Applied Policy Insight June 2024

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APPLIED POLICY INSIGHT

June 2024

Transforming Medicare Part D:

Understanding the New Out-of-Pocket Cap and Medicare Prescription Payment Plan

By Alison Falb, J.D., Health Policy Director

Momentous changes are coming to Medicare’s Part D program that will reshape the landscape of out-of-pocket (OOP) prescription drug costs for beneficiaries. Starting January 1, 2025, the Inflation Reduction Act (IRA) will introduce a $2,000 OOP cap on Part D costs for Medicare beneficiaries. Additionally, the new Medicare Prescription Payment Plan, sometimes referred to as the M3P, will allow enrollees to spread their OOP costs over the plan year, instead of paying upfront at the pharmacy. Although implementation of these policies is complex and affects many stakeholders, they have the potential to improve patient access to medications by increasing medication adherence and improving affordability.

A New Cap on Out-of-Pocket Expenses

The OOP cap is a key component of the broader redesign of the Part D program under the IRA. This redesign eliminates the coverage gap, also known as the donut hole, and fundamentally changes how Medicare beneficiaries manage their drug costs. In 2025, the OOP cap will be $2,000, but over time that amount will be adjusted for inflation and will not remain static at $2,000.

This cap is expected to bring substantial relief to beneficiaries who struggle with high prescription costs. However, it’s important to recognize that policy changes in healthcare often have complex ripple effects, sometimes resembling a game of whack-a-mole—addressing costs in one area can lead to increases in another. Within the context of broader changes to the Part D benefit, there may be mixed outcomes for beneficiaries. While the OOP cap and M3P have the opportunity to greatly benefit enrollees, their impacts do not happen in a vacuum. There is concern that enrollees might face higher Part D premiums resulting from higher plan liability for drug costs above the spending cap, though the IRA includes guardrails to stabilize premiums. On the other hand, this places increased financial pressure on plans who may address this pressure by increasing use of utilization management or other approaches like increasing utilization of generic drugs.

Introducing the Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan, is a voluntary program launching in 2025, designed to further ease the financial burden on Medicare beneficiaries. Under M3P, enrollees will pay $0 at the pharmacy when they fill a prescription. Instead, their OOP costs will be distributed into monthly payments throughout the year. This will be particularly beneficial for those beneficiaries with high upfront costs early in the year.

The success of M3P will heavily depend on effective implementation and robust beneficiary education. Clear communication will be crucial to ensure beneficiaries understand how to opt into the program and manage their payments.

Achieving Health Equity in Extreme Heat

By William Rogers, M.D., FACEP, Chief Medical Officer

As a heat dome settles across the Southwest, government agencies are emphasizing the importance of safeguarding against the impacts of extreme heat. Hospitals are preparing for potential surges in cases of acute heat-related illnesses including heat exhaustion and heat stroke. Healthcare providers also anticipate heat-related exacerbation of chronic conditions such as asthma, diabetes, and cardiovascular diseases.

While tornados and hurricanes may evoke greater fear, according to the Department of Health and Human Services' (HHS's) Office of Climate Change and Health Equity (OCCHE), heat is "the most lethal of all types of extreme weather." Government efforts to address the health effects of extreme heat vividly highlight the complexity of realizing health equity. Not only can heat's health impacts vary significantly within a single community, but this variation is frequently shaped by policies not immediately associated with health. As summer heats up, we examine how the actions of even long-defunct government agencies continue to health outcomes.

IP Among Issues in

WHO Pandemic Agreement Negotiations

The World Health Assembly, the decision-making body of the World Health Organization (WHO), concluded its annual meeting in Geneva, Switzerland, on June 1 without consensus on the WHO Pandemic Agreement.

The initiative for a pandemic agreement began in December 2021, as countries grappled with the impact of the COVID-19 pandemic. The goal was to create a legally binding international instrument to ensure equitable access to medicines, enhance cooperation among nations, and improve the global response to future health crises. The agreement, if adopted, would be only the third legally binding health accord negotiated by WHO member states, joining the International Health Regulations and the Framework Convention on Tobacco Control.

One of the more contentious issues in the negotiations over the treaty has been its treatment of intellectual property (IP) rights. Opponents contend that provisions in the draft agreement could undermine the IP protections which they say are crucial for pharmaceutical innovation.

As examples, Article 10 and Article 11 of the draft agreement promote the transfer of technology and know-how. They also recommend that research and development institutes and manufacturers forgo or reduce royalties on pandemic-related products for a limited time.

Applied Policy at AXS24

By Caitlyn Bernard, Health Policy Associate

Applied Policy was pleased to be represented among the over 7,000 attendees at the 20th Asembia Specialty Pharmacy Summit (AXS24), held at the Wynn and Encore Las Vegas Resort in Las Vegas, Nevada, April 28-May 2, 2024.

The event provided an opportunity to connect with our friends and partners in the industry and to engage in meaningful discussions on the future of specialty pharmacy.

In the dynamic pharmaceutical sector, the Asembia Summit has emerged as a cornerstone for the specialty pharmacy industry, providing a unique forum for stakeholders to address challenges, develop solutions, and shape the industry's future. Each year, leaders and professionals from across the pharmaceutical supply chain gather to foster valuable business relationships that influence prescription fulfillment and drug delivery for millions of patients globally.

This year’s Summit focused on critical industry trends, dissecting regulatory pressures, commercialization hurdles, the transformative influence of artificial intelligence, and the pivotal role of data-driven solutions in fortifying market dynamics.

Alison Falb Among Panelists at PQA

By Caitlyn Bernard, Health Policy Associate

Applied Policy Health Policy Director Alison Falb was among the featured speakers at the 2024 Pharmacy Quality Alliance (PQA) annual meeting held May 14-16 in Baltimore, Maryland.

Falb spoke at the general session on Improving Medication Access and Affordability: The IRA and Medicare.

PQA, renowned as a premier national quality organization, is dedicated to advancing medication safety, adherence, and appropriate usage. With a broad membership encompassing pharmacies, health plans, healthcare providers, pharmacy benefit managers, and other stakeholders, PQA works to elevate medication practices and ensure the delivery of top-tier healthcare services.

The three-day event provided a platform for insightful discourse for over 500 industry stakeholders including healthcare executives and quality specialists from pharmacies, health plans, healthcare providers, pharmacy benefit managers, biopharmaceutical firms, technology providers, and governmental bodies.

Attendees engaged in sessions and presentations that considered key issues and emerging trends spanning medication quality, measure development and implementation, care transformation, and technological advancements. Notably, discussions shed light on recent policy developments affecting patient medication access, as well as the pivotal role of pharmacists in addressing social determinants of health and mitigating health disparities.

Applied Policy's Latest Summaries

MEDCAC meeting on studies of new devices of self-management of type 1 and insulin-dependent type 2 diabetes in older adults

By Simay Okyay McNutt, Health Policy Manager

On May 21, Centers for Medicare & Medicaid Services (CMS) convened the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) to provide guidance on validated endpoints and minimally-clinically important differences (MCIDs) for clinical studies on devices for self-management of type 1 and insulin-dependent type 2 diabetes in older adults to help the agency with coverage decisions. Devices under consideration included continuous glucose monitors (CGMs), insulin pumps, and automated insulin delivery (AID) systems.

Read Applied Policy's summary

CMS Proposes Mandatory Kidney Transplant Payment Model

By Will Henkes, Health Policy Associate

On May 8, CMS released the Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model proposed rule. The rule proposes a new mandatory payment model, IOTA, which would subject eligible kidney transplant hospitals to upside and downside risk based on the number of transplants they perform, the efficiency of their matching process, post-transplant success rates, and certain quality measures.

Read Applied Policy's summary

HHS Finalizes Rule to Protect People with Disabilities

By April Gutmann, Health Policy Manager

On May 1, HHS, through its Office for Civil Rights (OCR), finalized the Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance rule. The goal of the rule is to promote access to healthcare for persons with disabilities and prohibit discrimination on the basis of disability by recipients of financial assistance from HHS (“recipients”).

This will apply to all HHS programs and organizations that do business with HHS. The final rule amends and updates the regulations that help persons with disabilities access health and human services under Section 504 of the Rehabilitation Act of 1973 and clarifies requirements not explicitly addressed in the current regulation. The final rule also aims to improve consistency with the American with Disabilities Act (ADA), the Americans with Disabilities Act Amendments Act (ADAAA), amendments to the Rehabilitation Act, and significant case law. These policies will take effect on July 8, 2024.

Read Applied Policy's summary

NVHPF Hosts CMS Leadership

for Discussion of Value-Based Care

On May 22, the Northern Virginia Health Policy Forum hosted two leaders from CMS's Center for Medicare and Medicaid Innovation (Innovation Center), Purva Rawal, PhD, Chief Strategy Officer, and Dilipan Sundaramoorthy, Special Assistant to the Chief Strategy Officer. The panelists discussed their work with value-based care, which aims to incentivize providers to deliver care that is coordinated, patient-centered, and high-quality.

Dr. Rawal and Mr. Sundaramoorthy described the Innovation Center's efforts to integrate value-based programs into Medicare and Medicaid and their potential to improve health equity, health outcomes, quality of care, and the sustainability of the health system. Jim Scott, President and CEO of Applied Policy, led the discussion.

A summary of the event is available for download here. A video recording of the event will be available on the NVHPF YouTube page next week.

GAO Announces MedPAC Appointments

Gene L. Dodaro, Comptroller General of the United States and head of the U.S. Government Accountability Office, has appointed Paul N. Casale, M.D., MPH, MACC, and Joshua Liao, M.D., M.Sc., as new members of the Medicare Payment Advisory Commission (MedPAC), with terms expiring in April 2027.

Dr. Casale has experience in clinical cardiology and healthcare policy. As the Executive Director of NewYork Quality Care, he has led initiatives in value-based care and payment reform. Dr. Casale also serves as a Professor of Population Health Sciences and Clinical Medicine at Weill Cornell Medicine. His previous experience on national committees includes chairing the Physician-Focused Payment Model Technical Advisory Committee. Dr. Casale earned his medical degree from Weill Cornell Medical College and a Master of Public Health from Harvard School of Public Health.

Dr. Liao is Professor of Medicine and Division Chief of General Internal Medicine at the University of Texas Southwestern Medical Center. He is also a member of the faculty at the University of Texas Southwestern O'Donnell School of Public Health. His academic and clinical background includes a medical degree from Baylor College of Medicine, clinical training at Brigham & Women's Hospital/Harvard Medical School, and a Master of Science in health policy research from the University of Pennsylvania.

MedPAC will also see the reappointment of Lynn Barr, Cheryl Damberg, Stacie Dusetzina, and Gina Upchurch.

The next public meeting of MedPAC is scheduled for September 5-6.

Katie Lawler Joins Intern Class

We are pleased to welcome Katie Lawler to Applied Policy’s intern class. Katie is a rising senior at Washington University in St. Louis, Missouri, majoring in Global Health and the Environment and Legal Studies. She is enrolled in the university's accelerated 3-2 program, allowing her to begin her master’s in public health coursework this fall while completing her undergraduate degree.

Katie expects to graduate with her master's in the spring of 2025, with a concentration in policy analysis and biostatistics. She plans to complement her studies at Washington University with a certification in medical coding.

Katie sees her internship as an opportunity to gain hands-on experience in healthcare and as a step towards finding her niche in the sector. She says that she is interested in increasing access and coverage in care within the medical device and health services spaces but is not yet certain if this will involve working for device and/or services companies or consulting.

When asked about her experience at Applied Policy thus far, Katie noted that she was impressed by the breadth of work Applied Policy undertakes. “From diagnostics to drugs to devices to services, Applied Policy covers a wide variety of areas within healthcare,” she said.

Outside of work hours, Katie is excited to explore the many outdoor walking, biking, and running paths that Alexandria and DC have to offer. Having previously hiked Mount Kilimanjaro, she’s no doubt up to the task.

On the Docket/Under Review

Applied Policy is following these rules under review at the Office of Management and Budget:

Occupational Exposure to COVID-19 in Healthcare Settings
Healthcare System Resiliency and Modernization (CMS-3426)
Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability
Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program (CMS-2433)
CY 2025 Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1807)
CY 2025 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1805)
CY 2025 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1809)
CY 2025 Home Health Prospective Payment System Rate Update and Home Infusion Therapy Services Payment Update (CMS-1803)
Mitigating the Impact of Anomalous Increases in Billing on Medicare Shared Savings Program Financial Calculations (CMS-1799)