overview:FY 2019 rulemaking has kicked off with a bang. The final 2019 Medicare Advantage Call Letter and Policy and Technical Changes final rule were released on Monday. Careful with the headline number of 3.4 percent increase in payments as it is based, in part, on increased Medicare FFS payments that ultimately may be reversed when therapy services are removed as a payment factor for Home Health and Skilled Nursing Facilities. Otherwise, both releases continue the Trump administration's themes of lowing drug prices, expanding and encouraging access to Medicare Advantage, limiting abuse of opioid drugs and ending certain anti-competitive practices of Pharmacy Benefit Managers. With the exception of a new policy on how Star Ratings will be calculated for plans that consolidate, it is mostly good news for MA plans and designed to drive penetration into the eligible population as far and as fast as possible. Ignore reports that suggest CMS has abandoned efforts to make PBMs share manufacturer rebates with enrollees. Nothing was proposed and so nothing was finalized. Expect something soon. For Part D sponsors, particularly those that are also PBM's, the pressure is on to reform. |
For all the reports of chaotic management in the Trump administration, HHS and the FDA have been remarkably consistent in the announcement and execution of policy changes. They have made drug prices, opioid abuse, beneficiary access and ending various Medicare shenanigans priorities in speeches and other policy platforms. Now comes the annual rulemaking season where thoughts become actions, starting with the Trump’s favorite reform tool: Medicare Advantage and Part D Prescription Drug Plans.
As we pointed out in February, it is the policy of this administration and this Congress to encourage enrollment in Medicare Advantage plans as fast and as much as possible. This policy goal is being accomplished through Congressional action like the FY 2018 spending deal (discussed in the February note), the Medicare Advantage Call Letter and the Medicare Advantage rule.
Beneficiary Access. The Medicare Advantage Rule for PY 2019 included several provisions designed to make MA plans more desirable to eligible seniors relative to Medicare FFS:
- CMS is expanding the definition of supplemental benefits to include anything used to diagnose, prevent, or treat an illness or injury, compensate for physical impairments, ameliorate the functional/psychological impact of injuries or health conditions, and/or reduce avoidable emergency and healthcare utilization.
- Example: Medicare Advantage plans could help pay for wheelchair ramps and other improvements that could prevent falls and encourage beneficiaries to live at home.
- CMS will permit MA plans to vary benefit design by reducing cost sharing for certain covered benefits, offer supplemental benefits, and lower deductibles for enrollees that meet certain medical criteria, provided similarly situated beneficiaries are treated the same.
- Example:A diabetic beneficiary would get reduced cost-sharing for endocrinologist visits, more frequent foot exams as a supplemental benefit and a lower deductible to encourage utilization.
- CMS will permit MA plans to vary supplemental benefits, in addition to premium and cost-sharing, by county within an MA plan’s larger service area.
- CMS will adopt a flexible standard for setting the Maximum Out of Pocket limits by increasing the voluntary MOOP limit to another percentile level of Medicare FFS beneficiary spending; increase the number of service categories that have higher cost sharing in return for lower MOOP; and implement more than two levels of MOOP and cost-sharing limits.
- CMS eliminates the meaningful difference requirement in PY 2019 that requires MA plan sponsors to only offer plans within the same area that are substantially different based on CMS’s annual evaluation
The Medicare Advantage Call letter also included a few provisions to make being in the Medicare Managed Care business more attractive.
- Payments to Medicare Advantage Plans are expected to increase almost 3.4 percent in PY 2019 versus an expected 1.84 percent projected in the Preliminary Call Letter. It is VERY important to understand that 0.93 percent of the increase is due to expected changes in Medicare FFS payments as a result of the Bipartisan Budget Act of 2018.
- This increased payments to Medicare FFS may not be long lived as there is rulemaking underway to eliminate therapy services as a payment factor for Home Health and Skilled Nursing Facilities. Once those rules are finalized in 2018-2019, the expected FFS will decrease and affect MA payments in subsequent years.
- Payments are being fine tuned to account for high cost patients. For 2019, CMS is finalizing an updated model that incorporates most of the proposed changes to the Part C risk adjustment model, such as adding mental health, substance use disorder, and chronic kidney disease conditions to the risk adjustment model. Although the 21st Century Cures Act required CMS to include the number of conditions for which Medicare Advantage enrollees were being treated, they were unable to finalize regulation for PY 2019.
Opioid Crisis. As Medicare, through the Part D Prescription Drug Plan, is one of the largest sources of opioids in the US, the Trump administration is making changes to Medicare Advantage PDPs to address abuse:
Under the Final Medicare Advantage rule:
- Part D plans can establish case management programs, triggered at 90 morphine milligram equivalent (MME) per day prescription amount, for beneficiaries at risk for prescription drug abuse or misuse
In the PY 2019 Call Letter:
- Initial opioid prescriptions will be for no more than seven days
Drug Prices. The Trump administration has taken the position that the best way to control prices is to ensure the market is working as well as possible. For CMS and the FDA, that means more and better access to generic drugs. The Medicare Advantage rule makes the following changes:
- Plan D sponsors can remove brand name drugs or make changes to their preferred or tiered cost-sharing status when they replace the brand name drugs or add to their formularies newly approved generics rated therapeutically equivalent by the FDA rather than wait until direct notice and formulary change request requirements have been met.
- Sponsors are allowed to make generic substitutions at any time of the year rather than waiting for them to take effect two months after the start of the plan year.
- Establish a lower maximum copay for biosimilar and interchangeable biological products that is equivalent to the lower copay required for generic and preferred multiple source drugs.
Finally, CMS has taken aim at the Pharmacy Benefit Managers (which in some cases are Part D plan sponsors) and certain anti-competitive practices that limit pharmacy’s access to Part D plan networks or discriminate in reimbursement:
- CMS has historically stated that Part D standard terms and conditions could be based on different types of pharmacies and geographical areas so long as all “similarly situated pharmacies offered the same terms. CMS has updated the term “similarly situated” to include any pharmacy that has the capability of complying with standard terms and conditions for a pharmacy type, even if the pharmacy does not exclusively operate as a pharmacy (read: Walmart, Kroger, etc.)
- Retail pharmacy was defined as “any licensed pharmacy that is not a mail order pharmacy” but mail order pharmacy was undefined. CMS has now defined retail pharmacy to mean “any licensed pharmacy that is open to dispense prescription drugs to the walk-in general public from which Part D enrollees could purchase a covered Part D drug without being required to receive medical services from a provider or institution affiliated with that pharmacy.” The term “mail order pharmacy” remains undefined.
These changes are meant to clear up confusion regarding how a Part D plan sponsor could categorize certain pharmacies with operations that fall into multiple lines of business. According to CMS, some Part D sponsors have used their classification system to exclude pharmacies from networks or alter reimbursement.
CMS also solicited comments on the use of accreditation requirements, above and beyond those typically required for licensure, as a barrier for entry for specialty pharmacies. They made no proposals in this regard.
Finally, since CMS made no formal proposal to require manufacturers’ rebates to be shared at the point of sale with beneficiaries, they did not finalize any change. However, they made it clear that they will be taking the issue up in future rulemaking as the White House budget includes such a provision.
There was some bad news for MA plans:
Effective in 2020, instead of assigning the Star Rating that the contract would have earned without regard to whether a consolidation took place, CMS will assign Star Ratings based on enrollment-weighted mean of the measure scored of the surviving and consumed contracts so that ratings reflect the performance of all contracts involved in the consolidation.
Call to discuss. Good news in health care is hard to come by.
