• CMS allowed to go forward only one of three proposed Part D plan initiatives aimed at reducing drug spending.
  • Part D plans will be required to implement an electronic real-time benefit tool.
  • MA plans will be allowed to use step therapy as a utilization management tool for Part B drugs.

May 20—Part D plans will have fewer new tools to control drug spending than Medicare initially proposed.

The Centers for Medicare & Medicaid Services recently finalized changes to rules for Medicare Advantage (MA) and Medicare Part D plans. The final rule includes only one of three proposed exceptions to Part D coverage requirements for plans.

Medicare had proposed allowing Part D plans to

  • Implement broader use of prior authorization and step therapy for protected classes of drugs
  • Exclude a protected-class Part D drug from formularies if the drug merely is a new formulation of an existing single-source drug or biological product
  • Exclude a protected-class Part D drug from formularies if the price of the drug has increased beyond a certain threshold over a look-back period

Ultimately, the only change finalized was the exception related to prior authorization and step therapy. However, that was tweaked to allow those approaches only for new drug regimens. Furthermore, prior authorization and step therapy will continue to be barred for antiretrovirals.

Any changes to formulary design and utilization management will be subject to CMS review and approval.

Updates to e-prescribing requirements

The final rule requires Part D plans to implement an electronic real-time benefit tool (RTBT) capable of integrating with at least one prescriber’s electronic prescribing system or electronic health record. 

“We believe that this requirement is appropriate given the act’s support of interactive real-time standards whenever feasible, and for standards that improve the cost-effectiveness of the Part D benefit,” CMS officials wrote in the rule.

Existing RTBTs can make beneficiary-specific drug coverage and cost information visible to prescribers for consideration at the point of prescribing.

The limited requirement that each Part D plan choose at least one RTBT that meets the specified criteria stemmed from the lack of industrywide electronic standards for RTBTs, according to CMS.

Plans will have until Jan. 1, 2021 to implement the new standard, but CMS urged them to implement it earlier, if possible.

The new standard will allow patients to understand their out-of-pocket costs for a medication before arriving at the pharmacy counter and, if necessary, to pursue lower-cost treatment options in consultation with their physician, said Joel White, president of the Council for Affordable Health Coverage (CAHC), a coalition of employers, insurers, life science companies, pharmacy benefit managers, brokers, agents, patient groups and physician organizations.

"Price transparency at the point of prescribing is largely missing from the healthcare equation. Real-time benefit tools are a disruptive force that can fix that disparity. We are glad to see the [Trump] administration heeding CAHC's calls for expanded use of this innovation," White said in a written statement.

Making better information available to enrollees

CMS finalized another requirement that Part D plans create by Jan. 1, 2021 an expanded Explanation of Benefits (EOB) to be sent to enrollees. The EOB must include drug price increases and lower-cost therapeutic alternatives.

“This information will inform Medicare beneficiaries about possible ways to lower their out-of-pocket costs by considering a lower-cost medication,” said a fact sheet.

The rule also implements a statutory requirement ensuring that Part D plans do not prohibit pharmacies from disclosing a lower cash price to enrollees nor penalize pharmacies that do so.

“This provision supports the President’s initiative to help lower out-of-pocket costs of prescription drugs for Medicare beneficiaries by helping inform them about lower-cost alternatives,” said the fact sheet.

Holding off on a new definition

CMS had solicited feedback on redefining negotiated price as the baseline, or lowest possible, payment to a pharmacy. The negotiated price for a drug is the price reported to CMS at the point of sale, which in turn is used to calculate beneficiary cost-sharing and to generally adjudicate the Part D benefit.

After receiving more than 4,000 comments on the proposal, CMS decided not to implement the new definition in 2020.

“A significant number of stakeholders submitted comments on the proposed rule,” Kelly Brantley, managing director at Avalere, said in a written statement. “CMS’s decision to not move forward with major changes, such as modifying the protected classes or definition of negotiated price, indicates the level of stakeholder interest in maintaining major aspects of Part D.”

Provisions for MA plans

The final rule allows MA plans to use step therapy as a utilization management tool for Part B drugs.

CMS said it was reaffirming MA plans’ existing authority to implement appropriate utilization management and prior-authorization policies and procedures for managing Part B drugs, to reduce costs for both beneficiaries and Medicare.

“The use of utilization management tools, such as step therapy, for Part B drugs enhances the ability of MA plans to negotiate Part B drug costs and ensures that taxpayers and MA enrollees face lower per unit costs or pay less overall for Part B drugs while maintaining access to medically necessary Medicare-covered services and drugs,” the rule said.

The final rule also modifies time periods for MA-plan determinations and appeals involving Part B drugs.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, May 21, 2019