Our News & Views
Derek Cothran, Principal and Paul Maurer, Senior Consultant
Making Sense of the CMS Final Rule: Value-Based Purchasing, Copay Accumulators and Best Price
"With the publishing of the final rule, a host of topics were clarified, including value-based purchasing (VBP) agreements under Medicaid, the reporting of copay accumulator programs and elements of best price reporting."
On the last day of 2020, the CMS final rule was published in the Federal Register. The draft rule, published in June 2020, received tens of thousands of comments throughout the public comment period and drew significant scrutiny from manufacturers, patient advocacy groups and healthcare providers due to its overarching and long-term structural implications. With the publishing of the final rule, a host of topics were clarified, including value-based purchasing (VBP) agreements under Medicaid, the reporting of copay accumulator programs and elements of best price reporting.
At almost 400 pages, the final rule is vast in its scope and depth and has far-reaching effects on manufacturers in areas that could easily be dismissed as being unrelated. However, many aspects of this rule are inter-related, and therefore must be well understood by most of a manufacturer’s functional areas.
From a big picture perspective, manufacturers must assess the make-up of their product and/or portfolio to better understand the impact – small or significant. This includes a study of payer mix, product value, historical and planned payer contracting strategies and the “trickle” down impact to how manufacturers provide patient copay affordability programs. It is important to note there is no such thing as “no impact”.
Based on interest from our clients, Protean is focusing on several aspects of the final rule and its potential and likely consequences. Below we spell out implications for two key areas.
Value-based purchasing agreements
The upside of the final rule is that it provides clarity, quite substantially in fact, on how to enter into VBP agreements. To date, the market has seen marginal interest in VBP. This is partially due to the lack of federal guidance in terms of how these contracts would impact the governance and reporting of best price to federal programs, such as Medicaid. Historically, it was also a concern of manufacturers who did enter into VBPs that a new best price could be set unwittingly based on the outcomes and performance within those agreements.
Within the final rule, CMS clearly sees the benefit of VBP agreements and is creating a framework for manufacturers to follow. This framework establishes agreements that include evidence-based measures (e.g., cost of a drug based on evidence of effectiveness) or outcomes-based measures (e.g., payment is based on the drug’s performance in a patient population) or potentially a third undetermined VBP option, which CMS encourages the market to develop.
It is Protean’s recommendation that manufacturers assess the following when considering a VBP strategy:
Determine the competitive advantage of entering into a VBP based on the product’s clinical profile, price and patient population
Identify via research and interviews which payers, if any, should be approached for VBP agreements
Draft and receive feedback on VBP agreements prior to entering into payer discussions
Review internal procedures and reporting to determine if and how VBPs can be operationalized within the organization
Determine if these agreements introduce a best price consideration
Accumulator programs and their impact on best price
As Protean has covered in this space and elsewhere before, payers and their PBMs were given the green light to implement copay accumulator (and maximizer) programs at their discretion with the finalization of a CMS rule made effective July 2020. We have yet to see full data on the increased adoption of copay accumulator programs as a result. However, based on Protean’s primary market research with payers and healthcare providers, it is safe to say that the market will see a significant increase in adoption where possible in 2021, and certainly by 2022.
Given this, manufacturers have started researching copay offering options including changing their mechanisms (e.g., secondary payer claims, debit card, rebate) and reducing total benefits to potentially mitigate their increasing financial risk particularly against gross-to-net calculations. This is and will continue to be critical to understand so that these programs can continue for patients with an affordability need.
Now, with the December 2020 rule finalization and subsequent implementation in January 2023, manufacturers must turn their attention to understanding not only how copay accumulator programs impact their internal budgeting and modeling, but also to understanding if and how the programs could impact the reporting of best price to eligible federal programs such as Medicaid.
This is because the final rule requires that copay accumulators that accrue the benefit to the plan and not totally to the patient must be accounted for in best price reporting. The rule also acknowledges the challenges in how manufacturers are made aware (or not) of the existence of an accumulator program and therefore do not know how funds are being applied (e.g., to the benefit of the plan or the benefit of the patient).
For the manufacturer it is very problematic when the benefit is captured by the plan as it potentially introduces an additional value to be counted towards best price calculations. Nevertheless, the rule states, “We believe manufacturers have the ability to establish coverage criteria around their manufacturer-sponsored assistance programs to ensure the benefit goes exclusively to the consumer or patient”. CMS goes so far as to suggest that manufacturers and payers work together on establishing data transparency so that accumulator plans and the patients it serves can be more easily identified.
Finally, CMS states the hope that this rule, “might lead to reforms in manufacturer assistance programs,” and even offers suggestions on how they should operate in the future (e.g., rebates to patients).
So, the question you probably have is, “What now?”. Protean suggests you start with the following:
Assess the exposure of the copay program benefit, along with existing payer contracts, to determine susceptibility to best price concerns
Review all existing payer contracts and their rebate calculations to determine a potential pathway to exclude volumes that are exposed to accumulator programs
It should be noted that skepticism is warranted here, however, through our research and interviews with payers, we have determined this is a possibility
Revisit the copay benefit delivery mechanisms to best understand if a simple (per se) change is the best mitigation tactic in ensuring the copay benefit goes entirely to the patient
Design an overhaul of the copay program, if necessary, including considerations of new suppliers and/or technology
Protean has been actively researching, assessing and making recommendations on these and related topics and has amassed a wealth of experience that may be of benefit to manufacturers. If you are interested in learning more, please contact the authors at email@example.com or PM@protllc.com to discuss the impact this final rule may have on you and your business.