COA PRESCRIPTION FOR HEALTH CARE REFORM: A POLICY BLUEPRINT FOR CONGRESS

ADDRESSING HOSPITAL CONSOLIDATION: DIAGNOSIS

Trend: Hospital consolidation has surged over the last 30 years, leading to a rise in mergers, acquisitions, and physicians employed by hospitals.^{9 10} This trend has driven the formation of large mega hospital systems that prioritize “profitability” over clinical objectives and patient wellbeing, resulting in highly concentrated markets where there is little meaningful competition.^{11 12} Also contributing to hospital consolidation is the payment differential between different sites of care—the more expensive hospital setting versus far less expensive independent physician practices. Research has found that payment differentials by site of care create incentives to consolidate health care markets.¹³

Patient Impact: Hospital consolidation has significantly increased health care costs and inefficiencies for patients and primary payers (i.e., employers, Medicare, state governments, and other payers) and reduced access.^{14 15 16} Patients face higher insurance and out-of-pocket costs, restricted choice and access of providers and clinic locations, and greater administrative barriers from administrative red tape.¹⁷ Consolidated hospital systems often result in “medical care deserts” for rural or underserved areas by closing less profitable satellite clinics, forcing patients to travel further for treatment or forego it altogether.¹⁸ The consolidation model also shifts the focus from personalized, community-based care with local providers to a one-size-fits-all depersonalized health care model.¹⁹ Despite promises of improved care coordination and efficiency, hospital consolidation has consistently failed to enhance the quality of care.^{20 21}

ADDRESSING HOSPITAL CONSOLIDATION: PRESCRIPTION AND TREATMENT

Implement Site-Neutral Payment Policies

• Legislate total site payment parity. Remove the “grandfathering” exception in Section 603 of the Bipartisan Budget Act of 2015, ensuring that the site-neutral payment policy is extended to all hospital-owned sites of care off-campus from the main hospital campus. Reimbursement will be based on independent physician office reimbursement, per the Medicare Physician Fee Schedule (MPFS).
• Ban all facility fees for hospital off-campus outpatient departments. Prevent hospital- owned off-campus outpatient departments from charging additional facility fees, reducing costs for patients and payers.
• Bundle and align radiation therapy technical payments at the hospital outpatient rate.

Tighten Hospital “Nonprofit” Status Requirements

• Modernize requirements for charity care in all nonprofit hospitals, which should provide a level of charity care commensurate with the tax breaks that accompany their nonprofit status.
• Require nonprofit hospitals to meet specific charity care standards or lose their nonprofit status. Nonprofit hospitals provide less charity care, on average, compared to other types of hospitals (government and for-profit hospitals).¹

Strengthen 340B Participation Requirements

• Require that 340B hospitals deliver charity care that meets or exceeds their tax exemptions.
• Establish clear 340B patient eligibility requirements by defining who qualifies as a “340B patient” to ensure the program serves patients in need.
• Define standards for 340B hospital child sites such that 340B hospitals cannot funnel 340B savings through hospitals in disadvantaged areas to child sites in wealthy areas.
• Exclude for-profit PBMs from serving as 340B mail order contract pharmacies to prevent corporate profit-seeking from undermining the intent of the program by diverting 340B funds from helping patients to feeding corporate coffers.

Require Transparency and Reporting in 340B

• Require transparency and accountability as to how 340B discounts are used to help patients in need in conjunction with strengthened 340B participation requirements, with sufficient penalties for program misuse.
• Strengthen oversight of the 340B program by granting additional authority and resources to federal agencies to enforce 340B rules and oversee program compliance.
• Require 340B hospitals to have standardized charity care requirements and reporting processes.

Reimburse 340B Hospitals Based on Surveyed Acquisition Cost Prices

• Adjust 340B hospitals’ reimbursement rate to be based on the CMS survey data of acquisition costs, as proposed in the 2021 Medicare Hospital Outpatient Prospective Payment System (HOPPS) proposed rule. In changing the reimbursement rate, exempt smaller rural 340B hospitals.²²
• Mandate CMS to conduct an updated survey of hospitals’ 340B acquisition costs and discounts to ensure that Medicare reimbursement accurately reflects net drug acquisition costs.

Restrict Aggressive Debt Collection Practices by 340B Hospitals

• Prohibit 340B hospitals from using aggressive debt collection tactics (e.g., wage garnishment, property liens, credit reporting) against patients, especially low-income, uninsured, or underinsured patients.
• Require 340B hospitals to document and exhaust all financial assistance options (e.g., sliding scale of charity care) before pursuing collections and ensure transparent disclosure of these options to patients at admission and discharge.

ADDRESSING HOSPITAL CONSOLIDATION: ONGOING TREATMENT

The 120^th Congress and beyond must ensure that there are effective guardrails for the 340B program, address anticompetitive hospital behavior, and ensure that rural hospitals and practices have a sustainable path forward.

Curb Unrestrained 340B Growth

• Transform 340B into a patient-centered program instead of a facility-centered program. 340B discounts should follow eligible patients in need, regardless of the care setting, providing direct out-of-pocket cost relief for qualifying individuals. Patient eligibility may be determined annually by issuing cards based on patients’ tax returns, which may be used either for Medicaid enrollment or rebates paid to the entity purchasing the drugs.

Restrict Anticompetitive or Punitive Hospital Actions Against Independent Providers

• Ban “all or nothing” contracts, in which a hospital requires physicians to accept unfavorable terms because rejecting the contract entirely could mean losing hospital privileges or access to a significant portion of their patient base.
• Require hospitals to maintain specialty-specific privileges (corresponding with the physician’s area of practice) for independent oncologists and other physician specialists in good standing with the facility.
• Enhance patient choice by preventing inpatient and emergency department referral systems from automatically mandating or preferring hospital-owned care options in referral systems while shutting out independent physicians.
• Enhance patient choice by requiring that inpatient and emergency department referral systems equitably provide information on care options owned and not owned by the hospital.

Support Rural Providers

• Extend existing physician and nurse incentive programs, such as tuition forgiveness and loan repayment, to independent physician practices serving rural areas, similar to those offered to hospitals.
• Increase the geographic practice cost index (GPCI) for rural areas to increase payment to rural practices, without reducing payment to those in urban areas.
• Adjust technical revenue payments, currently delivered per patient or individual fraction (for radiation oncology), to adequately cover the costs of acquiring and maintaining expensive equipment based on rurality.
• Allow physicians to own hospitals but require that they accept Medicaid patients at all locations.

Expand Site-Neutral Payment Policies

• Reduce payments to HOPDs to the ambulatory surgery center (ASC) payment rate for certain services, as referenced by the MedPAC 2022 Report to Congress.²³
• Seek opportunities to expand site-neutral payment policy within Medicare, for both Medicare Fee-For-Service (FFS) and Medicare Advantage (MA), as well as for Medicaid.

ADDRESSING INSURER/PBM CONSOLIDATION AND MARKET DOMINANCE: DIAGNOSIS

Trend: PBMs have become extremely powerful intermediaries in the health care system. The PBM industry is highly concentrated and vertically integrated. Integration in the insurance/PBM industry has resulted in the top three PBMs effectively controlling 80 percent of the prescription drug market.²⁴ Not only have PBMs merged, and continue to do so, but they are also part of insurance corporations that have in turn merged to increase their market dominance and leverage over patients, employers, and pharmaceutical manufacturers. As a result, insurance markets have grown increasingly concentrated, limiting patient choice and inflating costs.^{25 26} The modern PBM business model incentivizes PBMs to promote those drugs—often the most expensive drugs—that maximize their profits.²⁷ In the process, this has fueled an arms race between mega hospital systems and insurers/PBMs, each vying for greater market leverage by consolidating.²⁸ Patients and independent medical practices are left to shoulder escalating costs and complex administrative burdens, while the “corporate practice of medicine” increasingly becomes the norm, denying physician and patient treatment choices.

Patient Impact: Increasingly, insurers/PBMs are prioritizing their profits over appropriate clinical decisions and patient wellbeing, dictating what treatment will be given and how and where it will be administered, and causing delays in treatment.^{29 30} This is particularly detrimental in cancer care, where the opportunity for effective intervention is narrow. Delays in treatment can lead to disease progression, diminished treatment efficacy, and ultimately, worse patient outcomes, even death. Treatment options are increasingly dictated by insurer/ PBM profit incentives, not by what is clinically best for the patient.

PBM administrative layers have also increased patients’ out-of-pocket costs, creating significant financial burdens that make it difficult for patients to afford essential treatments.^{31 32} Despite negotiating rebates and discounts with drug manufacturers, PBMs rarely pass these savings on to patients and employers, leaving them with inflated costs. Utilization management practices, such as prior authorization, “fail-first” step therapy, and restrictive formularies, limit access to optimal, affordable medications and delay or deny critical patient care.³³ Consolidation among PBMs and their market leverage to dictate drug reimbursement has pressured independent pharmacies, creating “pharmacy deserts” across the country, especially in rural areas.³⁴ Access to needed medication to maintain health or address acute problems becomes impeded by the proximity to the nearest pharmacy.

ADDRESSING INSURER/PBM CONSOLIDATION AND MARKET DOMINANCE: PRESCRIPTION AND TREATMENT 

The 119^th Congress must prioritize PBM reform and stop the insurer/PBM middlemen from gaming the system, increasing costs, and hurting patients.

Require PBM Transparency

• Require PBMs to report on gross and net drug price, formulary construction, and related information including, but not limited to, drug rebates, spread pricing arrangements, formulary placement rationale, and information about benefit designs that encourage the use of pharmacies affiliated with PBMs to independent (non-corporate-affiliated) Medicare Part D plan sponsors.
• Mandate that specialty pharmacy performance or quality programs use evidence-based and relevant measures. For example, oncology practice dispensing facilities or pharmacies should not be measured on cardiovascular drug adherence. Mandate that the PBM drug dispensing fee must cover the cost of dispensing the medication.
• Require PBMs to publicly disclose the Maximum Allowable Cost (MAC) source used to calculate generic drug reimbursements.

Prohibit Insurers/PBMs from Owning Pharmacies

• Prohibit parent companies of insurers and/or PBMs from owning any type of pharmacy business.
  • Mandate that the Department of Health and Human Services (HHS), the FTC, and antitrust divisions of the Department of Justice (DOJ) use their authority to issue orders to violators to divest pharmacy business and relinquish revenue during the violation period.
  • Allow the FTC to distribute the funds to communities harmed by insurer/PBM ownership of pharmacies.
  • Report divestitures to the FTC and the Securities and Exchange Commission (SEC) to review all divestitures and actions to protect the financial viability, interest of the public, and competition.

Mandate PBM Rebate Reform

• Delink PBM rebates and fees as a percentage of prescription drug prices.
• Eliminate safe harbor protections for PBM rebates.
• Require that all PBMs institute “pass-through” pricing, in which (a) the amount a PBM charges a plan is equivalent to the amount the PBM pays the dispensing pharmacy, including dispensing fees; and (b) the amount paid to the PBM for a medication is passed through in its entirety to the pharmacy provider with no offset for reconciliation.

Prohibit Insurers/PBMs From Owning Physician Practices

• Prohibit insurers/PBMs from owning or controlling any type of physician practice.

Address Prior Authorization Challenges

• Ban “fail-first” step therapy and non-medical switching in cancer care if a drug is FDA approved, and a National Comprehensive Cancer Network (NCCN) Category 1 or 2A recommended cancer drug.
• Ensure a clear exception process for patients forced into “fail-first” step therapy and non-medical switching in cancer care.
• Require Medicare Part D (e.g., an oral cancer drug) and Part B (e.g., physician-administered drugs, radiation therapy) prior authorizations and appeals be reviewed by a physician of the identical specialty. For example, for medical or radiation oncology, a pediatrician cannot review an appeal of a cancer treatment.
• Mandate the timely review of all prior authorizations within 72 hours of submission.
• Require that all Part D plans establish electronic prior authorizations to expedite review and approval times.

Mandate Formulary Transparency and Accountability

• Require Medicare Part D plans to provide a continuity-of-care period following any mid-year plan drug formulary changes.
• Require Part D plan sponsors to provide transparent, comprehensive information on plan prescription drug claims.
• Prohibit Part D plan sponsors from making mid-year formulary changes that remove drugs or place drugs on more restrictive tiers unless the removed drug has been withdrawn from the market.
• Require Part D plan sponsors to provide an up-to-date, maintained, publicly accessible online link to the plan drug formulary.
• Require Part D plan sponsors to provide a plain-language, written justification when denying a prior authorization due to non- formulary rejections along with clear and meaningful recourse options.

Create Patient-Oriented Solutions

• Ban copay accumulator or maximizer programs that prevent patient assistance from counting toward out-of-pocket costs.
• Mandate coverage policies following Value-Based Insurance Design (VBID) principles that ensure access to proper screening, imaging, treatment, and long-term care options, including payment for diseases found at screening.

Curb Insurance/PBM Consolidation

• Require PBMs to provide the same reimbursements to independent pharmacies and specialty dispensing facilities as they do to their own mail order and affiliated specialty pharmacies until insurer/PBM pharmacies are divested to comply with the prohibition against insurer/PBM ownership of pharmacies.
• Prevent PBMs from steering patients toward their corporately affiliated pharmacies until insurer/PBM pharmacies are divested to comply with the prohibition against insurer/PBM ownership of pharmacies.
• Require PBMs and their mail order pharmacies to operate under the state pharmacy laws where the patient lives, not where the filling facility is located, until insurer/PBM pharmacies are divested to comply with the prohibition against insurer/PBM ownership of pharmacies.
• Require Group Purchasing Organizations (GPOs) affiliated with insurers/PBMs to completely disclose all relevant financial information regarding rebates and administrative fees.
• Prohibit PBMs from requiring the mandatory use of their mail order pharmacies and discriminatory differential patient cost sharing for independent pharmacies, until insurer/PBM pharmacies are divested to comply with the prohibition against insurer/PBM ownership of pharmacies.

Implement Medicare Guardrails

• Ensure that MA plans have clear, enforceable guardrails to protect patient access.
• Ensure that MA plans are not using “ghost networks” that delay access to care.
• Require CMS to create a centralized data hub where MA plan sponsors would load provider contact information to ensure completeness and accuracy of their networks.
• Require MA plans to cover the same benefits as fully loaded A, B, Medigap, and D Medicare FFS plans.
• Prohibit Medigap plans from using pre-existing condition exclusions.
• Ensure that the Medicare Plan Finder is kept up to date and is a valuable resource for beneficiaries, particularly those with chronic conditions and who take multiple medications.

ADDRESSING INSURER/PBM CONSOLIDATION AND MARKET DOMINANCE: ONGOING TREATMENT

The 120^th Congress and beyond must ensure that physicians are able to make clinical decisions and ensure that PBMs are held accountable to Employee Retiree Income Security Act (ERISA) fiduciary duties.

Create Federal Policies That Make Physicians, not Administrators, the Decision Makers

• Legislate a Corporate Practice of Medicine Doctrine (CPOM) at the federal level to ensure clinical decisions remain with licensed physicians, not corporations.

Amend ERISA to Require PBM’s to Follow ERISA Fiduciary Duties

Require PBMs to act as fiduciaries, which would mandate that PBMs act in the best interests of plan participants. As ERISA fiduciaries, PBMs could not engage in price-inflating behavior. Requiring PBMs to act as fiduciaries would align PBM practices with the best interests of plan sponsors and beneficiaries—for example, preventing a PBM from mandating patients receive an expensive originator biologic, which through rebating is more profitable to the PBM, rather than a less expensive biosimilar.

FIXING PHYSICIAN REIMBURSEMENT AND WORKFORCE SHORTAGES: DIAGNOSIS 

Trend: Outdated reimbursement models without inflation adjustments, continuous reimbursement cuts, and increasing bureaucratic barriers to patient care are accelerating physician burnout and driving many physicians out of independent practice. Since 2019, over 100,000 physicians have left private practice for hospital or corporate employment.³⁵ Regular reimbursement cuts to the MPFS, exacerbated by the ongoing Medicare sequester payment cut, have resulted in Medicare payments effectively lagging inflation by 28 percent over the last decade.³⁶ The result has been an unsustainable environment for many independent practices, leading to many closures and hospital mergers. Burnout is not only worsened by declining reimbursements but also by disputes with insurers/PBMs and excessive time spent on bureaucratic tasks such as prior authorization and data entry over clinical care.^{37 38}

Patient Impact: Outdated Medicare policies have contributed to a wave of independent community oncology practice closures, forcing patients with cancer into larger health systems where treatment costs are markedly higher.³⁹ Lower reimbursement may result in fewer physicians caring for Medicare patients, resulting in longer wait times and delays in care, which are linked to poorer outcomes.⁴⁰ Rural areas are disproportionately affected and patients have increased travel burdens when clinics close. Satellite clinic closures create “medical care deserts” that significantly limit timely access to cancer care and exacerbate disparities in cancer care.^{41 42} For both patients and physicians, these closures disrupt the continuity and quality of care, making it increasingly difficult to deliver the timely, modern, patient-centered treatment essential for improved outcomes.⁴³

The Facts: There is a Widening Gap Between Physician Reimbursement and the Cost of Providing Care

Physician Reimbursement Has Not Kept Pace With Inflation

The viability of independent physician practices is threatened by the continued decline in physician payment, which is true of all medical specialties, including primary care. In oncology, for example, an Avalere analysis found that from 2014 to 2023, the Medicare conversion factor decreased by a total of five percent, while the compounded increase of inflation over the same period was 28 percent.The gap between the rate of change of inflation and the conversion factor has resulted in dramatic physician underpayment over the last decade.i

Figure 5: Physician Payment for Some Services Lags Behind Inflationⁱ

FIXING PHYSICIAN REIMBURSEMENT AND WORKFORCE SHORTAGES: PRESCRIPTION AND TREATMENT

The 119^th Congress must reverse the trend of falling physician reimbursement and address workforce shortages with sustainable policy solutions.

Fix Physician Reimbursement

• Stop the continuous annual reimbursement cuts to the MPFS by incorporating factors that reflect rising real practice costs and are not currently included in Relative Value Units (RVUs), such as administrative work.
• Implement an annual Medicare Economic Index (MEI) increase to physician payment to address inflation and ensure practice sustainability.
• Eliminate the Medicare sequester reduction for independent physician practices to prevent further financial strain.
• Mandate real-time payment processing from CMS FFS carriers and MA plans to improve cash flow and reduce administrative burdens.
• Provide stable, predictable, inflation-adjusted payments that align reimbursement with clinical guidelines through the advancement of physician-driven value-based payment models that reform reimbursement for capital-intensive medical specialties, such as radiation oncology.
• Remove the budget neutrality requirement or increase the threshold to $100 million. Congress should consider a different budget neutrality structure that accounts for the broader drivers of Medicare spending that exist across payment systems, both independent practices and hospitals.
• Note that paying for increasing physician reimbursement and indexing it to inflation can be offset by site-neutral payments and lowered 340B hospital reimbursement (exempting rural hospitals). What this does, in effect, is create ecosystem equilibrium between the less expensive physician practice setting and the more expensive hospital setting.

Address Workforce Shortages

• Increase the number of Medicare-supported residency positions to stem the looming physician workforce shortage crisis, particularly in oncology. Allow Medicare funding to follow residents and fellows to accredited, non-hospital-based clinic sites.
• Implement physician and nurse incentive programs for community practices, especially rural practices, such as tuition forgiveness and loan repayment.
• Decrease the requirements for physicians from accepted foreign medical schools to practice in the U.S. and increase the availability of Conrad 30 waivers as a strategy for mitigating the shortage of qualified doctors in Health Professional Shortage Areas (HPSA), Medically Underserved Areas (MUA), or Medically Underserved Populations (MUP).
• Require HHS to apply the updated definitions of “commercially reasonable” and “fair market value” as established in the CMS Final Rule “Medicare Program: Modernizing and Clarifying the Physician Self-Referral Regulations.”⁴⁴ These key definitions, which are foundational to compliance with the Federal Physician Self-Referral Law (commonly referred to as the “Stark Law”), are not being applied during the review of certain hiring practices by hospitals. If these definitions are not properly applied, hospitals will continue to violate the Stark Law because payments to employed providers are not commercially reasonable and/or not consistent with fair market value. This will continue to fuel consolidation and increase costs to patients and the health care system.

Increase Rural Reimbursement Rates

• Adjust payment models to compensate rural physicians and practices adequately, recognizing the unique challenges and higher costs of delivering care to patients and regions with fewer resources.
• Adjust technical revenue to reflect market usage to ensure the adequacy of payment for radiation and imaging services across both rural and underserved urban regions.

FIXING PHYSICIAN REIMBURSEMENT AND WORKFORCE SHORTAGES: ONGOING TREATMENT

The 120^th Congress and beyond must ensure that the physician workforce will be healthy and thriving for years to come in order to meet the needs of Americans.

Address Workforce Shortages

• Expand the number of Medicare-supported medical residency positions, particularly in critical specialties like oncology, internal medicine, and general surgery.
• Provide tax credits and financial incentives to independent physicians who establish practices in rural or underserved urban areas.

ENSURING ACCESS TO ONCOLOGY THERAPIES: DIAGNOSIS

Trend: The oncology drug market is under immense pressure due to rising costs of innovative therapies, chronic shortages of essential GSIs, and the increasing influence of consolidated insurers/PBMs.⁴⁵ Market distortions, such as 340B and growing mandatory government rebates and discounts, contribute to higher launch prices for new products, exacerbate drug shortages, and threaten the viability of the biosimilar market intended to reduce costs. The oncology drug market is a harbinger of what other specialty drug markets now face or will face shortly.

For physician-administered therapies, the Medicare six percent add-on payment (i.e., ASP plus six percent) is essential to covering overhead, infrastructure and staff costs required to procure, store, handle, and safely administer complex oncology drugs.⁴⁶ This system has been under attack for years by policymakers. Due to sequestration, the add-on payment, in reality, is 4.3 percent and practices are not paid the full ASP plus six percent because the Medicare portion of the payment is cut by the two percent sequester. Practices rely on the add-on payment to offset otherwise unreimbursed costs that have increased significantly over time, especially since the pandemic-fueled increase in inflation of staff salaries and costs for materials.^{47 48 49}

As noted in the physician reimbursement section above, physician payment for chemotherapy administration has essentially unchanged since 2014. Furthermore, codes for chemotherapy infusion services were established in 2005 and have not been updated since, despite significant increases in practice expense relating to these codes (e.g., electronic medical records, USP 800 compliant pharmacies, and increasing physician practice expense), payment has decreased with the other codes from the MPFS.⁵⁰ Net cost recovery from the drug reimbursement itself is no longer adequate to cover the increasing cost of administration and this will be made worse with the implementation of the IRA.⁵¹

Unfortunately, the IRA exacerbates these challenges and threatens the ability of independent practices to continue treating Medicare patients. This is because it ties reimbursement to the negotiated maximum fair price (MFP) plus six percent, rather than ASP plus six percent. This shift will drastically cut reimbursement to practices for Part B drugs, disproportionately impacting independent community oncology practices that do not have the drug profits from 340B and higher services payments that are available to hospitals. Furthermore, practices with in-house medically integrated dispensing pharmacies will face additional challenges from IRA Part D price negotiation due to administrative burdens and financial risk associated with retrospective MFP effectuation.⁵²

There was a fundamental lack of understanding in developing the IRA that all indications of a drug, especially in cancer treatment, are not developed all at once on initial drug approval. Typically, an indication for a particular cancer is tied to a drug’s initial launch, with additional indications developed and launched over time, with pediatric cancer indications developed later in a drug’s lifecycle.

The practical impact of this market reality is that as a drug without competition approaches the IRA negotiation point, pharmaceutical manufacturers may well stop any further research investments in the drug for additional indications. Given that pediatric indications are typically late in the drug lifecycle, the IRA could have an alarming adverse impact on the development of pediatric cancer drugs.

Independent community oncology practices are also contending with persistent shortages of essential GSIs, critical to many standard cancer treatment regimens and clinical trial protocols.⁵³ Persistent, unanticipated shortages compromise patient care and increase costs.⁵⁴

In addition, the future of the biosimilar market is threatened by aggressive payer controls, restrictive formularies that favor more profitable products, and ongoing ASP price erosion.⁵⁵ Without policy adjustments to protect biosimilar pricing and ensure adequate coverage, this vital market segment risks destabilization, undermining the cost savings it was meant to deliver to patients and payers.⁵⁶

Patient Impact: Rising drug costs, restrictive payer controls, and opaque PBM rebate practices lead to delayed treatments and higher out-of-pocket expenses for patients, forcing many to choose less effective, costlier alternatives.⁵⁷ Broader challenges, including chronic shortages of critical GSIs and the uncertain future of the biosimilars market further hinder efforts to lower costs and ensure access to high-quality cancer care.⁵⁸ Adding to these pressures is the prospect of Medicare price negotiation changes under the IRA, which will significantly reduce drug reimbursement and lead to more independent practice closures.

ENSURING ACCESS TO ONCOLOGY THERAPIES: PRESCRIPTION AND TREATMENT

The 119^th Congress must address GSI drug shortages, ensure the stability of the biosimilars market, and mitigate the negative impacts of the IRA.

Address GSI Drug Shortages

• Exempt low-cost GSI drugs that are prone to be in short supply from 340B discounts, Medicaid rebates, and IRA inflation rebates.
• Change the basis of reimbursement for GSI drugs from ASP to Average Wholesale Price (AWP) as a more appropriate and stable pricing for low-cost GSIs.
• Create market incentives for manufacturers for GSIs with three or fewer active manufacturers.

Stabilize the Biosimilar Market

• Implement policies to address biosimilar pricing and coverage issues to stabilize and ensure a robust, healthy biosimilar market.
• Prohibit insurers and PBMs from restricting coverage to select biosimilars by banning the use of rebates on these products in Medicare.

Fix IRA’s Unintended Consequences

• Legislate a technical fix to the IRA that removes providers and patients from the middle of price negotiations and is budget neutral by having drug manufacturers rebate the negotiated price difference directly to Medicare.
• Legislate a technical fix to the IRA to remove the MFP from ASP calculations to prevent spillover effects of MFP on non-Medicare populations.
• Address the IRA small molecule development disadvantage by extending the start time of negotiations to the same time frame as biologics.
• Incentivize pediatric cancer drug development by exempting pediatric cancer drugs from the Medicare drug price negotiations under the IRA.

Sources:

• Assistant Secretary for Planning and Evaluation. “ASPE Report to Congress: Impact of Drug Shortages on Consumer Costs.” 22 May 2023. https://aspe.hhs.gov/reports/drug-shortages-impacts-consumer-costs
• American Society of Health-System Pharmacists. “Severity and Impact of Current Drug Shortages.” June/July 2023. https://www.ashp.org/-/media/assets/drug-shortages/docs/ASHP-2023-Drug-Shortages-Survey-Report.pdf
• Bond, Amelia M, et al. “The Role of Financial Incentives in Biosimilar Uptake in Medicare: Evidence from the 340B Program.” Health Affairs. 1 May 2023. https://pubmed.ncbi.nlm.nih.gov/37126754/

ENSURING ACCESS TO ONCOLOGY THERAPIES: ONGOING TREATMENT

The 120^th Congress and beyond must incentivize domestic drug supply, address GSI drug shortages, establish payment parity for radiopharmaceuticals, and ensure diversity in clinical trials.

Incentivize Domestic Drug Supply

• Establish a quality program for manufacturers of GSI drugs that financially rewards quality and continuous drug supply by increasing payments. Conversely, penalize poor quality and gaps in drug availability.
• Provide direct financial incentives (e.g., tax incentives, incentive bonus payments) for manufacturers to produce quality GSI drugs domestically, with continuous supply.
• Use tax incentives to encourage the development of manufacturing plants in the U.S. to ensure a stable supply of GSI drugs, not dependent on other countries. This should be considered a national security priority.

Address GSI Drug Shortages

• Ensure that policy solutions to address drug shortages do not put an undue burden on independent oncology practices and allow additional flexibilities for independent practices where appropriate (e.g., core standard requirements for drug purchasing).

Establish Payment Parity for Radiopharmaceuticals

• Mandate Medicare site-neutral payments for therapeutic radiopharmaceuticals. Under the HOPPS, therapeutic radiopharmaceuticals are considered a “drug” and are paid at ASP plus six percent when ASP data is available. The additional six percent is meant to reimburse for the complexity of the drugs, many of which are used to treat various types of cancer. However, radiopharmaceuticals furnished in the physician office are not paid at ASP and are instead paid by Medicare Administrative Contractors (MACs) under a variety of payment limits that vary geographically and, in the majority of MACs, are invoice-based pricing. As a result, freestanding radiation centers are most frequently paid significantly less than a HOPD and may not be able to justify offering radiopharmaceutical therapy because of the low reimbursement. This discrepancy is limiting access to care for patients with cancer in many communities.⁵⁹

Ensure Clinical Trial Diversity

• Ensure that diverse patient groups are represented in clinical trials.
• Allow foundations to assist patients with the expenses associated with participating in clinical trials.

MODERNIZING STRUCTURAL CMS MEDICARE POLICIES: DIAGNOSIS

Trend: Medicare’s structure is woefully outdated and has not adapted to the evolving health care landscape, lagging behind shifts in care delivery, fueling hospital consolidation, and exacerbating the closure of independent practices. Rather than supporting competition, CMS payment policies have fueled consolidation by regularly increasing payments to hospitals while consistently cutting reimbursement to physician practices.⁶⁰ Simultaneously, costs have increased for both Medicare and its beneficiaries. Additionally, the siloed nature of Medicare’s payment system is hopelessly outdated, hindering holistic global payment initiatives.

The Center for Medicare and Medicaid Innovation (CMMI) requires significant restructuring to ensure that Medicare policy aligns with the needs of patients and providers. Despite the focus on shifting to value-based health care and the proliferation of new CMMI payment models, the measurable impact on cost savings, quality improvement, and patient outcomes has been far less transformative than many had hoped thus far from CMMI.

Additionally, CMS refuses to “police” Medicare Part D in any way whatsoever, choosing to hide behind the “non-interference clause” of the Medicare Modernization Act of 2003. This is allowing PBMs implementing Medicare Part D plans to force pharmacy providers to accept “low-ball” reimbursement, very often lower than the actual acquisition price of the drug.⁶¹ This is fueling the closures of independent pharmacies, especially in rural areas, creating “pharmacy deserts” across the country.⁶²

Patient Impact: Outdated Medicare policies and regulations severely impact patient care by reducing access and increasing costs. Disparate reimbursement rates for advanced medical treatments strain independent practices, leading to closures and forcing patients into larger, more expensive health systems.⁶³ This not only increases patient costs but also affects the quality and timeliness of care, leading to poorer outcomes and exacerbating health disparities.⁶⁴ Comprehensive policy reform is urgently needed to better support patients, independent physician practices, and long-term Medicare stability.

Of particular note, citing Stark restrictions, CMS has blocked independent community oncology practices from delivering an oral cancer drug to a patient via mail, courier, ground package delivery, through a caregiver, or even a family member. Only the patient, in person, can receive the prescription. This is life-threatening in cases where the patient is too ill to pick up their drugs in person or where the patient does not have reliable or affordable transportation, especially in rural areas. The House passed legislation in the 118^th Congress that would overcome this absurd and life-threatening CMS restriction, but time ran out to pass the legislation in the Senate. This must be an immediate priority of the 119^th Congress.

MODERNIZING STRUCTURAL CMS MEDICARE POLICIES: PRESCRIPTION AND TREATMENT

The 119^th Congress must protect physician practices’ ability to deliver oral drugs to patients and improve Part D oversight by enforcing the Any Willing Provider (AWP) law. Furthermore, Congress must revise the IRA MFP effectuation process to remove independent physicians from IRA negotiations between pharmaceutical manufacturers and CMS.

Protect Physician Practices’ Ability to Deliver Oral Drugs to Patients

• Stop CMS from considering it a Stark violation if a practice delivers a drug to a patient from a medically integrated dispensing facility or related practice pharmacy, including not allowing a family member or caregiver to pick up the drug for a patient.^{65 66} The House must immediately introduce the Seniors Access to Critical Medications Act (H.R. 5526 in the 118^th Congress) and pass it and the same for the Senate. This is an important priority!

Improve CMS Oversight of Medicare Part D

• Force CMS to “police” Part D in terms of enforcing AWP laws and ensuring that pharmacy reimbursement is “reasonable and relevant” according to statute.
• Mandate that CMS enforce its own policies to provide meaningful oversight of Part D.

Fix Physician Payment

• Amend the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to tie annual updates of the Medicare Conversion Factor (CF) to a reliable index, such as the Medicare Economic Index (MEI), to ensure the physician payments reflect true cost increases.
• Inflation adjustments, which account for the broader impacts of medical inflation and economic realities, should be coupled with a robust regular update in calculations for the direct inputs for practice expense relative value units, accounting for clinical wages and costs of medical supplies, equipment, etc.
• Note that the cost of amending MACRA and providing inflation updates can be more than paid for by the fixes to 340B and payment site neutrality previously discussed and recommended in this document.

Fix Unintended Consequences of the IRA

• Implement a technical fix to the IRA to remove independent physicians from the negotiations between pharmaceutical manufacturers and CMS/Medicare, using a rebate mechanism similar to Medicaid best price.

Critically Evaluate CMMI

• Mandate a critical evaluation of CMMI, including whether payment models that place participants, including independent physician practices, “at risk” are in the best interest of patients.
• Restructure CMMI so that it removes legal and bureaucratic impediments to real testing of phase I models, as is the congressional intent of the center.
• Put guardrails on CMMI’s authority so that it is not used as a tool of the executive branch to change reimbursement and other policy bypassing Congress.

MODERNIZING STRUCTURAL CMS MEDICARE POLICIES: ONGOING TREATMENT

The 120^th Congress and beyond must work towards building a health care system with streamlined metrics, ensuring adequate financial support for smaller practices, aligning incentives more robustly with quality outcomes, and supporting systems that incorporate the social and economic realities of cancer patients. Additionally, Congress needs to implement solutions that ensure stable, long-term policy and better data transparency.

Completely Restructure Medicare

• Completely restructure the Medicare “silos” to create a global payment system for Medicare that equitably balances payments between hospitals and independent physician-run medical practices, promoting competition and more sustainable patient care. The current Medicare “silos” are hopelessly outdated.