SYRTIS SOLUTIONS MEDICAID NEWS - MAY 2020

Syrtis Solutions distributes a Medicaid newsletter on a monthly basis to help you stay informed. Here is a summary of last month's Medicaid news, legislation, and industry developments relating to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

See the newsletter here. 

MEDICAID NEWS RECAP - MARCH 2020

Syrtis Solutions distributes a Medicaid newsletter on a monthly basis to help you stay informed. Here is a roundup of last month's Medicaid news, legislation, and industry developments relating to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

Read the March newsletter here. 

SECTION 1135 WAIVERS AID STATES AMID COVID-19

Soon after COVID-19 was declared a national emergency on March 13th, the Centers for Medicare and Medicaid Services (CMS) was able to waive stipulations in federally funded programs to support States responding to the pandemic. To date, CMS has authorized Medicaid Section 1135 Waivers for 23 States that give them the power to suspend pre-admission screening for nursing facilities. Additionally, Washington, Missouri, North Dakota, and Oregon also have the authority to adjust Medicaid rates, cost-sharing amounts, and premiums without informing the public.

According to the Centers for Disease Control (CDC), 122,653 individuals in the U.S. have been infected and 2,112 have died. The data includes both verified and presumptive positive cases of COVID-19 reports to the CDC or tested at the CDC since January 21, 2020. That being said, those numbers are most likely to increase as a result of the lack of available testing.

Apart from the Section 1135 Waivers, the Department of Health and Human Services (HHS) and CMS are also responding to the virus by expanding Medicare. Their initiatives are geared at removing regulatory barriers for States and Medicare restrictions. CMS is also calling for Medicare Part D and Advantage prescription plans to waive cost-sharing for COVID-19 testing and treatment. Furthermore, CMS is asking that hospitals delay elective surgical procedures to conserve resources.

Click here to see Syrtis Solution's most recent COVID-19 announcement.

SECTION 1135 WAIVERS 

CMS has authorized the most lenient Medicaid waivers to New Hampshire, New Jersey, Illinois, and Mississippi. Their waivers consist of the following provisions:

• Temporarily suspend Medicaid fee-for-service prior authorization requirements. Section 1135(b)( 1 )(C) allows for a waiver or modification of pre-approval requirements, including prior authorization processes required under the State Plan for particular benefits.
• Extend pre-existing authorizations for which a beneficiary has previously received prior authorization through the end of the public health emergency.
• Suspend Pre-Admission Screening and Annual Resident Review (PASRR) Level I and Level II Assessments for 30 days.
• Enable modification to the timeframe for State fair hearing requests and appeals.
• Temporarily enroll providers who are enrolled with another State Medicaid Agency and/or Medicare for the duration of the public health emergency.
• Provision of services in alternative settings permitting facilities to be fully reimbursed for services rendered to an unlicensed facility provided that the State makes a reasonable assessment that the facility satisfies minimum standards.

North Carolina asked for all of the Section 1135 Waiver provisions above except extending pre-existing authorizations. California, New Mexico, Louisiana, and Arizona also made similar requests.

At the moment, CMS is still working on additional waiver applications from New Hampshire, California, Illinois, Arizona, Louisiana, New Jersey, Mississippi, North Carolina, New Mexico, and Virginia.

California's governor, Gavin Newsom, has also requested federal assistance to supplement temporary housing for the homeless in the event that they are exposed to or test positive for COVID-19 and provisions to waive the cost of testing and treatment for particular Medi-Cal beneficiaries.

Due to the major impact of COVID-19, federal departments and agencies are working to minimize regulation and barriers through Section 1135 Waivers to help States respond to the pandemic. These waivers are effective as of March 1 and last for the duration of the public health emergency or any extension thereof.

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MEDICAID NEWS RECAP FROM SYRTIS SOLUTIONS - FEBRUARY 2020

Every month, Syrtis Solutions puts together a Medicaid newsletter to help you stay up-to-date. Here is a roundup of last month's Medicaid news, legislation, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

Open the newsletter. 

MICHIGAN OPTS OUT OF RX CARVE-OUT

FROM CARVE-OUT TO SINGLE PDL

Back in September, Michigan proposed policy 1936-Pharmacy to carve-out the State's Managed Medicaid outpatient pharmacy drug coverage and move to a Fee-for-Service (FFS) model. That being said, plans to carve-out pharmacy benefits have recently been updated. After considering the plan, the State has made a decision to instead implement a single Medicaid Preferred Drug List (PDL). The single PDL was a recommendation in the Governor's Executive Budget and serves to maximize manufacturer rebates to increase savings. Along with the PDL, MDHHS is also advising raising MHP's dispensing fee to $3 for independent pharmacies. Currently, the department is preparing an updated policy and there will be an opportunity for public comment.

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MEDICAID MANAGED CARE RX BENEFITS HELP STATES

Medicaid prescription drug spending has been on the rise and some states have elected to carve out prescription drug benefits and shift to a Fee-For-Service (FFS) model. In theory, this delivery system helps states leverage their purchasing power to reduce costs and increase oversight. However, recent data reveals that when compared to FFS models, managed care prescription services save significantly more on brand name and generic drugs while also improving the quality of care.

In a 2018 report, the Association for Community Affiliated Plans (ACAP) studied Medicaid prescription drug spending between 2011 and 2017. The trade association focused on key expenditure trends and dynamics related to Medicaid's pharmacy benefits. Here is what the report discovered:

• Over a six-year period, managed care drug benefits produced significant savings despite the increase of prescription drug costs. "The average net (post-rebate) cost per MCO-paid Medicaid prescription during 2016 was $37, 73 percent of the average net cost of Medicaid prescriptions paid in the fee-for-service (FFS) setting during 2017, which was $50."

• The report also identified that managed care prescription services had higher usage of generic drugs which helped to minimize drug expenses. "In 2017, generic drugs represented 88.1 percent of MCO-paid Medicaid prescriptions versus 83.7 percent in the FFS setting."

• Six states that shifted to managed care prescription benefits only had a 1 percent increase in net costs per prescription between 2011 and 2014. Meanwhile, seven states that carved out pharmacy benefits saw a 20 percent surge in net costs per prescription during the same period. Compared to the six states that switched to a managed care model, these seven states missed out on an approximated $307 million in savings in 2014.

• Finally, including prescription drug services improves the quality of care. Since Medicaid health plans handle all of a patient's benefits, the plan can coordinate and communicate with providers more effectively. This makes care less complicated and also decreases unnecessary hospitalizations and emergency room use.

As a result of skyrocketing pharmaceutical drug costs and the increased size of the Medicaid population, some states have carved out pharmacy benefits and shifted to FFS models to rein in costs. However, data shows that Medicaid plans are able to save more when pharmacy and medical benefits are integrated together. Not only are plans able to save money on prescription drug costs, but they also improve the quality of care for their members. To preserve the program's resources and ensure its sustainability, states may want to reevaluate carving out benefits.

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SUPREME COURT TO WEIGH IN ON PBM REIMBURSEMENT RATES REGULATION

Recently, the Supreme Court announced that it would review the verdict from Rutledge v. PCMA, a case from Arkansas dealing with the state's legal right to regulate reimbursements from pharmacy benefit managers (PBMs). Their decision could significantly affect pharmaceutical drug costs and PBM business models. The initial briefing and oral arguments should occur between March and April.

The case under review is from the 8th U.S. Circuit Court of Appeals where the court ruled in favor of PBMs and denied Arkansas the regulatory authority (Arkansas Act 900) to raise reimbursement rates for prescription drugs. According to the Court of Appeals, the Employee Retirement Income Security Act of 1974 (ERISA) prevents states' from regulating PBM's reimbursement rates.

The Supreme Court's decision to review the case comes at a time when soaring health care costs are a major issue for states and PBMs have been criticized for adding to the problem. Critics argue that PBMs are benefiting from spread pricing by keeping the difference between what they charge plans for medications and what they reimburse to pharmacies. According to the petition to the Supreme Court, below-cost reimbursement rates have "driven more than 16% of independent rural pharmacies from the healthcare marketplace, and in many communities, nothing has replaced them".

The National Community Pharmacists Association's (NCPA) vice president, Mustafa Hersi is hopeful about the judgment. He stated, "We feel that this matter has national implications. PBMs have been relying on ERISA preemption to avoid meaningful oversight by states, and states like Arkansas have taken it upon themselves to draft well-tailored legislation-- that does not implicate or involve ERISA-- to regulate PBMs that operate within their state. The implications are that, if the court were to not only grant the request but rule in the favor of Arkansas, that states would be empowered to make more decisions to regulate PBMs and the role that they have in our health care system so that their citizens can make informed decisions with the respect to the choices that they have in health care."

The Pharmaceutical Care Management Association (PCMA) opposes the petition. In response to the Supreme Court's decision, the lobbying group stated, "The Employee Retirement Income Security Act (ERISA) has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws. We are committed to federal preemption, which is a vitally important issue to ensuring high quality health care for patients. Unique state laws governing the administration of pharmacy benefits are proliferating across the country, establishing vastly different standards. These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies. These inefficiencies divert funds from where they should be spent: providing access to the health care services on which employees of plans across the country rely. We are confident in the merits of our arguments in this case and look forward to presenting them before the U.S. Supreme Court."

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