CMS issues new proposal to address drug pricing has been added to your bookmarks.
CMS issues new proposal to address drug pricing
Medicare Advantage and Part D are targeted
The proposed rule would give Medicare Advantage (MA) and Part D plans greater room to negotiate with drug manufacturers through formulary placement and step therapy arrangements, and increase price transparency for patients and providers to make price-informed care decisions in real time.
November 27, 2018 | Health care
On November 26, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule titled, Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out of Pocket Expenses.
The rule is the latest in a series of initiatives undertaken by the Trump Administration to reduce drug costs, and follows many of the precepts initially outlined in the May 2018 policy document, “American Patients First Trump Administration Blueprint to Lower Drug Prices and Reduce Out of Pocket Costs.”
The proposed rule will be published in the Federal Register on November 30, 2018, with comments due no later than January 25, 2019.
Below are highlights from the proposed rule:
Changes to Part D protected drug classes
Under current rules, Part D plans must include all drugs from six protected classes on their formularies. Those classes are:
- Immunosuppressants for treatment of transplant rejection;
- Antiretrovirals; and
The proposed rule would allow Part D sponsors to:
- Implement broader use of prior authorization (PA) and step therapy (ST) for protected class drugs, including to determine
usefor protected class indications. The proposal would also allow indication-based formulary design and utilization management for protected class drugs.
- Exclude a protected class drug from a formulary if the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market.
- Exclude a protected class drug from a formulary if the price of the drug increases beyond the Consumer Price Index for all Urban Consumers (CPI-U) in comparison to a baseline month and year.
The proposed rule estimates that the Medicare trust fund would save $1.85 billion over 10 years, while Part D enrollees would save $692 million due to reduced
Bringing prices to e-prescribing
The proposed rule would require Part D plans to deploy an electronic real-time benefit tool (RTBT) capable of integrating with prescribers’ e-Prescribing (eRx) and electronic medical record (EMR) systems. Under the proposed rule, Part D plans would need to provide its beneficiaries’ prescribers comprehensive, real-time, and patient-specific formulary and benefit (F&B) information. F&B information would include a drug’s cost, alternatives within the plan formulary, and any requirements related to utilization management. The requirement would take effect on January 1, 2020.
Transparency in Part D explanations of benefits
The proposed rule would require Part D plans to include require additional information on EOBs related to negotiated price changes and lower-cost therapeutic alternatives. Negotiated prices would include an accounting of any price increases for a particular drug that have occurred over the course of the calendar year.
Lower-cost therapeutic alternatives (meaning drugs with lower cost-sharing or lower negotiated prices) could include a generic option the original prescription fill was for a brand
In keeping with prior guidance effective in 2019, MA plans in 2020 would continue to be allowed to implement step therapy and other drug utilization management protocols, but with added consumer safeguards. Under the proposal, step therapy requirements would only apply to newly prescribed medications, with a look-back period of 108 days to count towards present usage of a drug, similar to Part D requirements. Any utilization management would also be required to undergo a review and approval process by the plan’s pharmacy and therapeutics committee.
In alignment with current Part D rules, adjudication of expedited coverage requests (i.e., appeals) for Part B drugs would occur within a 24-hour timeframe, while standard coverage requests would be adjudicated within 72 hours. Independent review entity timeframes are also shortened to 72 hours.
Discounts and rebates reflected at
An exception to pricing requirements under current rules allows for the price of a Part D drug at the point of sale to be higher than what the plan sponsor initially negotiated with the drug manufacturer on the basis of a drug’s performance. The proposed rule would revise the definition of negotiated prices to mean the lowest amount a pharmacy could receive as reimbursement for a covered Part D drug under its contract with the Part D plan.
CMS also proposes to define “price concession” under Part D expansively as a means of consolidating pricing rules around a single principle, as opposed to treating concessions such as rebates or other subsidies granted to Part D plans as discrete categories.
In its discussion of the proposal, CMS cites current practices wherein price concessions are not reflected at point-of-sale, thus increasing a beneficiary’s out-of-pocket contributions, and moving them into the catastrophic phase of their Part D coverage. In the catastrophic phase, 80 percent of drug spending is Medicare’s responsibility, and only 15
CMS states that the point of sale provisions are still proposals for consideration in a future year, but may be implemented as soon as January 1, 2020. The proposed rule solicits public comment on industry readiness for deploying appropriate technology within this
As proposed, beneficiaries would save $7.1 to $9.2 billion over 10 years as a result of reduced cost-sharing, though offset by slightly higher premiums.
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