Health Care Reform & ACA

On October 15, 2018, the Centers for Medicare & Medicare Services (“CMS”) in the Department for Health and Human Services proposed a rule to require prescription drug manufacturers to post the Wholesale Acquisition Cost (“WAC”) for drugs and biological products covered by Medicare or Medicaid in direct-to-consumer television advertisements. The WAC reflects the manufacturer’s list price for a drug to direct purchasers, not inclusive of any discounts or rebates. CMS is proposing this rule in the context of broadcast advertisements, an area in which the Supreme Court has recognized that the government may take special steps to help ensure that viewers receive appropriate information.[1]

CMS stated that 47 percent of Americans have high-deductible health plans and that many patients may pay the list price of the drug until they meet their deductible. The proposed rule aims to provide greater transparency into the prices charged by prescription drug manufacturers. The theory is that markets operate more efficiently with greater transparency, and that increased exposure of the list price will also provide a moderating force to discourage price increases. While wholesale prices do not equate to the patient’s out-of-pocket obligation, CMS asserts that benefit designs are impacted by WACs, and patients in high-deductible plans may pay the full list price until meeting their deductible – thus, the WAC may still be relevant to many patient and impact their decisions and market dynamics. The price required to be posted would be for a typical course of treatment for an acute medication like an antibiotic, or a thirty day supply of medication for a chronic condition that is taken every month. The posting would take the form of a legible textual statement at the end of the ad and would not apply where the list price for a thirty day supply or typical course of treatment of a prescription drug was less than $35.

Overall, the agency has taken action designed to promote transparency in healthcare this year. In the drug pricing arena, CMS released a redesigned version of the Drug Spending Dashboards which identifies manufacturers that have increased their prices, along with year-over-year information on drug prices. Outside of the drug pricing space, CMS recently launched the eMedicare initiative to allow customers to find and compare Medicare coverage options and quickly see estimates on what the coverage would cost, among other features. CMS has also included requests for information on cost transparency and expanded patient access to data in recent payment rules, and is expected to propose more new policies in an upcoming regulation currently under OMB review.

CMS’s proposal is part of an ongoing effort by the Trump administration to bring down prescription drug prices and out-of-pocket costs, as signaled by the release in May of American Patients First, the administration’s drug pricing blueprint. This is also the latest in a series of steps focused on increasing data access and price transparency in healthcare. Although Congress was not successful in its attempt to address direct-to-consumer advertising this summer through a provision that would have allocated $1 million to the Food and Drug Administration to implement regulations requiring drug companies to list their prices in TV ads, Congress passed and the President signed into law legislation to improve transparency and lower health care costs for patients across the country. This law effectively paves the way for pharmacists to advise their patients on the cost of various medications and different payment methods, free from restrictions imposed by take-it-or-leave-it contracts with insurers.

In the present proposal CMS seeks public feedback on a variety of questions, including:

  • How providing consumers with the list price of a medication may influence interactions with prescribers, the selection of drug products, and the perceived efficacy of the prescribed drug.
  • How benefit design influences these choices.
  • Whether compliance with rule should be a condition of payment by a federal health care program.
  • Whether WAC is the amount that best reflects the “list price” for the stated purposes of price transparency and comparison shopping
  • Whether 30-day supply and typical course of treatment are appropriate metrics for a consumer to gauge the cost of the drug.
  • How to treat an advertised drug that must be used in combination with another non-advertised drug or device.
  • Whether the cost threshold of $35 to be exempt from compliance with this rule is the appropriate level and metric for such an exemption.
  • Whether rule should be extended to advertisements in other media forms, including radio, magazines, websites, etc.

This rulemaking presents a major opportunity for pharmaceutical companies, insurers, and patients alike to make their voices heard in an area that is critically important. Electronic comments can be submitted until December 17, 2018. For further assistance, please contact Jodi Daniel (jdaniel@crowell.com), Barbara Ryland (bryland@crowell.com), and Maya Uppaluru (muppaluru@crowell.com).

[1] See Red Lion Broad. Co. v. FCC, 395 U.S. 367, 390, 394 (1969) (“It is the right of the viewers and listeners, not the right of the broadcasters, which is paramount.”)

On October 3rd, the United States Senate passed a bipartisan opioids package with a sweeping vote of 98 to 1, after the U.S. House of Representatives passed the final version of the bill with a vote of 393 to 8. One of its components, the “Fighting the Opioid Epidemic with Sunshine Act,” expands the scope of reporting requirements under the Physician Payment Sunshine Act (known as the “Sunshine Act”), which will have immense implications for the pharmaceutical and medical device and supply industries.

Enacted at section 6002 of the Affordable Care Act in 2010 to increase transparency around the financial relationships between health care providers and drug manufacturers, the Sunshine Act requires “applicable group purchasing organizations” and “applicable manufacturers,” including pharmaceutical and medical device or supply companies with operations in the United States, to track and report payments and transfers of value that they make to “covered recipients,” currently defined to include physicians and teaching hospitals. These transfers of value include items such as consulting fees, honoraria for speaking events, and research grants.

The opioids legislation package expands the definition of “covered recipients” to include other types of health care professionals: physician assistants, nurse practitioners, clinical nurse specialists, registered nurse anesthetists, and certified nurse midwives. The new legislation additionally sunsets a prohibition in the Sunshine Act that prevents the inclusion of the National Provider Identifier on the CMS Open Payments website.

Given the Administration’s focus on the opioid crisis, identified as a “national emergency,” the expansion of the Sunshine Act reflects the reality that prescriptions of opioids and other drugs to individuals may come from health professionals who are not physicians. State “sunshine laws” that imposed reporting requirements on payments to these professionals have existed for a number of years, but the changes passed in the opioids package would make this standard the baseline for reporting covered payments nationwide. By the time these changes would be effective on January 1, 2022, applicable group purchasing organizations and manufacturers will need to update their Sunshine Act compliance and monitoring activities to account for the greatly enlarged scope of individual health care professionals to whom they may be providing direct or indirect transfers of value.

The expansion of the Sunshine Act’s covered recipient definition was introduced in the Senate version of the opioids package, and remained in the overall legislation despite vigorous opposition. To become law, the bill requires the signature of President Trump.

Iowa has enacted legislation to permit the offering of certain health benefit plans that would not be subject to the restrictions of the Affordable Care Act (ACA).

The bill combined two separate measures, each intended to expand access to association health plans (AHPs) that are exempt from many of the ACA’s protections. First, the new law would allow small employers to band together to form associations that would be eligible to offer members’ employees coverage as if they were a single large employer group, which would be subject to less burdensome regulation under the ACA. Second, a health benefit plan sponsored by a nonprofit agricultural organization domiciled in Iowa (the Iowa Farm Bureau Federation) and covered by a third-party administrator that has administered the organization’s health benefits plan for more than 10 years (Wellmark Blue Cross & Blue Shield) is exempt from the definition of insurance that is subject to regulation by the state insurance department.

Recently, AHPs have been touted by opponents of the ACA as a tool to avoid its effects for larger covered populations. Iowa’s measure follows an executive order by President Trump last fall directing the administration to, among other things, promote the use of AHPs. In response to that order, the Department of Labor proposed a rule that would expand the definition of AHP to allow employers greater access to AHP coverage. As we noted in a previous post, several states have pressed the idea through comments to that proposed rule that expanded access to AHPs would create opportunities for employers to offer more affordable coverage.

The impact of Iowa’s enactment remains to be seen. Critics of the measure have expressed concern that it will water down consumer protections by exempting coverage from ACA requirements that plans cover essential health benefits, such as maternity and mental health care. Although plans could continue to include such benefits, they would not be legally obligated to do so, and could cut costs by eliminating coverage for broad categories of health care. Continue Reading Iowa Enacts Legislation to Broaden Access to Association Health Plans

The Department of Labor’s proposed rule on association health plans (AHPs), issued in response to an October 12, 2017 Executive Order, has received almost 900 comments, including from several states and the District of Columbia (see, e.g., comments from Alaska, Iowa, Massachusetts, Montana, Pennsylvania, and Wisconsin). States emphasized the need for clarity in the rule and affirmation of states’ long-standing authority to regulate insurance including both solvency and consumer protection issues. Iowa, for example, attributed the more than 40-year success of a multiple employer welfare arrangement (MEWA) to both the entity’s interests to serve its members and the Iowa Insurance Division’s authority to ensure that MEWAs are “adequately solvent and following fair trade practices” and argued that continued robust state insurance oversight is critical to successful AHPs.

Last week, the Iowa Senate approved two bills which, if passed by the Iowa House of Representatives, would expand the availability in the state of AHPs, a type of MEWA covered by the Employee Retirement Income Security Act of 1974 (ERISA). The legislation would allow for Wellmark Blue Cross Blue Shield to administer an AHP for the Iowa Farm Bureau Federation and could threaten the membership of Medica, the only issuer of coverage through Iowa’s exchange.

Continue Reading States Seek Control over Association Health Plans in Comments on DOL Proposed Rule; Iowa Senate Approves Bill Expanding Availability of Association Health Plans—Potentially to the Detriment of ACA Exchange Plans

On March 8, the White House encouraged Congress to pass stabilization legislation that would not authorize the reimbursement of cost-sharing reductions (CSRs) made by health plans in 2017, as reported by Modern Healthcare. This move comes almost five months after the Trump Administration’s announcement in October that it would discontinue CSR payments effective immediately. The legislation, if passed, would preclude the government from paying CSRs for the 2017 year and would allow CMS to claw back surplus money that plans have received from the federal government and applied towards CSRs. Continue Reading White House Proposes Language to Congress Eliminating CSR Reimbursement for 2017

On Thursday, March 8, the Trump Administration rejected Idaho’s plan to sell health plans that do not include the consumer protections required by the Affordable Care Act (ACA). The rejection came in the form of a letter touting adherence to current law, though in many ways the letter was written by an apologetic Centers for Medicare and Medicaid Services (CMS) wanting to appease Idaho Republicans.

Earlier this year, Idaho Governor C.L. “Butch” Otter signed an executive order that allowed some Idaho health insurance plans to drop certain ACA requirements. For example, plans would not need to cover maternity care, mental illness, or other essential health benefits; insurers could charge higher premiums to those with preexisting conditions; and insurers could deny people coverage if they had failed to maintain continuous coverage. Insurers who sold such “junk” plans would be required to also sell at least one ACA-compliant option over the exchanges. Gov. Otter’s actions seemed to test just how far Alex Azar, Secretary of the U.S. Department of Health and Human Services, would go to support the “state experimentation” Mr. Azar himself advocated for under the exchanges, as discussed in our earlier post. The answer, for Idaho, is not far enough. Continue Reading Trump Administration Rejects (Nicely) Idaho’s Attempt to Skirt ACA

Crowell & Moring has issued its Regulatory Forecast 2018: What Corporate Counsel Need to Know for the Coming Year.”

The health care section of the Forecast, “Mergers: Keeping Care Competitive,” outlines how regulators have kept a close eye on the impact of industry consolidation and how the government has been aggressively blocking mergers it feels will hurt consumers. There is also an interesting section on the regulation of digital health technology in the cover story, Digital Transformation: The Sky’s the Limit.”

The theme of the fourth-annual Regulatory Forecast is how digital technology is driving the future of business across a wide range of industries – and how Washington, as well as state and global regulators, is forging the appropriate balance between fostering innovation and protecting consumers. This report is the companion piece to the firm’s 2018 Litigation Forecast, which was published in January and also focused on the opportunities and challenges general counsel face in navigating the Big Data revolution.

Be sure to follow the conversation on Twitter with #RegulatoryForecast.

 

Alex Azar assumed office as HHS Secretary on January 29, 2018, and has hit the ground running.  Among discussions on stabilization bills (see blog post discussion here and how these proposals further the Administration’s efforts on Trump’s Inauguration Day Executive Order here), Secretary Azar has been a vocal advocate for, in his own terms, “state experimentation” under both the Medicaid and health insurance exchanges (“Exchanges”).

Secretary Azar has not provided detail as to what type of experimentation he would like to see from states, but in his remarks at HHS headquarters on Tuesday, February 20, he stated that he was working with the Centers for Medicare and Medicaid Services (CMS) Administrator, Seema Verma, to give states “a menu of options” to decrease the restrictions under the Affordable Care Act (ACA).  In particular, Secretary Azar noted that he was exploring ways to allow states greater flexibility through federal waivers.

Continue Reading Will Secretary Azar Waive(r) Away the ACA?

On Tuesday, February 20, Department of Health and Human Services (HHS) Secretary Alex Azar announced that the agency intends to expand access to short-term, low-cost insurance policies. On Wednesday, HHS published its proposed rule, which promises to reduce restrictions on such limited-duration policies. The short-term insurance plans have fewer benefits and more limited consumer protections as compared to those proscribed by the Patient Protection and Affordable Care Act (ACA). While such short-term plans currently can only be carried for 90 days, the new proposal would extend that maximum coverage period to one year.

The proposed rule is in response to President Trump’s Executive Order from October 12, 2017, which called for HHS to expand access to low-cost insurance plans. The Executive Order asked the agency to explore the possibility of extending the maximum duration of such short-term, limited-duration plans in order to increase options for consumers. The short-term insurance plans are contemplated for individuals who are unemployed, between jobs, or otherwise looking to reduce premium costs for up to one year. The plans do not have to meet ACA requirements. Notably, they do not have to cover individuals with pre-existing conditions and they do not have to cover prescription drug plans. The plans offer more limited coverage for consumers, but impose less immediate financial burden through reduced premium cost. Insurers who sell the short-term plans would need to include clear statements on applications and plan documents that the coverage does not meet ACA requirements.

The proposed rule continues the Trump administration’s efforts to roll back the ACA and minimize its economic burden and comes just over a year after the president issued an Executive Order laying out that goal. It comes on the heels of earlier rules from the administration geared at stabilizing the individual and small group insurance markets. It also follows the signing of the new tax reform bill, which repeals the individual mandate of Section 5000A of the Tax Code and eliminates the shared responsibility payment for failure to obtain health insurance starting in 2019.

Continue Reading Azar Rolls Out Expansion of Short-Term, Limited-Duration Insurance Plans

First 100 Days LogoOn Tuesday, April 18, 2017, our Health Care Group will hold a webinar on the health care policy and transition challenges still at play as the Trump Administration nears the end of its 100 days in power.  During the webinar, participants will hear important insights and predictions on what a Trump-led Executive Branch will mean for health care industry stakeholders from:

  • Partner Xavier Baker, whose practice focuses on the regulatory and compliance aspects of commercial insurers’ participation in Medicare Advantage, Medicaid managed care, and the health insurance exchanges;
  • Counsel Gary Baldwin, the former deputy director of Plan and Provider Relations at the California Department of Managed Health Care (DMHC), with expertise in state insurance regulatory issues for commercial plans;
  • Partner Laura Cordova, the former assistant chief in the Fraud Section of the Criminal Division at the U.S. Department of Justice, who focuses primarily on counseling health care companies and executives in criminal, civil and administrative enforcement actions, which may still increase under a Trump administration; and
  • Counsel Stephanie Willis, who counsels health care entities in licensure and regulatory matters related to participation in health care reform incentive programs such as the Medicare Shared Savings Program and Meaningful Use.

Register for the webinar here.