CMS: To Protect and D-fend

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  • 05/22/2014

Per a report in Inside Health Policy:

CMS Holds Off Changes To Protected Rx Classes, Preferred Pharmacies, Limits On Plan Offerings

CMS kept its promise to put on hold key pieces of its proposed drug and Medicare Advantage proposed rule: the final regulation unveiled Monday does not rescind protected drug classes, does not open preferred pharmacy networks and does not limit the number of plans that insurance companies may offer.

CMS' proposed changes to regulations for Part D and Medicare Advantage plans were controversial on several fronts, and both parties attacked the rule, although sometimes over different provisions. After proposing the rule Jan. 6, CMS received more than 7,500 comments. In an unusual move, CMS Administrator Marilyn Tavenner told Congress in March that the agency would indefinitely put some of the most contentious measures on hold.

The strongest bipartisan opposition was against the agency's proposal to take away the protected status of three drug classes. Lawmakers, patient advocates and others argued that all drugs in those classes must be available because not all of the drugs in those classes work for all patients.

The final rule states that, although some commenters praised CMS for trying to apply criteria for drug categories or classes of clinical concern, no one supported the actual proposed criteria. Conversely, CMS did receive significant opposition to our proposed criteria.

"We are not finalizing any new criteria and will maintain the existing six protected classes," the rule states.

CMS received a lot of opposition to its proposal to open up preferred pharmacy networks, although that opposition came primarily from Republicans, who complained that CMS was opening the door to government interference between plans and pharmacy contracts, and the drug makers and pharmacy benefit managers that negotiate those contracts. Smaller community pharmacies, which usually are left out of preferred pharmacies, lobbied for the measure.

Preferred pharmacy networks provide lower cost sharing to beneficiaries who buy from those preferred pharmacies. The pharmacies agree to lower cost sharing in return for the greater volume of sales they get by offering lower prices. CMS proposed to allow beneficiaries to get the same cost-sharing at nonpreferred pharmacies. CMS thought that would simply give lower cost sharing to more beneficiaries, but others, including congressional Medicare advisers, warned that it would end the very preferred pharmacy networks that CMS was trying to expand upon.

"This lower cost sharing was subject to certain conditions that seemed straightforward to us at the time, but which have proven to need clarification," CMS states in the final rule.

Instead, CMS is exploring restrictions on preferred pharmacy networks in a separate document, called the call letter. Primarily, CMS wants to require that preferred networks reduce drug costs paid by plans in order to prevent Medicare from paying more for what intuitively should reduce Medicare spending.

CMS also is holding off on its proposal to limit the number of plans offered by sponsors of stand-alone drug plans. The final rule makes a case for restricting insurance companies to one basic plan and one enhanced plan per coverage year and for limiting the type of coverage offered in those two plans.

"Nevertheless, the comments have given us reason to conduct further analysis of this issue and continue our close observation of the developments in the Part D market," the regulation states.

However, CMS is following through with the proposed rule's measure to limit parent organizations to one prescription drug plan sponsor contract per region.

What the final does do:

       It requires Part D prescribers to enroll in Medicare. "CMS is requiring that physicians and eligible professionals who prescribe covered Part D drugs be enrolled in Medicare, or have a valid record of opting out of Medicare, in order for their prescriptions to be covered under Part D. Requiring prescribers to enroll in Medicare would help CMS ensure that Part D drugs are only prescribed by qualified individuals," the rule states, adding that it allows extra time, until June 1, 2015, for that requirement to take effect.

       It simplifies MA risk-adjustment data validation (RADV) audit appeals by combining error rate calculation appeals and medical record review-determination appeals. "The streamlined process will reduce administrative burden on both MA plans and CMS," the rules states.

       It lets CMS, its antifraud contractors and other oversight agencies the ability collect information directly from pharmacy benefit managers, pharmacies and other entities that contract or subcontract with Part D sponsors to administer the Medicare prescription drug benefit. This provision, which the HHS inspector general recommended, aims to provide faster access to records for investigations of Part D fraud and abuse.

       It revokes Medicare enrollment from physicians who abuse their prescribing rights.

       It expands incentives for activities that promote improved health, efficient use of health care resources and prevent injuries and illness.

       It allows the release of more privacy-protected Part D data. CMS is releasing to the public more unencrypted, prescriber, plan and pharmacy identifiers contained in prescription drug event records.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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