Monday, April 07, 2008
2009 MA, Part D Framework Takes Shape
•No 2009 MA Coding Intensity Adjustment, But Expanded Audit
•Revised Part D Reassignment Strategy Follows AHIP’s Suggestion
•Senate Judiciary Passes Weakened False Claims Bill
•House Probes ESA Bundling, Quality-Of-Life Ads
•GRAS Application May Be Test Case For Drugs-In-Food Ban
•FDA Previews 5-Year PDUFA Implementation
CMS UNVEILS 2009 MA, PART D PAYMENT POLICIES
CMS has once again rescinded a proposal to reduce Medicare Advantage (MA) payments because of the plans’ relatively detailed coding. Most stakeholders disagree with CMS on the existence of different coding patterns between the MA program and traditional Medicare, agency officials said Monday night upon releasing 2009 MA and Part D payment rates.
In a first, CMS will change the way it adjusts risk scores following MA plan audits. So far, an individual enrollee’s risk score has been adjusted if an audit found that a diagnosis wasn’t supported by medical records. Beginning toward the end of this year, CMS wants to make plan-level adjustments after auditing less than 1 percent of claims submitted by certain plans, especially those with very high or low risk score growth.
CMS hopes that these audits will help to establish whether differences in risk scores between MA plans and fee-for-service Medicare can be attributed to differences in coding patterns. The findings will guide the agency’s thinking on whether to adjust rates in 2010, the last year MA coding intensity adjustments are allowed under current law.
For MA plans, county-based age and disabled capitation rates will increase on average about 3.6 percent, slightly lower than the estimated 3.7 percent Medicare growth trend for 2009.
As announced in February’s so-called 45-day notice, the standard Part D benefit will have a $295 deductible and enrollees will meet the initial coverage limit after spending $2,700 on prescriptions and catastrophic coverage after spending $6,154, with an out-of-pocket maximum of $4,350, up $300 from this year.
Part D plans may continue to operate under either a pass-through or a lock-in rebate arrangement with their pharmacy benefit manager because the agency hasn’t finalized a rulemaking on the issue.
REVISED PART D REASSIGNMENT STRATEGY FOLLOWS AHIP’S SUGGESTION
What would prompt CMS to adopt a reassignment policy that’s nothing like the one it originally proposed? Lots of negative feedback on the initial plan, and an alternative suggested by America’s Health Insurance Plans (AHIP).
That’s what happened on March 31 when CMS scrapped the Part D “de minimis” demonstration as well as a proposal to allow certain drug plans to offer 2-tier premiums beginning next year, the latter of which was included in a much criticized Jan. 8 proposed rule.
Instead, CMS will change the way it calculates regional low-income benchmark premiums in an effort to reduce the number of vulnerable beneficiaries that are reassigned drug plans each year. AHIP and another unnamed stakeholder suggested the reform, reports InsideHealthPolicy’s Rolf Rosenkranz.
Because CMS’ final rule appears to have been AHIP’s brainchild, beneficiary advocates are greeting it with skepticism, just like they did with the trade group’s recent efforts to improve MA marketing and starve off congressional action.
Beneficiary advocates are happy that under the final rule roughly 670,000 fewer beneficiaries would have been reassigned earlier this year than the 2 million that would have been automatically switched under the proposed rule. But they also note that the final rule would still have raised this year’s reassignments by 140,000 compared to this year’s actual “de minimis” demo, under which drug plans retain their dual-eligible enrollees even if they bid up to $1 above CMS-calculated regional benchmarks.
But they applaud CMS for deciding to spend an estimated additional $1.68 billion over 10 years on low-income beneficiaries – something most advocates might not, even in their wildest dreams, have expected from the budget-conscious agency.
SENATE JUDICIARY PASSES WEAKENED FALSE CLAIMS BILL
The Senate Judiciary Committee approved a watered-down expansion of the federal False Claims Act, but the hospital, insurance and manufacturer lobbies still aren’t happy, reports Inside CMS’ Theresa T. Morgan.
Manufacturers in particular are irked by a provision in legislation spearheaded by ranking Senate Finance Committee Republican Charles Grassley (IA) that would allow only the Department of Justice to argue that a whistleblower case does not meet the False Claims Act’s qui tam rules because it relies on publicly available information.
Drug companies and other defendants have been using the “public disclosure” bar to fight whistleblower cases, a Washington lawyer told Judiciary members last month.
“The ‘public disclosure bar’ unfortunately has evolved into little more than a cudgel for defendants seeking to escape judgment for their misdeeds,” John Clark, counsel for Goode, Casseb, Jones, Riklin, Choate & Watson, testified. “The Department of Justice rarely invokes the clause. Defendants, however, can be counted on to assert it on even the flimsiest pretext, and all too many courts seem eager to seize upon it as if indulging a presumption that whistleblower claims are not favored and should be discouraged.”
In the final committee bill, only the Justice Department can use the public disclosure defense, one industry representative says – and that new policy would be retroactive. As a result, the False Claims Act would become a “boondoggle” for trial attorneys, the source cautioned.
The Bush administration, fearing additional scrutiny of its defense contractors in the Middle East, remains opposed to Grassley’s reform proposal.
Meanwhile, the Supreme Court is also tackling the issue.
HOUSE PROBES ESA BUNDLING, QUALITY-OF-LIFE ADS
House Energy & Commerce Committee Democrats are reviewing whether Amgen encouraged “excessive and dangerous off-label use” of Aranesp by offering discounts to physicians buying the controversial anemia fighter in conjunction with other drugs, and by claiming the medication improves patients’ quality of life, reports FDA Week’s John Wilkerson.
The move comes more than a year after the Medicare Payment Advisory Committee (MedPAC) suggested Congress review Amgen’s strategy to sell Aranesp, Neupogen and Neulasta in a bundle. At the time, MedPAC urged Congress to step in and require that CMS develop a policy allocating discounts from one drug to another drug when they are marketed to doctors in a “bundle.”
These reforms never materialized, but as the controversy surrounding Aranesp and other erythropoiesis-stimulating agents (ESAs) continues, House Democrats seem eager to follow every lead.
Johnson & Johnson subsidiary Ortho Biotech Products sued Amgen in October 2006 over its bundled sales practice. A New Jersey district court judge rejected the company’s call for a preliminary injunction that year, but the case is still pending. J&J markets Procrit, another ESA developed by Amgen. J&J has been lobbying heavily for CMS to stop the bundling practice, which it says unfairly hurts its market for Procrit.
Bundling has found its way into many an ESA debate – like that occurring at last month’s FDA oncology advisory panel, where some experts questioned whether the practice serves as an improper incentive for physicians to use certain treatments. And it’s clear that House Democrats are clamping down on marketing, as evidenced by their recent criticism of Lipitor and Vytorin ads.
Lawmakers’ investigation of Aranesp’s quality-of-life claims, which has been brewing for years, may soon come to a head.
GRAS APPLICATION MAY BE TEST CASE FOR DRUGS-IN-FOOD BAN
FDA met last month with representatives of a company that is trying to gain “Generally Recognized As Safe” (GRAS) status for a product that may be blocked by last year’s landmark drug safety law. Ventria Bioscience’s GRAS application for lactoferrin may be the first test case of a new statutory provision banning food ingredients that are either on the market as drugs or that are being tested as a potential drug.
Ventria has been petitioning FDA for GRAS status of two compounds found in human milk, lactoferrin and lysozyme, as ingredients in oral rehydration products and treatment for skin infections. But another company, Agennix, is developing lactoferrin as a cancer drug.
Ventria representatives met March 7 with FDA Commissioner Andrew von Eschenbach and several officials from the commissioner’s office and the food center, according to FDA’s public calendar. Rather than publicly state its position on the new drug safety law’s GRAS provision, the agency may simply grant Ventria the chance to withdraw its notice, reports Wilkerson.
The company already withdrew a GRAS notice for lactoferrin once, in 2006.
Trade groups that represent dietary supplement makers, such as the Council for Responsible Nutrition and the American Herbal Products Association, say they don’t see drug ingredients in food as a considerable problem. But the new statutory provision has industry worried. Companies are halting the publication of clinical studies on food ingredients for fear of triggering the law, and they are taking a hard look at which published studies could affect food ingredient development, one source familiar with the issue told FDA Week last month.
AD REVIEW, REAGAN-UDALL FUNDS ABSENT FROM FDA DRUG SAFETY PLAN
FDA appears to be taking its cues from lawmakers who blocked drug user fee money for drug ad reviews as well as funding for the controversial Reagan-Udall drug research initiative, reports FDA Week’s Jennifer C. Smith. The agency last week unveiled a five-year drug safety plan that neither anticipates new staff to review direct-to-consumer advertising nor FDA funding for Reagan-Udall work. Ironically, it was Congress that included both programs in the FDA Amendments Act, only later to be blocked by congressional appropriators this year.
That puts FDA in an awkward situation. The direct-to-consumer advertising review program that the agency negotiated with industry would have been paid for with industry user fees. Lawmakers, uncomfortable with the agency relying on industry fees to review ads, instead boosted agency appropriations for the task, but the funding amounts to only half of what FDA was supposed to get in the first year in user fees.
The joint FDA-industry Reagan-Udall initiative was also initially endorsed by Congress, but lawmakers then got cold feet because of concerns industry would unduly influence the agency’s drug development efforts. The initiative remains a high priority of FDA chief Andrew von Eschenbach, who has vowed to continue the program by relying solely on private funding.
Did lawmakers’ funding prohibition backfire? The key FDA initiative is now entirely funded by industry.--Rolf Rosenkranz and Donna Haseley