were hoping for in CMS’s recently finalized Risk Adjustment Data Validation rule, but industry experts say they weren’t surprised by the position CMS ultimately took after years of pressure to close out RADV audits and recover identified overpayments. And while one aspect of the rule could expose it to litigation and further delay CMS’s attempts to collect overpayments from MAOs, experts say plans still would be wise to sharpen their risk adjustment practices in order to limit their audit exposure.

Issued on Jan. 30, the final rule (88 Fed. Reg. 6643, Feb. 1, 2023) pertains to contract-level audits that CMS began conducting more than a decade ago to verify the accuracy of payments made to MA organizations and recover improper payments. The agency in 2012 said it planned to adopt a “fee-for-service adjuster” to account for any impact from unaudited diagnosis codes in FFS data that are used to calibrate the MA risk adjustment model. But in a November 2018 proposed rule (83 Fed. Reg. 54982, Nov. 1, 2018), CMS said its plans to recoup improper payments would not involve an FFS adjuster and that it may apply an extrapolation methodology when finalizing audits dating back to payment year 2011. The RADV provisions of the 2018 proposed rule received pushback from insurers and were never finalized by the Trump administration.

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Even With Split Congress, Some Experts Predict Heightened Health Care Oversight

Although there’s a divided Congress this year — with Republicans controlling the House and Democrats in charge of the Senate — there are still a variety of health care policy issues that federal and state legislators alike have in their crosshairs, experts said during a recent webinar hosted by the Alliance for Health Policy. And some of those agenda items could be of considerable interest to health insurance companies.

Paul Edattel, principal of Todd Strategy Group, LLC, a federal government affairs firm, said he expects the newly Republican-controlled House to zero in on budgetary issues. “Budgetary issues are top-of-mind for House Republicans and some Senate Republicans,” he remarked during the Jan. 25 webinar. “Things like the operating budget for the Department of Health and Human Services...will be under really heightened scrutiny relative to prior Congresses.”

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Medicare Enrollees May Still Face Affordability Issues After Part D Benefit Redesign

About 800,000 Medicare beneficiaries in 2024 and 200,000 in 2025 could see their out-of-pocket (OOP) medication costs exceed 10% of their annual income, even with the Part D drug benefit reforms passed via the Inflation Reduction Act (IRA), according to an Avalere analysis.

The IRA will establish a beneficiary OOP cap at the catastrophic threshold, which is estimated to be $3,233 in 2024. Avalere estimated that 1.5 million Part D enrollees without low-income subsidies (LIS) are projected to reach OOP drug spending levels above the catastrophic threshold in 2024. Among them, about 18% of beneficiaries will reach the catastrophic phase in the first three months. Greater shares of beneficiaries who are younger than 65 years old or who are Hispanic will face affordability challenges compared to the average non-LIS enrollees. The analysis also suggested that non-LIS enrollees taking asthma drugs, blood thinners, immunology therapies, cancer treatments and HIV drugs are more likely to reach the OOP cap in 2024.

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New Law Could Make Accelerated Approval Stricter, If FDA Enforces It

The FDA’s accelerated approval pathway will see major changes following December’s passage of the Consolidated Appropriations Act, 2023 (2023 CAA), the latest version of the annual legislation that funds the federal government. Experts say that the changes should force drugmakers to be more diligent about proving the clinical value of their early-stage pharmaceuticals — as long as the FDA uses its enforcement powers.

Stakeholders across the health care system have criticized the FDA’s approach to accelerated approval in recent years. The agency’s critics say that it has taken a lax approach, granting accelerated approval to drugs of dubious clinical value, which ultimately costs the health care system billions. In particular, the FDA’s move to grant accelerated approval to Biogen Inc.’s Alzheimer’s drug Aduhelm (aducanumab) faced criticism from researchers, medical practitioners, health systems and insurers. In addition, a recent congressional report documented ethical lapses by agency employees during the accelerated approval process for Aduhelm, and the HHS Office of Inspector General is currently investigating the agency’s decision.

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