Medicare Part D

Medicare-Negotiated Drugs May Not Get Favorable Coverage In Part D: Will CMS Intervene?

Drugs in the Medicare price negotiation process will be at a disadvantage in Part D plans because their lack of manufacturer rebates and discounts will mean lower profits for plans and more pressure on premiums relative to competitors.

The realization is more dreary news for products that end up in the crosshairs of the Inflation Reduction Act (IRA) pricing process, even though the law requires Part D plans to cover negotiated drugs. There is no requirement that plans put those products on a preferred formulary tier, nor are there limits on utilization management tools like prior authorization or step therapy that plans can impose.

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© 2024 MMIT

ACHP: Final Rule Checks ‘Untethered’ Agent, Broker Fees Impacting Competition

After pushing for new limits on broker compensation and other changes to ensure seniors are guided to Medicare Advantage and Part D plans that best meet their needs, the Alliance of Community Health Plans (ACHP) on April 4 celebrated a victory with the release of CMS’s final rule making policy and technical changes for the 2025 plan year. ACHP, which represents provider-aligned, not-for-profit health plans, had spelled out its hopes for these policies in its broader “MA for Tomorrow” framework and provided Senate testimony on the impact of excessive “add-on” broker fees paid by larger plans. After CMS issued its final rule containing new marketing-related policies, AIS Health, a division of MMIT, spoke with ACHP’s executive vice president of public policy, Dan Jones, to learn more about the group’s position.

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Finalized Broker Pay Cap Appears to Exclude FMOs, But Impact Remains Unclear

Building on a sweeping set of marketing-related provisions that went into effect this year, CMS’s recently finalized 2025 Medicare Advantage and Part D rule put new restraints on agent and broker compensation, among other things. The provisions advance the Biden administration’s ongoing efforts to shield consumers from misleading marketing, but with more of a focus on activities performed by independent agents and brokers rather than the broader third-party marketing organization (TPMO) industry that was targeted in previous rulemaking. Industry experts tell AIS Health, a division of MMIT, that the finalized provisions are still open to interpretation when it comes to the role of one type of TPMO — field marketing organizations (FMO) — which often conduct lead generating and advertising on behalf of plans.

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With Less Funding, MAOs Seek Creative Tradeoffs to Preserve Benefits

As Medicare Advantage insurers face revenue headwinds driven by changes to risk adjustment, Star Ratings and benchmark rates, one overarching question at recent conferences and webinars has been, how will MA plans do more with less? Medicare beneficiaries in recent years have flocked to MA largely because of rich benefit offerings they can’t get in fee-for-service Medicare, and they have grown accustomed to items like comprehensive dental, flex cards and fitness benefits. But as the June 3 bid deadline approaches, insurers are considering what benefits they may have to tweak and how they’ll market those benefits to consumers for 2025.

During an April 3 webinar cohosted by Deft Research and Rebellis Group, Deft Vice President of Client Services Rob Lourenço said the market is already showing signs of revenue changes trickling down to the consumer. In its latest Medicare Shopping and Switching Study, Deft observed a slight “pullback in certain benefits” and at a high level saw more removals of benefits than additions this year. Comparing plans that were offered in both 2023 and 2024, Deft saw that routine eye exam coverage remained stable, while 4% of plans removed eyewear coverage and 1% added the benefit, resulting in a net decline of -3% for eyewear access.

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Advocates’ Frustration Mounts Amid CMS Inaction on Copay Accumulators

Although a newly finalized health insurance regulation clocks in at 748 pages, it is missing something patient advocates have been eagerly hoping to see: language stating CMS will enforce a court ruling regarding the use of copay accumulator programs. Due to that omission, a patient advocacy group says it is once again exploring its legal options to curtail the practice in which payers prevent drug manufacturer coupons from applying toward patients’ out-of-pocket cost obligations.

Patients and advocacy groups for years have filed official comments on the annual Notice of Benefit and Payment Parameters (NBPP), urging federal officials to curtail the use of copay accumulator programs, according to Carl Schmid, executive director of the HIV+Hepatitis Policy Institute. “And every year, they’ve completely ignored those comments,” he tells AIS Health, a division of MMIT.

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Part D Formularies Get More Restrictive, but MA-PDs Beat PDPs on Access

Medicare Part D formularies are becoming more restrictive over time, asserts new research published in the March issue of Health Affairs. Studying Medicare administrative data that included Part D claims and plan formulary characteristics, researchers from the University of Southern California and Blaylock Health Economics found that utilization management tactics such as prior authorization, step therapy and formulary exclusions became far more commonplace between 2011 and 2020. In 2011, an average of 31.9% of drugs were restricted in some form, vs. 44.4% in 2020.

Restrictions varied based on drug costs and the availability of generic alternatives to brand-name drugs. Nearly 70% of brand-name compounds with no generic alternatives were restricted in 2020, compared to 30% of drugs with generic availability. Additionally, the lower the cost of the drug, the less likely it was to be restricted. In 2020, only 16.7% of drugs with generic availability that cost less than $100 per prescription faced restrictions, vs. 83.7% of brand-name only drugs that cost more than $1,000.

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News Briefs: Habitat Health Launches PACE Program in California With Kaiser Permanente

With support from Kaiser Permanente and investment firm Town Hall Ventures, Habitat Health has established a new Program of All-Inclusive Care for the Elderly (PACE) provider. Offering comprehensive care to adults who wish to live independently in their homes and communities, Habitat Health will serve aging and low-income adults in California in partnership with Kaiser and eventually expand to other states with local care partners. Habitat Health plans to begin serving PACE-eligible individuals in Los Angeles and Sacramento in 2025 and will serve as payer for all participants’ Medicare and Medicaid services. The new PACE provider will “benefit from Kaiser Permanente’s expertise in creating efficient systems and developing innovative technology to integrate complex care, and from Town Hall Ventures’ experience building successful care delivery companies that support underserved communities,” stated a March 27 press release from all three entities. Town Hall Ventures, whose leadership includes former CMS Acting Administrator and White House adviser Andy Slavitt, was founded in 2018 and has invested in or participated in the launch of 35 health care companies, including Cityblock Health, Landmark Health, Signify Health and VillageMD.

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© 2024 MMIT

Part D GLP-1 Spend Soars as CMS Makes Key Coverage Decision

Medicare is spending billions on GLP-1s, the groundbreaking diabetes drugs that are now seeing skyrocketing demand for their ability to help patients lose weight. While Medicare Part D plans are prohibited from covering weight loss therapies, a new FDA decision for Novo Nordisk’s Wegovy (semaglutide) could reshape the coverage landscape for some GLP-1s — and drive Part D spending even higher.

A March 22 analysis from KFF found that Part D spending on Novo’s Ozempic (semaglutide) alone reached $4.6 billion in 2022, a 77% increase from the prior year and a 207% increase from 2020. (Novo brands its injectable semaglutide as Ozempic for the treatment of Type 2 diabetes and as Wegovy for weight loss.) KFF found that Part D spending on GLP-1s has grown exponentially every year since 2018. Eli Lilly’s Trulicity (dulaglutide), an older GLP-1 that hit the market in 2014, saw the second-highest gross Part D spending among all therapies in 2022 at $6.2 billion. Ozempic, meanwhile, sat at No. 6. KFF speculated that both Ozempic and Novo’s oral semaglutide Rybelsus could be selected for Medicare drug price negotiation as early as 2025.

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No News Is Bad News for MAOs Hoping to See Pay Hike in 2025

The April 1 release of final rate projections for Medicare Advantage and Part D plans was largely uneventful as CMS maintained the same all-in estimate of what plans can expect to see, on average, in terms of a reimbursement update next year. But the market did not respond well: MA-exposed insurers’ shares took a tumble and equity analysts warned that a revenue decline — before coding trend — could lead to benefit cuts and footprint reductions.

Industry trade groups did not respond favorably, either. In a statement released immediately after the rate announcement, AHIP President and CEO Mike Tuffin said the finalized policies would “put even more pressure on the benefits and premiums of 33 million Medicare Advantage beneficiaries who will be renewing their coverage this fall,” particularly as the MA and Part D programs face regulatory and legislative changes.

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Wegovy Coverage Question Puts Part D Plans in Tricky Position

In newly released guidance, CMS told Medicare Part D plans that they’re allowed to cover weight-loss drugs if they’ve been approved for another medical use — a description fitting Novo Nordisk’s Wegovy (semaglutide) after it recently received an FDA nod for preventing major heart problems.

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have said their Part D plans will cover Wegovy for its newest approved use: reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria, the Wall Street Journal reported on March 28.

For other insurers that sell Part D plans, the decision about whether to cover Wegovy represents an additional challenge to grapple with, as they’re also facing significant regulatory changes.

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© 2024 MMIT