Pharmaceutical Care Management Association Issues Public Comment on Centers for Medicare & Medicaid Services Notice
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On
(PRA notice CMS-10725.) We appreciate the opportunity to comment on this PRA.
PCMA is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans and operate specialty pharmacies for more than 270 million Americans with health coverage through Fortune 500 companies, health insurers, labor unions, Medicare, Medicaid, the Federal Employees Health Benefits Program, and qualified health plans (QHPs) sold through the exchanges established by the Affordable Care Act. Our members work closely with plans and issuers to secure lower costs for prescription drugs and achieve better health outcomes.
Our comments address (I) the Agency's efforts regarding "mission critical" activities, (II) CMS's authority to collect these data as proposed, (III) considerations in regard to CMS's proposed timing of the proposed data collection, (IV) questions regarding the cost burdens of this ICR including interactions with existing and future state-level PBM reporting, and (V) concerns this collection raises regarding the confidentiality of any data reported.
I. CMS Should Consider Whether this Effort is "Mission Critical"
PCMA's member companies are working at a rapid pace to respond to the coronavirus pandemic so that patients can access medically necessary medications in the least burdensome way possible. Considering these ongoing efforts, we urge CMS to give thought to whether this effort (and any regulatory efforts undertaken prior to the pandemic) is diminishing CMS's ability, and those of its partners, to conduct mission critical activities. We believe such flexibility is consistent with the President's declaration of a national emergency under the Stafford Act on
We appreciate CMS's ongoing commitment to regulatory flexibility in responding to the COVID19 outbreak and looking forward to our continued partnership in providing much needed care to patients across the nation.
II. CMS Lacks the Authority to Collect the Data in the Form and Manner Proposed
A. CMS cannot import Part D requirements directly into QHPs for reporting purposes. We acknowledge that PBMs report similar information to what CMS would require in this PRA to be reported to QHP issuers on behalf of Medicare Part D plan sponsors. However, these data are reported under a separate statutory requirement applicable to Part D plans only, enacted in 2003./3
The Part D statute required the reporting of direct and indirect remuneration (DIR) and prescription drug event (PDE) data beginning in 2006. CMS has specifically differentiated these pre-existing DIR and PDE reporting standards for Part D from the SSA 1150A statutory requirements, which otherwise apply to Part D plans and QHPs, through regulations and subsequent guidance./4
For the purposes of QHP reporting in this current PRA, CMS's proposed data elements are structured similarly to these existing data collection for Part D. In the paragraphs below, we describe several definitions CMS had sought to adopt from the Part D program, that instead it will need to propose through regulation before proceeding.
B. CMS should reconcile its previous regulatory efforts toward implementation. In the opening paragraphs of CMS's support statement, CMS cites the statute as the underlying authority. However, CMS does not acknowledge in this document the regulatory text it previously finalized implementing this provision in the 2012 Exchange final rule./5
The current regulatory text limits CMS to specifying the "form, manner, and timing" of the submission standards, while the PRA goes far beyond this limitation. CMS does not have the authority to issue this PRA and must undertake separate rulemaking to collect comments on the range of topics addressed below, identified in reviewing the PRA notice to the 2012 regulations and the statute.
C. CMS lacks the authority to require PBMs to report the data directly. The language of the PRA directly conflicts with the statute and the 2012 Exchange final rule concerning which entities CMS would require to report. The statute limits the role of PBMs to reporting the required information only to the QHP issuer, which in turn, must report to CMS./6
The 2012 Exchange final rule specifically requires the issuer to report - not the PBM./7
The PRA notice would require that PBMs be the sole reporter. To the extent it is CMS's desire that PBMs specifically fulfil the reporting role on behalf of QHP issuers, as it seems in this PRA notice, CMS must undertake formal notice-and-comment rulemaking to change whom is required to report.
D. CMS lacks the statutory authority to collect National Drug Code (NDC)-level data from PBMs. The statute allows the Secretary to collect "the aggregate amount" of specified information for each QHP. However, in the PRA, CMS proposes to collect certain data elements at the NDC level. In no construct is reporting at the NDC-level reporting "in the aggregate." Beyond being outside of CMS's authority to collect data at this level, NDC-level reporting poses too great a privacy risk for patients. For orphan drugs, or for issuers in small states or plans with few enrollees, reporting at the NDC level could unwittingly identify patients, even though the data would be confidential to CMS, oversight bodies, and states for the purpose of operating their exchanges.
In addition to these patient privacy concerns, reporting at the NDC level poses a significant economic burden on PBMs, who may not have the required data elements at the NDC level for each QHP based on their current systems. Currently, CMS's Enrollee-level Data Gathering Environment Server (EDGE Server) collects information from QHPs at the claim level about a dispensed prescription, including the NDC and the amount paid to a pharmacy by the plan./8
This database does not collect price concessions or other data elements listed in the statute. Current regulations restrict CMS's use of the EDGE Server to risk adjustment and calibration purposes only.
Further, for this database to support the reporting of additional information under the statute, it would require substantial infrastructure development, for CMS and each QHP issuer. (We discuss cost burdens further in Section III of this letter.)
Thus, without an existing, validated, NDC-level reporting mechanism designed for this purpose for the QHP market, CMS cannot reasonably mandate that systems be built outside of its statutory authority to collect the data in the first place. To comport with the clear statutory limits, we request that CMS not move forward with any requirement to provide data at the NDC level.
E. CMS lacks the statutory authority to require the reporting of bona fide service fees from issuers and PBMs. The PRA would require that PBMs specifically report bona fide service fees that are excluded from price concessions. However, the statute and 2012 Exchange final rule both explicitly exclude bona fide service fees from the aggregate reporting requirement for "rebates, discounts and price concessions." Further, such service fees are classified by drug manufacturers, not by PBMs or issuers, as "bona fide" so long as they meet a specific four-part test./9
CMS should also account for the fact that PBMs would need to collect additional information from manufacturers, at an additional cost, and without creating conflict in their contracts with manufacturers. For these reasons, neither PBMs nor issuers should be required to report these fees as a part of any implemented transparency reporting.
F. Definitions are needed for key concepts prior to requiring any reporting of these data elements. CMS relied in large part upon the existing Part D DIR reconciliation reporting infrastructure in defining the data elements to be reported for the QHP market.
As we noted above, the statutory and regulatory authority for Part D reporting differs substantially from the authority CMS has for collecting these data elements for the QHP market. As such, there are several terms and phrases used in Part D that do not translate directly to the QHP market, or are not specified in the statute./10
Should CMS move forward with this data collection under a clarified regulatory structure, it should take care to define the following terms:
* Negotiated price: for purposes of reporting price concessions, CMS will need to choose a pricing benchmark against which issuers or PBMs would calculate the amounts paid by manufacturers or pharmacies (or paid to pharmacies). CMS cannot require the reporting of a specific pricing amount without defining it through rulemaking.
* Price concessions: we recommend CMS continue the use of the statutory definition in Section 1150A, added to the CFR through the 2012 Exchange final rule, which appropriately excludes bona fide service fees that are payments for services performed.
As a final point on regulatory alignment, we would remind CMS that it recently issued proposed regulations to address how several of these data elements are treated for purposes of medical loss ratio (MLR) reporting by issuers./11
In our comments responding to that proposed rule, we recommended that CMS create a definition of "price concessions" derived from the PBM transparency provision in Section 1150A. We also recommended that CMS ensure the definition of PBM retained rebates for purposes of revised MLR reporting be applied to this statutory reporting requirement.
G. CMS should not expand the data collection beyond the statutorily-defined data elements. In the PRA, CMS notes that it would like in the future to collect data at a more granular level specifically by type of pharmacy. CMS invites comments on how to do so without creating additional burdens for PBMs. However, CMS has the authority to collect pharmacy type data only as specified in the statute: independent, chain, supermarket, or mass merchandiser pharmacies. We urge CMS to adhere to the statutory limits imposed upon it by
PCMA Recommendation: CMS should undertake formal notice-and-comment rulemaking to clarify the questions we have raised above, to ensure that any data collection and definitions used for the reporting are consistent with statutory intent.
III. Issuers and Contracted PBMs Cannot Meet the Timeline for Reporting that CMS has Proposed
A. CMS is unlikely to meet its anticipated timeline. CMS estimates that this PRA process will conclude in enough time for PBMs to begin reporting finalized data elements for plan year 2020, on or after
Indeed, we think CMS is too ambitious in its timeframes. This PRA request is open for comment until
B. CMS should create a formalized process for updating any future ICR. While we note above that the proposed QHP reporting process differs from current Part D reporting of similar data, we suggest that CMS should take the lead from the Part D side in one aspect. Under the Part D DIR reconciliation reporting process, CMS typically issues a memo in the spring announcing proposed changes and seeks comments from plan sponsors. After finalizing the memo in late spring, CMS then opens the reporting module for the prior contract year. Thus, to put it in terms of similar timeframes, starting in
PCMA Recommendation: After promulgating regulations clarifying the details noted in Section II, CMS should impose any data collection for future plan years only, not plan years currently in progress. Each year, CMS should provide stakeholders an opportunity to provide comment on any significant changes prior to issuing final reporting guidance.
IV. CMS Should Minimize the Burden on Stakeholders
A. CMS's burden estimates are inaccurate. In the PRA, CMS estimates that about 40 PBMs will be affected. Each PBM will report on the plans they manage on behalf of the issuers with which they have contracts (there are about 275 unique QHP issuers). In total, CMS estimates that each PBM would report on 175 plans each, for a total of about 7,000 plans. Each PBM would incur about
We find these estimates to be severely understated. First, CMS makes no consideration for the costs borne by issuers, should they be the ultimate accountable party. Either way, PBM contracts with issuers will likely need to be amended for PBMs to collect the specified data or to report sensitive information. Typically, CMS would account also for the costs of reviewing the PRA notices themselves, upgrading IT systems or building them from scratch, and testing and validation. CMS must also consider the costs for changes it must make to the EDGE server, which as noted earlier, is not authorized for this use and not optimized for it either. Such a change will require regulatory changes and other significant input from the public (PBMs and issuers and other stakeholders like researchers with a vested interest in these data) and will be a time-consuming effort. As another example, PBMs may have to implement other significant system modifications to be able to capture rebate reporting at the member-level or identify a client's on-exchange QHPs from the rest of that client's commercial plans.
B. CMS should consider the interactions this ICR creates with state-level reporting requirements. While this ICR stems from a federal statutory provision, unlike other federal laws, the Affordable Care Act's provisions related to individual and small group health plans and health insurance issuers do not specifically pre-empt state law./12
While states may impose reporting requirements that are more stringent than federal law, multiple and duplicated reporting requirements make compliance to the various standards nearly impossible and highly burdensome.
Assuming CMS undertakes formal rulemaking, as we have recommended, it will have to address how such a rule comports with Executive Order 13132 on Federalism as part of a Regulatory Impact Analysis./13
Namely, it must answer to what extent is CMS usurping the rightful regulatory authority of a given state.
A federal data collection would also seem to minimize state efforts to understand and regulate their own markets. The federal statute, enacted in 2010, required the data to be made available to states as needed to manage their state exchanges and regulate the business of insurance. However, in the ten years since the enactment of the ACA, at least 14 states have enacted requirements for PBM transparency, leapfrogging CMS in this regard./14
We recommend that CMS examine these existing state requirements - especially as they relate to the exchange market - to determine whether any reporting to CMS under the federal statute is necessary. To the extent that any reporting would simply duplicate requirements already imposed by specific states, CMS should consider waiving federal reporting related to those states, or limiting the data collected to what those states already collect (but no broader than the federal statute would require).
C. CMS should reconsider this ICR given the Administration's efforts to reduce regulatory costs imposed on the private sector. CMS has, since the beginning of 2017, taken an active role in "putting patients over paperwork."/15
It has solicited public comments on several occasions and issued several deregulatory rules, demonstrating a true commitment to this initiative. As it undertakes formal rulemaking, we request CMS fully consider whether the benefits of reporting outweigh the costs imposed on stakeholders. Reporting under the statutory requirement is limited to the QHP market, which is relatively small (about 11 million covered lives in 2019)./16
What CMS and federal oversight agencies might learn about this market will not necessarily translate to policy improvements for the larger employer-sponsor insurance markets. Since the costs will be high and many states already collect similar data for the purposes explicitly outlined in the federal statute, it is not clear CMS needs to impose this burden at all.
D. CMS needs to reconsider its stance on calculating generic dispensing rates (GDR) by pharmacy type. In the PRA justification document, CMS informed PBMs that it would be able to calculate the GDR as required by the statute based on the data reported to it. We appreciate that CMS was looking for ways to minimize the reporting burden. However, and as we argue earlier, NDC-level reporting is not authorized by the statute. CMS's proposed data collection forms (following the necessary round of rulemaking) need to be amended to collect generic and brand prescription volumes by pharmacy type. CMS should be aware that PBM systems were not built with this reporting in mind, and may need substantial modifications to allow reporting at the state level by pharmacy type. Further, in constructing these data elements, CMS should put thought into how to report biosimilars, interchangeable biologics, authorized generics, manufacturer self-imported products (if FDA finalizes its draft guidance to allow this to occur), and state-imported products (if FDA finalizes its rules to allow this to occur).
PCMA Recommendation: After promulgating regulations clarifying the details noted in Section II, CMS should address to what extent its data collection duplicates any state reporting requirements and otherwise work to minimize the burden on issuers and PBMs. CMS should also revise its burden estimates for significant private sector investment and government costs.
V. Confidentiality of These Data Must be Protected, Beyond the Statutory Requirements
CMS is approaching the confidentiality of reported data appropriately. We appreciate that the PRA notice's language on confidentiality is comparable to the statutory requirements. CMS would only disclose reported data to federal oversight agencies and to states for the purposes of operating their exchanges. We thank CMS for ensuring appropriate safeguards on the use of these business-sensitive data elements. We are, however, unsure to what extent PBM reporting at the issuer and plan level will be problematic from a confidentiality standpoint. In some states, one PBM may represent a large majority of lives at the state level, even if they worked for multiple issuers. One issuer may represent all or most of the covered lives in a state or county./17
In these cases, a report at the plan level could be used anti-competitively. We suggest that CMS report data at the plan level only to a state when there are multiple PBMs operating on behalf of multiple issuers in that state.
PCMA Recommendation: We appreciate CMS's assurances for the confidentiality of the data to be reported. We ask that CMS also consider further limits to state-level reporting to protect sensitive business information.
Conclusion
We appreciate the opportunity to provide comments on this PRA information collection notice. PBMs support the Administration's efforts to provide meaningful operational data to regulatory authorities. However, as proposed, this data collection does not yet comply with federal law and imposes too significant a burden to move forward without significant changes and public input. If you need additional information, please contact me at [email protected].
Sincerely,
Assistant Vice President, Regulatory Affairs
cc:
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Footnotes:
1/ 85 Fed. Reg. 4983,
2/
3/ See Social Security Act Sec. 1860D-15(f)(1)(A).
4/ 77 Fed. Reg. 22071,
5/ 77 Fed. Reg. 18310,
6/ See Social Security Act Sec. 1150A(a)(2).
7/ See 45 CFR 156.295(a)
8/ See https://www.cms.gov/files/document/2016-data-elements-dictionary-and-record-layout.pdf for current data elements in the EDGE server.
9/ Bona fide service fees originated in the Medicaid Drug Rebate Program's definition of Average Manufacturer Price (AMP) and manufacturer price reporting, as being excluded from AMP based on the manufacturer's determination. Bona fide services fees could be paid by manufactures to any number of supply chain participants. The four-part test is also referenced in the 2012 Exchange final rule at 45 CFR 156.295(a)(2)(i).
10/ For example, under Part D reporting, sponsors inform CMS of rebates expected but not received, and provide additional information on these rebates. This concept is not anticipated in the statutory language of 1150A and would need to be justified to be included.
11/ 85 Fed. Reg. 7088,
12/ The regulatory framework established by the ACA does not include strict federal pre-emption. Instead it sets up a system where the federal regulations become minimum standards, when states choose not to act to set up an exchange or further regulate these markets. See
13/ 64 Fed. Reg. 43255,
14/ At present, we are aware of 14 states that require (or will require) PBMs to report pharmacy claims volume, aggregate payment, aggregate rebate data, or a combination of these data elements.
15/ See 83 Fed. Reg. 47686,
16/
17/ Based on 2018 issuer-level enrollment data (the latest made publicly available), eight states using the federally-facilitated exchange had only one issuer offering plans. See https://www.cms.gov/CCIIO/Resources/Data-Resources/issuer-level-enrollment-data. These data are also available at the county level but we limited our analysis to states. These data are not available at the PBM level.
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The notice can be viewed at: https://www.regulations.gov/document?D=CMS-2020-0008-0001
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