Be a good citizen, comment on rule making

The Center for Medicare and Medicaid Services (CMS) sent out their draft Notice for Benefit Payment Parameters (NBPP)-2020 in January. This is the Exchange play book for 2020. It covers how drugs must be covered, what open enrollment looks like, how risk adjustment should work. CMS also asks for advice on two big matters: Silver Loading for CSR payments and auto-enrollment. Comments close tonight at 5:00 PM EST. They can be submitted at Regulation.Gov .

If you have domain specific knowledge, commenting on rule making is good citizenship. Agencies are required to consider advice and comment in their final rules. Sometimes they will look at a comment and say “Yep, we’ve considered it and are still making our original decisions”. Sometimes an agency will go “Oops, you’re right, what we wanted to do is well intention but a pragmatically dumb idea…. let’s revise…..” And other times they won’t look at the comments at all which will get them in trouble when they get sued for violating the Administrative Procedures Act.

Commenting is citizenship. It helps define the world in which we live in. It helps contour the possible. So comment if you can.

I’ve worked on two comments. I have advised several law students as they write an informational comment on Silver Loading. I have also submitted a comment on risk adjustment as I think that CMS is still leaving an opportunity to game prescription drug based risk adjustment due to treatment initiation strategies available and there is a likely big curveball on PrEP coming.

My risk adjustment comment is below the fold.

II. BACKGROUND
A. Prescription Drug Risk Adjustment and Hepatitis-C antiviral as a unique case

Risk adjustment is critical to the success of any guaranteed issue insurance product. CMS has been diligent in updating and modifying the HCC model it uses for the individual and small group markets created and regulated by the Affordable Care Act. Risk adjustment is needed to minimize insurer incentives to “cherry pick” highly profitable enrollees whose profitability is primarily a function of health status rather than the insurer’s ability to appropriately manage risk, improve health and negotiate contracts., It also stabilizes the market if there is inefficient consumer choice.

The objective of the RxC multiplier is to compensate an insurer with the average incremental cost of treating a beneficiary. The multiplier is composed of the cost of the drug and any net secondary costs. Drugs can reduce or increase spending.

CMS has modified the risk adjustment program for the ACA in a number of fashions. The relevant change has been the incorporation of pharmaceutical derived (RxC) risk scores for a limited number of conditions. This change went into place for the 2018 plan year. A beneficiary is assigned an RxC when there is a claim for a single National Drug Code (NDC) at any point during the policy year. Currently there are ten categories of RxC. Several have very large coefficients (examples: AIDS/HIV, immunosuppressants, Hepatitis-C antivirals) while others have multipliers that are significantly smaller than these expensive categories.

One of the challenges of the current RxC model is that there are two different types of drugs that are being covered. One set of drugs in nine of the ten RxC categories are for persistent, long lasting conditions. Individuals with AIDS/HIV may experience suppressed and undetectable viral load but they will be prescribed antiviral medications for the rest of their life or at least the entirety of the contract year. Hepatitis C antiviral medication is the second, and smaller category. An individual who follows protocol and who responds well to this class of medication will have an episode of treatment that ranges from eight to twelve weeks. Prescriptions are usually filled in four week segments.

B. Pre-Exposure Prophylaxis (PrEP) background

Pre-Exposure Prophylaxis is a preventative treatment intended for individuals who are currently not infected with HIV/AIDS but are at a high risk of exposure. The Center for Disease Control (CDC) notes:

Pre-exposure prophylaxis, or PrEP, is a way for people who do not have HIV but who are at substantial risk of getting it to prevent HIV infection by taking a pill every day. The pill (brand name Truvada) contains two medicines (tenofovir and emtricitabine) that are used in combination with other medicines to treat HIV. When someone is exposed to HIV through sex or injection drug use, these medicines can work to keep the virus from establishing a permanent infection.
When taken consistently, PrEP has been shown to reduce the risk of HIV infection in people who are at high risk by up to 92%. PrEP is much less effective if it is not taken consistently.
PrEP is a powerful HIV prevention tool and can be combined with condoms and other prevention methods to provide even greater protection than when used alone. But people who use PrEP must commit to taking the drug every day and seeing their health care provider for follow-up every 3 months.
Truvada is an expensive drug. GoodRx displayed average quarterly retail costs of over $5,000 per filled prescription. A generic version is available with a quarterly retail cost of over $2,000 per filled prescription.
The United States Preventive Services Task Force (USPSTF) is a professional body of clinicians that evaluates different treatments for evidence and effectiveness. Regimes that are receive an “A” or “B” recommendation become cost sharing free preventive care treatments for plans that are regulated by the Affordable Care Act.

USPSTF is currently evaluating PrEP. The draft recommendation is an “A” for certain, high risk populations. Assuming the draft recommendation is not substantially changed in the final recommendation, PrEP will become a no cost sharing service for ACA regulated plans. This will most likely lead to a significant increase in prescriptions and claims expenses.

III. Comments
A. Hepatitis C treatment initiation timing incentives

CMS should be applauded for altering the coefficient of Hepatitis-C antiviral medications downward. Significant competition in the market among many near substitutes as well as the introduction of an authorized generic has created a large gross price to net price spread. The previous coefficient of 26.321 for a Silver plan has been reduced by over two thirds for the proposed coefficient of 8.134 for a Silver plan. This will remove some of the incentives of insurers that possess large discounts to over treat individuals with low acuity Hepatitis-C.

However, the fundamental formula for RxC risk adjustment still allows insurers to game risk adjustment. Currently, an insurer is will be credited with RxC-02 as soon as a claim with a valid Hepatitis-C antiviral NDC is submitted by a dispensing pharmacy. The course of treatment for Hepatitis-C normally will have at least two if not three dispensing moments. Any one of these moments will trigger a risk adjustment coefficient.

Hepatitis-C has significant variation in severity. Individuals with significantly scarred and fibrosis livers have different risk factors and expected short term expenses than individuals who are non-symptomatic. The risk adjustment formula treats both classes of individuals the same. Individuals with a high fibrosis score (F4 or F3) have urgent clinical need for treatment and cure. Insurers have no incentives to strategically time treatment initiation. If anything, insurers may have an incentive to initiate treatment for individuals experiencing cirrhosis of the liver as early as possible in order to minimize the probability of paying for a liver transplant.

However, individuals with low to no fibrosis of the liver do not have an urgent clinical need to initiate treatment with antiviral medication for Hepatitis-C. This is irrelevant if there is no “warehousing” of low acuity patients. If Hepatis-C patients with low acuity and low fibrosis scores have treatment rapidly initiated after diagnosis, then risk adjustment games will not matter.

However, insurers have strong incentives to manipulate timing of initiation. An insurer could, by changing pre-authorization requirements, engaging in seasonal outreach, or other schemes shift a significant proportion of treatment initiation dates to the month of December. Doing so would provide an insurer with a qualifying event in 2020 for a Hepatitis-C antiviral treatment (RxC-02) and when the patient refills their prescription in January 2021, a second risk adjustment event would be triggered.

If an insurer was to maintain continual coverage of an individual receiving Hepatitis-C antiviral treatment that initiated in December and refilled at any point in the the following year, the insurer would be double paid. If the individual who initiated treatment in December churned to a different insurer or left the ACA market segment in January, the original insurer would receive a full payment for Hepatitis-C risk adjustment while only paying one third to one half of the expected cost of treatment.

As a matter of public policy, we should not reward cynical timing games that only have financial benefit accruing to particular insurers acting in bad faith and that do not have any identifiable social or clinical benefit.

CMS should modify the Hepatitis-C risk adjustment (and any other future prescription drug based RxCs that have significant temporal discretion and a defined length of utilization) so that the coefficient is calculated as a function of the individual beneficiary’s actual utilization. The equation should be full coefficient multiplied by the percentage of pills dispensed divided recommended course of treatment.

Example 1: Bill is on a Silver plan. He is prescribed Harvoni. This is an 84 day course of treatment. He starts treatment on April 1, 2020. He refills on April 28, 2020 and May 25, 2020. Bill’s coefficient for Hepatitis-C in 2020 is:

8.134 x (84 days dispensed / 84 day recommended course of treatment) = 8.134

Example 2: Jill is on a Silver plan. She is prescribed Harvoni. This is an 84 day course of treatment. She starts treatment on December 17, 2020. She refills the prescription on January 14, 2021 and February 11, 2021. Her 2020 coefficient is calculated as:
8.134 x (28 days dispensed / 84 day recommended course of treatment) = 2.42

This type of time variant risk adjustment calculation will remove the incentive insurers currently have to strategically time the initiation of treatment for Hepatitis C.

B. PrEP Risk Adjustment needed

PrEP needs to be risk adjusted. Current treatment regimes are expensive ($8,000-$20,000 per full prescription year). The target audience is not insignificant in size and is not uniformly distributed. Geographic clustering of potentially highly expensive and non-risk adjusted individuals will lead to insurers to avoid specific risk. Strategies to avoid risk can include significant pre-authorization and monitoring requirements and partial rating area withdrawals.

Several insurers have been sued in the past for attempting to use formulary management decisions to discriminate and avoid individuals with AIDS and HIV. The motivation is real as a non-risk adjusted mandatory service that is both expensive and non-uniformly distributed would lead to insurers that cover a disproportionate share of PrEP prescriptions to increase their premiums at a higher rate than insurers that could successfully minimize PrEP exposure and claims costs. This would place the insurers covering PrEP at a competitive disadvantage on the individual market.

Adding a risk adjustment category for PrEP will alleviate incentives for insurers to avoid offering policies to individuals and areas that are disproportionately likely to be prescribed PrEP. This will promote public health as well as competitive insurance markets.

IV. Conclusion

Risk adjustment is critical for well functioning insurance markets that maintain guarantee issue and community rating features. Improving these two aspects of risk adjustment, Hepatitis-C and PrEP, will align insurer incentives towards managing care and costs instead of avoiding the sick and manipulating the rules for their own gain.
Thank you for your time and consideration of this submission.