Medicare Part D

Stelara Formulations, White Bagging Bring Complexity to IRA Negotiated Drug List

As CMS engages in the initial round of Inflation Reduction Act (IRA)-mandated drug price negotiations with manufacturers, one of the agents on the list of Medicare Part D drugs to be negotiated has certain aspects that make it a not-so-straightforward candidate. Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson has particular qualities that could result in unintended consequences, asserts one industry expert.

Stelara is unique among the first drugs to be negotiated in that it is available in both subcutaneous and intravenous formulations. The human interleukin-12 and -23 antagonist is approved for subcutaneous use for the treatment of people at least 6 years old with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy and people at least 6 with active psoriatic arthritis. It also is approved for the treatment of adults with moderately to severely active Crohn’s disease and adults with moderately to severely active ulcerative colitis, for whom treatment is initiated with a single intravenous dose, followed by subcutaneous maintenance dosing.

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Part D ‘Copay Smoothing’ Rollout Might Be Bumpy, Some Experts Warn

In a new draft guidance document, CMS lays out a litany of tasks Medicare Part D plans must complete to help enrollees take advantage of an Inflation Reduction Act (IRA) provision that allows people to pay off their prescription drug copays over time.

The memo is the second draft guidance document released by CMS regarding the Medicare Prescription Payment Plan, or “copay smoothing” — a program that the managed care sector appears to be growing uneasy about.

“Part D smoothing is coming; it’s coming like a typhoon,” said Nikki Hungate, an industry consultant speaking at the 7th Annual Medicare Advantage Leadership Innovations conference, held Jan. 30-31 in Scottsdale, Arizona.

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New Medicare Out-of-Pocket Drug Cost Cap Will Benefit Millions in 2025

Millions of Medicare Part D beneficiaries will save money after the introduction of a $2,000 out-of-pocket (OOP) spending cap for prescription drugs, a provision that is included in the Inflation Reduction Act of 2022 and takes effect next year, according to a recent KFF analysis.

Based on KFF’s review of drug claims data for Part D enrollees who do not qualify for the low-income subsidy (LIS), the analysis projected that, if the $2,000 cap had been in place in 2021, 1.5 million Medicare Part D beneficiaries — who spent $2,000 or more OOP on prescription drugs — would have saved money. Over the 10-year period between 2012 and 2021, a total of 5 million enrollees had OOP drug costs of $2,000 or more in at least one year.

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Is Medicare Part D Red Tape Worsening Outcomes for Low-Income Seniors?

Seniors who experienced fluctuations in eligibility for Medicare Part D’s low-income subsidy (LIS) spent more money on prescription drugs and filled fewer prescriptions overall, according to new research published in JAMA Health Forum. While researchers said questions remain about whether these temporary losses can impact medication adherence and health outcomes — particularly among non-white seniors — policymakers should consider streamlining LIS eligibility systems to reduce administrative barriers.

In 2023, 13.4 million Part D beneficiaries received full or partial LIS benefits. The program provides assistance with paying premiums and deductibles, and it reduces any post-deductible cost sharing for beneficiaries. The majority of LIS beneficiaries are “deemed,” meaning they are automatically enrolled in the program based on dual eligibility with Medicaid and/or enrollment in a Medicare Savings Program (MSP). (This also includes non-duals who receive Supplemental Security Income.) But 17% of LIS beneficiaries are “nondeemed,” meaning they are not enrolled in Medicaid or an MSP and must apply for LIS themselves. All LIS beneficiaries undergo annual redeterminations, but the process for deemed beneficiaries is automatic, leaving the nondeemed population to face potential administrative challenges and unnecessary coverage loss.

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MA Industry Braces for Part C Rate Cut, Part D Benefit Shakeup

As CMS proceeds with its planned phase-in of changes to the CMS-Hierarchical Condition Categories (HCC) risk adjustment model starting this year, the agency on Jan. 31 projected that Medicare Advantage plans next year can expect to receive an average increase of 3.70% in risk adjusted revenue. After picking apart the various factors that go into that assumption, however, the industry is bracing for an effective rate reduction, along with significant changes to the Part D benefit that incited proposed updates to the RxHCC risk adjustment model used to calculate direct subsidy payments to Part D plans.

CMS this time last year projected an all-in rate increase of 1.03%, which included an effective growth rate of 2.09% and expected revenue declines of -3.12% — stemming from changes to the CMS-HCC risk model and fee-for-service (FFS) normalization — and -1.24% due to changes in Star Ratings from the prior year. The agency also estimated an underlying MA risk score trend of 3.30%. Subsequent studies suggested that the removal of thousands of diagnosis codes, renumbering of several HCCs, and other technical changes would reduce plans’ risk scores by anywhere from 2% to 14%. In the final rate notice, CMS revised its all-in rate increase projection to 3.32% after deciding to phase in the risk model changes over a three-year period.

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‘Sleeper Issue:’ How Part B Drugs May Be Impacted by Medicare Part D Redesign

Physician-administered drugs could catch some windfall due to the Inflation Reduction Act’s Medicare Part D redesign.

Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025, including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers.

But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.

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‘D’ Is for Dynamic: CMS Proposals Could Shake Up Medicare Drug Benefits

In two recent proposals, CMS outlines numerous changes to technical aspects of the Medicare Part D program — many of which are related to provisions in the Inflation Reduction Act (IRA) that restructured the Part D benefit phases. Sources tell AIS Health, a division of MMIT, that the proposals could have both positive and negative effects on Part D plan sponsors and beneficiaries and will likely attract a bevy of industry feedback.

The documents in question are the 2025 Advance Notice of payment changes for Medicare Advantage and Part D plans and the Draft 2025 Part D Redesign Program Instructions. While the Advance Notice is unveiled around the same time every year, the draft Part D redesign instructions are being issued to help implement provisions of the IRA that make major changes to the structure of the Part D benefit.

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Tukey Trouble Sparks Elevance Suit Against HHS; Others May Follow

After a significant decline in Star Ratings performance for 2024, Elevance Health, Inc. and its affiliates have filed a lawsuit challenging CMS’s implementation of the Tukey outlier deletion methodology. Intended to infuse more “predictability and stability” into the Star Ratings by removing outliers from the cut point calculations for certain measures, its introduction was “fraught with errors and ambiguities during rulemaking” and marks a violation of the Administrative Procedure Act (APA), contends Elevance. And according to a leading Star Ratings expert, Elevance may not be the only MA insurer to sue CMS over its controversial implementation of the methodology.

The suit was filed by Elevance and affiliated entities in 18 states on Dec. 29 in the U.S. District Court for the District of Columbia. In its complaint, Elevance contends that CMS’s actions were “unlawful, and arbitrary and capricious” when it applied Tukey to the 2024 Star Ratings while contradicting its own policy of establishing “guardrails” for determining Star measure cut points. It also alleges that CMS was arbitrary and capricious when calculating the cut points and determining the plaintiffs’ Star Rating on a single Part D measure — Call Center-Foreign Language Interpreter and TTY Availability.

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Contract Terminations Signal Tougher CMS Enforcement Amid Stars Upheaval

As changes such as the application of the Tukey outlier deletion methodology and the introduction of the Health Equity Index stand to make the Medicare Advantage landscape more competitive, CMS in recent weeks issued three contract terminations based on poor performance over a three-year period. While the COVID-19 public health emergency afforded MA and Part D insurers certain flexibilities, experts say the recent enforcement actions signal a tougher CMS coming out of the PHE.

Modern Healthcare on Jan. 8 broke the news that consistently poor Star Ratings for Centene Corp.’s WellCare Health Insurance of Arizona and WellCare Health Insurance of North Carolina would force the exits of two Medicare Advantage Prescription Drug (MA-PD) contracts from the MA market. According to separate letters to the subsidiaries dated Dec. 27, CMS decided to impose intermediate sanctions after WellCare failed to achieve a Part C summary Star Rating of at least 3 Stars in three consecutive rating periods for the specific contracts. That means the contracts had to stop enrolling new Medicare beneficiaries and cease all marketing activities, effective Jan. 12.

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As Insurers Implement Key Part D Benefit Changes, IRA-Related Unknowns Remain

Thanks to the Inflation Reduction Act (IRA) of 2022, sponsors of Medicare Advantage Prescription Drug (MA-PD) plans and Prescription Drug Plans (PDPs) are preparing for the biggest Part D changes in the program’s 18-year history. As plans consider how they’ll manage an increasing share of responsibility for catastrophic drug costs, sources say they await critical outstanding information, such as an updated Part D risk adjustment model and additional guidance on the Medicare Payment Prescription Plan.

“The Inflation Reduction Act of 2022 will be ushering in many benefit parameters that will need to be carefully included in planning for 2025,” observes Debra Devereaux, R.Ph., principal and chief pharmacy/clinical officer with Rebellis Group. For starters, the IRA eliminates the coverage gap (a.k.a. the “donut hole”) for seniors in 2025, and plans will be responsible for 60% of drug costs in the catastrophic phase of coverage, which is triggered when enrollees exceed a new $2,000 out-of-pocket cap. (Plans paid 15% of that share in 2023 and will pay 20% in 2024, while CMS will decrease its share from 80% to 20% in 2025, and manufacturer discounts will be introduced in the initial and catastrophic coverage phases.)

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