Health systems, such as integrated delivery networks (IDNs), have become increasingly influential players in the US healthcare system, driven in part by the focus on value over volume and their varied influences on physician treatment and prescribing behaviors. In 2021, IDNs, like many other healthcare systems, are going to be impacted by several elements including an unprecedented number of current and proposed policies that, if they come to fruition, will have a significant impact on the healthcare landscape. These current and proposed policies will further influence quality of care, payment models, healthcare costs, patient costs, and the delivery of care, forcing health systems and IDNs to further reevaluate many of their processes, procedures, and care delivery models. Below are current and proposed policies that will have an impact on IDNs.

  1. Drug Costs policies that may impact IDN finances 
    • Most Favored Nation (MFN): This policy will ensure that Medicare will not pay more than the MFN price for certain Part B and eventually Part D prescription drugs. IDN Medicare Advantage plans may be impacted as the model is likely to lower Medicare Advantage payments by lowering Part B payments
    • The Drug Pricing Rebate Rule aims to eliminate the existing regulatory safe harbor for rebates involving pharmacy benefit managers (PBMs) in Medicare Part D. It will force PBMs and insurers to pass along any after-the-fact rebates they receive from pharmaceutical companies to patients at the point-of-sale. This rule may impact IDNs as they have used these rebates from their PBMs and plans to lower overall premiums or provide other benefits
    • Telehealth policies: CMS expanded the list of telehealth services and the amount that it would pay during the coronavirus disease 2019 (COVID-19) Public Health Emergency to support organization and provider reimbursement
  2. 2021 CMS policies that will reduce IDN / hospital reimbursements 
    • 340B Update: with the Appeals Court Upholding the340B Payment Reduction under the OPPS and CMS’ proposal for further reductions for CY 2021, 340B IDNs’ hopes for a retroactive remedy and future changes in reimbursement cuts are not likely.  This will result in further reimbursement cuts for Medicare outpatient drugs purchased under the 340B Program
    • Site Neutrality: IDNs / hospitals will see continued reduction in reimbursement rates for hospital outpatient clinic visit services when furnished in excepted off-campus provider-based departments
    • Inpatient Only (IPO) List: Elimination of the IPO list over 3 years beginning in CY 2021 as part of CMS’ site-of-care value propositions and cost effectiveness strategies
  3. 2021 CMS Quality Payment Programs to support the transition from volume to value 
    • Merit-based Incentive Payment System (MIPS) exemptions: Due to COVID-19, CMS is granting hardship exemptions for all 4 MIPS performance categories, and if their application is approved, they will be held harmless from a payment adjustment in 2022 based on their MIPS performance in 2020
    • MIPS Performance Category Weighting in Final Score: CMS is proposing to reduce the quality category weight from 45% to 40%, and increase the Cost category from 15% to 20%, with a maximum bonus or penalty of positive 9% or negative 9%, respectively
    • MIPS Value Pathways (MVPs) and The Advanced Alternative Payment Models (APMs) Performance Pathway (APP) programs implementation are been postponed to 2022
  4. Other Healthcare policy changesACA Reform: Changes to the US healthcare system and the ACA in 2021 and beyond including leveraging Medicare Advantage to increase competition, establishing a public option for purchase on the exchanges, and potentially lowering Medicare participation age to 60 years, will impact IDNs. These changes may be beneficial to IDNs as they will increase the number of people with health insurance and reduce organizational bad debt. However, the higher rates from commercial insurers used to cover gaps in Medicare and Medicaid payments may decline as payer mix changes (more government coverage and less commercial).


What pharma should consider 

In 2020, IDNs and health systems have seen a decline in revenue mainly due to COVID-19, and many of these policies will further impact their finances and recovery. Many of these entities will be looking to drug and product manufacturers to share in risk and patient outcomes under value-based contracts or alliances; partner and support IDN efforts around quality and patient access to therapies and products; and further increase discounts and rebates. Interdependent partnerships and collaborations between IDNs and manufacturers are expected to grow in 2021 to support the recovery of healthcare and to address the focused policies that will further impact healthcare under the new administration.