Additional Rebate for Generic Products Starts Q1 2017

Effective with the Q1 2017 Medicaid rebates, manufacturers of non-innovator products will be subject to an inflation penalty similar to the one already imposed on innovator products. This inflation penalty occurs when manufacturers raise their prices that go into the AMP calculation faster than inflation. Historically, price increases have not been an issue with generic products but in more recent years, for some drugs, increases are more common. This change was included in the Bipartisan Budget Act of 2015 (H.R. 1314).

To calculate the rebate for existing products, the baseline AMP will be the AMP reported by the manufacturer for Q3 2014. For new products, it will be the AMP of the fifth full quarter after the drug’s market date quarter. In response to this change, manufacturers questioned whether the additional penalty would apply retroactively to the first four quarters of sales under the new rule; however, in Manufacturer Release No. 101 CMS clarified that the inflation penalty is only applicable as of Q1 2017 for existing products or for new products, the quarter in which the baseline AMP is established.

In Release No. 101, CMS provides several examples of the timeline for calculating the additional penalty, and also notes that manufacturers must obtain baseline data, such as Market Date and Baseline AMP, for drug products approved under an NDA or ANDA that were purchased from other manufacturers. To determine if drugs should have the same baseline data, manufacturers may access the FDA Online Label Repository at http://labels.fda.gov/, and enter each drug’s NDC to determine if the drugs have the same NDA/ANDA.

For manufacturers, there are a few important things to keep in mind:

1. Accruals may need to be increased as of Q1 2017 to account for the Medicaid rebate liability.

2. Any inflation penalty assessed in Q1 2017 will impact the Q3 0217 PHS/340B prices.

3. If you are in the midst of a restatement that includes Q3 2014 (or the baseline AMP quarter), you’ll want to try to complete that prior to the Q1 2017 URA calculations by CMS

If you have not already done so, determining the impact of this new penalty is critical as it could significantly affect your organization’s total rebate liability. Be sure to communicate this to your finance team and other key leaders within your organization so they are not caught by surprise if there is an impact to your organization.

This year’s MDRP was full of information for manufacturers and as always, there’s a lot going on in the government programs, so if you need help or are overwhelmed by all of the information, give me a call. I can help you figure out what is relevant and how to ensure you’ve accounted for these potential changes! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

AMP Final Rule: Puerto Rico in the Balance

The 2016 Final Rule expanded our definition of “states, allowing the five US territories to join the MDRP. John Shakow’s stimulating presentation at the Medicaid Drug Rebate Program summit 2016, on September 21, dealt with this component of the Final Rule, and identified several areas for concern, and evaluations that manufacturers need to do prior to the April 1, 2017 day of decision.

Expansion

Territories:

• May join MDRP
• May waive participation

Drug Activity:

• Utilization - Subject to Medicaid rebates
• Transactions - Eligible for inclusion in AMP and BP calculations

** Manufacturers must include transactions regardless of waiver status**

Demographics

Puerto Rico is the largest of the territories, with 3.5 million people. The other four territories total 348 thousand, less than 10% of Puerto Rico’s population.

Economics

Puerto Rico is very poor, and almost half are enrolled in Managed Medicaid (1.67 million). Comparable state Medicaid enrollments:
WA 1.8 million

• AZ 1.8 million
• NJ 1.7 million
• TN 1.5 million

Puerto Rico has a $72 billion debt crisis. All public obligations are threatened with default.

Congress passes law in June 2016 to address this, called PROMESA (Puerto Rico Oversight, Management and Economic Stability Act). PROMESA (committee of 7) has the power to set fiscal policy, including waivers and Medicaid payments, and to cancel contracts.

Politics

Gubernatorial election is set for November 8. Current governor is not running, and neither candidate for office has taken a position on the waiver. The lame duck period runs into January 2017.

Applicable Medicaid Organizations

ASES - Puerto Rican Health Insurance Administration (Administracion de Seguros Salud de Puerto Rico) – responsible for Medicaid.

PSG - The Government Health Plan (Plan de Salud de Gobierno) - Puerto Rico’s Medicaid program

Abarca Health - The PBM that maintains, among other things, the prescription drug list and pharmacy benefit for PSG.

DACO - Puerto Rican Department of Consumer Affairs (Departamento de Asuntos del Consumidor de Puerto Rico) has price control authority over wholesalers and pharmacies (Regulation 3707).

Medicaid in Puerto Rico

Manufacturers contract with Abarca Health for PDL access, and pay rebates for inclusion.

Many contracts expire December 31, 2016, but can be automatically renewed.
John Shakow has seen Abarca contracts with “Best Price rip cord clauses” and “termination provisions.”

Price Controls - DRACO

Targeted drugs

• High volume drugs
• Chronic disease drugs
• Drugs used by elderly or infants
• Currently 75 drugs (innovator and generic)
• List can be changed

Pharmacies must maintain public price lists

Waiver Decision

• The decision to participate in MDRP lies with AES leaders (appointed by governor)
• Decision in January, AFTER new governor is sworn in

Considerations in Decision

• Abarca rebates – Will they be higher or lower than the MDRP URAs?
• If lower, will AES set up supplemental rebates to compensate?

Implications for Manufacturers

• Waiver executed – Abarca rebates remain
• No waiver

• URAs due on every unit reimbursed under PSG, possibly exceeding Abarca amounts
• May join consortium of states to obtain supplemental rebates

All of this is up in the air. So many variables or outcomes make planning difficult, but mandatory. Manufacturers need to look at commercial pricing concessions for best price impact, and model potential liabilities for either scenario.

One more thought. After considering John’s presentation, it could be déjà vu. If manufacturers decide that doing business in Puerto Rico is no longer in their financial best interest, or offering rebates to these purchasers is no longer attractive, they may refuse to sell there. The CMS FAQ36 answer to this requirement to sell to the Territories was “The final rule does not require that a drug manufacturer sell its drugs to certain purchasers.” If enough manufactures apply this tactic to a territory with such a large vulnerable population, will we see another version of the Veteran’s Health Care Act of 1992?

John Bliss is a contributing writer for the Medicaid Drug Rebate Program Summit. He has extensive experience in the pharmaceutical industry, including AstraZeneca, Sanofi Aventis, Merck, Pfizer, Daiichi Sankyo, and Bristol-Myers Squibb (BMS). The bulk of John’s career was at BMS. When OBRA90 hit, Government Pricing took over his life. Government pricing, managed care contracting, rebates, and chargebacks continue to extend challenges and provide meaningful employment. John now works as a consultant, primarily subcontracted by other consulting firms, providing value added services to each of them and their clients.

Medicaid Drug Rebate Program Summit: A Final Review

For the last few years, the final session at the Medicaid Drug Rebate Program Summit (MDRP) has been handled by John Shakow (King and Spalding) who highlights many of the “hot topics” from the various presentations during the conference. This review gives a good overview of the key takeaways and is very helpful if you want to review any of the slides provided by the speakers from this last week. Some of the slides he referenced included:

All of Miree Lee’s Government Pricing Basics, since understanding the basics is critical for manufacturers to be able to understand the impact of anything discussed during the conference.

Elizabeth M. Wicyk-McGovern of Hospira discussed the requirements for manufacturers when it comes to 340B Ceiling Price reporting. One of her slides shows the complicated nature of the PHS/340B program and the way covered entities (CE) can order, such as through a GPO contract, at the 340B price, or for a non-340B outpatient, and how it has to all be tracked by the CE.

Jeremy Docken from Kalderos gave an outstanding presentation regarding duplicate discounts and managed markets. John found it difficult to identify a single slide as the entire presentation showed how there is still significant revenue leakage within the industry when it comes to the PHS/340B Program.

John Gould of Arnold & Porter gave a presentation regarding bundling and one slide especially highlighted the difficulty when durable medical equipment (DME) is involved. Of issue is how do you address GP concerns with a drug and a DME if the DME is free with a purchase, even if it’s required to dispense the product.

When it comes to Mergers & Acquisitions, Sanjida Chowdhury (Fresenius Kabi USA) and Kathleen Peterson (Hogan Lovells) not only gave a number of considerations regarding what to consider but also showed how dangerous it can be to blindly purchasing a company or even a product without doing the full due diligence.

All of the slides from Alice Valder Curran (Hogan Lovells) provided a great review of the current environment surrounding pharmaceutical manufacturers and pricing, including the political nature of what we do.

And John even mentioned his own slide on Puerto Rico and the Medicaid Program, showing how there remains a high level of uncertainty as to how this may impact manufacturers’ contracting strategies and bottom line.

This year’s MDRP was full of information for manufacturers and as always, there’s a lot going on in the government programs, so if you need help or are overwhelmed by all of the information, give me a call. I can help you figure out what is relevant and how to ensure you’ve fully and accurate implemented the Final Rule! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

Read more about MDRP 2016 here:

MDRP 2016 Pre-Conference, Track C: The AMP Final Rule
Track D: 340B Guidance for Pharmaceutical Manufacturers: Fundamentals, Operations, and Compliance
Drug Pricing is Today's Environment
MDRP 2016: Day One - Government Agency Sessions
A Review with Some of the Top GP Legal Experts
Farewell to 2016's MDRP Summit

Unintended Consequences – AMP and 5i

It had humble beginnings. In 1991, Congress passed the Omnibus Budget Reconciliation Act (OBRA 90), setting up the Medicaid Drug Rebate Program (MDRP). The goal was to enlist the aid of pharmaceutical manufacturers in lowering the cost of pharmaceuticals prescribed to Medicaid patients, and financed by the Federal and state governments. Access to manufacturers’ “best price” was the goal, to help balance the Federal budget. The metric used to measure the best price differential was Average Manufacturer Price, or AMP.

AMP was defined in the statute as the average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to the retail class of trade. The calculation methodology worked reasonably well for the first fourteen years, without the benefit of regulations from CMS. CMS did provide some guidance through manufacturer notices, dealing with the classes of trade to be included in the retail class, and identifying the credits that could be applied to correctly compute this metric.

All that changed in 2007. In July, CMS released a final rule implementing the price reporting provisions of the Deficit Reporting Act (DRA) of 2005. The DRA modified the customer classes, and discounts, that could be included in AMP calculations. Not a huge deal. However, the DRA burdened the AMP with a new task; it was to become the basis for the Federal Upper Limit (FUL).

FULs are used to determine reimbursement values for generic drugs dispensed in the Medicaid program. Prior to this, FULs had always used Average Wholesaler Price (AWP) as the metric for paying pharmacies. CMS was concerned, for valid reasons, that AWP did not reflect marketplace reality, and that CMS was funding these transactions based upon some “suggested retail” pricing at the government’s expense.


The reaction in the retail industry was immediate. On December 19th, 2007, the U.S. District Court in Washington issued a preliminary injunction order to prevent the implementation of the new AMP rules and the AMP-based FUL, in response to a lawsuit filed by the National Association of Chain Drug Stores (NACDS). NACDS claimed the drug stores were likely to suffer irreparable harm if these rules were implemented.

ACA Proposed Rule…”Average Manufacturer Price (AMP) means, with respect to a covered outpatient drug of a manufacturer (including those sold under an NDA approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FFDCA)), the average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to retail community pharmacies and retail community pharmacies that purchase drugs directly from the manufacturer.” This rule was finalized this year intact, and solidified the concept of RCP.

Narrowly defining the marketplace class of drugs led to an obvious question…what happens to the drugs that rarely or never go through an RCP? Are they subject to the same calculation parameters? To resolve this dilemma, CMS had defined drugs that are “injected, infused, inhaled, instilled, or implanted.”

These are the new “5i” drugs, with their own AMP calculation methodologies, including which discounts are included, and how the entity classification is to be determined, all on a monthly basis. It raises several concerns, such as sharing the same Base AMP with “standard” AMP, determining the true split between pharmacy types when RCPs dispense 5i drugs, and the ability to make this determination monthly.
The beat goes on.


About the author:

John Bliss is a contributing writer for the Medicaid Drug Rebate Program Summit. He has extensive experience in the pharmaceutical industry, including AstraZeneca, Sanofi Aventis, Merck, Pfizer, Daiichi Sankyo, and Bristol-Myers Squibb (BMS). The bulk of John’s career was at BMS. When OBRA90 hit, Government Pricing took over his life. Government pricing, managed care contracting, rebates, and chargebacks continue to extend challenges and provide meaningful employment. John now works as a consultant, primarily subcontracted by other consulting firms, providing value added services to each of them and their clients.

Election 2016: What Each Candidate Could Mean for Pharma

Every four years we are inundated with non-stop coverage of the presidential election, with both sides vying contentiously for control of the White House as well as Congress. Thankfully, each election year also brings us the Summer Olympics, which offer a brief but much-needed respite from the talking heads and partisan bickering. For two short weeks, Americans come together to support the heroes who motivate and inspire us all, before returning to the ones who polarize and divide us. It’s easy for all of us to rally behind Michael Phelps and Simone Biles, sharing in their successes and taking pride in the honor they bring to our country. However, reaching a consensus on Trump and Clinton is a different story.

After the Olympics are over and the kids are back in school, Government Pricing professionals will convene in Chicago once again for IIR’s 21st Annual Summit on the Medicaid Drug Rebate Program (MDRP). We will all come with our own opinions and political convictions, but we will also be wondering how our day-to-day responsibilities will be impacted by the election. Although we at Government Pricing Specialists (GPS) don’t have a crystal ball, we can compare and contrast the candidates’ platforms, and how they could change the face of GP. Here are their positions on a few GP-related issues:

The Patient Protection and Affordable Care Act (ACA)

• Clinton – Per her website, Clinton would “Defend and expand the Affordable Care Act, which covers 20 million people.”

• Trump – Per Trump’s website, “On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.”

• Potential GP Impact:  

Under a Clinton presidency, if the ACA stands, the changes codified in the recent MDRP Final Rule would likely remain in effect but the “Cadillac Tax,” the excise tax on high-cost health insurance plans, would likely be repealed. 

Under a Trump presidency, the legitimacy of the Final Rule could be challenged if the ACA is repealed. However, repealing the ACA may be difficult since taking away a benefit is usually unpopular with voters. If the Republicans control both houses of Congress, it is more likely that substantial changes to the ACA would be introduced but if Democrats control the House of Representatives or the Senate, it is unlikely that we will see significant change.

Medicaid

• Clinton – Per Clinton’s website, she would “Fight for health insurance for the lowest-income Americans in every state by incentivizing states to expand Medicaid – and make enrollment through Medicaid and the Affordable Care Act easier.” 

• Trump – Trump has said that the Federal Government should provide block-grants to the states for Medicaid, that it should be entirely controlled by the states which he believes would reduce the fraud, abuse, and waste. 

• Potential GP Impact:

Under Clinton, if Medicaid enrollment increases, Medicaid sales would likely increase, as would the volume of Medicaid rebates. 

Under Trump, if federal funding is reduced, it could actually put pressure on manufacturers to provide more in terms of rebates. However, Trump believes that his plan to get more Americans working would actually reduce the need for Medicaid because more people would have access to health insurance through their employer.

Medicare

• Clinton – Per her website, Clinton would “require drug manufacturers to provide rebates for low-income Medicare enrollees that are equivalent to rebates in the Medicaid program.” She would also “Allow Medicare to negotiate drug and biologic prices… Clinton believes that we should drive the best bargain for Americans, and especially for senior citizens, by allowing Medicare to negotiate drug prices, notably for high-cost drugs with limited competition.” Clinton also supports the idea of allowing people to “buy into” Medicare if they do not meet the eligibility requirements.

• Trump – Although he does not specifically address allowing Medicare to negotiate prices on his website, at a January rally in NH Trump supported allowing Medicare to negotiate drug prices, saying, “Drugs with Medicare, they don’t bid ‘em out… They pay like this wholesale incredible number… They say like $300 billion could be saved if we bid ‘em out. We don’t do it…”

• Potential GP Impact – A proposal to create a rebate program for Medicare, similar to the MDRP, would likely take significant time to pass and be finalized (think of the 6 years we waited for the AMP Final Rule). More likely is an extension of the Medicaid rebate to prescription drugs for “dual eligibles” (participants eligible for Medicaid and Medicare), but even that may take a bit of time. A plan to allow Medicare to negotiate drug prices with manufacturers, which both candidates support, although not the GOP at large, could require manufacturers to manage Medicare contracts similar to how they manage their VA contracts.

This election may be the most interesting one in our lifetimes, at least to date. As healthcare and health insurance become a greater part of our nation’s economy, and our own budgets, these issues will continue to receive a lot of focus. Government Pricing has always been the image of that old saying, “May you live in interesting times,” but this election year has become the poster child for it!

We look forward to the MDRP Summit to hear more on the potential GP implications of the 2016 election, and to hear your questions and comments. If you have not already registered, do so today and use code XP2158MISC to get an additional $100 off of the current registration fee. GPS will be onsite and blogging for the 2nd year in a row, so we look forward to seeing you there!


Sources:
https://trumpcare.com/trumpcare-and-medicaid/
http://www.nytimes.com/2016/04/09/us/politics/donald-trump-health-care.html?_r=0 
https://www.hillaryclinton.com/issues/social-security-and-medicare/ http://www.ontheissues.org/Senate/Hillary_Clinton_Health_Care.htm http://www.nytimes.com/2016/05/11/us/politics/hillary-clinton-health-care-public-option.html 
http://www.ontheissues.org/2016/Donald_Trump_Health_Care.htm


About the Authors: 
Katie Lapins & Dana Zelig Collins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com. ; D.Collins@gp-specialists.com

MDRP 2016: Final Agenda Available!

Medicaid Drug Rebate Program
September 20-22, 2016 | Chicago, IL
Download the final agenda: http://bit.ly/1TY7XCQ 

Now in its 21st year, IIR's MDRP Summit (http://bit.ly/1ZdEll3) has continued to be THE authoritative MDRP Event for Everything Government Pricing, Rebates and Regulation. MDRP provides unparalleled access to the government regulators creating the rules, the industry leaders interpreting them, and the pharmaceutical executives implementing them.

Don't miss out on your opportunity to benchmark best practices and gain solutions to overcome new operational challenges brought on by AMP Final Rule, 340B, Medicaid Expansion, Class of Trade, Fair Market Value, FSS, VA, OIG, and other critical government programs.

Why should you attend MDRP?

Learn:
• AMP Final Rule Implementation
• 120+ Speakers
• 6 Keynote Presentations
• 340B Guidance Updates

Benchmark:
• State Dispute Resolution Meetings
• New Executive Leadership Boardroom
• Town Hall between Manufacturers and States

Connect:
• 14+ Federal and State Agencies
• 600+ MDRP Executives
• 20+ States
• 30+ Solution Providers

Access the final agenda: http://bit.ly/1TY7XCQ

$400 savings ends Friday, July 1st! Click here to register: http://bit.ly/1RNJ5rF

Medicaid Directors and the Brand New Challenges They Face

By Rene Macapinlac

The most recent State Medicaid Operations Survey, conducted by the National Association of Medicaid Directors (NAMD), shows just how the Medicaid program has changed and will continue to change rapidly in the days ahead.


Topping the list of major Medicaid innovations is payment and delivery system reform. Agencies are moving toward performance-based reimbursement models both within traditional fee-for-service care delivery and managed care. Directors face challenges with staffing, data and systems infrastructure, budgets, and procurement processes.

Difficulties in recruiting and retaining staff are pushing directors to internally shift existing staff resources and step up initiatives for acquiring new skill sets.  On top of the challenges with limited staffing and resources, the directors must deal with higher expectations, increased public visibility, and greater accountability.

Medicaid today has become a complex program covering a wide range of services requiring a broad scope of operational functions. These operational functions often involve contractors, making day-to-day management even more complex. Contractor involvement varies by state, with some agencies contracting key functions while others only do back-office functions.

Despite the persistent and increasing job challenges, Medicaid directors remain committed to building new capabilities in order to meet the needs of more than 72 million Americans. They are implementing new or expanded program integrity activities - conducting various audits, enhancing data resources and analytical tools, strengthening program policies and procedures, and coordinating with other entities.

Rene Macapinlac is the Director of Operations at ManagedCareBiz, an online resource for managed care professionals who need to stay up-to-date on industry news, analysis and commentary.

Using Technological Advancements to Improve Health Care Delivery

By Rene Macapinlac


Through the years, technology has played a vital role in improving the delivery of health. During day one of the Medicaid Managed Care Congress, the subject of technology often came up in discussing efforts to move beyond Medicaid and provide higher quality care.

Telecommunication technology or telehealth has become one of the main tools for health plans and providers to improve care and outcomes. Video conferencing is being used by patients and doctors for real-time consultations and discussions. Electronic devices available for transmitting patient health information to doctors and other health care providers. Pre-recorded videos and digital images of x-rays can now be electronically transmitted between primary care providers and specialists.

Mobile applications are increasingly being used for health services, information and education.

Underserved populations can be reached through targeted text messages to promote healthy practices, and through public alerts to inform them about disease outbreaks.

Technology has also played a vital role in data-gathering and building metrics to better measure patient outcomes and member engagement. It is a key component in the development of state-led payment and service delivery innovations.


Patient-Centered Medical Home (PCMH), the model of care for transforming the delivery of comprehensive primary care is leaning on technology -- email, video chat and mobile apps -- to help patients stay on top of their health and get health care when they need it.


The Children’s Community Health Plan uses claims-based technology to detect women at risk for delivering a child with neonatal abstinence syndrome (NAS). The number of cases of infants with NAS has increased with the rise in substance use disorder. Once algorithms identify at-risk women, they are provided with educational materials and their care providers are notified.


When it comes to diabetes management, Cigna-HealthSpring is using cellular technology (along with nurse visits) to help its members with uncontrolled diabetes. They give these members information on self-management and monitoring.


These are just some of the ways technology is changing the Medicaid managed care industry. Although implementation comes with issues and challenges to be hurdled, there is no question that all of these technological advancements have been improving outcomes and mitigating rising health care costs.


Technological innovations support the provisions of the Affordable Care Act by providing educational materials and opportunities for patients to care for themselves better. Furthermore they provide opportunities for doctors and other providers to intervene with a patient early on when the health condition is still easily treatable.



Rene Macapinlac is the Director of Operations at ManagedCareBiz, an online resource for managed care professionals who need to stay up-to-date on industry news, analysis and commentary.

Medicaid Expansion Boosts Insurance Coverage, Use of Healthcare Services

- By Rene Macapinlac

Critics of Medicaid expansion have voiced out several reasons why states should not expand the program. Aside from concerns that it will burden the state budgets, they question Medicaid’s effectiveness in providing quality care. 

Now there are solid facts to support the case for Medicaid expansion.

A recent study found that in states that expanded Medicaid under the Affordable Care Act, insurance coverage increased for low-income adults. The study, published by the Annals of Internal Medicine, also found better healthcare usage and diagnosis rates for chronic diseases.

Researchers at the University of Michigan and the University of California-Los Angeles analyzed data from the National Health Interview Survey between 2010 and 2014. They compared the changes in outcomes among adults (ages 19 to 64, with family incomes 138 percent below the federal poverty level) in the 26 states that expanded Medicaid in 2014 with outcomes for adults in states that did not enact Medicaid expansion.

Among other factors, the researchers looked into coverage improvements compared to the previous year, doctor visits, hospitalizations and emergency department visits.

Here are some of the study’s key findings:

• In states that expanded Medicaid, insurance coverage increased 7.4 percent and Medicaid coverage increased 10.5 percent compared to non-expansion states.

• States that expanded Medicaid saw an increase in adults reporting an overnight hospital stay (2.4 percent), or visit to a physician (6.6 percent) in 2014, compared to non-expansion states.

• In states the expanded Medicaid, the rate of diabetes diagnoses increased (5.2 percent) as well as cholesterol diagnoses (5.7 percent).


It’s important to note that there were limitations to this study. Researchers only looked at the experiences of low-income adults during the first year of enactment of Medicaid expansion. They were not able to definitively rule out other factors unrelated to Medicaid expansion that may have influenced the results.

Although the study showed low-income adults were more likely to go to a physician or hospital, it was not able to determine improvement in the adults’ health because of the limited available data.

The researchers, however, have no doubt that greater use of health services could pay off in the future. They pointed out in the study that increased detection of chronic health conditions under Medicaid expansion could have important implications for both population health and national spending on health care “if it leads to improved management and control of these conditions." Since states began Medical expansion in 2014, Medicaid enrollment has gone up to more than 70 million people.

Monitoring these trends over time will be critically important for Medicaid managed care professionals as they prepare to adapt to changes, particularly when it comes to the people now gaining Medicaid coverage. Under the Affordable Care Act, states are now using Medicaid managed care plans to cover beneficiaries in rural areas, those with complex and chronic conditions, and many new enrollees. It will be interesting to see in the coming months how access to providers will be affected - as enrollment goes up and the number of uninsured people go down.


About the author:

Rene Macapinlac is the Director of Operations at ManagedCareBiz, an online resource for managed care professionals who need to stay up-to-date on industry news, analysis and commentary.

3 Medicaid Mega-Reg Provisions Take Center Stage

In reporting the announcement of new rules updating managed care in Medicaid and the Children’s Health Insurance Program (CHIP), the media focused on three key provisions.

On April 25, the Centers for Medicaid and Medicare Services (CMS) finally released the rules aimed at overhauling Medicaid and Children's Health Insurance Program (CHIP) managed care plans. The new rules set the standards for modernizing the entire Medicaid managed care delivery system. This happens to be the first update to managed care regulations in more than a decade.

The lengthy ruling - more than 1,400 pages long - was broken down by the media. ManagedCareBiz, which keeps track of how the media reports on managed care issues, found that of all the provisions of the new regulation, the news media highlighted these three items:

- The new rules will establish a Medicaid managed care quality rating system to assist Medicaid recipients in picking a plan.

- The new rules will set a minimum medical loss ratio (MLR) of 85 percent for Medicaid. This means that profits of insurers will be limited as plans will spend a minimum of 85 percent of their intake on medical expenses rather than on administrative expenses.

- The new rules will require states to guarantee access to doctors and hospitals. The standards will include “time and distance” maximums to ensure physicians are not too far from the plan members.

News reports pointed out that the provision on quality ratings will have the most impact to the public as it will give consumers more information about the health plans available. It is comparable to the existing Medicare Advantage star rating system, which goes to show that the CMS is bringing Medicaid managed care in the same direction as Medicare Advantage.

Consumer advocates have been pushing the government for many years to come up with stricter standards for managed care plans. They believe that these plans have often favored profits over patients.

Other provisions of the new managed care rules for Medicaid and CHIP include:

- Requiring plans to regularly update directories of doctors and hospitals. (According to Kaiser Health News, a 2014 investigation by the Department of Health and Human Services’ inspector general found that half the doctors listed in official insurer directories weren’t taking new Medicaid patients.

- Pushing plans to better detect and prevent fraud by providers, including mandatory reporting of suspected abuse to the states.

- Making it easier for states to offer managed-care plans incentives to improve clinical outcomes, reduce costs and share patient information among hospitals and doctors.


The new regulation will be implemented in phases over the next three years, starting July 1, 2017. The CMS recognizes this as a major step forward in the administration’s efforts to strengthen Medicaid as well as CHIP which offers low-cost coverage to children in some families that don’t qualify for Medicaid.

With all of these changes happening, there is no better time to discuss and dissect Medicare managed care than today. If consumers have much of their attention on these three key takeaways, particularly the Medicaid managed care quality rating system, what are industry professionals focusing on? It will be interesting to see which provisions of the new Medicaid managed care regulation stand out for health care executives and other managed care professionals.


About the author:

Rene Macapinlac is the Director of Operations at ManagedCareBiz, an online resource for managed care professionals who need to stay up-to-date on industry news, analysis and commentary.

The Medicaid Managed Care Regulation is here!

Since the last major updates to Medicaid Managed Care regulation in 2003, Medicaid and managed care have both evolved dramatically. After years of waiting, CMS released the long-awaited final Medicaid Managed Care 'Mega-Reg' Rule. For those of you who would like to review it immediately, it is available here. As you know, this draft regulation will govern the activities of states and plans participating in the Medicaid and CHIP programs going forward. The time to plan has ended! It is “Game Time”!

IIR's Medicaid Managed Care Congress will be your first opportunity to dissect the implications of the Mega Reg and its impact on your daily operations and overall bottom line from thought leaders in the space including ACAP, Mostly Medicaid, and more.

Details:

Medicaid Managed Care Congress (MMCC 2016)
Marriott Harbor Inn
Baltimore, MD
May 18-20

MMCC’s Mega Reg Pre-Conference symposium will address and break down the rule, and analyze and interpret its effect with like-minded individuals and organizations. Key topics will include:

• Require transparency and fairness between plans and states in rate-setting
• Encourage efficient, realistic use of limited resources;
• Hold fee-for-service programs to the same standard as managed care;
• Set standards for network adequacy which reflect local conditions as they exist;
• Provide for realistic implementation timeframes for both plans and states;
• Promote the movement to value-based payment strategies; and
• Provide for comprehensive, accurate and fair quality reporting and standards.

Click here to download the full MMCC 2016 brochure


Below is a preview of the sessions in the Mega-Reg symposium:

MEGA REG SYMPOSIUM OPENING REMARKS

Jennifer Babcock, Vice President for Medicaid Policy and Director of Strategic Operations Association for Community Affiliated Plans (ACAP)

NETWORK ADEQUACY

CHALLENGES IN RATE-SETTING 

Clay Farris, Senior Healthcare Executive
Mostly Medicaid

QUALITY

Deborah Kilstein, Vice President, Quality Management and Operational Support
Association for Community Affiliated Plans (ACAP)

MEDICAL LOSS RATIOS, RISK CORRIDORS, AND OTHER MMC FINANCING ISSUES

CHANGING THE FACE OF MEDICAID: PROGRAM INTEGRITY REQUIREMENTS FOR MEDICAID MANAGED CARE 

Larry Heyeck, Deputy Director for Legal Services State of New Mexico

ALIGNMENT AND COORDINATION AMONG PUBLIC COVERAGE PROGRAMS, INCLUDING MEDICAID, MEDICARE, MARKETPLACES

Amy Thomas, Assistant Director of Plan Support
Association for Community Affiliated Plans (ACAP)

Download the full MMCC 2016 brochure here

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How Providers Can Help Increase Transparency Into Policy Plans

While doctors and dentists are on this this earth to help us live long and healthy lives, that often does little to ease the anxiety that many feel when visiting their office. In fact, increased levels of stress almost always accompany a visit to either the doctor or dentist’s office, in addition to a corresponding elevated blood pressure reading. The process can be made easier and more settling, however, when these same doctors and dentists properly educate their patents about new processes and policies being incorporated into the insurance.

Much of the anxiety that occurs when needing to go the dentist or doctor revolves around cost. Many simply do not know how, or if, they will be able to pay for any medical procedures that become necessary. They cannot understand their insurance policy, and are unsure of where to even go for help. For this reason alone, a staggering number of Americans simply stay away from the Doctor or Dentist’s office altogether until it is often too late. There are, however, certain things that insurance providers can due to help increase transparency within their policy plans.

Transparency Made Easier Under the Affordable Care Act

One of the final rules implemented as a provision within the Affordable Care Act was a requirement that all health plans now should provide consumers with a uniform summary of coverage. This applies to those people currently enrolled in a place, as well as new applicants. This is a step in the right direction, as it now ensures that individual dental insurance is transparent and easy to understand. Benefits and provisions of coverage should be more clearly spelled out of individuals, and this will make it easier for them to determine what is and is not covered, and to what extent.

In this regard, providers can help to ease the stress and anxiety that many consumers feel over health and dental insurance related issue. In the past, it was felt that many individuals faced too many choices when dealing with insurance policies, and that they were not adequately informed as to how coverage actually works. One survey even found that people would prefer to go to the gym or even work on their taxes than take the time to read through earlier versions of health insurance policies.

The Transparency of Coverage Disclosures

Most insurance policies must now disclose any information that would enable consumers to better understand how their particular plan will reimburse the claims that are made for covered services, and whether or not a service would actually be covered under the existing policy. In essence, the following information must be disclosed in a transparent and easy to understand manner:

• Polices and Practices Related to the Payment of Claims
• Financial Disclosure to be Made on a Periodic Basis
• Data Enrollment Must be Disclosed
• Data Account For Those Who Unenroll Must Be Disclosed As Well
• Information on the number of claims that are denied in the end
• Information about rating practices
• Data related to cost-sharing and payments, particular in terms of out-of-network coverage that is available
• Data of the rights afforded to enrollees and participants under the terms of the policy

All of the information mentioned above is to be written in clear English that is geared specifically to the consumer, and should be designed for people who have limited proficiency in the language. This effectively makes it easier for individuals to understand their policy and what they should expect from the insurance provider.

While there will likely still be a great deal of anxiety associated with visits to the doctor or dentist, this will be lessened somewhat with the advent of these new policies. Knowing what is covered and how the benefits will be paid can go a long way towards not only lessening the financial burden on the individual, but also towards making the process much more streamlined and comfortable in the end.



About the author:

Greg Dastrup is a world traveler and professional writer with a passion for learning new languages. He’s spent most of his career consulting for businesses in North America. You can follow Greg here.

The Implications of the Mega-Reg on the Medicaid Managed Care Industry: 2016 & Beyond

2016 is a year of transformation for the healthcare ecosystem - over the past year we’ve seen the implementation of major ACA provisions, delivery system reforms, payment reforms, and states pursuing better value. There’s been a recent shift away from taking a budget-driven approach, and is now driven by the desire to improve quality and outcomes. The implications will be huge and will go beyond Medicaid. 

We’ve had a short Q/A with Jennifer Babcock, Vice President for Medicaid Policy and Director of Strategic Operations, Association for Community Affiliated Plans (ACAP), who will also be chairing and presenting at the Medicaid Managed Care Congress in May. 

What upcoming major trends are you excited about? 

Medicaid is undeniably undergoing a great deal of change right now, and there are many advancing trends keeping all Medicaid policy analysts on our toes. One of the most exciting, from my perspective, is efforts by Medicaid health plans to impact social determinants of health and to integrate within the health plan help for people to get jobs, housing, nutritional support, even support as they leave the criminal justice system. A substantial number of ACAP member plans are doing important work in these areas, as described in a fact sheet we produced in 2014. Efforts by health plans to impact social determinants underscore that 
our collective goal is to improve the health and well-being of people covered in Medicaid.

Secondly, I’m excited to learn about efforts by plans, states, and providers to look at improving quality of health at the population level. Again, these efforts offer a great opportunity to improve the health of the entire nation, given how expansive a coverage program Medicaid is. 

What do you think will be the major implications of the Mega-Reg? 

If finalized the way we at ACAP hope, the Mega Reg will erase any lingering questions about the crucial role MCOs play in Medicaid, leading the way to greater emphasis on the partnership between states and plans. I hope, for example, that CMS will require transparency between states and plans in general, and in particular with regard to the rate-setting process to ensure that all rates are set and approved in a timely and comprehensible manner. Also, I would like to see CMS move toward payment and coverage models that use MCOs to promote population health. Lastly, I would like to see movement toward standardized quality measurement that allows us to learn what Medicaid pays for, not just in MMC, but FFS as well.

Do you have any best practices of success stories you’d like to share? 

My colleagues at ACAP worked with a subset of ACAP plans last year on a substance use disorder collaborative, which resulted in this toolkit, which is available publicly for other health plans to use. This toolkit provides best practices for plans working with individuals impacted with SUD, including opioid addiction. It’s an example of how effectively and quickly Medicaid MCOs can respond to a significant population health problem. We are very proud of these plans’ efforts. 

For MMCC, what do you hope to learn more about? 

I am looking forward to hearing from the real experts about quality in Medicaid managed care and Medicaid. I am anxious to gain insights about how best to coordinate and standardize the myriad quality measurement and reporting efforts so that we can get on with the business of using results to improve care for people, and to improve Medicaid overall, and CHIP as well. While it’s fascinating to see the efforts many states are making to report on the adult and pediatric core measures sets (the CMS 2015 Annual Report on the Quality of Care for Adults in Medicaid and 2015 Annual Report on the Quality of Care for Children in Medicaid and CHIP were released in February of this year), I feel strongly that we all can do more to ensure that quality of care for Medicaid and CHIP enrollees is measured, reported, and improved.

Learn about the implications of the new regulations and beyond by joining the Medicaid Managed Care Congress (MMCC) in Baltimore, MD (May 18-20, 2016.) For more information about MMCC 2016 visit the website here.

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Four Major Managed Care Industry Concerns by Jennifer Babcock (ACAP)

The managed care landscape is evolving with the elections around the corner and the Mega-Reg stipulated to release. There is a lot going on in the industry. Read about the four major concerns of the industry by Jennifer Babcock, Vice President for Medicaid Policy and Director of Strategic Operations, Association for Community Affiliated Plans (ACAP):


1.    ACAP’s member plans are very innovative and nimble Safety Net Health Plans that have demonstrated a clear dedication to their enrollees, their communities and to safety net providers. Some Safety Net Health Plans have participated in Medicaid in their states for decades. The move toward consolidation in the industry poses a threat to this commitment, so one of ACAP’s primary goals is to provide support for and create efficiencies for these plans.

2.   The continued lack of an Affordable Care Act Medicaid expansion in many states has produced a drastically inequitable coverage system with multiple negative impacts on people, providers, and states alike. I’m heartened, though, to see the efforts our members and many others are making in those states to encourage governors and state legislatures to expand.

3.   Despite progress, it is still so difficult for people to access all the services they need to thrive, including not only health services, but services addressing social determinants of health as well. Many ACAP health plan members have moved boldly into this area by providing linkages to housing, nutrition, and employment services. CMS has provided leadership in this area as well – one example is last year’s guidance related to how Medicaid programs can fund housing activities.

4.   The continued fragmentation of coverage and care complicates health care for families. Many of the families our plans serve are split between Medicaid, CHIP, Marketplace coverage, and Medicare. Certainly, plans can and do make the choice to operate in all of these programs to address overlap for families, but participation by plans in multiple programs is not a sure thing, and it is not an easy lift, particularly for Safety Net Health Plans. There aren’t always clear incentives for them to do so, which can mean that single families can have to manage two or more sources of coverage, networks, and so on. CMS’ efforts to align requirements across programs is appropriate and useful, although more work needs to be done in this area. Ultimately, enrollee families will benefit.



Hear more from Jennifer Babcock as she will be chairing and presenting at the Medicaid Managed Care Congress (MMCC) 2016, Baltimore, MD with the session "Dive Deep into the Implications of the Mega-Reg"

Download the brochure to see the most up-to-date agenda for the MMCC here.

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