CMS Finalizes Modified Medicare Advantage and Part D Changes

Summary

On May 16, the Centers for Medicare & Medicaid Services (CMS) released its final rule, Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses.

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In its proposed rule released in November 2018, the agency outlined a number of exceptions to the coverage and utilization management requirements for the 6 protected drug classes; however, CMS did not finalize these changes as proposed.

In the proposed rule, CMS outlines policies that would:

Allow plans to exclude coverage for protected class drugs that have Wholesale Acquisition Cost increases beyond the rate of inflation and to exclude new formulations of existing protected class products
Permit utilization management (UM) for individuals on established therapies and extend these UM permissions to HIV drugs

While these proposals would have represented a significant shift in Medicare coverage policy for protected class products, CMS finalized only a portion of this proposal, codifying current policy that permits plans to apply UM for protected class drugs (with the exception of antiretroviral drugs) for new starts only.

CMS also finalized previous guidance that allows MA plans to utilize step therapy for Part B covered drugs, including specific processes related to beneficiary appeals. Additionally, CMS will require Part D plan sponsors to:

Implement an electronic real-time benefit tool in 2021 that would enable prescribers and patients to make more informed choices at the point of prescribing
Include information on increases in the negotiated price of a drug and on lower-cost therapeutic alternatives in the Part D Explanation of Benefits

What’s Next?

The final rule indicates that CMS will continue to prioritize policies that increase plan flexibility while maintaining beneficiary access and protections. The finalized changes align with other recent administrative actions, including the guidance from August 2018 that will allow MA plans to implement step therapy for Part B drugs. With this regulation, plan sponsors may be more likely to leverage the additional flexibilities to manage utilization of Part B and Part D drugs.

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