Word from Washington: August 2023

Advocates are responding to yet another payer-side, cost-saving scheme that harms patient access to medicine. The latest version, the so-called “alternative funding program” (AFP), is a shady strategy pitched to employers that promises to lower health plan spending on specialty drugs such as bleeding disorder products and other expensive medicines. AFP vendors advise employer health plans to drop particular drugs or classes of drugs from their formularies. The AFP then steers the employees who use those medicines – insured individuals – into drug manufacturer charitable patient assistance programs (PAPs) to get their medications for free. If successful in this effort, the AFP vendor charges the employer a percentage of the employer’s expected savings (20 to 35% of list price of the employee’s drug) or a substantial per-employee, per-month fee.  

AFPs cause a wide variety of patient harms. The lengthy process that employees must go through to get their medicine subjects them to delays in filling their prescriptions, endangering patient care and health. AFPs also create confusion and anxiety on the part of impacted individuals about their insurance and employment status. The schemes discriminate against subgroups of employees based on health status (targeting those who require specialty medication) and income (higher income employees may eventually regain drug coverage through their health plan, if the AFP concedes inability to enroll them in the PAP because the employee is above income for charitable assistance). AFP vendors may also try to coerce some employees to switch to therapies with easier-to-fool foundations, or force some to source their medications from overseas, in violation of federal law and at a risk to their health. Finally, AFPs divert and misuse finite charitable resources – potentially jeopardizing PAP availability for uninsured and underinsured individuals with no other access to medication.  

HFA and allied groups representing a variety of health conditions are pushing back against AFPs on multiple fronts. We are engaging in discussions with federal lawmakers, the Federal Trade Commission, and state regulators. In August, HFA joined with 23 other organizations representing consumers and health care providers to file an amicus curiae brief in a lawsuit brought by a drug manufacturer (AbbVie), challenging the practices of an AFP vendor (PayerMatrix). The amicus brief explains how AFPs conceal critical information from consumers, interfere with the doctor-patient relationship, jeopardize the sustainability of PAPs, and engage in unfair and deceptive trade practices. HFA will continue to update the community as this work moves forward.  

Quick Hits: 

• When Congress returns from its August recess next month, it will have to act quickly on must-pass budget legislation in order to avert a federal government shutdown at the close of the fiscal year. Congress also needs to reauthorize a slew of federal health programs that expire on the same date (September 30^th). Complicating this effort, the House is scheduled to meet in session for just 12 days in September. Still to be determined: will the compressed calendar allow time for Congress to reach agreement on any of the other health-related bills that made it through House and Senate committees earlier this year, relating to pandemic preparedness, healthcare workforce, pharmacy benefits manager (PBM) transparency, drug shortages and more.  
• More than 5.5 million Medicaid enrollees have lost coverage in 46 states and DC as the nationwide Medicaid unwinding continues. Nearly three-quarters of coverage terminations have been for procedural reasons (e.g., not returning forms on time) – meaning that disenrolled individuals may in fact remain eligible for Medicaid. Alarmingly, children account for nearly 45% of coverage losses (in the 15 states that have reported age-specific data) and as high as 81% in states like Texas. In response to the mounting coverage losses, the U.S. Centers for Medicare and Medicaid Services (CMS) sent a letter on August 30^th requiring all states to assess and fix programming errors in their eligibility systems, and, where appropriate, pause procedural disenrollments and reinstate coverage for disenrolled individuals (children and adults) who still meet eligibility criteria. Nearly one-third of states have also received warnings from CMS about unreasonably long call center wait times that are causing beneficiaries to abandon attempts to renew their coverage. 
• In other Medicaid unwinding news, HFA updated its toolkit for member organizations and health care providers, facilitating outreach to Medicaid enrollees. Please help us spread the message that Medicaid beneficiaries should update their contact information; open and respond to communications from Medicaid; remember that children may remain eligible for Medicaid or CHIP coverage, even if their parents do not; and check HealthCare.gov for quality, affordable coverage options, if no longer eligible for Medicaid.  

• The U.S. General Accounting Office and Georgetown University’s Center for Health Insurance Reform released separate reports in August and late July finding that marketers are using aggressive and misleading tactics to sell health plans that do not meet Affordable Care Act standards for benefits covered or for financial protection. “Skinny” health plans, such as Farm Bureau plans, health care sharing ministry plans, short term health plans, and fixed indemnity plans, can turn down applicants based on their health status; deny or limit coverage for routine care, preventative care, and prescription drugs; and exclude or delay coverage for pre-existing conditions. Patient advocates have long voiced concern that “skinny” plans do not provide adequate coverage, while misleading consumers into thinking they have comprehensive health insurance.   
• The Biden Administration took a variety of actions in August to implement the Medicare Part D prescription drug reforms that were enacted as part of the 2022 Inflation Reduction Act. CMS released guidance detailing how Medicare Part D plans can structure new optional programs allowing seniors to spread out their out-of-pocket prescription drug spending over a 12-month period. These optional “prescription payment plans” will become available in 2025 and apply only to Part D prescriptions (most bleeding disorder products are covered under Medicare Part B). CMS also announced that it had selected the first ten Part D drugs that will be subject to price negotiation between Medicare and the drug manufacturer. This is only the start of the process: any negotiated prices will not be effective until 2026 and manufacturers have until October 1 to decide whether to participate in negotiations, pay an excise tax, or withdraw their products from coverage by Medicare. Meanwhile, six manufacturers, the U.S. Chamber of Commerce, and PhRMA have all filed suit to halt the drug price negotiation process.