Highlight on Virginia: Medicaid agency fails to collect $2.9M in drug rebates

For a covered outpatient drug to be eligible for federal reimbursement under the Medicaid program’s drug rebate requirements, manufacturers must pay rebates to the states. States bill the manufacturers for the rebates to reduce the cost of the drugs to the program. Previous HHS Office of Inspector General (OIG) reviews found that states did not always bill and collect all rebates due for drugs administered by physicians to enrollees of Medicaid managed-care organizations (MCOs).

An OIG review of Virginia’s Department of Medical Assistance Services, Division of Health Care Services (Virginia), from January through December 2013, found that Virginia did not bill manufacturers for some rebates for physician-administered drugs dispensed to enrollees of Medicaid MCOs. As a result, it failed to collect an estimated $2.9 million (federal share) in rebates.

Virginia uses a contractor to manage its drug rebate program. According to the OIG audit, in calendar year 2013, Virginia paid MCOs $2,411,629,093 ($1,238,462,930 federal share), which included expenditures for physician-administered drugs.

The OIG found that Virginia properly billed manufacturers for rebates for drugs associated with the National Drug Codes (NDCs) in its audit sample. However, Virginia did not have valid NDCs for other drug utilization data submitted by MCOs for physician-administered drugs, and it did not bill manufacturers for rebates for these drugs. Virginia estimated average rebates per claim billed to manufacturers, and the OIG determined these estimates to be reasonable. The OIG applied the estimates and determined that Virginia did not bill rebates of $5,831,528 ($2,915,764 federal share) to manufacturers for physician-administered drug utilization without valid NDCs.

The OIG concluded that Virginia did not bill manufacturers for rebates for these drugs because the MCOs submitted utilization data to Virginia with a blank NDC field or an invalid NDC. Although Virginia required MCOs to submit valid NDCs for all physician-administered drug utilization, Virginia did not implement edits in its Medicaid Management Information System to ensure that MCOs submitted valid NDCs. As a result, Virginia did not obtain rebates for these drugs.

The OIG recommended that Virginia: (1) work with CMS to resolve the drug utilization data without valid NDCs by determining the correct NDCs, billing manufacturers for the estimated $5,831,528 ($2,915,764 federal share) in rebates, and refunding the Federal share of rebates collected; (2) implement Medicaid Management Information System edits to verify that NDCs are present and valid in all drug utilization data; and (3) ensure that MCOs submit drug utilization data containing NDCs for all physician-administered drugs.

Virginia concurred with the OIG’s findings and plans to take corrective actions.

 

Value-based payments and EHRs expected to continue trajectory during reform

Despite the uncertainty surrounding health care reform under the upcoming Trump administration, health law experts project that the transition to value-based payments and further development of electronic health record (EHR) systems will be a constant in the coming years. Four of Avalere Health’s senior vice presidents offered their opinions during the 2017 Healthcare Industry Outlook webinar, making educated guesses about what upcoming changes the industry may see.

What will change?

The webinar started with the topic on everyone’s mind: what will happen to the Patient Protection and Affordable Care Act (ACA)? Broadly, the presenters expect that federal spending on health care will be capped and states will be granted more flexibility in designing their Medicaid programs. Reduction of regulations to encourage the private sector to provide a range of products in a competitive market is also to be expected.

The likelihood of repeal was discussed for several different ACA sections. The most likely to be repealed were the individual and employer mandates, subsidies, industry taxes, Medicare tax for high earners, and cuts to disproportionate share hospitals. Certain reforms, like protection for pre-existing coverage, drug related provisions, and changes to Medicare Advantage and Medicaid payment provisions are considered likely to remain. Subjects likely to be up for serious debate are Medicaid expansion, the Center for Medicare & Medicaid Innovation (CMMI), essential health benefits, and the preventive services coverage requirement.

Other areas

The focus on quality and value in health care is not expected to waver during the new administration. In light of significant regulatory and policy barriers, providers are unable to establish outcome-based contracts and create more innovative payment arrangements. More flexibility in the ability to establish and agree on value between parties is expected to be a policy pressure point.

The value discussion typically focuses on provider performance, but the presenters noted that drugs are an important value consideration, especially in light of rising costs. The traditional approach to determining drug value is expected to evolve, as frameworks had previously been established based on clinical benefit, toxicity, and product cost, which ignored patient considerations and relied too much on data from limited populations. In addition to incorporating more real world data, drug value frameworks have begun to focus on not only on health outcomes, but patient experiences and financial considerations during treatment.

Although “virtually every hospital” is using some sort of EHR system, interoperability continues to be a sticking point. In the near future, the ability to more effectively use, share, and interact with data is expected to improve. Continued advancements in studying data is also expected to change the way providers practice, including big advances in population health.

How will access to contraception coverage fare in light of the ACA repeal?

With the uncertainty about continued contraception coverage, a number of states have either enacted or introduced legislation to ensure that individuals continue to have access to contraception coverage and the number of women inquiring about birth control has increased. Since the November election and, in the wake of the imminent repeal of Obamacare, requests for intrauterine devices (IUDs) have been increasing significantly. Cecile Richards, President of Planned Parenthood, told CNN on January 9, 2017, that the demand for IUDs, a form of long-term birth control, has shot up 900 percent at Planned Parenthood branches because women “are desperately concerned that they will lose their access to health care,” SFGate news reported.

A December 7, 2016, Kaiser Family Foundation report that addressed private insurance coverage of contraception stated that many states have mandated minimum benefits for decades, including contraceptive coverage. Moreover, since the passage of the Affordable Care Act (ACA) (P.L. 111-148), states have strengthened and expanded the federal contraceptive coverage requirement. Among those states that have recently adopted contraceptive laws expanding ACA mandates for contraceptive coverage are New York, California, Oregon, Illinois, and Vermont.

New York

On January 11, 2017,  New York Attorney General Eric T. Schneiderman introduced “The Comprehensive Contraception Coverage Act of 2017” (CCCA), legislation that would provide access to cost-free contraception for women and expand coverage to men to ensure the continuation of contraception coverage under state law in light of Republicans’ goal of repealing the ACA.  The CCCA would (1) statutorily require state-governed health insurance policies to provide cost-free coverage for all FDA-approved methods of birth control, including emergency contraception, (2) prohibit insurance companies from “medical management” review restrictions that can limit or delay contraceptive coverage; (3) cover men’s contraceptive methods and bring their insurance coverage in line with the benefits enjoyed by women; and (4) allow for the provision of a year’s worth of a contraceptive at a time.

Crain’s New York Business addressed a number of items that are at stake in terms of women’s access to health care in New York under Donald Trump’s presidency. Although New York’s contraception legislation “has taken on new urgency for advocates since Trump’s victory,” the bill faces opposition from insurers because the provisions go beyond the ACA mandates, Crain’s predicted. In addition, Crain’s pointed out that Republicans in Congress will renew their efforts to defund Planned Parenthood, noting that access to services such as breast exams, Pap tests, STD screenings and family planning are most likely at risk of elimination for female Medicaid enrollees. Finally, abortion rights in New York might be curtailed if President-elect Trump’s Supreme Court judge appointee provides the Court with a majority of votes to overturn Roe v. Wade, the case that affirmed a woman’s constitutional right to an abortion under the 14th amendment. New York state law allows an abortion after 24 weeks only if it’s a matter of life and death for the woman, while constitutional law allows a woman to get a late-stage abortion if an anomaly poses a serious risk to her health or makes the fetus unviable, Crain’s explained.

Other States

In 2014, California passed the Contraceptive Coverage Equity Act of 2014 that requires plans to cover prescribed FDA-approved contraceptives for women without cost-sharing. In April of 2016, under the law, girls and women are able to drop by their neighborhood pharmacy and pick up birth control such as pills, patches, and injections without a doctor’s prescription but must speak with a pharmacist and fill out a questionnaire. Starting in January 2016, health plans were required to provide access to the full range of contraceptive methods approved by the FDA, including a variety of IUDs, for all insured individuals without cost-sharing, delays, or denial of coverage.

In 2015, Oregon passed two laws in 2015  expanding women’s access to birth control that became effective January 1, 2015.  HR2879 permits pharmacists to prescribe hormonal contraceptive patches and self-administered oral hormonal contraceptives, while HR3343 requires insurers to pay for a three-month supply of contraceptives when first prescribed, followed by a 12 month supply of contraceptives regardless of whether the woman was insured by the same plan at the time of the first dispensing. This law applies to oral contraceptive pills, the patch, and the vaginal ring.

The State Journal Register reported that Illinois adopted House Bill 5576, which will take effect January 1, 2017. Under the law, all ACA options must be covered without co-payments or deductibles, at least for women covered through health plans regulated by the state and plans that cover state employees, retirees, and their dependents. In addition, insurance companies must allow women to get a 12 month supply all at once.

The Burlington Free Press reported that Vermont legislation includes mandates from the ACA in the state law, but also expands upon the mandates to include additional birth-control methods, such as vasectomies. The bill specifies the 12 contraceptive products and services that must be included in health insurance plans as well as restrictions on cost-sharing for contraceptive services. It directs the Department of Vermont Health Access to establish 15 value-based payments for the insertion and removal of long-acting reversible contraceptives comparable to those for oral contraceptives.

Conclusion

Whether Congress repeals the ACA mandates requiring health insurance plans to provide contraceptive coverage and defunds Planned Parenthood is not certain. As of this writing, Congress has already taken initial steps to repeal the law. It remains to be seen if the actions the states have taken to ensure that both men and women have access to contraception under state law will hold up, and whether states that have introduced bills to ensure coverage will progress to enactment in the face of strong opposition.

 

Alabama wants to push back Medicaid managed care demonstration

Alabama wants to delay the transition of its Medicaid program to a managed care model. In a letter to CMS, the state requested CMS’ acceptance of amended terms for the state’s Medicaid transition demonstration. The request makes no substantive changes to the program. Its purpose is to allow the state more time to appropriate funding and complete readiness activities.

Waiver

In 2016, CMS approved a Section 1115 waiver permitting Alabama to transition its Medicaid program to a managed care model relying on regional care organizations (RCOs). Under the waiver, Alabama was granted almost $750 million to start and improve its RCO program. However, even with the federal funds, the state says it does not have the necessary funds to get the program up and running.

Delay

The state is requesting to change the demonstration time period from April 1, 2016, through March 31, 2021 to April 1, 2017, through March 31, 2022. The change is driven primarily by financial concerns. Alabama officials say the delay allows more time for the appropriation of additional state funding and completion of readiness activities. Finally, the letter indicated the delay would also help the state meet broader demonstration goals: addressing fragmentation in health care delivery, improving chronic disease prevention and management, improving access and care coordination, improving birth outcomes, and enhancing the financial efficiency of the health care delivery system.