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What to Watch for in MA and Part D Contracting for the 2022 Plan Year

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Summary

Recent regulatory action released in the final days of the Trump administration related to Medicare Advantage (MA) and Part D could significantly impact plan and manufacturer calendar year (CY) 2022 contracting strategies and stakeholder advocacy priorities.

In the final days of the Trump administration, the Centers for Medicare & Medicaid Services (CMS) finalized several changes to the MA and Part D programs for the 2022 plan year with significant implications for stakeholders. Plans will need to incorporate these changes into their 2022 bids, which are due to the CMS by June 7. These regulatory actions include:

Specialty Tier Changes

On January 15, the CMS finalized the CY 2022 MA and Part D rule, which includes a provision that will allow Part D plans to implement a second, preferred specialty tier with lower cost sharing beginning in CY 2022.1 The current maximum cost sharing threshold for the specialty tier—which ranges from 25% to 33% depending on a plan’s benefit design—will still apply to the higher, non-preferred specialty tier. The preferred specialty tier would need to offer lower cost sharing than the plan’s non-preferred specialty tier.

This change may impact out-of-pocket costs for enrollees in plans with 2 specialty tiers. Specifically, lowering cost sharing for some preferred specialty drugs may require plans to increase cost sharing on other non-specialty tiers in order to meet actuarial equivalence requirements.

The CMS also finalized a new methodology for updating the specialty tier threshold. This change will increase the CY 2022 specialty tier threshold from $670 to $830, thereby impacting which drugs plans can place on either specialty tier starting in 2022.

CY 2022 Center for Medicare and Medicaid Innovation (CMMI) Demonstrations

On January 14 and 19, the CMMI released the CY 2022 Request for Applications (RFAs) for the Part D Senior Savings Model and the Part D Modernization Model, respectively. Although the CY 2022 RFA for the Part D Senior Savings Model largely maintains the 2021 model parameters, the CMMI included significant changes and new formulary flexibilities for the CY 2022 Part D Modernization Model.

The Part D Modernization Model, which began in January 2020, incentivizes Part D plan sponsors to take on 2-sided risk for spending in the catastrophic phase while giving plans additional formulary flexibilities to encourage use of lower-cost therapies. Beginning in CY 2022, model participants will be able to waive 2 significant Part D program requirements: mandatory coverage of “all or substantially all” drugs in the 6 protected classes and inclusion of at least 2 drugs per class. The CMMI, however, postponed waiving mandatory coverage of antiretrovirals until 2023. These significant formulary flexibilities could have considerable implications for beneficiaries taking drugs in the 6 protected classes.

Move to Point-of-Sale (POS) Discounts

Along with these recent regulatory actions, stakeholders will need to consider implementation of the Office of Inspector General final Anti-Kickback Statute (AKS) rebate rule released in November 2020. While implementation of the rule was delayed until 2023 due to stakeholder legal action, the Biden administration will need to decide how to move forward with the lawsuit by April. This follows an announcement by the Biden administration on January 30 to delay implementation of certain parts of the rule by 60 days to give the administration more time to review the rule.

Replacing current manufacturer rebates with upfront discounts passed directly to beneficiaries at the POS will have significant impacts on formulary negotiations and interact with other policies such as the Part D Senior Savings Model. The CMS will need to take many steps to implement the rule, including consideration of issues related to the definition of negotiated price, plan bid guidance, and requirements for POS chargeback payments.

Future Outlook

On January 20, the Biden administration released a memo directing executive departments and agencies to review any regulations that have not yet taken effect and to consider re-opening a 30-day public comment period. This may provide stakeholders an additional opportunity to engage with the new administration on these policy changes. However, there is uncertainty about how the Biden administration may consider CMMI demonstrations that are already in place.

As plans and manufacturers have already started negotiating formularies for the 2022 plan year, the Biden administration will need to quickly review these recent regulatory actions and make key decisions around implementation ahead of the June 7 bid deadline. Additionally, the Biden administration will need to decide whether to move forward with the AKS final rebate rule for the 2023 plan year by April. Other Part D reforms, including Part D benefit redesign and Part D inflation rebates, may be considered in Congress in 2021. With the potential for significant Part D reforms to be implemented for 2022 and future plan years, stakeholders should also consider implications of these changes—including the potential interaction effects with current policies and future Part D reforms—on contracting strategies and advocacy priorities.

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Notes

  1. Currently, Part D plans are only permitted to have 1 specialty tier.
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