November 8, 2009
Here are articles from the latest issue of American Health & Drug Benefits. AHDB is a peer-reviewed journal for 30,000 decision makers in health plans, PBMs, Medicare, Medicaid, and the pharma and biotech industries:
Predictive and Prognostic Models: Implications for Healthcare Decision-Making in a Modern Recession:
F. Randy Vogenberg, RPh, PhD examines the role of predictive modeling in the healthcare decision-making process and its impact on clinical outcomes. Dr. Vogenberg discusses the difference in the value of modeling to patients, providers, employers, and health insurers. He describes how applying predictive modeling can enhance patients' and providers' ability to make the best clinical decisions. Dr. Vogenberg is principal, Institute for Integrated Healthcare, Sharon, MA; adjunct Instructor, University of Rhode Island College of Pharmacy; and senior fellow, Jefferson University School of Population Health, Philadelphia, PA.
Kathryn Fitch, RN, MEd; Sara W. Goldberg, FSA, MAAA; Kosuke Iwasaki, FIAJ, MAAA; Bruce S. Pyenson, FSA, MAAA; Andreas Kuznik, PhD; and Henry A. Solomon, FACP, FACC analyze the effects of statin therapies on working age people at high-risk for cardiovascular disease. Using a target population of between ages 35-69, the authors found that 4 percent of the target population generated 22 percent of the risk for coronary heart disease and stroke, and that aggressive cholesterol-lowering statinssignificantly reduced the potential for events and is cost-neutral for payers. Ms. Fitch is healthcare management consultant, Ms. Goldberg is consulting actuary, Mr. Iwaski is consulting actuary, and Mr. Pyenson is principal and consulting actuary, at Milliman. Dr. Kuznick is associate director of outcomes research and Dr. Solomon is medical director at Pfizer.
Bharati Bhardwaja, PharmD, BCPS; Nikki Carroll, MS; Eli Korner, PharmD; and Kavita V. Nair, PhD discuss a new study that assesses the effects of prescription benefit coverage on medication adherence among Medicare beneficiaries diagnosed with end-stage renal disease (ESRD) taking sevelamer hydrochloride. The authors draw on lessons learned from caps on total drug spending and its impact on medication adherence, and conclude that caps on adherence negatively impact adherence and healthcare costs. Dr. Bhardwaja is a nephrology clinical pharmacy specialist, Kaiser Permanente and clinical assistant professor, University of Denver School of Pharmacy. Ms. Carroll is biostatistician at Institute for Health Research, Kaiser Permanente. Dr. Korner was research investigator, Kaiser Permanente during this study and is currently medical liaison, virology and hepatology, Roche Laboratories. Dr. Nair is associate professor, School of Pharmacy, University of Colorado at Denver.
Private Health Plans Perspectives: Electronic Personal Health Records and Electronic Prescribing:
Nancy M. McGee, JD, MPH; Gene Reeder, RPh, PhD; Timothy S. Regan, BPharm, RPh, CPh; J.D. Kleinke; and Steve Arnold, MD, MS, MBA, CPE analyze the results of a survey of commercial payers representing 16 national plans and 80 million covered lives to better understand payer involvement in electronic personal health records (ePHR) and e-prescribing. While respondents were enthusiastic about ePHRs and have aggressively moved to implement them, there was also disappointment in members' low utilization of these electronic systems. The authors suggest that Americans' concern about their health data being used inappropriately may be at the root. Ms. McGee is senior vice president and chief operating officer, Lash Group, San Bruno, CA. Dr. Reeder is director of payer market research at Xcenda. Mr. Regan is executive director, customer insights, at Xcenda. Mr. Kleinke is chief executive officer, Mount Tabor Online Services, Portland, OR. Dr. Arnold is vice president and chief medical officer,Touchstone Health Plan, Lagangeville, NY.
Debate on the Elderly and End of Life Care Under Health Reform:
In The Politics of Epidemiology, by Robert E. Henry, and End-of-Life Choices Are Necessary in Any Healthcare Reform by Gary M. Owens, MD, the authors tackle the thorny issue of how to address the elderly and end-of-life, both in healthcare reform and as a society. Mr. Henry argues that it is not a part of America's fundamental character to adopt policies that would determine what kind of care a person gets based on age and infirmity and that the government should avoid mandating processes that might ultimately encourage terminally ill patients to die quickly and efficiently. Dr. Owens argues that meaningful conversations between physician and family members and patients about their wishes at the end of their lives are important and should be encouraged to avoid potentially aggressive treatments that the patients themselves may not want. While he agrees that a health system should support the health of citizens, it should also respect the values of those facing end-of-life decisions. Mr. Henry is editor-in-chief of American Drug and Health Benefits. Dr. Owens is president, Gary Owens Associates, Philadelphia, PA.
Can Generics Help Heal Our Ailing Healthcare System:
Dalia Buffery, MA, ABD discusses the current struggle in Congress over the role and place of biosimilars. Recent legislative skirmishes in the House Energy and Commerce Committee defeated the 5-year exclusivity period for biosimilars proposed by Chairman Henry Waxman in favor of a 12-year exclusivity period. She asserts that while generic oral drugs have saved over $734 billion in the last decade, it will be important to craft a bill on biosimilars that both encourages and rewards innovation while also reducing costs to the system in the long run. Ms. Buffery is editorial director,American Health and Drug Benefits.
Learn More:
American Health & Drug Benefits is available in print and online atwww.AHDBonline.com. To view the current or past issues or download in PDF format, click here.
Kip Piper is health policy editor of American Health & Drug Benefits
August 9, 2009At the last annual meeting of the Academy of Managed Care Pharmacy, several of us spoke on pharmaceutical research and development in the quickly emerging value-driven healthcare system. Topics focused on the impact of value-based benefit designs, comparative effectiveness research, and government policies on the development of new drugs and biologics:
Research and Development in the Current Healthcare System: An Overview
Thomas McCarter, MD, FACP
What Constitutes Medical Evidence in the Era of Comparative Effectiveness?
Nirav R. Shah, MD, MPH, FACP
New Government Policies: Opportunities for Supporting Research and Development
Kip Piper, MA, FACHE
Drug Discovery and Development in a Value-Driven Healthcare System
Matthew Sarnes, PharmD
A Hypothetical Case: Current Drug R&D Process
Michael F. Murphy, MD, PhD
Our presentations were published in a supplement issue ofAmerican Health & Drug Benefits, a peer-reviewed journal serving about 30,000 decision makers. To read the articles, which are approved for continuing education credit, click here.
August 8, 2009
The HHS Agency for Healthcare Research and Quality (AHRQ) hasannounced plans for spending its $300 million share of the $1.1 billion Congress appropriated forcomparative effectiveness research(CER) under the American Recovery and Reinvestment Act of 2009 (ARRA or Recovery Act for short). AHRQ plans to solicit grant applications this fall and award grants and contracts by spring 2010. The $300 million must be encumbered by end of FFY 2010.
AHRQ Spending Plan for Comparative Effectiveness Research in 2010:
New Grants ($198.5 million):
$148 million for evidence generation, including prospective studies and patient registries:
- $100 million for the Clinical and Health Outcomes Initiative in Comparative Effectiveness (CHOICE), a new national effort to establish a series of prospective pragmatic clinical comparative effectiveness studies that measure the benefits treatments produce in routine clinical practice. This will include novel study designs focusing on real-world and under-represented populations (children, elderly, racial and ethnic minorities, and other understudied populations).
- $48 million for the establishment or enhancement of national patient registries that can be used for researching the longitudinal effects of different interventions and collecting data on under-represented populations.
$29.5 million to support innovative translation and dissemination grants.
$20 million to support training and career development.
$1 million for other grants.
New Contracts ($19.5 million):
$9.5 million to establish an infrastructure to identify new issues for comparative effectiveness research.
$10 million to establish a citizen's forum to engage stakeholders and to expand and standardize public involvement in the federal comparative effectiveness research program.
Expand Existing Contracts ($79 million):
$50 million for evidence synthesis.
$24 million for evidence generation.
$5 million for translation and dissemination.
Administration ($3 million):
$3 million for salary and benefits for new AHRQ staff to administer the CER program.
Health Conditions Selected for Comparative Effectiveness Research:
For the time being, AHRQ is going to use the same 14 priority conditions designated earlier by the HHS Secretary under the Medicare Modernization Act. The priority conditions were selected because of their high interest for Medicare, Medicaid, and theChildren's Health Insurance Program (CHIP):
- Arthritis and non-traumatic joint disorders
- Cancer
- Cardiovascular disease, including stroke and hypertension
- Dementia and other brain and nerve conditions, including Alzheimer's Disease
- Depression and other mental health disorders
- Developmental delays, attention-deficit hyperactivity disorder, and autism
- Diabetes mellitus
- Functional limitations and disability
- Infectious diseases including HIV/AIDS
- Obesity
- Digestive system conditions (peptic ulcer disease and dyspepsia)
- Pregnancy including preterm birth
- Pulmonary disease and asthma
- Alcohol and drug abuse
For more information on AHRQ's CER program, visiteffectivehealthcare.ahrq.gov.
May 18, 2009
Here are articles from the latest issue ofAmerican Health & Drug Benefits.AHDB is the peer-reviewed journal for 30,000 decision makers in health plans, PBMs, Medicare, Medicaid, and the pharma and biotech industries:
May 2009 Issue:
The Paradox of Public Policy Reform: Change or Continuum?
By Robert E. Henry
Are You Kidding Me? Clinical Comparative Effectiveness or Evidence-Based Medicine
By Thomas Kaye RPh, MBA, FASHP
MIPPA: First Broad Changes to Medicare Part D Plan Operations
By Jean D. LeMasurier and Babette Edgar, PharmD, MBA
Stakeholder Perspective by Mark Newsom, MSc
ProvenCare: Geisinger's Model for Care Transformation through Innovative Clinical Initiatives and Value Creation
Interview with Ronald A. Paulus, MD, MBA
Perspective: The Integrated Patient-Centered Medical Home: Tools for Transforming Our Healthcare Delivery System
By Matias A. Klein
Increased Patient Cost-Sharing, Weak US Economy, and Poor Health Habits: Implications for Employers and Insurers
By Melinda C. Haren, RN; Kirk McConnell; Arthur F. Shinn, PharmD, FASCP
Stakeholder Perspective by Paul Anthony Polansky, BSPharm, MBA
New Legislations on Generics and Biosimilars Brewing in Congress
By Dalia Buffery, MA, ABD
Paying for Cancer Care: Economic Models Start to Emerge, Dovetailing Healthcare Reform
By Caroline Helwick
Read Current and Past Issues:
American Health & Drug Benefits (AHDB) is available in print and online at www.AHDBonline.com. To view the current or past issues,click here.
AHDB also published web exclusives, available for reading here.
Kip Piper is health policy editor of American Health & Drug Benefits.
February 17, 2009
As the new Obama Administration and the 111th Congress focus onhealth care issues, here is a quick list of some of the Medicare policy changes Democrats will likely seek in 2009-2010:
Likely Changes in Medicare Advantage:
1. Phase-out of difference between Medicare Advantage plan rates and Medicare fee-for-service:
2. Significant increase in MA plan oversight, especially on marketing, quality, data reporting, and process compliance. Expect new CMS requirements via both rules and guidelines, plus tighter audits and faster action on plan sanctions.
3. Special Needs Plan (SNP) law sunsets on December 31, 2010. Reauthorization prospects depend largely upon:
Likely Changes in Medicare Part D Drug Benefit:
1. Federal negotiation of prescription drug prices in Medicare Part D. Political symbolism with no budget savings unless feds unwisely use the authority to:
2. Create a "Public Plan" option in Part D. This would be a government-run Part D drug plan to compete with commercial plans (MA-PDs and PDPs). Would mean federal government getting far more and directly involved in marketplace and key decisions over formularies and pricing. Huge implications for health plans, drug plans, PBMs, pharma manufacturers, and pharmacies.
3. Require Medicaid-like best price drug rebates in the Medicare Part D benefit. Initially, this will likely apply only to prescription drugs used by dual eligibles. However, in future, it will likely extend to all of Part D. The political temptation will be too great.
4. Like with Medicare Advantage plans (for Part A and Part B services), increased federal compliance oversight of MA-PDs and PDPs for Part D benefits.
Other Likely Changes in Medicare Program:
1. Development of new payment models in Medicare, notably demos of bundled hospital-physician payments, episode-based payment, and gainsharing. These reform will create new opportunities, realign incentives in the marketplace, and could help focus federal policy makers on fixing the biggest drivers to high costs.
2. More transparency. Public reporting of prices, quality, and safety. Reporting will be increasingly tied to payment penalties for non-reporting. Policy makers are losing patience with provider trade groups balking at disclosure.
3. Promote use of patient-centered care models and medical homeconcept, especially for the chronically ill.
4. Reform Medicare physician payments, either another temporary fix or permanent change. Otherwise, docs face an automatic 20% rate cut in 2010. The current system is absurd but permanent fix will cost $262 billion to $460 billion over ten years (depending on whether rates are frozen or docs get modest annual increases).
The changes described here range from the necessary to the useful, from the shortsighted to the unwise. But the Obama Administration and Dem leaders in the House and Senate have a long, ambitious wish list of changes for Medicare. And it is still unclear how the tough economy, budget realities, and larger health reforms will affect their Medicare agenda. Regardless, buckle up for a wild ride.
December 23, 2008
Medicare beneficiaries in Special Needs Plans (SNPs) have higher Part D prescription drug utilization and costs than enrollees in other Medicare Advantage Prescription Drug Plans (MA-PDs) do. This is no surprise since, by design, Special Needs Plans serve higher-risk Medicare patients, including many dual eligibles. However, despite higher drug utilization rates in SNPs, SNP enrollees and other MA-PD enrollees have similar rates of inappropriate drug pairs (therapeutic duplications and drug-drug interactions).
Compared to enrollees in other (non-SNP) Medicare Advantage drug plans, SNP enrollees fill 11% more scripts. The average annual prescription cost per SNP beneficiary is 49% higher compared to that of other MA-PD beneficiaries. The difference in per capita drug costs between SNPs and other MA-PDs appears due to a combination of factors: SNP beneficiaries' higher utilization, use of costlier drugs, lower utilization of 90-day prescriptions, and SNPs paying more for some highly utilized drugs.
While SNP beneficiaries fill more prescriptions on average than other MA-PD beneficiaries, SNP and other MA-PD beneficiaries are exposed to potentially inappropriate drug pairs at similar frequencies. However, at higher levels of drug utilization, SNP beneficiaries are less likely to be exposed to a potentially inappropriate drug pair than other MA-PD beneficiaries.
Most inappropriate drug pairs (65%) in SNPs and MA-PDs are drug-drug interactions. Of these, 83% presented a moderate risk and 17% a serious or severe risk of an adverse drug event. The remaining potentially inappropriate drug pairs (35%) are therapeutic duplications. The majority of inappropriate drug pairings - in both SNPs and other MA-PDs - recur and involve drugs prescribed by the same physician and filled by the same pharmacy.
These findings, from a new analysis of 2006 data by the HHS OIG, provide further evidence for the urgent need of e-prescribing nationwide. There is also a need for genuine medication therapy management programs and more information and decision support tools for physicians and pharmacists - as well as sharpened accountability for those relatively small number of prescribers and dispensers who apparently generate the majority of potentially dangerous drug pairings.
December 16, 2008
Medicare reimbursement policies are highly complex. Yes, that could be the litotes of the decade. Thankfully, the outstanding staff at the Medicare Payment Advisory Commission(MedPAC) produce and routinely update a series of basic primers on Medicare payment methodologies for hospitals, physicians, other providers, Medicare Advantage plans, and Part D prescription drug plans.
MedPAC's primers are reader friendly and crafted for a general audience. Typically 2 to 4 pages in length, they summarize the basic elements of each given payment methodology, with some history, policy context, and a flow chart(s) diagramming how payments are generally calculated.
Here are the latest primers on the basics of Medicare payment methods:
Medicare Hospital Services:
Medicare Outpatient Services:
Medicare Post-Acute and Related Services:
Medicare Health Plans and Prescription Drug Plans:
August 18, 2008
Many of my clients ask me how Medicaid policy is made, particularly for coverage, reimbursement, and managed care and other delivery systems. The $360 billion Medicaid program is highly complex and there are many nuances and exceptions, but here is a high-level primer on the basics.
Given the Medicaid program's shared federal-state funding and governance, underlying complexity, and variability across the respective states, Medicaid policy is set through several distinct vehicles, some federal and some state.
Medicaid Policy Making by Federal Government:
The primary federal policy making vehicles are:
Federal Medicaid Statutes:
Title XIX of the Social Security Act provides the federal statutory framework for Medicaid nationwide. Like its Medicare counterpart, Title XIX is extraordinarily complex and frequently amended by Congress. The federal Medicaid statutes are a mix of mandates and options for states. Medicaid legislative changes are often accomplished through budget reconciliation bills rather than separate stand-alone legislation. Short-term fixes may be made through appropriations bills.
Federal Medicaid Rules:
The vast bulk of federal Medicaid rules are promulgated by theCenters for Medicare and Medicaid Services (CMS). As with Medicare rules, CMS must follow the rulemaking process required by federal Administrative Procedures Act (APA) and the same clearance process. Most proposed and final rules affecting Medicaid are drafted by staff in CMS' Center for Medicaid and State Operations (CMSO), with legal advice from the HHS Office of General Counsel (OGC). Before publication in the Federal Register, proposed and final rules require approval of the HHS Secretary andWhite House Office of Management and Budget (OMB). OMB's Medicaid rule reviews are conducted primarily by the Medicaid Branch in OMB's Health Division but coordinated through OMB'sOffice of Information and Regulatory Affairs.
Federal Medicaid Guidance:
CMS uses several mechanisms to make or clarify Medicaid policy through "sub-regulatory guidance." This includes CMS' State Medicaid Manual and an important and influential ad hoc series of letters to State Medicaid directors - both issued by CMSO.
Federal law requires formal rulemaking for most substantive policy making, including interpretations of federal statutes. However, CMS often sets policy administratively, either in lieu of or far in advance of formal rule making. For example, if Congress makes significant changes to Title XIX with a tight deadline for implementation, CMS often issue a guidance letter or directive months in advance of issuing necessary conforming regulations. CMS must perform a balancing act to comply with the intent of APA and still implement frequent changes enacted by Congress or expected by the White House or HHS Secretary.
Officially, letters to State Medicaid directors (SMDs) are not intended to make policy per se but many states and experts believe some of these SMD letters make policy that requires formal rulemaking. Under a new Executive Order, OMB now has the authority to review and approve CMS guidance. This is consistent with its longstanding authority to review rules and waivers and a response to growing use of sub-regulatory issuances by agencies across the Executive Branch. OMB's new role continues to evolve.
Federal Medicaid Waivers:
Under sections 1115 and 1915 of the Social Security Act, the HHS Secretary may waive a variety of federal statutes and rules to permit state Medicaid programs to change benefit packages, eligibility, cost sharing, and care delivery in ways not permitted by current law. For my recent primer on federal Medicaid and Medicare waivers, click here.
Medicaid Policy Making by States:
The state-level policy making mechanisms in Medicaid are:
Medicaid State Plan:
Each state Medicaid program has its own "State Plan," which serves as the funding agreement between the state Medicaid agency and CMS. The State Plan specifies all of the state's key policies on Medicaid eligibility, benefits, cost sharing, reimbursement, managed care, quality assurance, utilization management, and program integrity. Here's an example of a Medicaid State Plan.
State Plans are highly detailed (typically 1000-2000 or more pages in length) and subject to frequent revision to reflect changes in federal law or rules, CMS guidance, state policy choices, and court rulings. State Plan Amendments (SPAs) are drafted by the state Medicaid agency and submitted to CMS for approval. Many SPAs are routine, following "preprints" - boilerplate checklists that allow states to propose SPAs needed to conform the State Plan to federal mandatory policies or common practices already approved for other states. States don't have to follow the preprints but it makes routine SPAs much easier. The state publishes a prior public notice for each SPA.
Routine SPAs are handled by the CMS regional offices but CMSO's central office staff in Baltimore handles all major and controversial SPAs. CMS may ask questions and may deny SPAs that it determines fail to comply with federal requirements. If an SPA rejected, the state may appeal CMS' decision to the HHS Departmental Appeals Board (DAB) and thereafter to the federal courts.
State Statutes and Administrative Rules:
Each state also sets some degree of Medicaid policy through state statutes and administrative rules. States vary widely in the degree to which state Medicaid policies are set forth in statutes or rules. Most states set eligibility, benefit packages, and cost sharing in statute and/or rules. Other policies, such as specific reimbursement methodologies and rates, are sometimes set administratively by the state Medicaid agency through manuals and instructions to providers. The basic parameters of hospital and nursing home payment formulars are often set in state statute. Still other policies are made through the state budget process or contracting mechanisms, such as managed care RFPs and Medicaid health plan contracts.
However, some states, specify a considerable amount of Medicaid policy through rules. While state Medicaid rules are drafted and promulgated by the state Medicaid agency, some states require legislative committee review and approval of all rules. (Note that regardless what is addressed in state statutes or rules, the State Plan must reflect the latest policies.)
January 29, 2008
More purchasers and payors are moving away from simplistic cost-driven drug benefit designs to formularies and cost sharing based on value. The impact of value-based drug benefit designs on manufacturers will depend on how quickly individual firms adapt their business thinking and communications strategies.
Until recently, the path to success for a drug manufacturer was based largely on product novelty, physician-centric marketing, and revenue strategies balancing unit prices and concessions against formulary position.
To maximize market share and margins in the world of value-based drug benefit designs, drug manufacturers will need to:
(1) Demonstrate the clinical and economic case for each product and each therapeutic class with an indication,
(2) Build absolute and comparative evidence on a continuous basis,
(3) Develop new value-based pricing models and market partnerships, and
(4) Communicate far more effectively with public and private payors.
For many firms, this will require a significant, even scary change in thinking and tactics; payor-centric communications; comfort with a massive increase in transparency; and a greater willingness to partner. Therefore, while the financial risks of moving to a value-based world are daunting, ultimately the greatest challenges are intellectual.
Value-based drug benefit designs will pose the greatest challenges to manufacturers with product lines (or pipelines) dominated "me too" drugs; rigid, risk-adverse organizational silos; and out-dated, prescriber-centric communications.
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