MA and Part D Proposed Rule Increases Plan Flexibility, Reduces Regulatory Burden

The Centers for Medicare & Medicaid Services (CMS) recently released the highly anticipated Medicare Advantage (MA) and Prescription Drug Benefit Program (Part D) Proposed Rule for 2019. A big focus of the proposed regulation included increasing plan flexibility and reducing regulatory burden. Comments on the proposed rule are due to CMS by January 16, 2018.

Increase of Plan Flexibility

Notably, CMS proposed to remove meaningful difference requirements for MA plans offered in the same county. In a policy reversal, CMS stated it does not believe eliminating this requirement would increase similar plan options significantly or create confusion with beneficiary decision-making.

In another policy shift, CMS determined it has authority to allow for additional benefit and cost-sharing flexibility for certain beneficiaries with special medical needs. In previous years, CMS held that it did not have authority to allow MA plans to offer reduced cost-sharing for certain benefits. With this proposal, CMS aims to allow MA organizations to offer more tailored plan options and benefits with lower cost-sharing and deductibles for enrollees with specific medical criteria. CMS seeks comment on implementation of this proposal and will provide more detail in the 2019 Call Letter.

Reducing Regulatory Burden

The proposed rule focuses on the recent paperwork reduction initiative CMS has announced. CMS proposes to allow electronic delivery of the Evidence of Coverage, saving $51 million in the process. CMS also proposes some significant changes to the definition of marketing by narrowing the scope of what is defined as marketing. CMS proposes a new category of “communications” that would be subject to less oversight.

CMS also proposes a significant reduction in the burden of reporting Medical Loss Ratios (MLRs) by mandating that MA and Part D sponsors only report the MLR percentage and amount of remittance owed to CMS. In addition, in a big win to the industry, CMS proposes to allow fraud reduction activities to be included in the calculation of the MLR.

The proposed rule also aims to bring more transparency to the Star Ratings program. In large part, this proposal codifies the Star Ratings program as it currently operates and increases program stability. However, Melissa Smith, Gorman Health Group’s (GHG’s) Vice President of Stars & Quality Innovations, notes, “CMS has signaled an intent to evolve the program, specifically by requesting feedback on how well the existing Star Ratings measures create meaningful quality improvement incentives and differentiate plans based on quality. Plans should seize the opportunity to provide feedback to CMS on the numerous proposals under consideration, including improving the focus on health outcomes, changing the assignment of ratings during contract consolidation, collecting and scoring measures at the plan level versus the contract level, selecting some measures for reporting only at the parent level, and scaling reductions to the Star Rating for appeals measures when data issues are identified.”

A Few Part D Callouts

In a highly technical framework, CMS proposes to build upon its current opioid abuse work by allowing Part D sponsors to implement a drug management program that limits “at risk” beneficiaries’ access to controlled substances determined to be “frequently abused drugs”. At-risk beneficiaries would be identified through the existing Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS). Along with this new policy, CMS also proposes to limit the availability with the Special Enrollment Period (SEP) for dually or other Low Income Subsidy (LIS)-eligible beneficiaries who are identified as at-risk beneficiaries.

CMS is proposing to revise existing policy related to tiering exceptions, including the permissible limitations Part D plan sponsors may apply to tiering exception requests. Specifically, CMS is proposing to eliminate the provision allowing plans to exclude a dedicated generic tier from the tiering exceptions process and establish a framework based on the type of drug (brand, generic, biological product) requested and the cost-sharing of applicable alternative drugs.

CMS is also proposing to add a provision that would clarify Part D rules and CMS expectations regarding statutorily required Any Willing Pharmacy provisions and proposes to add a clarifying definition of mail-order pharmacy and revise the definition of retail pharmacy.

The regulation also includes a provision to treat follow-on biological products as generics for LIS Cost Sharing and Non-LIS Catastrophic Cost Sharing. “Plan sponsors would be impacted by this change classifying biosimilar drugs as generics for the purposes of calculating cost-sharing for LIS members and during the catastrophic phase of non-LIS members. Members would pay the generic cost share for a biosimilar,” notes Wayne Miller, GHG’s Senior Director of Pharmacy & Clinical Services.

CMS also proposes expedited submissions of certain generics and other mid-year formulary changes. The proposed provisions would provide more formulary flexibility, for instance, by permitting Part D sponsors to immediately substitute newly released equivalent generics for brand name drugs at the same or lower cost-sharing if they meet revised requirements, including generally advising enrollees beforehand that such changes can occur without a specific advance notice and later providing information to affected enrollees about any specific generic substitutions that occur.

Finally, the proposed rule includes a Request for Information soliciting comment on potential policy approaches for applying some manufacturer rebates and all pharmacy price concessions to the price of a drug at the point of sale. Part D plans would be required to recognize the value of manufacturer rebates and pharmacy payments in retail prescription prices. These amounts are two key components of Direct and Indirect Remuneration (DIR) that are currently paid to plans. CMS is asking for feedback for future rulemaking but did not propose any specific changes. Any program modifications would not occur until at least 2019 or later.

This blog is just a highlight of a major regulation, one that we have not seen in years. For more information regarding the impact on your organization, contact us today.




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