Updates on Federal and State Legislative Issues Affecting Managed Care

Atlanta—With federal and state governments facing financial difficulties and the adoption of the Patient Protection and Affordable Care Act (ACA), managed care professionals are facing a challenging and changing environment. They must adapt to the new regulations and be aware of the ways pending legislation will impact the industry, according to speakers at the AMCP meeting who spoke at a Contemporary Issues session titled Federal and State Legislative Updates. Mary J. Ryan, RPh, MBA, vice president in Medco Health’s corporate regulatory group, discussed the federal issues. She said a few factors have led to a frenzied political environment in Washington, DC, with Democrats controlling the Senate and Republicans having the majority in the House of Representatives and the upcoming 2012 presidential election contributing to an uncertain future. In addition, when Ms. Ryan spoke on October 20, no federal budget had been passed for the 2012 fiscal year, which began on October 1. “There are a lot of funding issues going on right now,” Ms. Ryan said. As part of the negotiations to raise the debt ceiling in August, government leaders agreed to form a 12-member congressional super committee that will propose a plan by Thanksgiving to cut $1.5 trillion from the federal deficit in the next decade. They must vote on the proposal by December 23. If the plan is not accepted, there will be an automatic $1.2 trillion in spending cuts in defense and domestic programs. Ms. Ryan listed some ways to cut the deficit, including saving $120 billion in Medicaid rebates for dual eligibles, $2.34 billion in reduced data exclusivity for innovator biologics, and $8 billion for prohibiting generic exclusion agreements. Ms. Ryan said that AMCP supports the following provisions: repealing the 6 protected classes in Medicare Part D (antidepressant, antipsychotic, anticonvulsant, immunosuppressant, antiretroviral, and antineoplastic); repealing prompt pay requirements in Medicare Part D; banning patent settlement agreements; and reducing data exclusivity for innovator biologics. However, AMCP does not support other provisions, such as the federal negotiation of Medicare Part D prices and the expansion of Medicaid rebates to dual eligibles. In addition to the deficit talks, the ACA is also affecting the industry. Although Republicans are opposed to the healthcare reform and would like to repeal the legislation, President Barack Obama has already implemented some of the provisions, with more expected to come in the next few years. According to Ms. Ryan, there have been 27 legal cases filed to challenge the ACA’s constitutionality. The state of Virginia sued Department of Health and Human Services (DHHS) Secretary Kathleen Sebelius. The judge initially ruled that the requirement that everyone purchase health insurance (known as the individual mandate) was unconstitutional but that the remaining parts of the healthcare reform bill were constitutional. The DHHS appealed, and the judge dismissed the case. However, Virginia’s attorney general is expected to appeal the decision to the US Supreme Court, according to Ms. Ryan. In another case, 25 states sued the DHHS. The court initially ruled that the entire bill was unconstitutional. On appeal, the judge said that the individual mandate was unconstitutional, but the rest of the legislation was “legally operative,” according to Ms. Ryan. On September 28, the federal government appealed the decision to the Supreme Court, which is expected to hear the case in 2012. Ms. Ryan then addressed a few noteworthy pieces of legislation that affect managed care. The Medication Therapy Management Benefits Act of 2011 is intended to increase the number of Medicare Part D beneficiaries eligible for medication therapy management (MTM) services and requires health plans to contract with any qualified provider for MTM services. Although AMCP supports MTM programs, the organization is opposed to this act because it will increase costs and possibly lead to difficulties ensuring quality and preventing fraud. In recent months, there have been numerous news stories and congressional hearings on healthcare fraud, waste, and abuse, particularly in Medicare and Medicaid. Ms. Ryan said AMCP supports the efforts to “crack down on fraud, waste, and abuse,” and the organization wants the fraud language in the ACA to expand to include Medicare Part D. Sens. Al Franken (D-MN) and Amy Klobuchar (D-MN) have introduced 2 bills regarding Medicare Part D drug price negotiations, which AMCP opposes because it requires Medicare Part D plan sponsors to negotiate prices with the federal government. Ms. Ryan said the passage of the legislation is unlikely. AMCP also does not support proposals that extend Medicaid rebates to dual eligibles that are already covered through Medicare Part D, which the Congressional Budget Office estimates will save $120 billion in the next 10 years. Ms. Ryan explained that the Medicaid rebate program serves as a price floor, contributing to higher prices for payers. With government leaders looking for any way to cut spending, the US Food and Drug Administration (FDA) could receive less funding than in the past. According to Ms. Ryan, the House of Representatives decreased funding to the FDA by $285 million, although the Senate committee on appropriations passed a bill that increased FDA funding by $50 million. AMCP has advocated for the FDA to receive appropriate federal funding. Another important issue involves generic exclusion agreements, in which brand name and generic drug manufacturers settle patent litigation out of court and delay the introduction of generic products. If the agreements are found to be illegal, the Federal Trade Commission estimates it could save $35 billion over 10 years, including $8.8 billion in savings for the federal government, according to Ms. Ryan. AMCP is in favor of eliminating barriers of entry for generic drugs, and Ms. Ryan said the organization has worked with Sen. Herb Kohl’s (D-WI) staff to prohibit generic exclusion agreements. Ms. Ryan said there has been some legislation concerning imports of prescription drugs from other countries, but AMCP does not support importation unless their safety and effectiveness are proven. Although AMCP opposes the Medication Therapy Management Benefits Act of 2011, it supports MTM grant programs that are proposed under the Agency for Healthcare Research and Quality. Ms. Ryan said AMCP is working with pharmacy organizations to secure funding for the programs. Finally, AMCP is opposed to restrictions on pharmacy benefit managers (PBMs) that contract with health plans in the government’s Federal Employees Health Benefits program. Ms. Ryan mentioned that the proposal would restrict pharmacists who work for PBMs from managing the prescription drug benefit. State Issues John Bishop, PharmD, pharmacy director for government programs at PacificSource Community Health Plans, followed with a discussion of state legislative updates. Like the federal government, most states have serious financial problems and some have adopted managed care strategies, according to Dr. Bishop. Several states have introduced legislation requiring certain therapeutic classes, such as antiseizure, antiretroviral, antidepressants, and oral contraceptives, to be included on the preferred drug list. They are also implementing utilization management mandates and requiring certain benefit designs such as full coverage for tobacco cessation, prohibiting coinsurance, and limiting cost-sharing. Some states have adopted any-willing-provider legislation, requiring health plans to accept any provider that agrees to conform to the state’s requirements on conditions and reimbursement. States are also introducing bills to regulate and oversee PBMs. In addition, states are prohibiting mandatory mail order pharmacy, adopting new requirements for out-of-state pharmacies, auditing pharmacy reimbursement, and requiring standardization of electronic prescribing. Furthermore, 48 states have enacted legislation for prescription drug monitoring programs, electronic databases that collect data on substances dispensed in the state. In 36 states, the program is in place. Requirements found in the ACA have affected states, as well. By 2014, people whose incomes are ≤133% of the federal poverty level are eligible for Medicaid, expanding the number of people who will have insurance. To prepare for the changes, some states are transitioning members from fee-for-service to managed care, and Dr. Bishop expects more states to adopt Medicaid managed care programs. States are also creating health insurance exchanges to provide a marketplace for people to purchase policies by 2014. The federal government has given states leeway on how to structure the exchanges (as a state agency or independent nonprofit), what organizations will participate, and what benefits are required. To date, 14 states have enacted exchanges, 16 have attempted to start them, and 5 are pending. “There are a lot of questions regarding health insurance exchanges,” Dr. Bishop said. “They will impact us significantly."