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CMS Proposes Medicare Part D Update

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Officials at the Centers for Medicare and Medicaid Services (CMS) hope to hold down prescription drug costs by giving Medicare drug plan managers more bargaining power, and by giving patients more information about what drugs really cost.

CMS — an arm of the U.S. Department of Health and Human Services — unveiled a 185-package of draft Medicare drug benefits regulations Monday. The draft regulations could update prescription drug benefits rules at Medicare Part D drug plans, and at Medicare Part C Medicare Advantage plans.

(Related: Trump Signs Two Drug Cost Information Bills)

Medicare Part D drug plan issuers still compete hard for customers, and they still pay agents and brokers meaningful commissions.

For producers in the Medicare plan market, the new draft regulations could bring new opportunities to connect with clients and prospects.

All Medicare users and prospects may be hungry for general information about what the draft regulations could do.

If the draft regulations actually take effect, consumers with health problems will want help with figuring out which plans offer the best coverage for the kinds of prescriptions they take.

The Draft

Many of the provisions in the new draft regulations deal with the rules for designing a drug plan “formulary,” or the list of drugs that a plan will cover.

Current regulations require a plan formulary to include just about all available drugs in six major drug categories: antidepressants, antipsychotics, anticonvulsants, antiretrovirals, anticancer drugs, and immune system suppression drugs for transplant patients.

CMS wants to let a plan exclude a drug in one of those classes if the cost of the drug increases too fast, or if a “new drug” is simply a new version of a drug that’s already available.

CMS also wants to let a drug plan provider require prior authorization for use of a drug in a protected class, and, in some cases, to let a drug plan provider require a patient to try a cheaper drug before moving up to a more expensive drug. Requiring a patient to try a cheaper drug first is called “step therapy.”

Other provisions in the proposed regulations could:

  • Require each Part D drug plan provider to offer an electronic “real-time benefit tool” (RTBT) system. The RTBT system would tell a doctor who was prescribing a drug if a lower-cost alternative were available. That could help hold down drug costs while a patient was still in the doctor’s office.
  • Require a Part D drug plan to include detailed drug pricing information, and information about lower-cost alternatives, in patients’ explanation-of-benefits (EOB) statements. In theory, the EOB information could help patients hold down future prescription spending.
  • Require drug companies, pharmacy benefits managers (PBMs) and drug plans to make any manufacturer rebates show up at the point-of-sale. That way, a rebate would have a direct effect on the price a patient pays when the patient picks up a prescription. Today, in many cases, PBMs and drug plans build rebates into their overall pricing structure. Supporters of making rebates show up at the point of sale say that could increase drug price transparency.

The draft regulation would apply to Medicare Advantage plans because many of the provisions in the draft relate to drugs that physicians administer in their offices, or to drugs that hospitals or other facilities administer in the facilities. Providers get reimbursement for those drugs from the Medicare Part B program, or from Medicare Advantage plan managers, rather than from Medicare Part D drug plan providers.

The proposed regulations are set to appear in the Federal Register Friday.

Comments on the draft regulations will be due Jan. 25, 2019.

CMS lists Christian Bauer as the contact person for Medicare Part D issues.

CMS lists Mary Abeln, Jelani Murrain and Brandy Alston as the contact people for issues related to Medicare Advantage plans.

Health Insurers React

Matt Eyles, president of America’s Health Insurance Plans (AHIP), said in a statement that AHIP welcomes the Trump administration’s focus on reducing drug prices.

“Drug prices are out of control and leave too many Americans, including Medicare beneficiaries, to choose between paying their bills and paying for their medications,” Eyles said in the statement. “The problem is the price, driven by monopolies in a broken market that empower branded drug makers to raise prices on the same product year after year.”

But Eyles said AHIP will have to study the draft regulations before saying what it thinks about the provisions in the draft.


A preliminary copy of the draft regulations is available here.

A section-by-section summary of the draft is available here.

— Read Key Medicare Drug Plan Benchmark Price Fallson ThinkAdvisor.

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