Senator Max Baucus (D-Mont.) |
September 18, 2009 – Sen. Max Baucus, chair of the powerful Senate Finance Committee, presented hisproposal for overhauling the nation’s health care system Wednesday. As expected, the $865-billion plan included several provisions that will have a direct or indirect impact on players in the 340B drug discount program.
Legislation to extend 340B discounts to the hospital inpatient setting and expand the program to other providers is not in Baucus’ bill. Those reforms, however, should be incorporated when the Finance and Senate HELP committees merge their bills.
New discount program for Part D coverage gap
The Montana Democrat included in his plan a new, 50-percent drug discount for Medicare Part D patients stuck in the so-called doughnut hole where prescription drug coverage ceases. This discount was first discussed in June when drug manufacturers announced they had reached a deal with the Democrats in Congress and the White House to contribute $80 billion toward health care reform. A portion of the industry concession would come in the form of discounted brand-name drugs sold to patients in the Part D doughnut hole.
The new discount program could ease the burden on 340B hospitals and other safety-net providers that now pick up the cost of medications for patients stuck in the coverage gap who cannot afford to pay out of pocket – although some 340B pharmacists have voiced concern that many such patients couldn’t afford a 50-percent discount, either.
The provision was hailed by the AARP, however, the large non-profit representing seniors and millions of Medicare patients. While not complete, the proposed discount “substantially fills” the gap in Part D coverage, said AARP Executive Vice President John Rother.
The drug discount would kick in when patients exceed the initial coverage limit ($2,700 in 2009) and last until they reach the catastrophic coverage level ($6,153 in 2009), at which point patients are once again fully covered by Medicare. It would not be available for patients who qualify for the low-income subsidy, are enrolled in an employee-sponsored retiree drug plan, or have an annual income above $85,000 for singles or $170,000 for couples.
Pharmacy dispensing fees would be excluded from the discount, which means patients would continue to carry those costs. The Senate Finance Committee legislation also stipulates that drugs sold and marketed in the U.S. would not be covered under Part D unless the manufacturers of those drugs signs an agreement with the Secretary of Health and Human Services to participate in the program.
A third-party government contractor would administer the new discount program, which would begin July 1, 2010.
Medicaid rebate rises to 23.1 percent, extended to managed care
340B entities could also benefit if Chairman Baucus’ proposal to hike the flat rebate percentage used to calculate Medicaid’s basic rebate for outpatient brand-name drugs from 15.1 percent to 23.1 percent becomes law. This was another concession industry reportedly agreed to earlier this year.
The 340B discount is based on a formula similar to the one Medicaid uses to calculate the rebate, and any changes to the rebate would likely carry over to 340B.
Rebates for clotting factors and for drugs approved for pediatric use would rise from 15.1percent to 17.1 percent, and the rebate for generics from 11 percent to 13 percent.
In addition, the Senate Finance Committee legislation would extend the rebate to Medicaid managed-care drugs. That means brand-name and generic prescription drug manufacturers would be required to pay rebates for Medicaid patients who receive care from managed-care plans, similar to the way rebates are now required for fee-for-service patients.
The bill does not say whether 340B drugs are exempt from the rebate provision, but theMonitor has learned that the committee is seriously considering such an exemption.
DHS payments phased out
State allotments to hospitals that serve a large percentage of low-income and uninsured patients (so-called disproportionate-share hospitals, or DSH) would remain intact until a state trigger is activated. It would kick in when Census Bureau data shows that a state’s rate of uninsured individuals has decreased by at least 50 percent. At that point, the DSH payments would also drop by 50 percent, except for in states with low DSH state allotments, which would see just a 25-percent drop.
Each year after that, assuming that the number of uninsured individuals in the state continues to shrink, DSH payments would be decreased accordingly. At no point, however, would a state’s DSH allotment fall below 35 percent of the total allotment for 2012, adjusted for Consumer Price Index growth.
Baucus: “A unique moment”
The bill will now go to mark-up and be voted on by the full committee – perhaps as early as next week.
Baucus’ plan has no backing from Republicans, even though it omitted one of the sticking points in this year’s contentious health care reform debate: a public government insurance option. Nor has the plan won accolades from leading Democrats.
Sen. Jay Rockefeller of West Virginia, a senior Democrat on the Finance Committee, fired off aletter to Baucus and Sen. Charles Grassley (R-Iowa), the committee’s ranking Republican, warning about Baucus’ decision to push for health cooperatives in lieu of a government-sponsored insurance plan.
“This is a dying business model for health insurance,” Rockefeller wrote. “Moving forward with health insurance cooperatives would expose Americans…to a health care model that has already been tried and largely failed in the vast majority of the country.”
But the Montana senator has said he’s intent on pressing forward.
“The cost of America’s broken health care system has stretched families, businesses and the economy too far for too long. For too many, quality, affordable health care is simply out of reach,” Baucus said in a statement released Wednesday. “This is a unique moment in history where we can finally reach an objective so many of us have sought for so long.”