Industry Trends

Perspectives on Legality of Closed Medicaid Formularies

March 19, 2020

As part of long-awaited guidance that CMS issued to states on Jan. 30 outlining how they can test-drive a fixed federal Medicaid budget and more program flexibilities, the Trump administration invited states to try out something else that hasn’t been done before: implement a closed drug formulary for a portion of their Medicaid population, AIS Health reported.

As part of long-awaited guidance that CMS issued to states on Jan. 30 outlining how they can test-drive a fixed federal Medicaid budget and more program flexibilities, the Trump administration invited states to try out something else that hasn’t been done before: implement a closed drug formulary for a portion of their Medicaid population, AIS Health reported.

“For the first time, participating states will have more negotiating power to manage drug costs by adopting a formulary similar to those provided in the commercial market, with special protections for individuals with HIV and behavioral health conditions,” CMS said in its press release unveiling the Healthy Adult Opportunity demonstration, which states can apply for via a Section 1115 Medicaid waiver.

Currently, states’ Medicaid programs must cover all FDA-approved drugs, as mandated by federal law. But CMS is suggesting that states can waive that requirement for the population they choose to cover under their demonstration — likely people who are covered by Medicaid expansion — and still participate in the Medicaid Drug Rebate Program.

But some industry experts tell AIS Health they’re not sure whether that will be legally permissible.

“I have my doubts as to whether this will bear legal scrutiny because it goes against the entire Medicaid Drug Rebate Program, which is rebates in exchange for open formularies,” says Jeff Myers, the former CEO of Medicaid Health Plans of America and founder of health care consulting firm OptDis.

Indeed, “the legal side is obviously the giant question with the whole Healthy Adult Opportunity program,” Jason Karcher, an actuary with Milliman, Inc., tells AIS Health. “We just don’t know how the courts will ultimately see this, although I think it would be fair to be skeptical that we’ll actually get to see a waiver under this [guidance] make it in the near future.”

Trends That Matter for Diabetes Drug Costs

March 12, 2020

With the cost of diabetes drugs still growing, PBMs and payers are looking for more innovative strategies to hold down costs, AIS Health reported. For some, that might include a strategy similar to the one recently unveiled by CVS Health Corp.’s Caremark unit. The plan, called RxZERO, offers a slimmer formulary for the diabetes drug class, but with no out-of-pocket costs for members.

With the cost of diabetes drugs still growing, PBMs and payers are looking for more innovative strategies to hold down costs, AIS Health reported. For some, that might include a strategy similar to the one recently unveiled by CVS Health Corp.’s Caremark unit. The plan, called RxZERO, offers a slimmer formulary for the diabetes drug class, but with no out-of-pocket costs for members.

Mike Schneider, a principal in the commercialization and market access practice at Avalere Health, says the plan is innovative. “You’ve seen Express Scripts do something where they’re offering specific insulins at very low out-of-pocket costs, but this is the first time I’ve seen a PBM come up with a way to eliminate out-of-pocket costs completely,” he tells AIS Health.

With the elimination of copays and other cost-sharing payments for diabetes drugs, CVS is betting members will better adhere to drug regimens and potentially avoid unnecessary hospitalizations and other services.

In January, Eli Lilly and Co. said it planned to sell new versions of Humalog Junior KwikPen and Humalog Mix 75-25 at half of their current U.S. list prices. Novo Nordisk A/S also started to offer generic versions of its frequently prescribed insulin drugs Novolog and Novolog Mix 70-30 at a 50% discount compared to the current list price. The graphics below show how these four medications are covered among commercial health plans, health exchange programs and Medicare and Medicaid programs.

Perspectives on ACA Exchange Draft Regulation

March 5, 2020

On Jan. 31, CMS released the 2021 Notice of Benefit and Payment Parameters (NBPP), which is the annual omnibus regulation that outlines the rules of the game for Affordable Care Act (ACA) exchange plans. But that was only after a trade group for safety-net health plans sent a strongly worded letter warning the Trump administration that the clock is ticking for issuers to finalize their 2021 premiums and benefit designs.

On Jan. 31, CMS released the 2021 Notice of Benefit and Payment Parameters (NBPP), which is the annual omnibus regulation that outlines the rules of the game for Affordable Care Act (ACA) exchange plans. But that was only after a trade group for safety-net health plans sent a strongly worded letter warning the Trump administration that the clock is ticking for issuers to finalize their 2021 premiums and benefit designs.

In its Jan. 27 letter, the Association for Community Affiliated Plans (ACAP) complained to CMS that the proposed 2021 NBPP “appears to be stalled at the Office of Management and Budget.” (The OMB completed its review of the regulation on Jan. 29.) Insurers need to submit qualified health plan (QHP) applications starting in early May, ACAP pointed out. “Building in a minimum 30-day comment period in addition to 30 days for the Department to review, revise, and release the final [rule] would allow just one month for issuers to operationalize and implement necessary updates,” the group wrote. “This timeframe will not allow issuers sufficient time to prepare products and operations for Benefit Year 2021.”

Fritz Busch, an actuary with Milliman Inc., tells AIS Health that the final NBPP has come out in April during the past two years, but before that arrived much earlier. The delay of the NBPP “presents operational challenges for a lot of plans, because so many plans are right in the middle of doing their pricing and other planning for the year,” he adds.

As for the content of the draft NBPP, the most attention-grabbing proposed changes to the rules surrounding subsidy eligibility. CMS said it’s seeking public comment on “new automatic re-enrollment processes for enrollees whose share of the premium after applying premium subsidies is $0, in order to reduce the risk of incorrect expenditures on subsidies that cannot be recovered through reconciliation.” In addition, “periodic data matching standards would be amended to help ensure premium subsidies are not inappropriately paid to enrollees who are determined to be deceased, or dually eligible for Medicare.”

Trends That Matter for Nebraska Medicaid Expansion

February 27, 2020

With Medicaid demonstration programs that include work requirements struck down in three states, it’s become increasingly clear that such waivers may not survive legal scrutiny. So Nebraska, which submitted its own Section 1115 waiver application in December, is trying a different tactic, AIS Health reported.

With Medicaid demonstration programs that include work requirements struck down in three states, it’s become increasingly clear that such waivers may not survive legal scrutiny. So Nebraska, which submitted its own Section 1115 waiver application in December, is trying a different tactic, AIS Health reported.

In its application to CMS, the state proposes to modify voter-approved Medicaid expansion by creating two tiers of coverage: Basic, which includes “comprehensive medical, behavioral health and prescription drug coverage” as required by federal law, and Prime, which is the Basic package plus vision, dental and over-the-counter medication coverage.

“Unlike other states, everyone who meets underlying eligibility criteria will receive at least the robust Basic benefits package,” the application notes.

A recent Kaiser Family Foundation analysis shows that if all 14 non-expansion states expanded Medicaid, about 4.8 million additional people would be eligible for coverage, including 2.3 million adults in the coverage gap — whose income is above current Medicaid eligibility but below the lower limit for marketplace premium tax credits — and 2.1 million adults with incomes between 100% and 138% of the poverty threshold.

Radar on Market Access: Future of Medicaid Work Requirements Dims After Arkansas Demo Is Struck Down Again

February 27, 2020

A three-judge federal appeals court panel on Feb. 14 sided with a lower court and unanimously ruled that Arkansas’ Medicaid work requirements are unlawful because they don’t align with the chief objective of the Medicaid program — providing access to medical care to those who can’t afford it, AIS Health reported.

A three-judge federal appeals court panel on Feb. 14 sided with a lower court and unanimously ruled that Arkansas’ Medicaid work requirements are unlawful because they don’t align with the chief objective of the Medicaid program — providing access to medical care to those who can’t afford it, AIS Health reported.

“This certainly puts a damper on their plans,” says Joan Alker, a research professor and executive director of the Georgetown Center for Children and Families, referring to other states’ hopes to set up similar Medicaid waiver demonstrations.

In addition to Arkansas’ program, CMS has approved Medicaid waivers that include work requirements in Arizona, Indiana, Kentucky, Michigan, New Hampshire, Ohio, South Carolina, Utah and Wisconsin. Both Kentucky and New Hampshire’s waiver programs have been struck down in court, and Kentucky has since abandoned its appeal after a Democratic governor, Andy Beshear, replaced Republican Matt Bevin.

Arizona and Indiana voluntarily suspended their programs, Alker noted in a Feb. 14 blog post, while Michigan’s has been challenged in court. Meanwhile, an additional 10 states have applied for Medicaid waivers that include work requirements.

“I do think it [the appeals court ruling] will likely inhibit states from moving forward with work requirements waivers that have already been approved by CMS,” says Charles Luband, a partner in the health care practice of the law firm Dentons. “It is possible that CMS will continue to accept requests for work requirements and may even continue to approve them, but if they do, CMS is going to have to try harder to meet the standard that’s set out here” in the appeals court ruling, Luband says.

CMS, for its part, is reviewing and evaluating the appeals court’s opinion in order to determine next steps. Arkansas Gov. Asa Hutchinson (R) said in a statement that he hopes the Supreme Court will review the ruling in the case.

However, Luband says that may not be likely. “The [Supreme] Court generally likes to take cases when there is a split between the circuits, and there’s none here,” he says.

Perspectives on Part D Reform in 2020

February 20, 2020

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

In the Senate, tweaking the Part D benefit is part of a larger piece of bipartisan legislation (S. 2543), championed by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.). From the House, there’s the sweeping legislation (H.R. 3) proffered by Speaker Nancy Pelosi (D-Calif.).

Both bills would implement out-of-pocket spending caps for Part D beneficiaries and considerably change how costs are divided up in the catastrophic phase of coverage. They would also require drug manufacturers to repay Medicare if certain Part B or Part D drug prices rise faster than inflation.

“If you look at both the House and the Senate bills that have been put forward here, those [Part D] designs look very similar to one another, so I’m somewhat optimistic that…maybe there’s an opportunity for that to move forward,” says Stacie Dusetzina, an associate professor of health policy at the Vanderbilt University School of Medicine.

However, Elizabeth Carpenter at Avalere Health contends that “it is unlikely in this environment that any drug pricing legislation would move as a standalone bill.” The most likely pre-election vehicle for a Part D redesign would be the health care extenders package that expires in May, she adds.

Gerard Anderson, a professor at Johns Hopkins University Bloomberg School of Public Health, is more optimistic. “Drug pricing is the No. 1 issue for most voters when they’re talking about health care,” he points out. “So they’re going to feel a strong pressure” to pass something in Congress. Given that dynamic, he says he expects the Wyden/Grassley bill is likely to pass this year.

In whatever form a Part D redesign passes, Dusetzina says the biggest winner would be patients. While manufacturers and health plans would be on the hook for more spending in the catastrophic coverage phase, “on net, it probably isn’t very harmful for any one entity,” she contends.