CMS Issues Final Rule for Medicare Advantage and Part D Pricing

CMS, Medicare Advantage, Rx/Pharmacy on May 22, 2019
Posted by Jean S. Goldstein, JD

Last week, the Centers for Medicare and Medicaid Services (CMS) issued a final rule, (CMS-4180-F) impacting Medicare Advantage Plans (MAP) and Part D programs.  The rule aims to ensure that patients have greater transparency into the cost of prescription drugs, so that beneficiaries can compare options and also enables MAPs to negotiate better prices for physician-administered medicines in Part C. 

The provisions of the final rule include:

Codifying Part D Protected Classes

Current Part D policy requires sponsors to include on their formularies all drugs in six categories or classes: 1) antidepressants; 2) antipsychotics; 3) anticonvulsants; 4) immunosuppressants for treatment of transplant rejection; 5) antiretrovirals; and 6) antineoplastics; except in limited circumstances.  The rule codified that Part D sponsors are only permitted to impose prior authorization and step therapy requirements for beneficiaries initiating therapy (i.e., new starts) for 5 of the 6 protected classes.

Adoption Real Time Benefit Tools (RTBT)

CMS is requiring that each Part D plan adopt one more of the Real Time Benefit Tools (RTBT) in the Part D program, which are capable of integrating with at least one prescriber’s ePrescribing system or electronic health record (EHR), no later than January 1, 2021.  RTBTs have the capability to inform prescribers when lower-cost alternative therapies are available under the beneficiary’s prescription drug benefit, which can improve medication adherence, lower prescription drug costs, and minimize beneficiary out-of-pocket costs.

Finalizing of Regulations for Step Therapy for Part B Drugs

CMS is finalizing regulations, under which MAPs could implement step therapy for Part B drugs as a recognized utilization management tool.  CMS has stated they believe that use of step therapy as a utilization management tool will better enable MA organizations to ensure that Medicare beneficiaries pay less overall or per unit for Part B drugs.

Requirement for Part D Explanation of Benefits

Effective January 1, 2021, CMS will require the Part D Explanation of Benefits that Part D plans send members to include drug price increases and lower cost therapeutic alternatives. This information will be useful to inform Medicare beneficiaries about alternatives, and ways to lower their out of pocket costs. 

Prohibition Against Gag Clauses in Pharmacy Contracts

This rule also implements the statutory requirement that restricts Part D sponsors from prohibiting or penalizing a pharmacy from disclosing a lower cash price to an enrollee.

CMS previously also solicited public comments on a policy that would re-define negotiated price as the baseline, or the lowest possible, payment to a pharmacy. CMS received over 4,000 comments.  However, CMS is not implementing this policy for 2020, and will continue to review these comments as it continues to consider policies that would lower prescription drug costs, address challenges that independent pharmacies face, and improve the quality of pharmacy care.

Takeaway and Commentary:

The rule is significant as there may be an impact felt by primary payers.  Particularly, if beneficiaries are able to secure the lowest cost possible for prescriptions, pharmaceutical companies will have to compete on the basis of price, which will ultimately result in lower costs for medications across the board.  Practically speaking, the impact may not be felt for quite some time, but more driven competition in the pharmaceutical space will yield lower prices and will hopefully positively impact claims involving Medicare beneficiaries.