Tuesday Tidbits

The Centers for Medicare and Medicaid Services (CMS) actuaries issued their report on 2007 healthcare spending, which continued to outpace the CPI-U.  CMS explained in a press release that 

“Retail prescription drug spending grew 4.9 percent in 2007, slower than the 8.6 percent growth in 2006.  The deceleration in 2007 was the result of several factors, including sustained growth in the generic dispensing rate, slower growth in prescription drug prices, and growing consumer concerns for drug safety. “The generic dispensing rate continued to climb in 2007 as several major blockbuster drugs lost patent-protection; this continued growth in the use of generics contributed to both a deceleration in total expenditures as well as prices. “Prescription drug prices, as reflected in the National Health Expenditure Accounts, grew 1.4 percent in 2007, much slower than the 3.5 percent growth in 2006.  This lower price growth was not only driven by the increased use of generics, but also by the introduction and continuation of generic drug discount programs by large retail chain stores. “Increased safety concerns for certain prescription drugs in 2007 also likely influenced the drug spending trend, as the Food and Drug  Administration issued sixty-eight “black-box” warnings (indication that the drug carries a significant risk of serious or even life-threatening effects), compared to fifty-eight in 2006 and twenty-one in 2003. “With the exception of prescription drugs, spending for most other health care services grew at about the same rate or faster than in 2006.”

Speaking of prescription drug spending, CMS announced today that it will be putting the squeeze on Medicare Part D plans next year.  The CMS press release explains that

CMS currently allows Part D sponsors that contract with a PBM to report to the CMS the amount paid to the PBM (the lock-in price) or the amount the PBM paid to the pharmacy (the pass-through price).  Under the lock-in approach, a Part D plan agrees to pay a PBM a set rate for a particular drug. The PBM then negotiates with pharmacies to obtain the lowest possible price for the drug, which often is lower than the amount the PBM receives from the plan. Under the new rule, plans may continue to use the lock-in model with their PBMs, but they must report to CMS the price actually paid to the pharmacy as the negotiated price.  Any difference between the price paid by the plan to the PBM and the price paid by the PBM to the pharmacy must be reported as an administrative cost.  This requirement helps ensure that sponsors’ administrative costs are not included in the drug costs used to determine how much the beneficiary will pay, as well as reinsurance and risk corridor payments made by CMS.  This will also create a uniform definition of drug costs for all Part D sponsors. “For patients whose plan used the lock-in model, this regulation will reduce what they pay at the pharmacy counter because their copayment will no longer be based on a higher negotiated price,” said CMS Acting Administrator Kerry Weems. “The current lock-in approach also moves beneficiaries through the Part D benefit more quickly, bringing them to the ‘coverage gap’ sooner than under the pass-through pricing model.

Finally, Healthcare IT News reports that “Four healthcare industry organizations — The Council for Affordable Quality Healthcare (CAQH), the Healthcare Information and Management Systems Society (HIMSS), the Integrating the Healthcare Enterprise (IHE) Initiative and the Blue Cross and Blue Shield Association (BCBSA)– are collaborating with the Centers for Medicare and Medicaid Services on a 5010 testing project of the new X12 HIPAA 5010 transactions.” HHS is expected to promulgate in the near future the final rule requiring health plans, providers, and clearinghouses to begin using those standards for their HIPAA regulated transactions by a deadline that will be set in the rule.