MetroHealth Issues Public Comment on Centers for Medicare & Medicaid Services Rule

WASHINGTON, Feb. 3 -- Michael Stern, executive vice president and chief operating officer of the MetroHealth, Cleveland, Ohio, has issued a public comment on the Centers for Medicare and Medicaid Services rule entitled "Most Favored Nation Model". The comment was written on Jan. 26, 2021, and posted on Feb. 1, 2021:

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The MetroHealth System ("MetroHealth") submits these comments in response to the Centers for Medicare & Medicaid Services' (CMS') Most Favored Nation ("MFN") Model interim final rule,/1 published in the Federal Register on November 27, 2020.

MetroHealth is a large, public safety-net provider located in Cuyahoga County, Ohio, which includes the City of Cleveland and its surrounding suburbs. MetroHealth is committed to improving the health of the community and reducing health disparities and health inequities. Our staff of 8,000 provide care at MetroHealth's four hospitals, four emergency departments, and more than 20 health centers and 40 additional sites throughout Cuyahoga County. The health system is also home to Cuyahoga County's most experienced Level I Adult Trauma Center, verified since 1992, and Ohio's only adult and pediatric trauma and burn center.

In 2019, MetroHealth served 300,000 patients at more than 1.4 million outpatient visits in our hospitals and health centers. Three-quarters of those patients are either uninsured or covered by Medicare or Medicaid. MetroHealth also provided $231 million in community benefit. The community that we serve experiences significant barriers to positive health outcomes. One in five residents of our community struggles with food insecurity. Twenty percent of the residents in our community live at or below the federal poverty line ($26,200 for a family of four in 2020). A third of our patients do not have stable housing conditions. Finally, there is a 23-year life-expectancy disparity between two census tracts, less than five miles apart, in Greater Cleveland.

These figures inform our approach to improving health outcomes. At MetroHealth, we understand that effective, high-quality health care does not end at the clinic door. Through MetroHealth's Institute for H.O.P.E TM (Health, Opportunities, Partnerships & Empowerment), our health system is at the forefront of addressing social determinants of health to improve the health of our community. Our initiatives to take on health disparities in our community depend on our ability to leverage limited economic resources through funding sources designated for hospitals that serve low-income populations, including the 340B Drug Pricing Program ("340B Program").

Our comments address CMS' proposal to further reduce payments to safety net hospitals, especially those participating in the 340B Program. Treating a high volume of Medicaid and low-income Medicare patients, MetroHealth clearly is an intended participant of the 340B Program and has participated in the program since its inception./2

We rely on our 340B Program savings to meet the needs of the low-income patients we serve, including Medicare beneficiaries, and the current Medicare 340B Program payment cuts have directly impacted our ability to provide needed care to low-income patients. We urge CMS to consider the consequences of the MFN model on safety-net hospitals serving the nation's vulnerable patients, as well as the vulnerable beneficiaries they serve.

CMS' MFN model will have further negative implications for patient access to lifesavings drugs. CMS currently reimburses providers for separately payable Part B drugs, which are administered in our hospital outpatient departments, at Average Sales Price ("ASP") plus 6 percent. Since 2018, we have been reimbursed at 77.5 percent of ASP for 340B drugs--a policy we have been against since it was first proposed because it redistributes reimbursement from safety net hospitals to non-safety net hospitals. We purchase Part B drugs primarily from drug wholesalers, administer or dispense them to the patient, and then bill Medicare for the drug. The types of drugs we administer and bill under Part B include lifesaving injectable drugs, intravenous cancer drugs, immunosuppressive drugs, and hemophilia blood clotting factors.

Through the MFN model, CMS will tie the payment for 50 drugs to the lowest international price from a group of 22 Organization for Economic Co-operation and Development (OECD) countries. The lower payments will be phased in over four years, with the fully phased-in MFN payments in effect in years four through seven of the model. Prices in these OECD countries are substantially lower than in the United States due to entirely different market forces, drug negotiation practices in these countries, more aggressive government intervention in setting drug prices, and drug manufacturer pricing decisions. By tying U.S. reimbursement to international levels without putting pressure on drug manufacturers to reduce U.S. prices, CMS places safety net hospitals like MetroHealth at financial risk and our patients at risk of losing access to lifesaving drugs.

In CMS' illustrative list of the lowest OECD price for the top 50 Part B drugs, many drugs are priced at approximately ASP minus 90 percent. CMS will set the Medicare reimbursement rate based on these international prices, without regard for what the manufacturer charges providers to purchase the drug. The ASP-based reimbursement system Medicare currently uses is intended to make providers whole by approximating the price a provider pays to purchase a drug (by using ASP) and reimbursing a provider at ASP plus an add-on payment to cover additional administrative costs. Under the MFN model, absent aggressive price reductions from drug manufacturers (which are highly unlikely), providers will purchase drugs at prices similar to what they pay today but will be reimbursed at a rate far below the acquisition cost. As a result, these providers will be incurring substantial losses on these drugs.

These losses will be even more pronounced for safety net hospitals and would deprive them of their ability to receive discounts and realize savings as intended under the 340B statute. The program, codified in section 340B of the Public Health Service Act, was created by Congress to allow covered entities to "stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services."/3

Under the 340B program, covered entities can purchase certain outpatient drugs at discounted prices, enabling savings that are critical to the operations of hospitals that fill a safety-net role. The 340B program is structured by statute to provide hospitals discounts for covered outpatient drugs, regardless of the receiving patient's insurance status. Congress expected various public and private payers would reimburse hospitals at higher rates than the discounts they received from drug manufacturers, which is how hospitals were expected to stretch resources to expand access to medications and other vital services.

By grossly underpaying providers for Part B drugs without exerting pressure on manufacturers to lower their prices, CMS would deprive 340B hospitals like MetroHealth of savings on Part B drugs. Thus, the model negates the benefit of the 340B program to hospitals and, ultimately, to our patients who benefit from our use of the related savings. CMS clearly acknowledges these unfavorable outcomes in the rule, noting that 340B hospitals may have "fewer resources available for their 340B program activities" and "will face the same or increased burden from model participation."/4

Astoundingly, CMS estimates that the MFN Model will lead to "reduced beneficiary access through 340B providers" and predicts nearly $143 billion worth of drugs will simply be forgone by patients./5

Further, by CMS' own estimate, by the end of the second year of the model, nearly 20 percent of Medicare beneficiaries will lose access to needed Part B drugs. At least a portion of the estimated savings attributable to this model would be due to beneficiaries "not accessing their drugs through the Medicare benefit."/6

It is entirely irresponsible to implement a new payment system that would eliminate beneficiary access.

MetroHealth provides lifesaving drugs and services through programs made possible by our 340B savings. Specifically, savings from the 340B program have enabled us to offer HIV and diabetes management programs, which combined served at least 2,000 patients last year. The savings have also helped us embed clinical pharmacists in our HIV, Oncology, Pulmonary, and Endocrinology clinics. The added support from our clinical pharmacists have helped increase the use of medication therapy management and adherence to lifesaving drugs. Most importantly, the savings have been used to make available lifesaving drugs to low-income patients. CMS has historically shared the goals of these initiatives, which benefit the health care system more broadly.

We recommend the MFN rule be withdrawn. By withdrawing the model and preserving access to 340B discounts, CMS will ensure safety-net hospitals can continue to use their limited resources to provide access to affordable, lifesavings drugs, and improve health outcomes for vulnerable populations.

MetroHealth looks forward to partnering with CMS and the new administration to address rising drug prices in ways that preserve the ability of safety net hospitals like MetroHealth to address health disparities and health inequities. We agree that population health gains will not be sustainable unless we address these gaps. We are committed to serving our patients' needs while also improving the health of our community.

Please contact Allison Poulios, Director of Government Relations, at 216-339-6806 or apoulios@metrohealth.org, if you have any questions or comments related to our public comments.

Sincerely,

Michael Stern, FACHE

Executive Vice President, Chief Operating Officer

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Footnotes:

1/ 85 Fed. Reg. 76180 (Nov. 27, 2020).

2/ MetroHealth's participating start date was January 1, 1994. See 340B OPAIS database, https://340bopais.hrsa.gov/cedetails/15881.

3/ H.R. Rep. No. 102-384, pt. 2 (1992).

4/ 85 Fed. Reg. 76180, 76229.

5/ Id. at 76239.

6/ Id. at 76237.

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The rule can be viewed at: https://www.regulations.gov/document?D=CMS-2018-0132-2750

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