CMS Seeks to Pass Part D Price Reductions to Beneficiaries

CMS proposed rulemaking Thursday that would pass pharmaceutical price concessions to beneficiaries in Medicare Part D plans and make the medical loss ratio in Medicare Advantage plans more robust.

CMS proposed a draft of rules Thursday aimed at transparency in Medicare Advantage (MA), including improvements for beneficiaries who are dual eligible, and changes to Part D, including passing any price concessions received from pharmaceutical firms to beneficiaries at the pharmacy counter.

“We are dedicated to ensuring older Americans and those with disabilities who are served by the Medicare program have access to quality, affordable health care, including prescription drugs and therapies,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “Today’s proposed actions follow our guiding principles by improving health equity and enhancing access to prescription medications.”

In a fact sheet, CMS wants Part D plans that have agreements with certain pharmacies, where they pay less for drugs if metrics are not met, to share the savings with beneficiaries by applying those savings to the negotiated price of the drug.

The agency also proposes redefining the negotiated price as the lowest admissible payment to a pharmacy, starting January 1, 2023.

In the proposed rule, CMS said beneficiary Plan D costs would be reduced by 2%, or $21.3 billion over 10 years. However, the plan would cost the government $40 billion during that time due to increases in direct subsidy and low-income premium subsidy payments, representing a 3% increase. Drug makers would save about $14.6 billion, CMS said.

CMS said the move would “reduce beneficiaries’ Medicare Part D out-of-pocket costs and improve price transparency and market competition in the Part D program.”

For beneficiaries who qualify for both Medicare and Medicaid, CMS is looking to improve the information they receive in an effort aimed at health equity and reducing health disparities.

The proposed rule would require that MA organizations with Dual Eligible Special Needs Plans (D-SNPs) establish, maintain, and consult with 1 or more enrollee advisory committees to include the voices of these beneficiaries, who tend to be low income and have more chronic illnesses. The proposal would streamline the grievance and appeals processes in certain D-SNPs, simplify information about accessing services, and change MA cost-sharing aimed at improving payments to providers who serve this population.

Beneficiaries would have to be asked about their barriers to accessing care through standardized questions in required health risk assessments on housing instability, food insecurity, and transportation. CMS would boost oversight of third-party marketing organizations that act, directly or indirectly, on behalf of MA organizations and Part D sponsors by requiring free translation services.

In addition, applications for new or expanded MA plans must show they have a sufficient network of contracted providers. If previous performance was poor, MA plans would not be able to expand.

Another part of the rule would increase what MA and Part D must report in their medical loss ratio (MLR). The MLR is the portion of premiums spent on medical care; currently, plans are required to meet an MLR of 85%.

The proposal would require the reporting of the underlying cost and revenue information needed to calculate and verify the MLR percentage and remittance amount, which was the case from 2014 to 2017.

In addition, if the rule is adopted, plans would have to include the amounts spent on providing supplemental benefits—dental, vision, hearing, transportation, and meals—which are not provided in traditional fee-for-service Medicare.