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In the newsletter this week you will find information on Medicare Part B premium increase, VPB in Medicaid pharmacy, HHS actions on opioids, study of insurers’ spending on medications, and Commonwealth Fund’s Scorecard on Local Health System Performance.

NAMD Update

July 19, 2016
From the NAMD Desk
HEADS UP: 2017 Medicare Part B Premium Increases Set to Impact States
Recently, the Medicare Board of Trustees published its
2016 annual report on the Medicare program. In this report, the Trustees estimate the 2017 Medicare Part B premium increase required under statute. The 2017 monthly Part B premium is anticipated to be $149, an increase of $27.20 from the 2016 premium of $121.80. Please see p. 87 of the Trustees report for the relevant discussion.


Directors may recall that last year, Part B premiums were projected to substantially increase for Medicare Part B beneficiaries who do not use Social Security benefits to pay the premiums – including, primarily, dually eligible beneficiaries whose Part B premiums are paid by state Medicaid programs. This was driven by the 2016 Social Security cost of living adjustment (COLA) being zero percent, which interacts with statutory provisions requiring Part B premiums to not increase beyond the Social Security COLA for beneficiaries paying their premiums with Social Security benefits. As a result, premiums were to increase significantly for the remaining beneficiaries. Congress intervened to protect states and beneficiaries from this increase.


The legislative fix for the 2016 Part B premium increase does not apply for 2017, as it would hold premiums at their previous levels only if the Social Security COLA remained at zero percent for 2017. As the 2017 COLA is projected to increase the benefit by 0.2 percent, Part B premiums must increase.


RECAP: July All-Director Call
Recently, NAMD held the July edition of our monthly All-Director call. Directors discussed a variety of topics, including:
  • The status of the access monitoring rule;
  • IMD issues under the final Medicaid managed care rule;
  • State strategies to address the Zika virus;
  • Updates on Medicaid mental health parity;
  • The relative alignment of various CMS efforts impacting value-based purchasing; and
  • Hepatitis C.
NAMD Calls for Congressional Action on Hepatitis C
On July 6, NAMD issued a press release calling on Congress to address the irrational pricing of curative hepatitis C therapies, which continue to place significant pressure on state budgets even as additional products enter the market and states expand access to these therapies. The statement notes that Medicaid Directors are committed to maximizing the quality of care provided to beneficiaries within strict budgets, and calls for methods to ensure access to curative therapies for patients with HCV without jeopardizing care for the remaining 72 million Medicaid beneficiaries.


Read the full statement here.
In This Issue

NAMD Fall Meeting
Nov. 6-8, 2016

Information and registration



Reg Update


CMS Extends Comment Period for RFI on MMIS Modularity
Recently, the Centers for Medicare and Medicaid Services (CMS) announced an extension of the comment period for responses to its Request for Information on the availability of modular solutions for Medicaid enterprise systems. Comments on the RFI will now be accepted until COB August 15, 2016.


The RFI in particular seeks input on the ability and interest among stakeholders in producing and offering solutions for Medicaid enterprise systems, with a focus on clinical and administrative data warehousing and identity management solutions. RFI responses will inform CMS’s ongoing work on pre-certification of vendor Medicaid Management Information Systems (MMIS) modular solutions.


CMS Program Notice Addresses VBP in Medicaid Pharmacy
On July 14, the Centers for Medicare and Medicaid Services issued a Medicaid drug rebate program (MDRP) notice to states discussing value-based purchasing (VBP) arrangements in the Medicaid pharmacy benefit. The notice addresses the following areas:
  • VBP and MDRP Best Price: The notice reiterates the definition of “best price” in the MDRP, and notes that the impact of a particular VBP arrangement on a manufacturer’s best price depends highly on the specific nature of and provisions within the agreement. CMS recommends manufacturers reference statute and regulations in structuring VBP arrangements and to consult CMS with any questions. CMS may issue additional guidance on this topic.
  • Medicaid and VBP: CMS encourages manufacturers to partner with state Medicaid agencies to implement VBP arrangements under supplemental rebate agreements. To the extent a VBP arrangement provides supplemental rebates to states, these rebates would be excluded from best price.
  • Collecting Supplemental Rebates on Medicaid Managed Care Drug Claims: CMS recommends that states negotiate supplemental rebates with manufacturers for Medicaid managed care drug claims, and recommends states assess the impact of decisions in this area on their managed care contracts. Alternatively, CMS suggests states may wish to align their FFS preferred drug list with their managed care organizations’ formularies for certain drug classes and collect supplemental rebates on those drugs dispensed under managed care – this approach would not require altering an existing state plan allowing for collection of supplemental rebates under managed care.
Access the notice here.
CMS Issues Guidance on Annual Re-Determination of Medicare Part D LIS Deemed Status
On July 15, the Centers for Medicare and Medicaid Services (CMS) published an informational bulletin outlining the process for the annual re-determination of Medicare Part D low-income subsidy (LIS) deemed status. In the re-deeming process, an individual determined or re-determined eligible for LIS from July 2015 through June 2016 will be deemed eligible through December 31, 2016. If an individual is found during the subsequent re-determination process starting July 2016 to be LIS-eligible, that individual will be re-deemed for all of CY 2017.


CMS relies on state reporting of full or partial duals to undertake the above process, as the timing and status of Medicaid eligibility determinations will impact an individual’s LIS status. CMS will issue a notice to states in September containing a file of residents who will be notified of their loss of deemed status effective January 1, 2017. CMS will also provide states with data on the MMA state response file of the re-deemed status of those reported on a given file. CMS strongly emphasizes that state MMA files submitted in July onwards must be accurate and complete.
Access the guidance here.


CMS Issues FAQ on Final Outpatient Drug Rule
On July 6, the Centers for Medicare and Medicaid Services (CMS) issued a Frequently Asked Questions document on the final Medicaid covered outpatient drug rule. The FAQ addresses several topics within the rule and clarifies requirements for states and manufacturers.


Notable highlights for states from this guidance include the following:
  • CMS does not intend to annually review state professional dispensing fees (PDFs), but does expect states to consider these fees along with ingredient costs when proposing FFS pharmacy reimbursement changes.
  • States are not required to use a specific methodology, formula, or survey instrument in setting their PDFs.
  • CMS does not intend for the new average acquisition cost (AAC) methodology to necessarily result in a cost-neutral outcome for states compared to their existing reimbursement methodologies.
  • Provides additional clarity on how states are to apply the final AMP-based FULs.
  • Clarifies that states may ensure their reimbursement to 340B covered entities does not exceed the 340B ceiling price by utilizing the 340B price calculation described in Section 340B of the Public Health Service Act. There is no indication of whether 340B ceiling prices will be made directly available to states.
  • Clarifies that drugs reimbursed for Indian Health Service and Tribal providers through an encounter rate are not eligible for rebate under the Medicaid drug rebate program.
Access the FAQ.


HHS Announces Series of Actions on Opioids
On July 6, the U.S. Department of Health and Human Services (HHS) announced a series of steps the department will be taking to address the ongoing opioid abuse epidemic. The actions, which build on its existing HHS Opioid Initiative, include:
  • A final rule released by the Substance Abuse and Mental Health Services Administration (SAMHSA) expanding access to medication-assisted treatment (MAT) by allowing practitioners who have a waiver to prescribe buprenorphine for up to 100 patients to obtain a waiver to treat up to 275 patients. This second waiver is contingent on the practitioner having additional credentialing in addiction medicine or addiction psychiatry, or practice in a qualified setting.
  • A proposal to remove HCAHPS survey pain management questions from the CMS hospital payment scoring calculation, in order to remove a potential incentive for hospitals to overprescribe opioids for purposes of obtaining higher survey scores.
  • A requirement for Indian Health Service (IHS) opioid prescribers and pharmacists to check state prescription drug monitoring program (PDMP) databases prior to prescribing or dispensing an opioid medication for more than seven days.
  • Funding new research on opioid misuse and pain management techniques.
Read a press release describing the opioid-related initiatives here.


2015 Actuarial Report on the Financial Outlook for Medicaid
Recently, the CMS Office of the Actuary circulated its 2015 actuarial report on the financial outlook of Medicaid. The report analyzes past Medicaid trends, provides 10-year projections for Medicaid spending and enrollment, and assesses the impact of the ACA’s Medicaid eligibility changes which took effect in 2014.

In FFY 2014, the report found that:

  • Total Medicaid spending was $496.3 billion ($301.5 billion or 61% federal, $194.8 billion or 39% state). Medicaid spending increased by 8.4% between FFY 2013 and 2014, with federal Medicaid spending increasing by 13.6% – primarily attributable to the ACA’s eligibility expansion.
  • Medicaid covered on average 64 million people in 2014, including 4.3 million newly eligible adults in the first 9 months of the ACA’s eligibility expansion. Enrollment grew 9.2% between 2013 and 2014 – if newly eligible adults are excluded, enrollment growth is estimated at 1.8%.
  • Per-enrollee 2014 spending is estimated at $7,315. Estimated spending for children, non-newly eligible adults, and newly eligible adults ($3,141; $4,914; and $5,488; respectively) was significantly lower than spending for aged enrollees and disabled enrollees ($15,113 and $18,789, respectively). Per-enrollee spending grew at an estimated 0.1% between 2013 and 2014 – if newly eligible adults are excluded, per-enrollee spending grew at an estimated 2%.
The report estimates that Medicaid expenditures increased by 12.1% in FFY 2015, to $554.3 billion. The federal share is estimated to have increased to 63% ($347.5 billion) of overall program spending and to grow by 16.2% compared to 2014 due to the 100% federal payments for newly eligible enrollees. State spending is estimated to have increased by 5.9% from 2014, to $206.8 billion. Over the next decade, the report projects Medicaid spending to grow by 6.4% annually to $920.5 billion in 2024, and for enrollment to increase by 1.9% to 77.5 million over the same period.


An online version of the actuarial report will be available on CMS’s website in the near future. In the meantime, please contact Jack for a copy.


CMS, CDC, HRSA Announce Joint HIV Health Improvement Affinity Group
The Centers for Medicaid and Medicare Services (CMS), the Centers for Disease Control and Prevention (CDC), and the Health Resources and Services Administration (HRSA) recently announced the launch of a new joint initiative: the HIV Health Improvement Affinity Group.
The HIV Health Improvement Affinity Group will bring together state public health and Medicaid and Children’s Health Insurance Program (CHIP) agencies to collaboratively improve health outcomes for Medicaid and CHIP enrollees living with HIV by identifying opportunities to strengthen the HIV care continuum among these populations. Participating state public health and Medicaid/CHIP programs will have an opportunity to learn about and share best and promising approaches with their state peers to improve viral load suppression among people living with HIV who are enrolled in Medicaid and CHIP.  State teams will also receive direct technical assistance that:
  1. Supports improved HIV-related outcomes among Medicaid and CHIP enrollees; and
  2. Builds stronger relationships among state Medicaid/CHIP programs, state public health departments, and other partners (e.g., primary care associations (PCAs), federally qualified health centers (FQHCs), local health departments, and other relevant public and private entities).
For more information about the HIV Health Improvement Affinity Group and the application process, please visit or email

Hill Update


Congress Heads into Summer Recess; Zika, Mental Health Reform, Budget Politics Remain on the Agenda
This week, both chambers of Congress head into the summer recess and will not return to session until after Labor Day. Several key outstanding items remain on the Congressional agenda upon return, including potential emergency funding to address the Zika virus, Senate work on its own mental health reform legislation in response to the House’s recent passage of such a bill, and the perennial budget process. NAMD will keep Directors informed of relevant developments on these and other issues.


Congress Sends Opioid Legislation to President’s Desk
On July 13, the Senate passed the conference report of the Comprehensive Addiction and Recovery Act, 92 – 2, mirroring a similarly overwhelming positive vote from the House. The legislation passed without dedicated funding, which will be left to the budget process that Congress will take up upon its return from summer recess. The bill now heads to the President’s desk, where it is anticipated to be signed into law.


E&C Advances Special Needs Trust Legislation
On July 12, the House Energy and Commerce Committee (E&C) passed by voice vote H.R. 670, the Special Needs Trust Fairness Act of 2015. Introduced in February 2015 by Rep. Glenn Thompson (R-PA), the legislation would amend the Social Security Act to allow individuals to establish their own special needs trusts, which would be exempt from the individual’s income for purposes of determining Medicaid eligibility.

In the News


Medicaid Therapy Rate Reductions Blocked by Texas Supreme Court
Recently, the Texas Supreme Court issued a temporary injunction to the Texas Health and Human Services Commission to suspend a planned 26% provider rate reduction for Medicaid therapy services, initially scheduled to take effect July 15. The rate reductions came about in part as a step to meet savings targets required by the Texas legislature, which voted in 2015 for the Medicaid agency to generate $150 million in savings in therapy services in 2016 and 2017.


Study Finds Insurers’ Spending on Medications Soared between 2003 and 2014
A new study published by the journalHealth Affairs finds that U.S. insurers’ spending on costly “specialty” drugs for hepatitis, diabetes, rheumatoid arthritis, and other conditions quadrupled between 2003 and 2014, jumping from 11% to 43% of all prescription drug spending. Meanwhile, the number of prescriptions for specialty drugs tripled, rising from 0.6% of prescriptions filled in 2003 to just 1.8% in 2014; furthermore, patient out-of-pocket climbed by 46%. According to Stacie Dusetzina, assistant professor of pharmacy and public health at UNC Chapel Hill, “this may be a foreshadowing for what’s next…there’s a lot of new, very-high-priced treatments that are getting ready to emerge on the market, which would increase spending.” A spokesperson for the trade group Pharmaceutical Research and Manufacturers of America noted that the high costs of innovative treatments are not a harbinger for the entire prescription medicine marketplace, as they “ignore the discounts and rebates negotiated by insurers and pharmacy benefit managers.”


A New York Times article discussing stakeholder reactions to the study is here.


In a separate article citing the same study from
Health Affairs, the New York Times lists the eight drugs with the highest monthly cost to commercial insurance plans in 2014 for a 30-day supply.


Please read this article here.

Take Note


NGA Announces Compact to Fight Opioid Addiction
On Wednesday July 13, the National Governors Association (NGA) reported that 46 governors have signed a joint commitment to fight against the opioid epidemic through thoughtful, bold, and collaboratively driven strategies. In signing the compact, the governors have pledged to reduce inappropriate opioid prescribing; change the nation’s understanding of opioids and addiction; and ensure a pathway to recovery for individuals with addiction. During the 2017 NGA Winter Meeting, NGA will report on the specific steps governors have taken to meet these commitments.

Read more here.


Commonwealth Fund Releases 2016 Scorecard on Local Health System Performance
Last week, the Commonwealth Fund published the 2016 edition of its Scorecard on Local Health System Performance, which assesses the state of health care in more than 300 U.S. localities from 2011 to 2014. In evaluating community performance on four main dimensions of care encompassing 36 measures, the Scorecard demonstrates that many U.S. communities experienced improvements in care between 2011-2014 (i.e., fewer uninsured residents, better quality of care in doctors’ offices and hospitals, more efficient use of hospitals, and fewer deaths from treatable cancers, among other gains, etc.); the highest-ranking regions were located in Hawaii, the Upper Midwest, New England, and the San Francisco Bay area. Still, only 14 U.S. localities improved on the majority of the Scorecard’s indicators over the three-year period, proving that many local health systems have yet to reach the potential attained elsewhere in the country – oftentimes due to crippling social and economic factors. Applying these findings, the Fund recommends that the nation make greater investments to address the social determinants of health, including economic opportunity, housing, nutrition, and environmental conditions, as well as meet mental and behavioral health needs across
all communities.

View scorecard analysis here.


KFF Issue Brief Analyzes Medicaid’s Costliest Drugs
On July 15, the Kaiser Family Foundation published an issue brief surveying the 50 costliest drugs (before rebates) used by the Medicaid program from January 2014 through June 2015, with Abilify (psychosis), Sovaldi (HIV/AIDS), Vyvanse (obesity, anorexia, ADHD), Harvoni (HIV/AIDS), Truvada (HIV/AIDS), Lantus (diabetes), Methylphenidate (obesity, anorexia, ADHD), Atripia (HIV/AIDS), Advair Diskus (asthma), and Lantus SoloStar (diabetes) ranking in the top ten. In doing so, Kaiser uncovered several reasons why the drugs are so costly, finding that the most expensive drugs:
  • Treat costly illnesses for which Medicaid is a key source of coverage (behavioral health conditions, hepatitis C, and HIV);
  • Reflect Medicaid’s role in caring for individuals with substantial health needs (hemophilia, multiple sclerosis, and rare infant disease);
  • Have some form of regulatory and market exclusivity, enabling manufacturers to charge a premium price for the drug at the prescription level; and/or
  • Are frequently prescribed (such as opioids like Hydrocodone-acetaminophen and Suboxone).
Among the  most commonly prescribed
outpatient prescription drugs in Medicaid, the top five drugs are used for pain relief (hydrocodone-acetaminophen and ibuprofen), management of chronic illness (lisinopril and omeprazole), and antibiotics (amoxicillin). However, these drugs are not necessarily among the costliest used by Medicaid as many are inexpensive at the per prescription level.
Read issue brief here.


GAO Report Analyzes Prescription Drug Shortages
Recently, the Government Accountability Office (GAO) published a report analyzing trends in prescription drug shortages from 2010 through 2015, and the Food and Drug Administration (FDA)’s response to these shortages. GAO identified three key factors impacting shortages for sterile injectable anti-infective and cardiovascular drugs in 2012, 2013, and 2014:
  • A decline in the number of drug suppliers;
  • A failure of at least one establishment manufacturing a drug to comply with manufacturing standards, resulting in an FDA warning letter;
  • Drugs with sales of a generic version.
The first two factors indicate supply disruptions, while the third suggests low profit margins for generic drugs incentivize manufacturers to reduce production and make the market more susceptible to shortages.

Access the report here.


NGA Publishes State Road Map for Addressing Opioid Abuse
Recently, the National Governors Association (NGA) published Finding Solutions to the Prescription Opioid and Heroin Crisis: A Road Map for States, a comprehensive resource for states detailing a variety of strategies, authorities, and approaches for tackling the ongoing opioid abuse epidemic. The resource is intended to serve as an ongoing reference point for states which provides key background information, step-by-step assessment and intervention strategies, summaries of existing evidence-based strategies, and includes a comprehensive appendix of state data and other resources.

Access the report here.


Hilltop Institute Updates Community Benefit Law State Profiles
Recently, the Hilltop Institute’s Hospital Community Benefit Program released its June 2016 update of its
Community Benefit State Law Profiles resource. These profiles compile each state’s community benefit laws and regulations and analyzes them within the context of the ACA’s community benefit framework. Along with the update, the Hilltop Institute published an
issue brief describing trends in state community benefit laws.


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