Reference Pricing on Drugs Yields Lower Prices for Purchasers: Study

A new study on reference pricing for drugs from the University of California in Berkeley found that costs declined for the drug purchaser but that employees spent more out of pocket. During 18 months after implementation, spending by the RETA Trust--a national association of 55 Catholic organizations—dropped by $1.34 million, but employees’ cost sharing increased by $120,000. With reference-drug pricing, drugs are not placed in traditional tiers but instead payment for drugs is limited to the least costly drug in each category, except for when the physician offers a clinical reason for a more expensive drug. The study looked at 1.1 million prescriptions that were reimbursed from 2010-2014. The RETA Trust put the drugs into 78 therapeutic classes. Classes that include complex and expensive specialty drugs were not included in the program and were subject to the regular tiered formulary. The researchers compared the RETA Trust data with that of a labor union’s health benefits trust that maintained a drug formulary with copayments similar to those that RETA Trust but that did not implement reference pricing. After the implementation of reference pricing, the RETA Trust paid prices that were 13.9% lower than the labor union.

All Counties Set to Have at Least 1 Insurer for 2018 Marketplaces

With open-enrollment season just a few weeks away for the public marketplaces, an Ohio carrier in August announced it would offer coverage in Paulding County, thus eliminating that county’s distinction as the last remaining county without an insurance choice for the exchange. CareSource will offer plan designs; it and Centene have covered 55 out of 82 counties once at risk of being without an exchange insurer for 2018. Centene is offering coverage in Nevada and Missouri. Insurers have until September 27 to finalize their plans for exchange participation, and the US Senate’s Health, Education, Labor and Pensions committee will hold hearings in September to debate a package on market stabilization. Legislators will likely consider funding for cost-sharing reduction packages.

Drug Pricing Transparency Bills Sweeping the US

Thirty state legislatures are considering up to 60 drug price transparency bills that take aim at drug manufacturer expenses and shining a light on practices of pharmacy benefit managers, the National Academy for State Policy (NASHP) says. Some legislation requires drug companies justify prices, particularly for new drugs. Vermont last year passed the nation’s first drug price transparency law, and other states have since introduced similar bills. Vermont requires drug companies to justify price increases by disclosing information about their expenses. It applies to drugs with annual price increases of at least 15 percent or 5-year price increases of 50% or more. In New York, a law requires manufacturers to pay supplemental rebates if Medicaid spending rises above a threshold. NASHP says lawmakers in Massachusetts, New Jersey, New York, and Oregon introduced bills to determine when drug prices create “excessive costs.” The bills set up panels to advise state officials on drug policies based on prices from manufactuers.

CMS Announces Hospital Pay Increases for Medicare Patients

The Centers for Medicare & Medicaid Services (CMS) announced that inpatient hospitals will see a 1.3% pay increase for fiscal 2018 and that changes to uncompensated care payments will increase pay by another 0.7%. It earlier estimated that spending on inpatient hospital services for Medicare patients will increase by about $2.4 billion next fiscal year. Originally CMS had proposed a 2.9% pay bump. The American Hospital Association said the final rule on inpatient services will impact hospitals’ ability to provide services for patients. CMS also said that long-term hospitals should see a 2.4% or $110 million, pay cut for fiscal 2018.

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