Managed Care Updates: Fall 2022

Evidence-Based OncologyDecember 2022
Volume 28
Issue 8
Pages: SP561

Reports focus on Medicare's cuts to Physician Fee Schedule and the American Medical Association' update on pharmacy benefit managers.

Medicare Fee Schedule Expands Access to Some Services but Cuts Physician Reimbursement 4.5%

CMS released the 2023 Physician Fee Schedule (PFS) rule, which finalizes policies relating to telehealth; expands access to behavioral health care, cancer screening coverage, and dental care; and cuts reimbursement by 4.48%.

In the announcement of the final rule, the Biden administration touted the coverage expansions and that the final rule promotes innovation and coordinated care while aligning with the president’s Cancer Moonshot goal to cut the cancer death rate by at least 50% in the announcement of the final rule.

“Access to services promoting behavioral health, wellness, and whole-person care is key to helping people achieve the best health possible,” CMS Administrator Chiquita Brooks-LaSure, said in a statement.1 “The Physician Fee Schedule final rule ensures that the people we serve will experience coordinated care and that they have access to prevention and treatment services for substance use, mental health services, crisis intervention, and pain care.”

However, at the very bottom of the announcement was the update to the payment rates for calendar year (CY) 2023. The PFS conversion factor is $33.06, which represents a decrease of $1.55, or 4.48%, from the 2022 PFS conversion factor.

“This conversion factor reflects the statutorily required update of 0% for CY 2023, expiration of the temporary 3% supplemental increase in PFS payments for CY 2022 provided by the Protecting Medicare and American Farmers From Sequester Cuts Act, and the statutorily required budget neutrality adjustment to account for changes in payment rates,” the announcement explains.

The cut to the physician reimbursement is what caught the attention of leaders. Jack Resneck Jr, MD, president of the American Medical Association (AMA), said payment rate reduction is “damaging” and the final rule fails to account for inflation in practice costs and challenges to practice sustainability as a result of COVID-19.

“Such a move would create long-term financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians,” Resneck said in a statement.2 “We will be working with Congress to prevent this harmful outcome.”

The Surgical Care Coalition added that in addition to the Medicare cut, surgical care will face a nearly 8.5% cut.

“Without Congressional action, vulnerable seniors’ nationwide access to timely, high-quality, and essential surgical care will be negatively impacted,” Patricia L. Turner, MD, MBA, FACS, American College of Surgeons (ACS) executive director and CEO, said in a statement.3 “If allowed to go into effect, these reductions will be yet another blow to an already stressed health care system. The ACS has always been willing to work with Congress to find permanent solutions to this issue in the long term, but we must act now to preserve critical access for patients.”

However, not all physicians and organizations were upset; there were some positive changes for accountable care organizations (ACOs). The National Association of ACOs (NAACOS) praised the final rule. NAACOS President and CEO Clif Gaus, ScD, called the final rule a “win to patients.” CMS is allowing ACOs to have more time before being forced to take on financial risk, providing advanced shared savings payments to some ACOs serving underserved populations, and adding a health equity quality adjustment, according to NAACOS.

“On balance, we believe this final rule will grow participation in accountable care organizations, which have already generated billions of dollars of savings for our health system,” he said in a statement.4

However, it wasn’t all compliments. Gaus noted concerns with the use of a prospectively projected administrative growth factor for ACO benchmarks or their spending targets, which NAACOS believes will harm more than one-third of ACOs.

“CMS should consider correcting the ‘rural glitch,’ where ACOs no longer benefit from the regional adjustment when lowering the spending of their assigned patients,” Gaus said. “This change would greatly help ACOs but remains in effect even after today’s changes.”

340B Program Payments
On the same day the PFS final rule was released, CMS also released the final rule of the Hospital Outpatient Prospective Payment System, which included payment for drugs acquired through the 340B program. CMS finalized a general payment rate of average sales price (ASP) plus 6%, which is a reversal from the payment of ASP minus 22.5% for calendar years 2019 through 2022.

The Community Oncology Alliance’s executive director, Ted Okon, MBA, called the final rule an “abdication of duty” regarding the health care system and patients.

“Just as President Biden seeks to make major efforts to reduce health care spending and lower the price of drugs, it is unbelievable that his administration will grossly overpay large health systems abusing the 340B Drug Pricing Program, which will cost Medicare seniors more out of pocket for their Medicare Part B drugs,” Okon said in a statement.

CMS cited the Supreme Court’s unanimous decision in American Hospital Association v. Becerra, in which the court declared the reduction in yearly payments to hospitals as part of the 340B program unlawful. According to the decision, the reduced reimbursement rate could have been lawful if HHS had first conducted a survey of hospitals’ acquisition costs and set reimbursement rates based on those costs. Without the survey, HHS could not cut reimbursement rates to 340B hospitals, while maintaining a different reimbursement rate for non-340B hospitals.

“CMS already has survey data and even went into detail in the 2021 proposed payment rule that they should be paying 340B hospitals at ASP –28.7%,” Okon said. 

1. HHS continues Biden-Harris administration progress in promoting health equity in rural care access through outpatient hospital and surgical center payment system final rule. News release. HHS. November 1, 2022. Accessed November 5, 2022.
2. AMA: Medicare payment schedule rule threatens patient access. News release. AMA. July 7, 2022. Accessed November 5, 2022.
3. Medicare cuts harming seniors’ access to surgical care set to take effect in less than two months. News release. Surgical Care Coalition. November 1, 2022. Accessed November 5, 2022.
4. NAACOS praises positive changes for ACOs in final CMS rule. News release. NAACOS. November 1, 2022. Accessed November 5, 2022.

AMA Report Evaluates PBM Competition

In local markets in the United States where pharmacy benefit managers (PBMs) provide services to commercial health insurers, there is a widespread lack of competition, according to a new report from the American Medical Association (AMA).1

The analysis uses 2020 data for individuals with a commercial drug benefit tied to a medical benefit, as well as the PBMs used by insurers, to provide insight on PBM services performed for insurers. Five PBM services are reviewed: rebate negotiation, retail network management, claim adjudication, formulary management, and benefit design.

“The American Medical Association already has serious concerns about PBM business practices that can have a detrimental impact on patients’ access to and cost of prescription drugs,” AMA President Jack Resneck Jr, MD, said in a statement. “PBM markets require careful scrutiny as less competition and more vertical integration can embolden anti-competitive business practices to the detriment of patients.”2

PBMs were first created in the 1960s and manage the drug insurance benefits for the majority of Americans today. When PBMs were created, the goal was to contain drug spending by creating competition among substitute drugs. Manufacturers provide rebates to PBMs for favorable placement on the drug formulary, and PBMs are supposed to pass those rebates on to the insurer or employer.

“It is not clear whether PBMs are passing on those rebates,” the report notes. “Perhaps in response to this incomplete pass-through of rebates, health insurers have been vertically integrating with PBMs. As a result, the largest insurers in the country and even some smaller ones already have their own PBM or share the same owner with one.”

The analysis looked at enrollment in commercial drug insurance obtained directly from health insurers through health plans combining the medical and drug benefit. The analysis did not include carved-out lives.

More than a third (37%) of the national markets for formulary management and benefit design are managed in house by insurers rather than through PBMs.

Across the remaining 3 functions—rebate negotiation, retail network management, and claims adjudication—the report found little difference in market shares. The 4 largest PBMs collectively have a 66% share of the national PBM commercial market, according to the report. Furthermore, 10 PBMs control 97% of the market share.

The largest PBM in the commercial drug coverage market is Express Scripts, with a 22% share, followed by OptumRx with 17% and Prime Therapeutics with a 15% share. The data used reported on CVS/Caremark and Aetna separately, but their merger was approved at the end of 2019. When they are combined, CVS has a market share of 17%.

In addition, the report highlights “a significant degree of vertical integration between health insurers and PBMs.” The 8 largest insurers have a collective national market share of 61% and are affiliated with the 8 biggest PBMs.
Looking at PBM market concentration at the local level, the results show that 78% of state-level markets and 85% of metropolitan statistical areas–level markets are considered highly concentrated for rebate negotiation.

Results were similar for the retail network management and claims adjudication markets.

Although there is a large extent of vertical integration at the national level, the same is not necessarily true at the local level, according to the report. “In fact, most health insurers don’t have a national presence and instead operate at the local level as they are typically licensed to operate in a single state,” the report explains.

Although 69% of drug lives are covered by a vertically integrated insurer on the national level, there is wide variation at the local level. On average, 63% of state-level lives are vertically integrated, but this varies from South Dakota with only 6% of lives to North Carolina with 97% of lives vertically integrated.

“The novel data presented by the AMA analysis is intended to help regulators, lawmakers, researchers, and policy makers better evaluate merger proposals in the future that may harm patients by raising prices, lowering quality, reducing choice, and stifling innovation,” Resneck said. 


1. Guardado JR. Competition in commercial PBM markets and vertical integration of health insurers with PBMs. American Medical Association. Accessed November 5, 2022.
2. AMA examines PBM market competition and integration with insurers. News release. American Medical Association. October 13, 2022. Accessed November 5, 2022.

In Advanced NSCLC, Forgoing Treatment Leads to Increased Health Care Utilization

A notable percentage of people with non–small cell lung cancer (NSCLC) go untreated for their cancers, and those patients tend to require more inpatient and emergency department visits than people who receive cancer treatment, according to a new report.
The findings, which were presented recently at the Academy of Managed Care Pharmacy Nexus 2022 conference, offer new insights into the economic impacts of NSCLC treatment decisions.
Julie Vanderpoel, PharmD, MPA, of Janssen Scientific Affairs, and colleagues, noted that NSCLC represents up to 85% of all lung cancer cases. Although therapies such as surgery, radiation therapy, and chemotherapy have long been a part of lung cancer care, newer treatment options include targeted therapy and immunotherapy, the authors noted. Yet the availability of new treatments has not been able to reverse the stark survival data for NSCLC. Just 26% of people with NSCLC are alive after 5 years, and the numbers are substantially lower for people with stage III and IV NSCLC, Vanderpoel and colleagues noted. For patients who opt against treatment, the mean and median survival is only about 6 months.
The investigators wanted to know how the current treatment landscape for people with NSCLC translates into health care resource use and cost, both for individuals with NSCLC generally and for those who opt for or against treatment. To find out, they consulted claims databases of both commercial insurers and Medicare and Medicaid, and retrospectively analyzed patient costs both before and after a patient’s lung cancer diagnosis. The study included patients whose diagnosis came after January 1, 2015, in order to ensure the report reflected recent trends.
A total of 32,019 patients met all of the study’s inclusion standards, and 12,501 of those patients had advanced NSCLC. The patients had a mean age of 67.2 years and the advanced cohort had a mean age of 65.7 years. The mean baseline Quan-Charlson Comorbidity Index scores of participants was 2.1 for the entire cohort and 1.7 for the advanced NSCLC cohort. None of the patients had metastatic disease at baseline, per study protocols. During the 12-month pre-diagnosis baseline period, the participants had an average all-cause health care cost of $1857 per patient per month (PPPM), and those with advanced disease had index-period health care costs averaging $1387 PPPM.
Overall, 65% of patients in the study received treatment for their cancers over the average observation period of 13.3 months. About half (50.7%) of participants had observed metastatic disease during the postindex evaluation period, including 56% of individuals who received treatment and 40.7% of individuals who went untreated.
Among individuals with advanced cancers, 69.2% received treatment over a mean follow-up period of 9.5 months. Of those, 94.2% of treated patients and 100% of untreated patients reported metastatic disease.
For all patients, tumor removal surgery was the most common treatment. Among the advanced cohort, radiation therapy and antineoplastic therapy were most common.
The investigators found that the advanced NSCLC cohort had higher health care utilization. In both the overall and advanced cohorts, those who went untreated had higher rates of inpatient hospital stays, longer hospital stays, and higher numbers of emergency department visits, Vanderpoel and colleagues found.
Overall, patients had an average PPPM cost of $14,591, and those with advanced cases had an average cost of $22,350 PPPM. Among all patients, treated patients had costs just above the average ($15,050 PPPM), but untreated patients had slightly lower costs ($13,740), a reduction in spending attributable to lower pharmacy costs.
However, among patients with advanced cancers, treated patients had lower-than-average costs of $21,973 PPPM, whereas those who went untreated had PPPM costs of $23,196.
The authors said the increased hospital utilization of untreated patients, particularly those with advanced cancers, may be an indication of poorer quality of life in that population.
“These findings have important implications to population health decision makers regarding the value of innovative medications on the outcomes and quality of care for patients with advanced NSCLC,” the authors concluded. 

Vanderpoel J, Vadagam P, Emond B, et al. Health care utilization and costs of untreated patients with non-small cell lung cancer and advanced non-small cell lung cancer. Presented at: AMCP Nexus 2022; October 11-14, 2022; National Harbor, MD. Abstract C11.

Risk of HCC Warrants Careful Surveillance in People With Primary Biliary Cholangitis

People with primary biliary cholangitis (PBC) and cirrhosis should be aggressively screened for hepatocellular carcinoma (HCC), using twice-annual liver screening, according to a new report in Clinics in Liver Disease.
The authors wrote about the latest evidence related to the risks and outcomes of HCC in people with PBC. They said such cases warrant vigilance.
PBC is an autoimmune condition that affects the biliary epithelial cells, leading to a range of symptoms and severity, the authors noted. Some patients experience no symptoms, others develop cirrhosis, and some develop end-stage liver disease.
Another common complication of PBC, however, is HCC.
“Advanced fibrosis is the most important risk factor for the development of HCC, but there are other reports showing the development of HCC in PBC without evidence of advanced disease,” the investigators wrote.
They said autoimmune liver disease has been linked with an increased risk of developing HCC, but they said that risk is typically lower than the risk conferred by other liver diseases. Among autoimmune diseases, PBC appears to be associated with the greatest HCC risk. Among the research they cite, one study found people with PBC had an odds ratio (OR) of developing HCC of 31.33 (95% CI, 23.63-41.56) compared with primary sclerosing cholangitis (OR, 4.42; 95% CI, 2.06-9.45).
Although PBC cannot be cured at present, the investigators said treatment with ursodeoxycholic acid (UDCA) can delay progression to cirrhosis, and cirrhosis in PBC puts patients at a higher risk of developing HCC. However, there have been several studies looking at how UDCA itself affects the risk of HCC, and those studies have so far been inconclusive, the authors said.
Apparent risk factors for the development of HCC in people with PBC include age, the male sex, and comorbidities such as diabetes, previous viral infections, and alcohol consumption, they reported. They noted that even though PBC is more common in women than in men, studies indicate that women with PBC cirrhosis are less likely than men to develop HCC.
“The possible protective effect of estrogen against hepatocellular cancer through inhibiting cytokine and interleukin-6 has been proposed,” the investigators wrote.
What is clear, however, is that HCC is associated with a high risk of death. The 5-year survival rate among people with HCC and PBC is just 50%, significantly lower than the 75% HCC survival rate among people with other chronic liver diseases, the authors said. The best chance of survival for patients is liver transplant, they noted.
At present, the authors added, cirrhosis is the only indication for which all scientific societies recommend HCC screening. They said cirrhosis in PBC warrants screening every 6 months given the high risks associated with HCC, and they added that more studies are needed to better understand the ways in which treatment response for PBC might affect the risk of developing HCC. 

Sy AM, Ferreira RD, John BV. Hepatocellular carcinoma in primary biliary cholangitis. Clin Liver Dis. 2022;26(4):691-704. doi:10.1016/j.cld.2022.06.011

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