HHS Releases Blueprint to Address Prescription Drug Costs

This week, our In Focus, written by HMA Principal Anne Winter and Senior Consultant Aimee Lashbrook, examines American Patients First:  The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, released May 11, 2018. Over time, the pharmaceutical supply chain has become a complex ecosystem, responding to the ever-changing dynamics of new drug products, pricing strategies, health care reform, benefit design, and the regulatory environment making it, arguably, the most complicated in health care. Due to this complexity, solutions to equitably control drug pricing will take a multiprong approach that includes regulatory redesign.

The Blueprint identifies several challenges to addressing drug pricing:

  • A business model born on the complexity of supply chain dynamics
  • Loss of patent exclusivity and increase in generic alternatives
  • Impact of the Affordable Care Act (taxes, rebates)
  • Expansion of the 340B drug discount program
  • Expansion of international price controls
  • Lack of negotiation tools for government programs
  • Changes in insurance benefit design that shifts costs to consumers
  • Growth in high-cost drugs

The Blueprint offers multiple strategies to address these challenges:

The multiple strategies outlined in the Blueprint are categorized by whether the U.S. Department of Health and Human Services (HHS) believes they can be addressed now, in the short term, or whether they require additional research and stakeholder input. HHS believes it can take many actions now within the current regulatory environment. These actions, which may only require a “stroke of a pen”, and more long-term solutions that will require additional stakeholder feedback, are outlined in the tables below. HHS is requesting public comment on many of these longer-term solutions and interested parties should participate in this stakeholder feedback process.

The majority of the strategies to increase competition involve bringing more therapeutic alternatives to single source brand drugs to market. Increased competition is accomplished through improving pathways for generic drug and biosimilar development and prescribing.

Strategies for better negotiations focus on value-based purchasing of drugs, Medicare Part B and D, and foreign government actions. Medicare reforms include allowing Part D plans to negotiate tighter formularies and administering drugs normally paid through the Part B benefit.

Strategies to incentivize lower list prices focus on government programs, pharmacy benefit manager (PBM) rebate strategies, the 340B drug discount program, and drug coupons. Rebates have a particular focus due to the dynamic between the list price of drugs and the net price of drugs post-rebate.

All the strategies to reduce out-of-pocket costs are Medicare-driven and focused on providing Medicare beneficiaries with information on drug costs and lower cost alternatives.

HHS is already taking action on policies outlined in the Blueprint, such as issuing a Health Plan Management System (HPMS) memorandum prohibiting pharmacy gag clauses in Part D contracts, releasing the names of manufacturers who have had complaints filed against them regarding sample availability, and publishing an updated Medicare drug pricing dashboard. These actions are in addition to policies already being pursued by HHS prior to releasing the Blueprint, which are identified in the table below.[1]

For additional information, please contact HMA Principal Anne Winter at

[1] *Proposed in the President’s 2019 budget.

Medicaid and Exchange Enrollment Update – 2017-18

This week, our In Focus section reviews updated reports issued by the Department of Health & Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) on Medicaid expansion enrollment from the “December 2017 Medicaid and CHIP Application, Eligibility Determination, and Enrollment Report,” published on April 30, 2018. Additionally, we review 2018 Exchange enrollment data from the “Health Insurance Marketplaces 2018 Open Enrollment Period: Final State-Level Public Use File,” published by CMS on April 3, 2018. Combined, these reports present a picture of Medicaid and Exchange enrollment at the beginning of 2018, representing more than 74 million Medicaid and CHIP enrollees and nearly 12 million Exchange enrollees.

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Electronic Visit Verification: Implications for States, Providers, and Medicaid Participants

This week, our In Focus, written by HMA Principal Jen Burnett in collaboration with the National Association of States United for Aging and Disabilities (NASUAD), summarizes key considerations and policy decisions contained in Electronic Visit Verification: Implications for States, Providers, and Medicaid Participants for state consideration as they work to implement electronic visit verification (EVV) systems in accordance with the mandate included in the December 2016 21st Century Cures Act (the CURES Act).

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MLTSS Implementation Plans in North Carolina and New Hampshire

This week, our In Focus reviews two recently released papers outlining North Carolina’s and New Hampshire’s plans to implement Medicaid managed care long-term services and supports (MLTSS). The North Carolina Department of Health and Human Services released “North Carolina’s Vision for Long-term Services and Supports under Managed Care” on April 5, 2018, and is accepting comments through April 27. The New Hampshire Department of Health and Human Services released its “Implementation Plan for Medicaid Care Management – Nursing Facility/Choices for Independence Services” on March 6, 2018, and is accepting comments through May 4, 2018. Both states are anticipated to release requests for proposals (RFPs) for integrated Medicaid managed care services in the next several months.

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Four HMA Behavioral Health Experts Speaking at NatCon18

The National Council for Behavioral Health Conference, held April 23-25, will host more than 5,000 leaders in healthcare. Attendees will explore healthcare’s greatest innovations in practice improvement, financing, integrated health care, technology, policy and advocacy, and professional development. Four HMA behavioral health experts will be speaking at NatCon18.

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The Policy, Implementation and Operations of Medicaid Personal Responsibility Initiatives: An Introduction

This week, our In Focus section highlights HMA Medicaid Market Solutions (MMS), formerly SVC, Inc., which is at the forefront in supporting state flexibility in designing and implementing initiatives including Section 1115 Demonstration Waivers promoting member engagement and personal responsibility. Over the coming weeks, HMA MMS will present a series of articles providing an in-depth look at the facets of these new Medicaid models. 

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Medicaid Managed Care Spending in 2017

This week, our In Focus section reviews Medicaid spending data collected in the annual CMS-64 Medicaid expenditure report. After submitting a freedom of information act request to CMS, we have received a draft version of the CMS-64 report that is based on preliminary estimates of Medicaid spending by state for federal fiscal year (FFY) 2017.  The final version of the report will be completed by the end of 2018 and posted to the CMS website at that time.  Based on the preliminary estimates, Medicaid expenditures on medical services across all 50 states and 6 territories in FFY 2017 exceeded $571 billion, with over half of all spending now flowing through Medicaid managed care programs. In addition, total Medicaid spending on administrative services was $27.8 billion, bringing total program expenditures to just under $600 billion.

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Alabama Integrated Care Network Program

This week, our In Focus section reviews Alabama’s Integrated Care Network (ICN) program, based on a concept paper released by the Alabama Medicaid Agency in March 2018. The ICN program will establish a new Medicaid long-term care program focusing on a person-centered approach to care delivery using the Primary Care Case Management (PCCM) Entity delivery model, with implementation expected on October 1, 2018.

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