CMS Proposes Changes to MA, Part D Including Protected Classes, Service Areas

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By Mindy Yochelson  

Jan. 6 --The Centers for Medicare & Medicaid Services Jan. 6 proposed a variety of policy changes to the Medicare Advantage and Part D prescription drug benefit programs, including eliminating categories of drugs from the protected drug class requirement and limiting to two the number of drug plans that sponsors may offer in a service area.

The proposal, which would affect plans beginning in 2015, would also put additional conditions on prescription drug plans' preferred pharmacies.

The CMS said that the proposed rule, Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs, would save $1.3 billion between 2015 and 2019.

The rule is scheduled for publication in the Jan. 10 Federal Register, and the CMS will accept comments until March 7.

The agency periodically updates the programs through such regulations, some of which are new policies while others are codifications of informal guidance that has been put out since the last rule.

The proposal was published five months before the CMS's June 2 deadline for submission of 2015 bids.

Protected Classes

The CMS said it wants to change the criteria for protected drug classes and said it plans to eliminate some classes from that status.

The Medicare Modernization Act required Part D plans to include on their formularies “all or substantially all” drugs in six protected classes: anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants for the treatment of transplant rejection.

However, the Affordable Care Act allowed the CMS to specify criteria for identifying protected classes through notice-and-comment rulemaking.

“Instead of mandating coverage of all drug products in a particular class on all Part D formularies, we can save costs by identifying more efficient formulary requirements or other beneficiary protections in most cases,” according to the proposal.

Seven-Day Criteria

The proposal would interpret the ACA to limit protected classes to those for which access to all drugs in a category or class for a typical individual with a disease or condition treated by the drugs in the class is required within seven days.

Further, “more specific formulary requirements would not suffice to meet multitude of specific applications of the drugs within the category or class,” the proposal said.

The agency said it convened a consensus panel of CMS pharmacists to identify which drug categories or classes met its proposed criteria for clinical concern.

“After a detailed analysis of existing therapies and widely-accepted treatment guidelines, the panel concluded that immunosuppressants for transplant rejection, antidepressants, and antipsychotics do not meet” the proposed criteria and thus would not be eligible for the additional protections, the proposal said.

Therefore, the CMS said it would no longer require all drugs from the antidepressant and immunosuppressant drug classes to be on Part D formularies.

“Although antipsychotics do not meet the criteria, they will remain protected at least through 2015 while CMS evaluates additional considerations and the need for any other formulary exceptions,” according to the agency.

Preferred Pharmacy Networks

In the area of preferred pharmacies, the agency said it proposes to clarify that preferred cost sharing should signal consistently lower costs and plans to change the definition of negotiated prices.

Some Medicare drug plans have contracts with pharmacies that are part of the plan's network and give the plans--and consumers--a larger discount than other pharmacies. These preferred pharmacies are willing to offer better price concessions than other pharmacies in the plan's network to increase their market share.

In a statement accompanying the proposed rule, the CMS said it wants to “revise the regulatory definition of negotiated prices to require all price concessions from pharmacies to be reflected in negotiated prices.”

The proposed rule “would require greater cost savings for beneficiaries in return for offering preferred cost sharing so that sponsors cannot incentivize use of selected pharmacies, including the sponsors' own related-party pharmacies that charge higher rates than their competitors,” the CMS said.

CMS Concerns

In the 2014 Call Letter (63 HCDR, 4/2/13), issued in April 2013, the CMS said that, although regulations permit lower cost sharing at some network pharmacies, they also require that the reductions not increase the CMS's payments to the plans.

The Call Letter expressed concern that an agency analysis of costs for the top 25 brand and top 25 generic drugs showed that costs might be higher in preferred networks than in nonpreferred networks in some plans.

In the proposed rule, the CMS said it wants to revise the provision on preferred cost sharing in network pharmacies to state that: “A Part D sponsor offering a Part D plan that provides coverage other than defined standard coverage may reduce copayments or coinsurance for covered Part D drugs obtained through a subset of network pharmacies, as long as such preferred cost sharing is offered in accordance with the requirements of § 423.120(a)(8) and for Part D drugs with consistently lower negotiated prices than the same drugs when obtained in the rest of the pharmacy network.”

By “consistently lower,” the CMS said it means that plan sponsors must offer beneficiaries and the Part D program lower negotiated prices on all drugs in return for the lower cost sharing.

Lower Pricing Standard

“In practice we believe this would mean that whatever pricing standard is used to reimburse drugs purchased from network pharmacies in general, a lower pricing standard must be applied to drugs offered at the preferred level of cost sharing,” it said.

“In addition, we solicit comments on whether we should also establish standards on how much lower drug costs should be in return for preferred cost sharing,” the CMS said. “We are aware that there is a wide range of savings projections associated with the use of limited networks.”

Other Changes

Among other changes, the proposal would:

• establish U.S. citizenship and lawful presence as an eligibility requirement for enrollment in MA and Part D plans;

• streamline the Risk Adjustment Data Validation (RADV) audit process by combining error rate calculation appeals and medical record review-determination appeals into one combined process;

• expand the release of unencrypted prescriber, plan and pharmacy identifiers contained in prescription drug event records to give researchers broader access to health-care data;

• require that physicians or nonphysician practitioners who write prescriptions for covered Part D drugs be enrolled in Medicare for their prescriptions to be covered under Part D; and

• modify the agent/broker compensation structure.


To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Ward Pimley at

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