New requirements for Medicare drug plans

New requirements for Medicare drug plans

In a final rule issued May 16, the Centers for Medicare and Medicaid Services (CMS) created new requirements for Medicare Part D and Part C drug plans. They are designed to further the administration’s goal of lowering drug costs through price transparency and competition. 

By 2021, plans will have to adopt Real Time Benefit Tools (RTBT) that will allow providers to identify lower-cost alternative therapies available under the beneficiary’s prescription drug benefit. The RTBTs must be capable of integrating with at least one e-prescribing system or electronic health record.

How will this affect you? RTBTs have the potential to provide physicians with information at the time of prescribing as to:

  • The patient’s out of pocket cost.
  • Whether a less expensive product is available under the patient’s plan.

Many commercial plans already make this type of tool available to providers. It is likely the new Medicare requirement will spur those that don’t to implement RTBTs across their entire line of business.  The administration believes that this will:

  • Generate competition among drug manufacturers.
  • Lower prescription drug costs.
  • Potentially increase medication adherence.

However, it may also add time to medical office visits.

Step Therapy Clarification

CMS is also clarifying and putting into regulations its policies on use of step therapy by Medicare drug plans. CMS already allows Medicare Advantage (MA) plans to use step therapy for Part B and Part D and most commercial plans impose step therapy requirements. Under the new regulations, MA plans seeking to implement a step therapy program for Part B drugs (e.g., biologics such as Xolair) can apply the restrictions only to new administrations of a drug using a one-year look-back period. Patients will not lose coverage or have to jump through hoops for drugs they are taking at the time the step therapy program is introduced. However, if a patient is started on a new drug, step therapy requirements may apply. 

Patients can appeal denials of a Part B drug based on a step therapy program and are entitled to a response within 72 hours or within 24 hours for an expedited request. CMS estimates that step therapy will allow MA plans to reduce their Part B drug costs by about 1.6%.  At the same time, the expedited appeal rights are intended to ensure that patients are not denied access to drugs they truly need.  Nevertheless, CMS has created a process in which plans are able to undercut or second guess a physician’s judgment.

The Advocacy Council is advocating legislation that would require plans to consider the patient’s medical history and the physician’s professional judgment when implementing step therapy programs. We recently sent a letter supporting legislation that would impose these requirements on all Employment Retirement Income Security Act plans.