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Sweeping changes to 2015 Medicare Advantage, Part D regs

This week, CMS released a proposed rule that would revise the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements. CMS estimates that the proposed rule would reduce Medicare spending by $1.3 billion between 2015 and 2019.

Negotiated prices: Among many other things, the proposed rule would revise the definition of “negotiated prices” to require that all price concessions from pharmacies are reflected in these prices. Under the proposed rule, negotiated prices would mean prices for covered Part D drugs that: (1) the Part D sponsor (or other intermediary contracting organization) and the network dispensing pharmacy or other network dispensing provider have negotiated as the amount such network entity will receive, in total, for a particular drug; and (2) are inclusive of all price concessions and any other fees charged to network pharmacies; and (3) include any dispensing fees; but (4) exclude additional contingent amounts, such as incentive fees, only if these amounts increase prices and cannot be predicted in advance; and (5) may not be rebated back to the Part D sponsor (or other intermediary contracting organization) in whole or in part.

Protected classes of drugs: The rule would also modify CMS’s interpretation of the Affordable Care Act’s “drug categories or classes of clinical concern” requirement. Instead of mandating coverage of all drug products in a particular class on all Part D formularies, CMS would limit protected classes to those meeting criteria established under the regulation. The proposed criteria would result in formulary inclusion of all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes (subject to proposed exceptions), but the rule would not require all drugs from the antidepressant and immunosuppressant drug classes to be included on all Part D formularies. While antipsychotics would not meet the criteria, CMS proposes that they remain protected at least through 2015 to ensure that CMS has “not overlooked a need for any transitional consideration.”

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Preferred pharmacies: Rules would also shift for “preferred pharmacies” within Part D plans’ pharmacy networks. CMS would allow Part D sponsors to reduce copayments or coinsurance at such pharmacies only if they offer consistently lower negotiated prices than are available from other pharmacies in the pharmacy network. CMS also proposes to modify the “any willing pharmacy” requirement to require plan sponsors to contract with any willing pharmacy able to meet one set of the terms and conditions offered by that plan for that type of pharmacy.

Contracted network rules: Under the new regs, a Part D sponsor must offer and publicly post standard terms and conditions for network participation for each type of pharmacy in its contracted network, and (1) may not require a pharmacy to accept insurance risk as a condition of participation in the PDP sponsor's contracted pharmacy network, and (2) must offer payment terms for every level of cost sharing offered under its plans (consistent with CMS limitations on the number and type of cost sharing levels) and for every type of similarly-situated pharmacy.

Prescribing rights: CMS also seeks the right to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has an abusive pattern of prescribing Part D drugs and represents a threat to beneficiary health and safety, or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also would require that prescribers of Part D drugs enroll in Medicare as a condition of coverage for their prescriptions.

Other proposed changes in the rule include: Limit prescription drug plans sponsors to offering no more than two Part D plans in the same service area; implement an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments; and establish U.S. citizenship and lawful presence as an eligibility requirement for enrollment in MA and Part D plans.

CMS will accept comments on the proposed rule until March 7, 2014.