Keeping you updated on the latest Medicare and Part D news

CMS Releases Policy Proposals for Medicare Part D


CMS recently released a variety of policy changes for the Part D program titled Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs. The proposal will be published on January 10, 2014 and open for comments for 60 days. According to CMS, the proposed changes would yield $1.3 billion in savings between 2015 and 2019.

Notable components of the proposal include:

-changing the criteria for protected drug classes.

  • Sponsors are currently required to cover all drug products within the protected classes, but CMS hopes to identify more cost- efficient formulary requirements.

-greater regulation of preferred pharmacy networks.

  • In 2014, more than 70% of Part D plans use preferred pharmacy networks, up from around 40% in 2013. This has been cause for concern for CMS since an analysis of the top 25 brand and top 25 generic drugs showed that some preferred pharmacy networks had higher costs. CMS wants to ensure that preferred pharmacy networks produce cost savings, and that savings are passed on to beneficiaries.

greater CMS oversight of physicians and non-physician practitioners

  • The proposal would require all physicians and non-physician practitioners who write prescriptions covered by Part D to be enrolled in Medicare. Furthermore, CMS would have the authority to exclude practitioners with improper prescribing habits or a suspended/revoked license. Starting in 2015, sponsors must deny claims, including at the point of sale, which do not have an active and valid National Provider Identifier (NPI).

including U.S. citizenship or lawful presence as a requirement to enroll in Part D plans

-increased data sharing and program integrity investigation

  • CMS proposed the ability to release unencrypted prescriber identifiers and pharmacy identifiers to a broader audience of requestors, representing a change in current regulations governing the release of Prescription Drug Event (PDE) data. The goal is to encourage external researchers to investigate areas of program integrity and quality.
  • CMS also wants the authority to directly request information from all relevant entities stemming from the sponsor, as well as remove the current provision allowing sponsors to choose how requested information will be provided to CMS. Currently, CMS’ fraud contractors cannot request information such as a beneficiary’s medical records directly from practitioners and hospitals; they can only request data through the sponsors, who act as a middleman. In publications such as ProPublica, the Part D program has undergone severe criticism for a lack of fraud controls (see previous blog post). The current proposal would increase CMS’ ability to investigate fraud and improper prescribing practices, as well as take action against prescribers.

-limiting parent organizations to one Prescription Drug Plan (PDP) sponsor contract per PDP region, and limiting stand-alone PDP sponsors to two plans per PDP region

  • The proposed limitations aim to encourage true competition between PDP contracts, increase efficiency, and preserve the integrity of performance ratings. When the same parent organization has multiple PDP contracts within the same region, CMS believes that competition is compromised and that duplicate contracts do not provide better options than could be offered by a single contract. Furthermore, parent organizations can move lower performing plans into separate contracts to improve the ratings of their better performing contracts, which undermines the accuracy of performance ratings. 
  • CMS also proposed changing the bidding process to accept only one basic and one enhanced bid per stand-alone PDP sponsor by 2016. Generally, the distinguishing feature between plans is coverage in the coverage gap (a.k.a. the donut hole). As the coverage gap closes, CMS believes that the meaningful differences between plan options will decrease and that two plan options, one basic and one enhanced, are sufficient to address beneficiary needs. Currently, many sponsors submit three bids per region each service year, one basic and two enhanced, which is not only inefficient but also a source of risk segmentation. If this limitation took effect in CY2013, it would have reduced the total number of stand alone plans by 13 percent, but only impacted 2 percent of overall stand-alone PDP enrollment. 

The proposal can be accessed here. Extended analysis is expected once the proposal is formally published and open for comments.


2 thoughts on “CMS Releases Policy Proposals for Medicare Part D

  1. Pingback: Growing Opposition to CMS’ Proposed Changes to Part D | AcuPartD

  2. Pingback: Update: Controversial Proposed Changes to Medicare Part D Withdrawn | AcuPartD

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