Healthcare Business News

Drug, insurer groups battle Medicare Part D cost-control measure

By Virgil Dickson
Posted: February 26, 2014 - 5:45 pm ET

Drug industry and insurance groups are lobbying hard to scuttle a proposed CMS rule aimed at controlling costs, increasing competition and curbing fraud in the Medicare Part D prescription drug program.

At the same time, community pharmacists around the country expressed strong support for the provision that would give independent pharmacies the opportunity to participate in Part D plans as preferred providers if they accept the drug plan's contract. And some consumer advocates backed the provision that would limit the number of Part D plans sold in each market.

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The Part D rule has become an election issue, with Republicans accusing the Obama administration of endangering the popular Part D program.

The proposed rule, which CMS projected would save $1.3 billion over five years, offers an array of changes to the senior drug-benefit program. They include allowing no more than two plans to be sold in each market to ensure more meaningful plan choices; ending coverage for drugs for certain illnesses; and changing the way in which pharmacies bid to be included in plans. The public comment period for the rule ends March 7.

But the Pharmaceutical Care Management Association (PCMA), which represents pharmacy-benefit managers, said the proposed rule should be withdrawn because it oversteps the federal agency's authority to make changes to the program and will increase costs for both seniors and the government.

The PCMA said the 2003 Medicare Prescription Drug, Improvement and Modernization Act establishing the Part D program includes a “noninterference clause” that blocks the CMS from establishing a list of specific drugs that Part D plans must cover or exclude. It also prohibits the government from interfering in the negotiations between Part D plans and pharmaceutical manufacturers and pharmacies, including setting a price structure.

Mark Merritt, the PCMA's president and CEO, said the rule also would increase costs to the federal government by $1.2 billion to $1.6 billion in 2015, according to a Milliman analysis commissioned by PCMA. Milliman based its findings on a survey of Part D plans and pharmacy-benefit managers that provide coverage to more than two-thirds of the 18.4 million Medicare Part D beneficiaries.

Other findings are that approximately 6.9 million Medicare Part D beneficiaries who are not low income would experience cost-sharing increases in 2015 if the rule goes into effect, and up to 50% of plan choices may be eliminated or materially changed during 2015 and 2016 as a result of the proposed rule.

The Milliman report was released as the House Energy and Commerce Committee's Health Subcommittee held a hearing Wednesday to discuss the proposed rule.

At the hearing, Joe Baker, president of the patient advocacy group Medicare Rights Center, expressed support for several of the proposed provisions, including those that ensured a meaningful difference between Part D plans and increased drug-pricing transparency. “Most people with Medicare fail to re-evaluate their coverage options on an annual basis, largely because there are too many options and too many variables to compare, even when they can save money or increase their coverage by switching plans,” Baker said.

Meanwhile, dozens of community pharmacies, the National Community Pharmacists Association and the National Rural Health Association sent a letter to CMS Administrator Marilyn Tavenner supporting provisions in the proposed rule. The letter cited statements from congressional Republicans saying that provisions of the proposed rule would make it easier for Medicare beneficiaries in small towns and rural areas to obtain drugs under the Part D program through community pharmacists.

The CMS released the proposed rule to control expected higher costs to the Part D program from new biologic therapies and rising subsidies for insurers and lower-income beneficiaries, CMS official Jonathan Blum told the House panel Wednesday. The agency also has said it wanted to address anti-competitive tactics that have contributed to inconsistencies in bidding and payments for Part D plans.

Fraud and abuse have also been a continuous concern. Improper payments made through Medicare Part D increased from $1.6 billion in 2012 to $2.1 billion in 2013, up about 30%.

The CMS is suggesting that each payer offer no more than two Part D plans in the same service area, saying the limit would give consumers “meaningful differences” in coverage options. The proposed rule would also prohibit Medicare Advantage plans from offering coverage options that replace plans the CMS previously required the carrier to terminate or consolidate due to low enrollment.

The rule also sets a higher standard for covering “all or substantially all” drug offerings for a specific disease group. This so-called “protected class” of drugs includes antineoplastics, anticonvulsants, antiretrovirals, antipsychotics, antidepressants and immunosuppressants.

The proposal would limit such coverage to drugs prescribed if the person would be hospitalized, severely incapacitated or die if they don't get the drug within seven days. With that standard in mind, the CMS would no longer require all drugs from the antidepressant and immunosuppressant drug classes to be covered. The CMS is also considering taking away the status from antipsychotics pending further study.

Independent pharmacies are happy with the proposal to stop mail-order pharmacies from charging lower copayments than retail pharmacies. Specifically, the CMS is proposing that one-month supplies filled by mail-order pharmacies cannot have cost-sharing lower than a comparable one-month supply filled at retail outlets.

In addition to saving money, the rule is also looking to curb prescription drug abuse. The CMS is proposing to exclude providers from Medicare if the government determines a pattern of abusive prescribing of Part D drugs. The agency also wants to prohibit doctors who aren't enrolled in Medicare from prescribing drugs that are reimbursed by Part D. The rule would put the onus on payers to ensure that a prescriber has the authority to prescribe under the program.

Follow Virgil Dickson on Twitter: @MHVDickson

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