RISE summarizes the latest regulatory headlines.

OIG: Increase in biosimilar use could lead to significant savings for Medicare Part D and beneficiaries

A new Office of Inspector General (OIG) report investigates biologics, some of the most expensive drugs available, and the increase in spending for them in Medicare Part D because they treat common among Medicare beneficiaries. Indeed, biologics are estimated to cost Part D upwards of $12 billion annually. OIG recommends the use of a biosimilar, a lower cost biologic that is similar to an existing biologic approved by the Food and Drug Administration. Although there are only a limited number of biosimilars currently available for Part D covered reference products, multiple biosimilars for Humira—the best-selling prescription drug in the world—are expected to be available in 2023 and present an opportunity to significantly decrease Part D drug costs. OIG estimated that had biosimilars been used as frequently as the most used biologics it could have saved Part D spending by $84 million or 18 percent. Furthermore, beneficiaries’ out-of-pocket costs for these drugs could have decreased by $1.8 million or 12 percent. As a result, OIG recommends the Centers for Medicare & Medicaid Services (CMS) encourage plans to increase access to and use of biosimilars in Part D and monitor biosimilar coverage on formularies to identify trends.

CMS issues proposed rules for IRF, IPF, hospice payment rates

CMS issued proposed rules for fiscal year 2023  to update Medicare payment policies and rates under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP), Inpatient Psychiatric Facility Prospective Payment System, and hospice.

For FY 2023, CMS is proposing to update the IRF PPS payment rates by 2.8 percent based on the IRF market basket update of 3.2 percent less a 0.4 percentage point productivity adjustment. The proposed rule also contains an adjustment to the outlier threshold to maintain outlier payments at 3.0 percent of total payments. This adjustment will result in a 0.8 percentage point decrease in outlier payments. CMS estimates that overall IRF payments for FY 2023 would increase by 2.0 percent (or $170 million) relative to payments in FY 2022.

The proposed rule for IPF PPS would establish a permanent 5 percent cap policy to smooth the impact of year-to-year changes in IPF payments related to changes in the IPF wage index. The proposed rule includes a request for comment on the results of the data analysis of the IPF PPS adjustments. CMS is not proposing any changes for the IPF Quality Reporting Program in this FY 2023 proposed rule.

Under the proposed rule for hospice, hospices would see a 2.7 percent ($580 million) increase in their payments for FY 2023. The proposed 2.7 percent hospice payment update for FY 2023 is based on the estimated 3.1 percent inpatient hospital market basket update reduced by the productivity adjustment (0.4 percentage point). Hospices that fail to meet quality reporting requirements receive a 2-percentage point reduction to the annual market basket update for FY 2023.

Biden’s 2023 budget proposal includes big boost of funds for HHS

The Biden administration’s budget proposal for fiscal year 2023 would provide $127.3 billion in discretionary budget authority (a nearly 27 percent increase from fiscal year 2021) and $1.7 trillion in mandatory funding for the Department of Health and Human Services. The proposal provides funding to increase access to behavioral health care, which includes greater coverage of behavioral health services in Medicare without beneficiary cost-sharing and improved training in diversity and health research and development against diseases such as cancer, diabetes and dementia. Health and Human Services Secretary Xavier Becerra said in an announcement that the "President’s budget is a reflection of our values as a nation. From addressing health disparities to strengthening behavioral health to investing in our children, this budget will help turn hardship into hope for millions of families. And it will ensure we can fulfill our department’s crucial mission of improving the health and well-being of the American people.”