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The key trends and considerations for specialty providers navigating a changing policy landscape
As we continue to navigate the sharp political divide in Washington, it’s often challenging to know what the immediate future holds from a policy perspective, particularly when it comes to such a central issue like healthcare.
As an early indicator, we have seen the Biden administration come into office laser-focused on addressing the Covid-19 pandemic, as evidenced by an early working group that was assembled to combat the spread of the virus. Still, aside from the early executive orders in support of the Affordable Care Act (ACA) and the focus on Covid, it was hard to predict what the first 100 days would look like for Biden’s broader healthcare priorities. However, one thing is certain—now that Democrats have established one-party control of Congress, it will be a bit easier for Biden’s priorities to take shape and ultimately move forward. This could involve drug pricing reform, further bolstering of the ACA, and even exploring the possibility of a public option.
For many healthcare providers (HCPs) across specialties, this challenging and rapidly evolving policy landscape can make it difficult to plan for the future. With so much activity—and just as much political fluctuation—the following are key considerations and trends for HCPs to keep an eye on throughout the remainder of the year.
Bipartisan focus on drug pricing reforms
While specific policies on drug pricing reform could have starkly different outcomes, pressure on drug prices is expected to continue. With a narrowly divided Congress, albeit under one-party control, the Biden administration will likely focus on a slate of bipartisan reforms that both parties have begun to rally around over the last 24 months. These could include increased transparency, price caps to protect patient out-of-pocket costs on prescription medicines and reforms in which manufacturers would pay rebates to the federal government if drug prices rise beyond the rate of inflation.
There is also likely to be a continued focus on international price disparities, allowing for the importation of prescription drugs from other countries, allowing Medicare to negotiate prices and tools to incentivize the use of generics and biosimilars. Since many of these reforms have enjoyed some degree of bipartisan support in the past, they are likely to gain early traction in Congress. Notably, Sen. Ron Wyden (D-OR), incoming chair of the Finance Committee, recently said he would push for Medicare drug negotiations, revisit the bipartisan drug pricing bill that passed out of committee last Congress and penalize manufacturers for price hikes.
Continued controversy surrounding most favored nation model
In the coming months, it’s also fair to expect the intense scrutiny and controversy around the Trump administration’s most-favored nation (MFN) drug pricing model to re-emerge, though with a slightly different risk profile.
As background, in late November 2020, the Trump administration used its purported authority under the ACA’s Innovation Center to publish the MFN as an interim final rule. The MFN model would have lowered the reimbursement amount for 50 high-cost Medicare Part B drugs to the lowest price manufacturers receive in similar countries. MFN’s impact on patients and specialties would have been profound. Most startling is that by Centers for Medicare & Medicaid Services’ (CMS) own estimates, 9% of patients would have lost access to their treatments in the first year of the model, a number predicted to have grown to 19% by the third year.
Luckily, late last year multiple courts ruled against the Department of Health and Human Services (HHS) regarding the proposed model, and on Jan. 8, HHS notified the D.C. District Court that it would not appeal the preliminary injunction issued in California Life Sciences Association, et al. v. CMS, et al. This ruling and subsequent decision to not appeal effectively halted the model from moving forward.
The Biden administration still has a brief window to appeal the ruling, although it appears that the new administration is not inclined to push the rule as-is. While the administration could always move forward with rulemaking on the MFN model, they will more likely want to pursue their own drug pricing initiatives from and beyond the aforementioned list of proposals. This could happen through executive action or in conjunction with congressional leaders.
The moving target within the physician-fee schedule
Specialty providers are also enjoying a modest, and potentially time-limited, reprieve in the CY 2021 Medicare Physician Fee Schedule (PFS). Included in a year-end legislative package signed into law in late December, Congress averted a -10% reduction to the PFS conversion factor. Prior to this last-minute congressional action, CMS had finalized the double-digit reduction to the conversion factor that is used to calculate total reimbursement for covered services. The reduction was a result of a significant revaluing of most evaluation and management (E/M) codes, including a number of new codes to account for prolonged visits and complexity of E/M services. Of note, CMS estimated that certain specialty providers would heavily utilize both new codes.
To avert the double-digit reduction and maintain budget neutrality, Congress delayed implementation of the complexity code and infused an additional $3 billion into the PFS budget. The result of these two levers was a CF that was reduced to -3% while maintaining increased valuations for E/M services. However, this could create a fair amount of uncertainty and potential need for action prior to 2022, as there could be a shortfall if the added funds are not recommitted. Policymakers remain committed to stabilizing the provider community and have routinely expressed concern that a public health emergency isn’t the right time to finalize a reduction across the board. Still, the actions of Congress could have created a level of uncertainty in E/M billing that will surely need to be addressed this year.
With so many critical policy decisions hanging in the balance, specialty providers may feel inundated with updates and new information. Still, staying informed, engaged and abreast of these changes is the best way to ensure they are positioned to quickly pivot and adapt their practices to stay ahead in this increasingly unpredictable new healthcare landscape.
About the author
Ben Jones, VP of Government Relations & Public Policy for The US Oncology Network, supported by McKesson