Insight Spring 2020

Spring 2020 | 18 Spring 2020 | 19 Legislative Update Medicare Part D Reform on the Horizon Brad Kile, Ph.D., President - Dumbarton Group, LLC With 15 years of Medicare Part D experience under their belts, policymakers in Washington, DC, are exploring reform to Medicare Part D that could mark the most significant changes to the popular program since its inception in 2006. There are policy developments of interest to pharmacists and pharmacies in a proposed rule released in February 2020 by the Centers for Medicare & Medicaid Services (CMS) including: drug management programs; medication therapy management; specialty tiers; real-time benefit tools; and the quality rating system. Under the proposed rule, CMS would revise requirements for the program and implement provisions of the Bipartisan Budget Act of 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, and the 21st Century Cures Act. On a separate policy track, Congress is aiming to advance structural reforms to realign risk sharing between plans, manufacturers, beneficiaries, and the government. CMS Reform in the Proposed Rule CMS is planning to expand drug management programs (DMPs) that are currently voluntary by making themmandatory, beginning in 2022. Under DMPs, plans limit at-risk beneficiaries’ access to controlled substances that CMS determines are frequently abused drugs to a selected prescriber(s) and/or network pharmacy(ies). The proposed rule would also amend the definition of “potential at-risk beneficiary” to include individuals identified as having a history of an opioid-related overdose. CMS will maintain current policy that exempts patients from DMPs that: 1) are residents in long-term care facilities or other facilities that contract with a single pharmacy, 2) have elected to receive hospice care, or 3) have a cancer diagnosis. Additionally, CMS is seeking to expand medication therapy management beginning in 2021, by adding at-risk beneficiaries to the targeted population and enhancing service components offered under the program. Of concern to pharmacies is a series of program integrity and transparency proposals that could allow plans to impose significant requirements and limitations on pharmacies. Notably, plans would be given authority to suspend pharmacy payments pending investigations of credible allegations of fraud. As part of its effort to improve transparency, CMS proposes to require plans to disclose pharmacy performance measures used to evaluate pharmacy performance as established in network pharmacy agreements. CMS also makes several adjustments to the Five-Star Quality Rating System design to improve the consistency of its measures. The rule would give plans new flexibility for their specialty tiers by allowing plans to establish up to two specialty tiers with thresholds based upon cost and maximum cost-sharing for patients. CMS is also proposing plans implement a beneficiary real-time benefit tool (RTBT) by 2022. The RTBT must include drug costs, formulary alternatives, and utilization management requirements. Structural Reform While the proposed rule sets the stage for more immediate reform, there is momentum for broader, longer-range structural reform to address costs and risk sharing between plans, manufacturers, beneficiaries, and the government. The U.S. House of Representatives, U.S. Senate, and the Medicare Payment Advisory Commission (MedPAC) each offer different approaches to restructuring Part D in response to dramatic increases in drug costs, especially among those in the specialty tier. The common thread among leading proposals in Congress and MedPAC is realignment in four different areas: deductibles, initial coverage, the coverage gap (aka “donut hole”), and catastrophic coverage. There is a general agreement that under a restructured benefit enrollees would pay 100% of their deductible and the coverage gap phase would be eliminated permanently. For the initial phase, cost sharing responsibility would be spread across beneficiaries, plans, and manufacturers, with the House, Senate, and MedPAC each proposing different allocations of costs. Each proposal looks to restructure risk in the catastrophic phase from the current policy where the beneficiary pays 5%, the plan pays 15%, and the government assumes 80%. The MedPAC proposal eliminates beneficiary responsibility in the catastrophic phase and would limit the government’s risk to 20%. For generic drugs, MedPAC would shift plan risk to 80% and for brand and biologic drugs the manufacturer would cover 20% with the plan responsibility at 60%. The leading congressional proposals would also cap the government’s risk in the catastrophic phase to 20% for brand drugs, with the balance shared between plans and manufacturers. Each proposal is designed to realign financial incentives for plans and manufacturers. For plans, the changes in the catastrophic phase that shift risk from the government to the plans will provide stronger incentives for plans to manage enrollee’ spending across all phases of the benefit. The changes would also shift incentives for manufacturers. A restructured benefit where manufacturers assume risk in the catastrophic phase is likely to reduce manufacturers’ incentives to increase drug prices or introduce new products at high prices. The Road Ahead Through changes to Medicare Part D in the proposed rule, CMS is seeking reform while improving the overall program. Pharmacists and pharmacies are likely to be only modestly impacted by policies in the proposed rule that address drug management programs, medication therapy management, specialty tiers, real-time benefit tools, and the quality rating system. The more impactful changes will come from the restructuring of Part D to realign risk. With the 2020 election dominating the political agenda, it is unclear if Congress will advance structural reform this year. However, with the broad appeal across political parties to reshape Part D, stakeholders will be watching closely as both CMS and Congress evaluate options to deliver lower drug costs to beneficiaries. Resources: Medicare and Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. Centers for Medicare & Medicaid Services. Accessed 2/18/20. www.federalregister.gov/ documents/2020/02/18/2020-02085/medicare-and- medicaid-programs-contract-year-2021-and-2022- policy-and-technical-changes-to-the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3 / S. 2543) and Lower Costs, More Cures Act (H.R. 19 / S. 3139). Library of Congress. Accessed 2/18/20. www. congress.gov/ Eric Rollins, Rachael Schmidt, and Shinobu Suzuki. The Medicare prescription drug program (Part D): Status report and a proposal for restructuring. MedPAC. 1/16/2020. Accessed 2/20/20 www.medpac.gov/docs/ default-source/default-document-library/part_d_public_ jan_2020.pdf?sfvrsn=0 Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. Centers for Medicare & Medicaid Services. Accessed 2/18/20. www. federalregister.gov/documents/2020/02/18/2020-02085/ medicare-and-medicaid-programs-contract-year-2021- and-2022-policy-and-technical-changes-to-the