Medicare Part D

Shortly after the city of New York inked a deal with CVS Health Corp.-owned Aetna to administer a PPO plan to some 250,000 retirees and their eligible dependents, a group of former city employees are suing to block Mayor Eric Adams (D) from transitioning their retiree health care coverage away from fee-for-service (FFS) Medicare. According to news reports, the class action lawsuit was filed in the state Supreme Court on May 31 by nine individual municipal retirees and the NYC Organization of Public Service Retirees, which sued to block the implementation of a previous contract with Elevance Health, Inc. (then Anthem). The original transition was supposed to begin on April 1, 2022, but the city revised its plans after a state Supreme Court judge ruled that the proposal violated city law by requiring retirees who opted out of the switch to pay $191 per month to maintain their FFS coverage. That July, Elevance backed out of the deal. In the “final approved plans, retirees who opt out of the city’s coverage will have to pay for any supplemental coverage on their own,” reports Becker’s Payer Issues. The plaintiffs alleged that the option to switch to FFS with Medicare Supplemental Insurance is cost prohibitive and that the new coverage offering constitutes nothing more than a “bait and switch,” according to Crain’s New York Business. The $15 billion pact with Aetna is expected to save the city $600 million a year.

From CMS’s expanded definition of primarily health-related supplemental benefits to the introduction of Special Supplemental Benefits for the Chronically Ill (SSBCI), Medicare Advantage plans have gained increasing flexibility over the last few years to offer supplemental benefits that can address social needs. Through the ongoing MA Value-Based Insurance Design (VBID) model — the only MA-focused demonstration being tested by the CMS Innovation Center — MA organizations have even more flexibility to target and tailor a variety of interventions. During a recent virtual panel of the Fourth National Medicare Advantage Summit, several longtime participants of the model agreed that such flexibility is critical to meeting beneficiaries’ evolving health-related and other social needs.

CMS first tested the model on a limited basis in 2017, allowing sponsors to offer reduced cost sharing for medications and offer high-value services to beneficiaries with select chronic conditions. Today, the model allows MAOs to tailor their MA plan offerings using several approaches and has 52 MAOs offering services to an estimated 6 million enrollees.

Although new treatments hold tremendous promise for addressing obesity and the myriad health issues associated with it, Medicare Part D is barred from covering them, and private insurers’ coverage is variable. And there are multiple barriers that will make fixing those coverage gaps challenging, health policy experts said during a recent panel discussion.

Perhaps the most headline-grabbing obesity treatment is semaglutide, which Novo Nordisk sells under the brands Ozempic (for Type II diabetes) and Wegovy (for weight loss). That drug has recently been the topic of a cascade of news articles discussing the drug’s ability to help patients shed stubborn pounds, side effects such as hair loss, and shortages faced by some diabetes patients due to semaglutide’s skyrocketing popularity.

As marketing experts from regional Medicare Advantage plans and their strategic partners shared success stories from the recent Medicare Annual Election Period and their year-round member engagement campaigns at the 14th Annual Medicare Market Innovations Forum, there was one commonly recurring theme: Today’s MA beneficiaries are increasingly embracing technology for everything from conducting AEP research to maintaining a healthy lifestyle.

In his experience working with digital marketing agency Amsive, Dan Paladino noted that Medicare consumers are relying on digital tools to research their coverage options “early and often” and that clients have experienced a surge in digital use “across many channels” this past AEP.

Most new drugs covered under Medicare Part D are subject to prior authorization (PA) requirements, largely due to their high launch prices. A recent study published in JAMA Health Forum observed that these policies are frequently inconsistent across payers and may prove too burdensome for patients and providers.

Researchers identified drugs approved between 2013 and 2017 and reviewed the 2020 formularies of the eight largest Part D payers, which cover about 90% of all Part D beneficiaries. They compared PA policies to each drug’s FDA-approved indications and noted if payers mirrored the approved labeling or were more restrictive than the drug’s label. Researchers observed substantial variation in the frequency and type of PA across payers, and they found that about 40% of the new drugs had PA criteria that went beyond the drug’s labeling.

For payment year 2024, Medicare Advantage plans can expect to receive, on average, a 3.32% increase in risk adjusted revenue, compared with the 1.03% increase CMS projected in its Advance Notice released on Feb. 1. That’s largely because the agency opted to phase in its controversial changes to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model, rather than fully implement it next year, after considering feedback from stakeholders. Still, some organizations remain concerned about the potential impact the new model will have on certain high-risk populations.

According to a fact sheet about the 2024 MA and Part D rate notice, which was released on March 31, two key components of the agency’s forecast changed: (1) a revenue decline stemming from the risk model revision and fee-for-service (FFS) normalization changed from -3.12% to -2.16%, and (2) the underlying coding trend is now expected to be 4.44%, compared with a previous estimate of 3.30%. CMS noted in the fact sheet that unlike in previous years’ estimates, it could not provide a separate update on the FFS normalization factor “because there is considerable interaction between the impact of the MA risk adjustment model updates and the normalization factor update.”

A recently introduced bipartisan bill seeks to reduce Medicare Advantage plan overpayments by eliminating financial incentives to “upcode,” or make beneficiaries appear sicker than they may be in the name of higher Medicare reimbursement. Introduced by Sens. Bill Cassidy, M.D. (R-La.) and Jeff Merkley (D-Ore.), the No Unreasonable Payments, Coding or Diagnoses for the Elderly (No UPCODE) Act would eliminate those incentives by: developing a risk adjustment model that uses two years of diagnostic data instead of just one year; excluding diagnoses collected from chart reviews and health risk assessments for risk adjustment purposes; and including an adjustment that fully accounts for the impact of coding pattern differences between traditional Medicare and MA.

Medicare will likely focus on 38 Part D and two Part B drugs in the first three years of Medicare drug price negotiation — a provision of the Inflation Reduction Act — and these drugs combined accounted for $67.4 billion in gross Medicare spending in 2020, according to a study published in the Journal of Managed Care & Specialty Pharmacy. The authors identified 40 drugs expected to be negotiated by CMS for 2026-2028 based on “drug age, drug or biologic status, orphan drug status, Part B and Part D gross spending in 2020, and estimates of when a drug will be subject to generic or biosimilar competition.”

The 10 drugs likely to be selected for negotiation in 2026, which include several anticoagulants and cancer therapies, accounted for $33.7 billion of Medicare Part D gross spending as of 2020. The majority of insured people under Medicare formularies have plans that put these drugs under the preferred/preferred (prior authorization and/or step therapy) tier and covered/covered (PA/ST) tiers, according to data from MMIT Analytics. (MMIT is AIS Health’s parent company.) Biden administration officials said that the first 10 drugs selected for negotiation will officially be announced on Sept. 1, 2023.

CMS on March 8 submitted its lengthy Medicare Advantage and Part D final rule making policy and technical changes for 2024 to the White House Office of Management and Budget (OMB), just 23 days after the comment period closed. “Not a good sign for those who submitted comments with the expectation that CMS would fully consider their concerns and suggested alternatives to some of the proposed regulatory changes,” remarked Epstein Becker & Green’s Helaine Fingold on LinkedIn. The proposed rule, published on Dec. 27, contained multiple marketing-related provisions and featured numerous health equity components, from the incorporation of a health equity index in the Star Ratings to new requirements around information provided to enrollees. The final rule at AIS Health press time was still pending OMB review.

Most new drugs covered under Medicare Part D are subject to prior authorization (PA) requirements, largely due to their high launch prices. A recent study published in JAMA Health Forum observed that these policies are frequently inconsistent across payers and may prove too burdensome for patients and providers.

Researchers identified drugs approved between 2013 and 2017 and reviewed the 2020 formularies of the eight largest Part D payers, which cover about 90% of all Part D beneficiaries. They compared PA policies to each drug’s FDA-approved indications and noted if payers mirrored the approved labeling or were more restrictive than the drug’s label. Researchers observed substantial variation in the frequency and type of PA across payers, and they found that about 40% of the new drugs had PA criteria that went beyond the drug’s labeling.