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Avalere Outlook: 3rd Quarter

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Welcome to our first issue of Avalere Health Quarterly, a sector-by-sector analysis of major issues and moving parts in healthcare for the coming 3 to 6 months. The Quarterly offers Avalere expert opinion on how major industry catalysts will impact your business decisions.

Key Calls

Life Sciences:

    • Drug Pricing – Exchange plan contracting will conclude in both federal and state exchanges in the next month; most plans will rely on commercial pricing in 2014.

Device Coverage – CMS is likely to release final Coverage with Evidence Development (CED) guidance in line with draft guidance. Medicare local contractors are likely to use CED as a way to cover devices and diagnostics while they collect more information.
Molecular Diagnostics – Despite FDA’s renewed statement of intent, the logistical challenges of implementing a broad Lab Developed Testing (LDT) oversight plan and questions about the limits of FDA’s authority imply a low likelihood of LDT regulatory guidance in 2013.

Managed Care:

    • Commercial and Exchange Roll Out – While Avalere’s model approximates 8M 2014 Exchange enrollees, this estimate is contingent on all states launching on 1/1/14 and on fully-funded enrollment efforts. Given the underfunded outreach efforts to date, ongoing concerns around technology to support the exchanges, and varying levels of state efforts around enrollment launch, actual 2014 enrollment could be lower than estimated.

Medicaid – ~50% of states will forego Medicaid expansion in 2014 (representing roughly 1/2 of the eligible lives); Arkansas and 1-2 others have initiated waiver negotiations with CMS on Medicaid premium assistance model as a Medicaid expansion alternative.

Healthcare Facilities:

    • Outpatient & Physician Office – If, as seems likely, CMS finalizes around Nov. 1 its proposal to compress the 10 current hospital codes for clinic-based E/M services down to 1, it will undermine Congress’s ability to enact in the upcoming doc fix legislation MedPAC’s proposal to reduce total payments for E/M services in the outpatient hospital setting down to the non-facility doctor office rate.

SNF & IRF – Congress is likely to include normalization of payments between SNFs and IRFs for hips and knees in a doc fix proposal, benefiting SNFs.
Labs – CMS will finalize its proposal to revalue for 2015 all 1,250 clinical laboratory fee schedule codes, to take technological advancements into account, unless Congress pressures CMS to hold off and let it enact the proposal in order to generate scorable savings as a doc fix offset.

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