CMS Releases Proposed Changes for Medicare Advantage and Medicare Part D

Comments to the Proposed Rule are due no later than April 6, 2020.

No Call Letter for 2021

One noticeable difference in the Proposed Rule from similar proposed rules in the past is that the current Proposed Rule incorporates many of the technical provisions that would typically be included in CMS’s annual Call Letter. CMS announced that it will not be publishing a Call Letter for 2021.  

Substantive Provisions of Interest

Coverage Gap Discount Program

The Proposed Rule would modify the definition of “applicable discount” found at 42 CFR § 423.2305 to conform to the Balanced Budget Act of 2018, which increased the “applicable discount” from 50% to 70% of the portion of the negotiated price of the applicable drug under the Coverage Gap Discount Program.

Suspension of Pharmacy Payments Based on Credible Allegations of Fraud

The Proposed Rule seeks to codify provisions of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act that allows Medicare Part D plan sponsors and Medicare Advantage (MA) organizations offering MA-PD plans to suspend payments to pharmacies based on credible allegations of fraud. Part D plan sponsors would be required to notify CMS of any payment suspension via a secure internet portal. The portal would also allow plans to refer pharmacies engaged in “substantiated or suspicious activities…related to fraud, waste, or abuse” to CMS for investigation.

Importantly, the Proposed Rule would add the defined term “substantiated or suspicious activities of fraud, waste, or abuse” to include “allegations that a provider of services (including a prescriber) or supplier engaged in a pattern of improper billing; submitted improper claims with suspected knowledge of their falsity; submitted improper claims with reckless disregard or deliberate ignorance of their truth or falsity; or is the subject of a fraud hotline tip verified by further evidence.”

In addition, the Proposed Rule would codify provisions of the SUPPORT Act that will require MA organizations or Part D plan sponsors to adopt procedures to identify and report to CMS any payment suspension implemented by a plan and any information related to inappropriate prescribing of opioids. The MA organizations and/or Part D plan sponsors would also be required to submit numerous data elements when reporting payment suspensions.

Permitting a Second “Preferred” Specialty Tier on Part D Formularies 

In an effort to encourage the use of lower-cost drugs, reduce enrollee cost sharing, and ultimately reduce costs to CMS, the Proposed Rule would allow Part D plans to add a second specialty drug tier to plan formularies beginning January 1, 2021. Plans would have the flexibility to decide which drugs are placed on either specialty tier, subject to certain CMS review requirements.  CMS would also require that if a Part D plan does decide to implement two specialty tiers, one of those tiers must be designated as “preferred” and must offer lower cost sharing than the other specialty tier.  

The Proposed Rule also would codify into regulation how plans currently establish cost sharing for specialty drugs under sub-regulatory guidance. CMS proposes to set a maximum allowable cost sharing for a single specialty tier or, in the case of a plan with two specialty tiers, the higher cost- sharing, specialty tier as follows: (1) for plans with the full deductible provided for in the Defined Standard benefit, 25% coinsurance; (2) for plans with no deductible, 33% coinsurance; and (3) for plans with a deductible that is greater than $0 and less than the deductible provided for in the Defined Standard benefit, a coinsurance percentage that is determined by subtracting the plan’s deductible from 33% of the initial coverage limit (ICL), dividing the difference by the difference between the ICL and the plan’s deductible, and rounding to the nearest one percent. CMS also proposes to require that a plan’s second specialty tier, if any, must have a maximum allowable cost sharing that is less than the maximum allowable cost sharing of the higher cost-sharing, specialty tier.

Finally, the Proposed Rule would codify into regulation the methodology used to determine the underlying specialty tier cost threshold, which is currently $670 per month. The Proposed Rule specifies that the determination of the specialty tier cost threshold for a plan year is based on Prescription Drug Event (PDE) data from the plan year that ended 12 months prior to the beginning of the applicable plan year.

Beneficiary-Facing Real Time Benefit Tool

In May 2019, CMS finalized requirements that, effective January 1, 2021, Part D plans implement a prescriber-facing real time benefit tool (RTBT) that could provide complete, accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information (including cost, formulary alternatives, and utilization management requirements) to prescribers.

In the Proposed Rule, CMS is now proposing that Part D plans implement a RTBT for use by beneficiaries, effective January 1, 2022. The beneficiary RTBT would allow enrollees to view accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information, so as to allow both prescriber and patient to consider potential cost differences when choosing a medication that best meets the patient’s medical and financial needs.

Specifically, the beneficiary RTBT must be able to provide present real-time values for the patient’s cost-sharing information and clinically appropriate formulary alternatives, where appropriate, including the formulary status of clinically appropriate formulary alternatives, any utilization management requirements, such as step therapy, quantity limits, and prior authorization, applicable to each alternative medication. The Proposed Rule would require information contained in the RTBT to also be available via the Part D plan’s customer service call center.

Pharmacy Performance Measure Reporting Requirement

CMS proposes to require Part D plans to report and disclose the specific pharmacy performance measures they use to evaluate network pharmacy performance, as set forth in the plan’s network agreements. CMS would make the measures collected publically available and would limit disclosure to those needed to identify and understand each measure and how the measure is applied by pharmacy type.

CMS also encourages the industry to develop a standard set of pharmacy measures itself, and for Part D plans to adopt those measures. CMS believes that performance measures should:

• Improve medication use and outcomes for the beneficiaries served;
• Be specified at the right level of attribution and appropriate level of comparison considering pharmacy type;
• Factor in both pharmacy accountability and drug plan performance goals;
• Have clear specifications and be established prior to the measurement period;
• Be reliable, transparent and fair; and
• Use threshold minimums if appropriate.

Stakeholders who have comments about the Proposed Regulations should submit them by the April 6, 2020 deadline.