Medicare Part D

Study: With High Prices, Rebate Revenue Is Growing for PBMs

New research published in JAMA Health Forum found that rebate revenue for PBMs grew between 2015 and 2019 — but that growing rebate revenue was not passed on to patients.

The research letter’s authors measured both prerebate and postrebate drug costs taken from medical loss ratio (MLR) filings made by plans to CMS. The research sample includes commercial insurance filings from small group, individual and large group health plans across “approximately 2,200 unique health plans” covering 70 million lives.

WellCare Kept PDP Enrollees Via ‘Conversational’ Outreach Pilot

A pilot with Drips’ trademarked “conversational texting” platform has helped WellCare significantly lower the percentage of Prescription Drug Plan policies that were being terminated due to nonpayment, according to a case study presented at the 13th Annual Medicare Market Innovations Forum, held May 11 and 12 in Phoenix.

Since WellCare was acquired by Centene Corp. in January 2020, the PDP team has been focused on “optimizing operational execution” and ensuring a positive member experience, said WellCare Senior Director of Prescription Drug Plans Talia Duany, who presented the case study with Drips. “When you’ve got 4.1 million members in an industry that’s shrinking — this year we saw the biggest [decline] in available PDP options, everyone’s moving into [Medicare Advantage] — having a robust member retention strategy” is critical.

CMS Finalizes MA Rule Provisions, Delays Pharmacy DIR Change

Just a month shy of the bid deadline for the 2023 plan year, CMS on April 29 finalized most provisions of a sweeping Medicare Advantage and Part D rule that was proposed in January. Those provisions included restoring detailed medical loss ratio (MLR) reporting requirements, requiring MA Special Needs Plans to incorporate certain questions on social risk factors into health risk assessments, and finalizing a pathway to allow for star ratings to reflect a Dual Eligible SNP’s local performance. But one Part D provision regarding pharmacy direct and indirect remuneration (DIR) was notably delayed, allowing plans, pharmacies and pharmacy benefit managers time to renegotiate pharmacy pacts.

“Generally speaking, the rule wasn’t surprising. CMS largely did what they proposed. I think the major concession that plans and PBMs were concerned about was the start date of the pharmacy DIR change, and they had that addressed. But by and large this rule was consistent with CMS’s goals of raising the bar for what it means to be a SNP and for reducing costs at point of sale for seniors” starting in 2024, says Tom Kornfield, senior consultant with Avalere.

Biosimilars Stand to Cut Costs for Medicare Part D and Beneficiaries, If Uptake Improves

New biologic drugs cost Medicare Part D and its beneficiaries almost $12 billion in 2019, but increased biosimilar uptake could cut spending significantly in coming years, according to a March report from HHS’s Office of the Inspector General (OIG). Specifically, the OIG report pointed to upcoming launches of Humira (in 2023) and Enbrel (in 2029) biosimilars as potential catalysts for change. The two biologics alone accounted for nearly half of 2019’s Part D spending. Studying 2019 Part D plan formularies, OIG found that biosimilar uptake for four select drug classes was limited due to lack of coverage, and formularies that did cover biosimilars did not encourage their use over the original reference products despite their lower cost. OIG advised CMS to encourage payers to place biosimilars on formulary, which the agency agreed with. As of the second quarter of 2022, most Medicare beneficiaries still have better access to the biologics OIG studied over their biosimilars, with the exception of Teva Pharmaceuticals’ Granix, a biosimilar to Amgen’s Neupogen, and Pfizer’s Retacrit, a biosimilar to Amgen’s Epogen and Johnson & Johnson’s Procrit. Granix holds covered or better status for 51% of Medicare beneficiaries, according to data from MMIT Analytics (MMIT is the parent company of AIS Health). Retacrit, meanwhile, holds 66% covered or better status.

Drug Price Controls Appear Central to Democratic Priorities

Democratic lawmakers are expected to make a strong push to revive a variety of drug pricing proposals, such as those that would grant CMS the ability to negotiate the price of certain drugs and place a cap on Medicare beneficiaries’ out-of-pocket spending.

House Majority Leader Chuck Schumer (D-N.Y.) has indicated he is targeting the current congressional work period that runs through Memorial Day as the time to make good on drug pricing plans that Democrats have long favored, noted Matt Kazan, managing director of policy with consultancy Avalere Health, during an April 27 webinar.

The convergence of several factors, including looming mid-term elections and the scheduled end of the COVID-19 public health emergency (PHE) could spur Democrats to make a last-ditch effort to resuscitate the Build Back Better Act (BBBA) and the drug pricing controls contained within it — especially since the end of the PHE could significantly impact Medicaid and Affordable Care Act (ACA) exchange enrollment.

Many Medicare Enrollees Can’t Afford Cancer, Specialty Drugs

Large numbers of Medicare beneficiaries who are ineligible for low-income subsidies and have been prescribed high-price prescription drugs for conditions such as cancer don’t initiate their treatment, likely because they can’t afford it, according to new research published in Health Affairs. One of the study’s authors tells AIS Health that severe illness is a possible outcome of noninitiation in the studied clinical areas and adds that proposals under consideration in Congress to cap out-of-pocket spending for Medicare beneficiaries would make a big difference to the affected patients.

According to the paper, “among beneficiaries without subsidies, we observed noninitiation for 30 percent of prescriptions written for anticancer drugs, 22 percent for hepatitis C treatments, and more than 50 percent for disease-modifying therapies for either immune system disorders or hypercholesterolemia.”

Enforcement Actions Show Mounting CMPs from Financial Audits (with table: CMP Amounts Imposed on Medicare Advantage Insurers From February to April 2022)

Between February and April of this year, CMS imposed a total of nearly $1 million in civil monetary penalties (CMPs) on Medicare Advantage and Part D organizations for program violations uncovered during routine audits, including so-called “one-third financial audits.” While CMS has yet to release its annual report that provides a fuller picture of plan noncompliance, the latest round of CMP notices offers some important lessons for sponsors and flags a few potential areas of risk that they should be monitoring in their own operations, according to compliance experts.

Of the 15 CMP notices recently posted to the CMS Part C and Part D Enforcements Actions webpage, six resulted from 2021 program audits and eight were related to 2020 financial audits. Additionally, CMS imposed a fine on Anthem, Inc. for a Part D appeals violation stemming from a previously detected system migration issue that occurred in 2020.

Many Medicare Enrollees Can’t Afford Cancer, Specialty Drugs

Large numbers of Medicare beneficiaries who are ineligible for low-income subsidies and have been prescribed high-price prescription drugs for conditions such as cancer don’t initiate their treatment, likely because they can’t afford it, according to new research published in Health Affairs. One of the study’s authors tells AIS Health that severe illness is a possible outcome of noninitiation in the studied clinical areas and adds that proposals under consideration in Congress to cap out-of-pocket spending for Medicare beneficiaries would make a big difference to the affected patients.

According to the paper, “among beneficiaries without subsidies, we observed noninitiation for 30 percent of prescriptions written for anticancer drugs, 22 percent for hepatitis C treatments, and more than 50 percent for disease-modifying therapies for either immune system disorders or hypercholesterolemia.”

Part D Out-of-Pocket Cap: Limited Impact, Low Cost

A small share of Medicare Part D beneficiaries without access to the low-income subsidy (LIS) program would benefit from the introduction of a $2,000 out-of-pocket (OOP) spending cap for prescription drugs, a provision that is included in the Build Back Better Act, according to a recent Urban Institute analysis. In 2019, a $2,000 cap could have saved approximately 866,000 non-LIS Part D enrollees about $900 each, on average. There are 32.8 million total non-LIS enrollees in the Part D program. The cap would carry a small price tag, increasing total Part D expenditures by $782 million in 2019 and the premium across all Medicare beneficiaries by $4.35 annually. The study concluded that capping out-of-pocket costs for certain Part D beneficiaries would enhance the program without significantly raising costs.

Industry Trade Groups Sound Off About Proposed DIR Overhaul

The main health insurer and PBM trade groups are not fans of CMS’s proposal to reform the direct and indirect remuneration (DIR) system in Medicare Part D, judging by their recently submitted comment letters and interpretation of a recently published actuarial analysis.

The policy in question is part of the 2023 Medicare Advantage and Part D proposed rule, which CMS issued in January. Among a slew of other provisions, the agency is seeking to require part D plan sponsors to apply all price concessions that they receive from network pharmacies at the point of sale. Smaller pharmacies have long complained that the current system — in which Part D plan sponsors can recoup price concessions (i.e., DIR) from pharmacies for dispensed drugs if the pharmacies do not meet certain metrics — makes it difficult if not impossible to do business.