UPDATE: Oct. 29, 2020: America's Health Insurance Plans said in a statement Thursday the final rule's approach is flawed and will increase costs and premiums.
"As consumers' bargaining power, health insurance providers work hard to negotiate lower prices, which result in lower premiums and costs. But competition experts, including the bipartisan Federal Trade Commission, agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor — not a ceiling — for the prices that drug makers, providers, and device makers would be willing to accept."
- CMS said Wednesday that "most private health plans" will be required to cover an approved COVID-19 vaccine and its administration with no cost-sharing from in-network and out-of-network providers once the shot is recommended by a CDC panel. This was mandated by Congress in the Coronavirus Aid, Relief, and Economic Security Act passed in March.
- Medicare will also cover a future vaccine at no cost to beneficiaries and Medicaid will cover it with no cost sharing for most beneficiaries through the public health emergency. Providers administering the vaccine to people without insurance will be reimbursed by the federal government and providers are prohibited from charging consumers for administration of the vaccine if they receive it from the government, according to the interim final rule.
- The rule also directs Medicare to give enhanced payments for inpatient treatments that involve the use of products authorized or approved to treat COVID-19 and exclude those drugs and biologics from being packaged into Comprehensive Ambulatory Payment Classification. They will be paid for separately.
A third surge in COVID-19 cases in the United States, with many hospital systems warning of capacity challenges, underscores how much hopes for a return to normalcy could hinge on a safe and effective vaccine.
More than 40 vaccines are in clinical testing worldwide, with four in late-stage studies in the U.S. Should data from the trials of those four prove positive, their developers plan to seek an emergency use authorization form the FDA. Results from both Pfizer and Moderna are likely to come next month.
If a vaccine is authorized, distribution will likely be a major hurdle. CMS is attempting to get ahead of one piece of that puzzle by spelling out requirements for how that process will be paid for.
In a statement, CMS Administrator Seema Verma said the department "is acting now to remove bureaucratic barriers while ensuring that states, providers and health plans have the information and direction they need."
The interim final rule released Wednesday states Medicare payment rates will be $28.39 for a single dose vaccine and, for a vaccine of two or more doses, the administration payment rate will be $16.94 and the second dose reimbursed at a $28.39 rate. Those rates will be adjusted geographically.
America's Health Insurance Plans said in a statement Wednesday it approved of the action from CMS. "We applaud the Administration for making sure that all Americans can get vaccinated with no patient costs, and we thank them for ensuring that the vaccine will be administered at an affordable price," the group said.
Commercial payers have likely modeled the costs of a vaccine and considered that when setting rates. Anthem CEO Gail Boudreaux, for example, said in an earnings call Wednesday morning the insurer had considered multiple variables when determining its pricing and will follow CMS guidance.
Medicare Advantage plans will be paid for costs of the vaccine through the Medicare fee-for-service program for contract years 2021 and 2021. This is positive for MA plans, SVB Leerink analyst Stephen Tanal said in a note Thursday morning.
"This may not surprise all MAOs, but it's plausible that some may have taken a more conservative approach to MA plan design/bids absent prior written affirmation and given the relative unpredictability of healthcare policy more recently. If nothing else, the confirmation of actuarial soundness amounts to a welcome development itself."
Tanal also said the rule, especially the provision that makes continued receipt of the enhanced Federal Medical Assistance Percentage contingent on vaccine coverage, is likely to increase spending for Medicaid programs but not necessarily "material incremental pressure" for managed care organizations.
Group purchasing organization Premier also supported the move, but warned more action will be needed to ensure successful widespread administration of a vaccine and called for a single standard. "This vaccination program is unlike any other — the scale, multi-dose administration and ultra-cold storage requirements make it a particular challenge," it said.
The rule also implements a part of the CARES Act that requires providers to publicize cash prices for COVID-19 diagnostic tests during the public health emergency.
The final interim final rule also extends the fifth performance year of the Comprehensive Care for Joint Replacement alternative payment model for six months. That's among other efforts CMS has taken to relax timelines and regulations for value-based care programs amid the pandemic.
The Trump administration's Operation Warp Speed has pledged about $11 billion toward seven vaccine candidates.
In the U.S., shots developed by Moderna, partners Pfizer and BioNTech, Johnson & Johnson and AstraZeneca are now in advanced testing. Each aims to have initial data from their late-stage studies and, potentially, first supplies, available by the end of this year.
As for treatments, FDA last week granted the first full approval for a medicine to treat COVID-19: Gilead's Veklury. The drug is infused, and treatment is typically given over five or 10 days.