On Monday, NAHU submitted comments to HHS in response to the prescription drug rebating proposed rule that was published in February as part of the Administration’s "America First" prescription drug initiative. The proposal seeks to eliminate rebates from pharmaceutical companies to PBMs in Medicare Part D and in Medicaid managed care organizations. It calls for eliminating the existing discount safe harbor for rebates and replacing it with narrower safe harbors to protect certain point-of-sale price reductions for patients with high out-of-pocket costs and to protect certain PBM service fees. NAHU specifically asked the Administration to delay implementation of the rule until January 2021, recognizing recent CMS guidance to facilitate a rushed implementation for 2020, to ensure that any savings do not result in benefit reductions or increased charges for other services, and to protect coverage for beneficiaries enrolled in an employer group waiver plan (EGWP or “Egg-Whip”).
Our primary concerns with the proposal included:
- The potential for premium increases and reduction in supplemental benefits. By eliminating rebate payments in Medicare Part D, it could lead to cost adjustments by manufacturers and PBMs and eliminating existing revenue for insurers that is used to offset plan premiums or provide beneficial supplemental benefits.
Potential impacts for the roughly 4.3 million Medicare Advantage beneficiaries enrolled in an EGWP, particularly those enrolled via self-funded employer groups. This may lead to these plans being discontinued or for employers to raise premiums for all enrollees by the rebate amounts.
An inadequate transition period for the currently proposed January 1, 2020, implementation date that will have an unnecessarily detrimental impact on available plan options and rates for 2020. We recommended delaying implementation until January 1, 2021, to give time for stakeholders to make adjustments during the product development period. This could also provide time to address legal issues arising from the statutory exception to the Anti-Kickback law that could result in marketplace disruption and uncertainty for all stakeholders.
The Administration should spend time during the 2020 plan year studying both the value of current rebates and how rebate funds are used and distributed today that would require a higher degree of rebate transparency and accountability at the manufacturer, PBM and plan levels.