Reimbursement Briefs: Medicaid Savings, Kcentra Payment, Formulary Discrimination Concerns

Cost reductions in Medicaid associated with increased drug use; Medicare add-on payments for Kcentra extended; patient groups seek formulary non-discrimination provisions in HHS rule.

Medicaid Cost Reduction Linked To Drug Use

An increase in overall prescription drug use is associated with decreases in medical costs for a subset of Medicaid fee-for-service enrollees in a study by health care economist Christopher Roebuck (RxEconomics), et al., published online in Health Affairs Sept. 8.

The study suggests that the same connection between increased drug use and lower medical costs that has been endorsed by the Congressional Budget Office for the Medicare program could be applied to Medicaid. However, results are based on a small sample size and will need to be researched further to see if they are generalizable to the much larger population of enrollees in Medicaid managed care, the researchers point out.

A 1% increase in overall prescription drug use was linked to decreases in total non-drug Medicaid costs of: 0.108% for a sample of 385,000 blind or disabled adults, 0.167% for a sample of 166,000 “other” adults (primarily women) and 0.041% for a sample of 1 million children. Most notably, spending on inpatient services dropped 0.308% among blind/disabled adults and declined 0.236% in other adults.

Results were similar to the widely quoted estimate by the CBO that a 1% increase in drug use could be connected to a 0.2% decline in medical spending in Medicare, the researchers note. CBO cited the correlation in a 2012 announcement that its future evaluations of the cost of legislation affecting Medicare prescription drug use will include any offsetting effects on the program’s overall medical spending (Also see "CBO Legislative Scores Will Account For Medicare Rx’s Reductions In Other Medical Costs" - Pink Sheet, 30 Nov, 2012.).

Medicare Add-On Payments For Kcentra Extended

CMS will continue to supplement reimbursement to hospitals for CSL Behring’s prothrombin complex concentrate Kcentra at up to $1,587.50 per case through fiscal 2016. The decision, announced in the CMS final rule for the Medicare Part A hospital inpatient prospective payment system, will allow new technology add-on payments (NTAP) for a third year, which is the maximum duration allowed. Kcentra is an emergency treatment for patients on long-term warfarin therapy who experience major bleeding.

The Medicare NTAP program began in 2001 as a way to provide supplemental reimbursement to innovative treatments that are not adequately paid for under the Medicare Severity Diagnosis-Related Groups (MS-DRGs). The idea is to boost payments for new treatments for a limited period of time until Medicare has enough experience to update DRGs to appropriately reflect the cost of the new treatment. CMS also announced in the final rule that it will provide add-on payments to Amgen Inc.’s oncology drug Blincyto (blinatumomab) (Also see "Amgen's Blincyto Is First Cancer Drug To Get Medicare Add-On Payments" - Pink Sheet, 12 Aug, 2015.).

Formulary Non-Discrimination Oversight Sought In HHS Rule

The HHS Office of Civil Rights’ proposed rule on non-discrimination in health programs falls short in not defining discriminatory practices in the benefit design, including formularies, of plans governed by the Affordable Care Act, patient groups say. Announced Sept. 3, the proposal addresses issues including individuals who are denied health care or health coverage based on their sex, including their gender identity.

In a statement on the proposal, National Health Council CEO Marc Boutin urged HHS to address two additional issues in the final rule: First, he said, “there is a need to root out discrimination of plan benefits by condition …. We have already heard of patient communities facing unreasonable costs because of drug tiering and other practices that are intended to shift costs to people with chronic conditions or discourage them from enrolling in particular health insurance plans.”

Second, “we urge the federal government to be more proactive in reviewing health plans prior to accepting them into the marketplace,” Boutin said.

The AIDS Institute made a similar request in a separate statement, noting there are “countless examples of marketplace plans that employ discriminatory benefit design by placing all medications to treat a certain condition on the highest cost tier, not covering certain medications, imposing excessive medication management tools, and charging patients high cost sharing.” The AIDS Institute and the National Health Law Program filed a discrimination complaint with HHS in May 2014, alleging a number of insurers in Florida employed such practices (Also see "HIV Drug Copay Case Spotlights Discriminatory Formulary Issue In Exchange Plans" - Pink Sheet, 12 Nov, 2014.).