Medicare Part D

Part D Redesign, MFPs, Plan Changes Will Impact Contracting Strategies

While changes to the Medicare Part D benefit resulting from the Inflation Reduction Act (IRA) are already underway, Part D plans and manufacturers still face a good deal of uncertainty as to how the Medicare landscape is going to shake out. Changes to Medicare Part D plans in 2025 will almost certainly impact a large swath of beneficiaries, as well as manufacturers’ contracting strategies for 2026, said industry experts at a recent webinar hosted by Avalere.

“We are at an interesting moment for Part D,” observed Ethan Hall, associate principal on the client solutions team for Avalere, during an Oct. 30 webinar that he moderated.

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Medicare’s Protected Class Policy Hinders Rebate Negotiation, Study Finds

A Medicare Part D policy forbidding plan sponsors’ formularies from excluding nearly all drugs in six “protected” classes hinders payers’ ability to negotiate prices and may lead to significantly higher costs to the health care system, according to a recent analysis published in Health Affairs. The study’s lead author notes this is the first peer-reviewed trial suggesting Part D plans “can’t negotiate as high of rebates as they might otherwise be able to” for drugs in the protected classes.

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Analyses Paint Mixed Picture of Stand-Alone PDP Costs in 2025

Premiums for many stand-alone Medicare Part D Prescription Drug Plans will go up moderately in 2025, while the number of PDP options for beneficiaries will drop significantly, according to AIS Health’s analysis of the recently released CMS Medicare Advantage and Part D landscape files.

The Inflation Reduction Act, passed in 2022, ushered in a host of policy changes to the Part D benefit that will take effect in 2025: Most notably, Medicare Part D beneficiaries’ out-of-pocket drug costs will be capped at $2,000 annually and Part D plan sponsors will be responsible for 60% (up from 20%) of any costs their enrollees incur beyond that cap. As a result, the Medicare Part D national average monthly bid amount (NAMBA) is projected to increase by $115, nearly 180%, to $179.45 in 2025.

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Early Takes on 2025 Landscape Files Confirm MAOs’ Margin-Chasing Cuts

In its annual release of key premium, benefit and plan information for Medicare Advantage and Part D, CMS on Sept. 27 emphasized stability and robust offerings for 2025, despite repeated warnings from industry trade groups and plans of anticipated benefit reductions in the face of revenue challenges. While emerging analyses tell a slightly different story — that of insurers pursuing higher deductibles and/or maximum out-of-pocket cost amounts to maintain, for example, competitive premiums — industry experts say these early comparisons only tell part of the story, as other yet-to-be released data will convey additional nuances of MA and Part D market changes.

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Directing Patients to M3P, Pfizer Notice Suggests ‘Pulling Back’ of Financial Assistance

Medicare Advantage insurers and their distribution partners are bracing for a busy Annual Election Period, thanks in part to multiple Part D benefit changes resulting from the Inflation Reduction Act. Adding to their concerns about likely market disruption and enrollee confusion is a new drug manufacturer letter that raises operational and financial questions about the interplay between Patient Assistance Programs (PAPs) and the Medicare Payment Prescription Plan (M3P).

In a letter dated Aug. 19, Pfizer Inc. informed Part D beneficiaries using its Pfizer Oncology Together program that they must enroll in the M3P before they can be reconsidered for the PAP. According to the company’s website, Pfizer Oncology Together provides financial assistance with out-of-pocket (OOP) deductible, co-pay, or coinsurance costs for eligible patients who have been prescribed certain Pfizer Oncology oral and injectable medicines.

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News Briefs: Centene Wins New Iowa Medicaid Pact, Loses MA Enrollment Privileges in Missouri

After failing to meet minimum medical loss ratio (MLR) requirements for three years in a row, Centene Corp. is prohibited from enrolling new beneficiaries into its Medicare Advantage Prescription Drug (MA-PD) plan in Missouri, while a UnitedHealthcare (UHC) subsidiary regained enrollment abilities after a similar suspension. According to a Sept. 6 letter posted to CMS’s Parts C and D enforcement actions webpage, Centene’s Wellcare of Missouri Health Insurance Company, Inc. reported MLRs of 78.9%, 77.7% and 84.0% for contract years 2021, 2022 and 2023, respectively. When an MA organization has an MLR for a contract that is below 85.0% for three or more consecutive years, CMS must suspend the MAO’s ability to accept new enrollments in the second succeeding contract year after the third consecutive year of noncompliance, explained CMS. The enrollment freeze will take effect for any coverage beginning Jan. 1, 2025, through Dec. 31, 2025, and the contract will be removed from the Medicare Plan Finder list of available MA-PD plans during the 2025 Annual Election Period that begins on Oct. 15. According to CMS enrollment data for September, Wellcare of Missouri serves 4,254 MA enrollees, including 2,872 with Part D coverage. Meanwhile, UHC’s Care Improvement Plus South Central Insurance Co. was released from an enrollment suspension after reporting an MLR exceeding 85.0% for contract year 2023, according to a separate notice issued on Sept. 6. The UHC plan, which currently serves about 8,600 MA-PD enrollees, will be allowed to enroll beneficiaries during the upcoming AEP.

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Republicans Call Part D Demo an ‘Unchecked Taxpayer-Funded Bailout’

Republican lawmakers in an Aug. 26 letter to the Congressional Budget Office (CBO) criticized the rollout of a demonstration program that is intended to ease Medicare Part D premiums for beneficiaries and help stabilize the market but could cost taxpayers billions of dollars. It is the latest salvo from politicians since CMS announced the Part D Premium Stabilization Demonstration on July 29, the same day it revealed the national average monthly bid amount (NAMBA) would increase by nearly 180% next year.

Debra Devereaux, an executive consultant with Rebellis Group, speculates that some stand-alone Prescription Drug Plans (PDPs) “must have had eye-popping bids” to prompt CMS to launch the program. She suggests that PDPs likely increased their premiums for next year to offset major changes that are part of the Inflation Reduction Act (IRA) and will result in plans shouldering significantly more financial risk. The demonstration program is only for PDPs and does not include Medicare Advantage Prescription Drug (MA-PD) plans.

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Surveys: Medicare, Commercial Payers Already Are Making IRA-Driven Changes

The Inflation Reduction Act (IRA) was a sweeping piece of legislation that impacted multiple industries, but the prescription drug aspects of the law have arguably gotten the most attention, both positive and negative. CMS recently released the eagerly anticipated negotiated prices for the first 10 drugs, which will go into effect on Jan. 1, 2026. In preparation for the law’s potential impact, research from Zitter Insights found that both Medicare and commercial plans already have begun to modify their drug management approach.

Among the pharma provisions of the IRA, which was signed into law by President Joe Biden on Aug. 16, 2022, are requiring Medicare to negotiate the prices of the most expensive Medicare drugs, starting with the top 10 Part D agents; sanctioning companies whose Part B drugs’ prices increase faster than the rate of inflation; and implementing a phased-in Medicare Part D redesign that modifies the percentages different stakeholders are responsible for and caps beneficiaries’ out-of-pocket costs at $2,000 starting next year.

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Payers Eye Rebate Leverage, UM in Response to Medicare-Negotiated Drug Prices

Now that CMS has revealed the prices of the first 10 drugs subject to Medicare price negotiation, all eyes are on how Part D plans will cover those drugs on their formularies in 2026, when the new prices go into effect.

To that end, a recent poll from Zitter Insights offers some clues about how payers and PBMs are thinking about this thorny question.

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Study Puts Price Tag on Medicare Coverage of GLP-1s for Obesity

If Medicare Part D covered GLP-1 drugs for obesity, rather than just Type 2 diabetes, it could increase annual spending by $3.1 billion to $6.1 billion, according to a recent Health Affairs study.

The introduction of GLP-1 medications for treatment of diabetes and obesity has reignited the debate over Medicare’s prohibition on covering weight loss medications. In June, the House Ways & Means Committee advanced legislation that would provide a limited pathway for adults 65 and older to get anti-obesity GLP-1s covered by Medicare. The bill has not yet passed the full House.

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