Medicare Advantage and Part D Proposed Rule for Contract Year 2015 Prepared for Healthcare Leadership Council. January 2014 Avalere Health LLC 1

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1 Medicare Advantage and Part D Proposed Rule for Contract Year 2015 Prepared for Healthcare Leadership Council January 2014 Avalere Health LLC 1

2 Overview On January 6, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule seeking to implement key policy changes to the Medicare Advantage (MA) and Medicare Part D programs for contract year (CY) The rule proposes several significant policy changes to program requirements that will affect all industry stakeholders: o Health plans and other Part D plan sponsors o Part D drug manufacturers o Pharmacies o Providers who prescribe Part D drugs Additionally, proposed changes to Part D data access have impacts on all stakeholders. Comments on the proposed rule are due March 7. 2

3 Increased CMS Role in Plan Oversight and Market Participation 3

4 CMS Proposes Tighter Requirements for Sponsor Participation Meaningful Differences Policy o For CY 2016, would limit sponsors to one basic and one enhanced plan per region. o May require enhanced options to have higher premiums than the sponsor s basic offering. New Contracts Following Contract Termination o Would restrict Medicare Advantage organizations (MAOs) from offering any new contracts or expanding the service areas of any other contracts for two years after termination. New Sponsor Applicant Requirements o Would require any entity seeking to contract as a Part D plan sponsor to have one year of experience serving as a Part D plan sponsor or performing key Part D functions for another sponsor either by the sponsor itself or one of its contracted first-tier, downstream, and related entities (FDRs). Quality Requirements o Would require in plan contracts that plans achieve scores of 3 or higher on CMS performance standards for patient outcomes, intermediate outcomes, process, patient experience, and patient access to care. Independent Audits o Would require MAOs and Part D sponsors to hire independent auditors in order to increase the frequency of audits to once every three years. 4

5 Key Dates for Medicare Part D Plans in the 2014 Plan Year May Prove Challenging after Delayed Rule Draft CY 2015 combined 45-day Advance Notice and Call Letter Released* Final CY 2015 Combined Announcement of MA and Part D Payment Policies and Call Letter released* CY 2015 Plan Bids Due To CMS CY 2015 Marketing Materials Due CY 2015 Plan Marketing Begins CY 2015 Plan Finder Tool Launches Annual Election Period for CY 2015 Ends CY 2015 Plan Applications Due to CMS CY 2015 Plan Formularies Due To CMS Summer Formulary Update Window** CMS awards CY 2015 contracts to plans Annual Election Period for CY 2015 Begins CY 2015 Plan Year Begins Feb May 2014 July 2014 Sept Dec. 7, 2014 Feb Apr June 2014 Oct Oct. 15, 2014 Jan. 1, 2015 Expected Confirmed CY - Calendar Year CMS - Centers for Medicare and Medicaid Services MA - Medicare Advantage Assumptions: All dates based on 2013 releases for the 2014 Plan Year; timeline assumes no legislative changes. *Combined Call Letter includes formulary, transition, enrollment and marketing guidance. **Additional limitations to summer formulary update window: 1) only drugs new to summer formulary reference file (FRF) can be added to approved formularies 2) negative changes will be permitted to brand drugs only if equivalent generic is added to summer FRF 5

6 Changes to Part D Drug Coverage Policy and Medication Therapy Management 6

7 Moving Forward, the Protected Class Policy Would Apply Only to Classes Meeting Two New Criteria CMS proposes two criteria to identify drug classes of clinical concern: 1. A typical beneficiary 1 who is initiating therapy must administer a drug within the category or class in less than 7 days or failure to do so will lead to hospitalization, incapacity, disability or death. 2. Other CMS formulary requirements are not sufficient to ensure the access to an appropriate range of therapies, either due to the diversity of disease or condition manifestations or the associated specificity or variability of drug therapies necessary to treat such manifestations. After applying the new two-prong test to the universe of Part D drugs, CMS: o Proposed to eliminate the requirements for plans to cover all products in the antidepressant and immunosuppressant classes for CY 2015 o Is considering removing the requirement for the antipsychotic class for CY 2016 o Would maintain the requirement to cover all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes 1. CMS proposes to define a typical beneficiary as an individual who has the average clinical presentation of a given disease or condition. Source: 42 CFR Parts 409, 417, 422, et al. Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs; Proposed Rule. 7

8 Expansion of MTM Eligibility Criteria MORE THAN HALF OF PART D BENEFICIARIES WOULD BE ELIGIBLE FOR MTM SERVICES Number of Chronic Conditions Current Policy Plan sets threshold of 2 or 3 May target specific conditions but must include 5 of 9 core chronic diseases: Hypertension Congestive heart failure Diabetes Dyslipidemia Respiratory disease Bone disease arthritis Mental health Alzheimer s disease End stage renal disease Proposed 2 or more, including a core chronic condition Cardiovascular disease Diabetes Dyslipidemia Respiratory disease Bone disease arthritis Mental health Alzheimer s disease End stage renal disease Number of Drugs Plan sets threshold between 2 and 8 At least 2 Minimum Annual Drug Costs Estimated Eligible Beneficiaries $3,144 $ million 18 million 8

9 Enhanced Scrutiny of Pharmacy Contracting and Operations 9

10 Rule Includes Several Provisions Regulating Part D Pharmacies Interpreting Non-Interference Provision o CMS may not be a party to, or arbitrate at a later date, negotiations between manufacturers and pharmacies, or between drug manufacturers and Part D sponsors, except as necessary to enforce applicable CMS requirements. o This prohibition does not apply to negotiations between Part D sponsors and pharmacies. Any Willing Pharmacy Standard for Preferred Cost-Sharing Pharmacies o Would require sponsors to include any pharmacy willing to meet the terms of the preferred pricing arrangement in their preferred networks. o Would require that negotiated prices for preferred pharmacy networks not exceed prices at non-preferred pharmacies. Pharmacy Price Concessions to Factor into Negotiated Price o Would include in the definition of negotiated price all price concessions sponsors receive from network pharmacies, including administrative fees. Mail-Order Timeframes o Would require mail order pharmacies to fill 99 percent of mail order prescriptions within three business days (from receipt of prescription to order shipment), or five business days for prescriptions that require additional intervention (e.g., illegible orders, third party rejection, and coordinating with multiple providers as part of drug utilization management). 10

11 Provider Requirements for Participating in Part D 11

12 New Policies Will Result in New CMS and Plan Sponsor Scrutiny of Prescribers of Part D Drugs Prescriber Enrollment Requirements o ACA requires that prescriptions covered by Part D must be prescribed by a physician or an eligible professional. o Rule would require Part D sponsors to deny claims for Part D drugs that do not include a valid and active physician or eligible professional national provider identifier (NPI). o Part D sponsors must also deny claims for Part D drugs if the physician or eligible professional is not either enrolled in Medicare in an approved status or has a valid opt-out affidavit on file with a Part A/B Medicare Administrative Contractor (MAC). Improper Prescribing Practices o Would provide CMS authority to deny or revoke a provider s Medicare enrollment in any of the following cases: The provider s Drug Enforcement Agency (DEA) certificate is suspended or revoked. His/her ability to prescribe has been suspended. He/she has a pattern of prescribing Part D drugs in an abusive manner. He/she fails to meet Medicare requirements. 12

13 Expanded Access to Part D Data 13

14 Rule Promotes Expanded Access to Utilization Data for the Part D Program Proposed Data Access Rules o Would allow CMS to release unencrypted prescriber, pharmacy, and plan identifier information included in PDE records to all categories of requestors Categories include other HHS entities, Congressional oversight agencies, non-hhs executive branch agencies, states, and external entities o Would maintain current policy to not release beneficiary identifiable data, drug cost data of Part D sponsors, and other data perceived as commercially sensitive for Part D sponsors (e.g., rebate and price concessions). o Requests comment on current restrictions on the release of PDE data for commercial purposes, unless a commercial firm funds a researcher who is free to publish the results regardless of findings 14

15 Conclusion 15

16 The Rule Proposes Significant Changes Affecting All Aspects of the Healthcare Industry Health Plans Limitations on number of plans Restrictions on new sponsors and those with terminated contracts CMS oversight of pharmacy contracting and concessions Manufacturers Narrowing of protected classes Expansion of Medication Therapy Management eligibility Downstream impacts of plan/pharmacy policies Pharmacies Any willing pharmacy requirement for preferred cost sharing CMS oversight of contracts with Part D sponsors Inclusion of all concessions in negotiated prices Providers Sponsor requirement to ensure Medicare enrollment for Part D prescribers Increased CMS authority to revoke Medicare enrollment for improper prescribing practices 16

17 For More Information Contact Us: Matt Eyles Executive Vice President Lisa Murphy Director 17

MEDICARE PART D THE BASICS

MEDICARE PART D THE BASICS THE BASICS Participation is voluntary. The income level and assets of beneficiaries determine the level of prescription assistance they will receive. Beneficiaries with incomes over 150% of the Federal