Perspectives

Perspectives on Part D Reform in 2020

February 20, 2020

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

In the Senate, tweaking the Part D benefit is part of a larger piece of bipartisan legislation (S. 2543), championed by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.). From the House, there’s the sweeping legislation (H.R. 3) proffered by Speaker Nancy Pelosi (D-Calif.).

Both bills would implement out-of-pocket spending caps for Part D beneficiaries and considerably change how costs are divided up in the catastrophic phase of coverage. They would also require drug manufacturers to repay Medicare if certain Part B or Part D drug prices rise faster than inflation.

“If you look at both the House and the Senate bills that have been put forward here, those [Part D] designs look very similar to one another, so I’m somewhat optimistic that…maybe there’s an opportunity for that to move forward,” says Stacie Dusetzina, an associate professor of health policy at the Vanderbilt University School of Medicine.

However, Elizabeth Carpenter at Avalere Health contends that “it is unlikely in this environment that any drug pricing legislation would move as a standalone bill.” The most likely pre-election vehicle for a Part D redesign would be the health care extenders package that expires in May, she adds.

Gerard Anderson, a professor at Johns Hopkins University Bloomberg School of Public Health, is more optimistic. “Drug pricing is the No. 1 issue for most voters when they’re talking about health care,” he points out. “So they’re going to feel a strong pressure” to pass something in Congress. Given that dynamic, he says he expects the Wyden/Grassley bill is likely to pass this year.

In whatever form a Part D redesign passes, Dusetzina says the biggest winner would be patients. While manufacturers and health plans would be on the hook for more spending in the catastrophic coverage phase, “on net, it probably isn’t very harmful for any one entity,” she contends.

Perspectives on Consolidated PBMs in 2020

February 6, 2020

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

Indeed, 2019 ended with Prime Therapeutics LLC and Express Scripts unveiling a three-year collaboration in which the latter PBM will negotiate with pharmaceutical manufacturers, on behalf of Prime’s members, for drugs covered on the pharmacy benefit, as well as provide services related to retail network contracting.

By teaming up with Prime, Express Scripts will be leading rebate negotiations and pharmacy network development for 103 million people, Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute, wrote in a blog post. “This combined volume of Express Scripts and Prime will have enormous leverage with manufacturers and pharmacies,” he noted.

To Ashraf Shehata, KPMG national sector leader for health care and life sciences, the Prime/Express Scripts partnership is yet another example of “pure play” PBMs’ move toward consolidation. Given that trend, the opportunity to scale up both organizations’ purchasing power, and “the ability to kind of lock in Blue clients,” Shehata says, “I think it makes a lot of sense” for the two PBMs to team up.

Employers, meanwhile, are likely to press PBMs of all varieties for innovative solutions — not just deep drug-pricing discounts — during the selling season for 2021 contracts, Anderson says.

Therefore, “there’ll probably be a lot of new innovators in the market — people coming up with new products that maybe look and sound different,” he says. “But the question people are going to have to ask is, how different really is it? And is it really a differentiator in the marketplace?”

Perspectives on MA Supplemental Benefits

January 23, 2020

Despite Medicare Advantage insurers’ enthusiasm for increased flexibility in allowable supplemental benefits and a slew of recent plan press releases touting goodies such as pest control and “Papa Pals” for the 2020 plan year, uptake of more “resource intensive” benefits geared toward seriously ill seniors remains relatively modest, according to a new report from the Duke Margolis Center for Health Policy.

Despite Medicare Advantage insurers’ enthusiasm for increased flexibility in allowable supplemental benefits and a slew of recent plan press releases touting goodies such as pest control and “Papa Pals” for the 2020 plan year, uptake of more “resource intensive” benefits geared toward seriously ill seniors remains relatively modest, according to a new report from the Duke Margolis Center for Health Policy.

The December report, “Improving Serious Illness Care in Medicare Advantage: New Regulatory Flexibility for Supplemental Benefits,” showed that a total of 507 standard MA plans in 2019 offered one of five types of benefits addressing serious illness, accounting for roughly 11% of the approximately 4,500 standard MA plans in 2019, AIS Health reported. By contrast, 377 in 2020 offered at least one of the five benefits highlighted in the report, while no plans in 2019 offered more than one of these benefits. But that drop was mainly driven by one major carrier abandoning its caregiver support benefit for 2020. Meanwhile, about 175 plans offered at least two of these types of these benefits, according to Robert Saunders, research director and one of the report’s authors.

Despite the decrease in caregiver support, which had the greatest initial uptake of the five benefit categories in 2019, researchers saw meaningful increases for 2020 in benefits such as adult day care and palliative care that “more directly address the needs of members with serious illness.”

The study also linked the PBP data to MA enrollment figures by plan and by county to assess the geographic impacts of the policy changes. For 2020, many parts of the country do not have any plans offering new supplemental benefits, and those aimed at serious care were likely to be offered in urban counties, said the report.

Barring any major disruption, 2021 will likely be the year of growth for new flexible benefits, as it takes plans a couple years to price, test and stand up ones that will have a lasting impact, adds Saunders.

Perspectives on UnitedHealth/Diplomat Deal

January 9, 2020

Diplomat Pharmacy, Inc., which has been in a tailspin amid mounting financial losses, agreed to a deal with UnitedHealth Group on Dec. 9 that will see the larger firm’s OptumRx division purchase the midsized specialty pharmacy provider/PBM, AIS Health reported.

Diplomat Pharmacy, Inc., which has been in a tailspin amid mounting financial losses, agreed to a deal with UnitedHealth Group on Dec. 9 that will see the larger firm’s OptumRx division purchase the midsized specialty pharmacy provider/PBM, AIS Health reported.

Diplomat’s difficulties began to come into focus earlier this year, when the firm disclosed customer losses in its PBM business and “increased competitive pressure in the specialty market.” In August, Diplomat said it was “reviewing strategic alternatives” to maximize shareholder value. Then on Dec. 9, UnitedHealth disclosed that it agreed to pay $4 per share for Diplomat’s outstanding stock and assume its debt. Equities analysts noted that Diplomat’s stock was trading at $5.81 as of market close on the Friday before the transaction was unveiled.

Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute, says that “the specialty pharmacy market is reaching maturity, as PBMs and insurers dominate specialty drug dispensing channels.” Diplomat, he says, “was unable to navigate the industry’s evolution.”

“Diplomat’s sale at a bargain basement price signals that the shakeout is underway,” Fein adds. “Fewer new specialty pharmacies are starting up, the bigger companies are getting acquired, and market share is concentrating further with the biggest players.”

Ashraf Shehata, KPMG’s national sector leader for health care and life sciences, says that the purchase of Diplomat comes as the rivalry is intensifying between UnitedHealth and its two big consolidated rivals, CVS Health Corp. and Cigna Corp.

Now that those companies have completed major transactions to assemble their assets — with CVS buying health insurer Aetna and Cigna acquiring the PBM Express Scripts — “we’re kind of seeing what I call the second phase right now of the competition really heating up between the big players,” he says.

Growth continues to be the “name of the game” for those three companies, Shehata says, but it’s difficult to come by in an industry that’s already so consolidated. Because of that, “now you might see some growth on the edges” in the same vein as the UnitedHealth/Diplomat deal, he adds.

Perspectives on Dual Eligible SNPs

December 26, 2019

Through strategic acquisitions, product launches and geographic expansions, Medicare Advantage insurers across the U.S. are offering new Special Needs Plans (SNPs) aimed at improving the lives of members who are dually eligible for Medicare and Medicaid, AIS Health reported.

Through strategic acquisitions, product launches and geographic expansions, Medicare Advantage insurers across the U.S. are offering new Special Needs Plans (SNPs) aimed at improving the lives of members who are dually eligible for Medicare and Medicaid, AIS Health reported.

According to an analysis of the 2020 “landscape” files posted by CMS in September, Chicago health care consultancy Clear View Solutions, LLC, estimates that there are 171 net new SNP IDs, up from 60 net new plans in 2019. And 97 of those net new plans are dual eligible SNPs, compared with 47 D-SNPs that were introduced for 2019.

“I do think there is some ‘pent up energy’ from plans, and now that there is clarity with permanency and the requirements for integration, plans are ready to move forward,” Cheryl Phillips, M.D., CEO of the SNP Alliance, says in an email to AIS Health.

Phillips says plans may also be “working to better position themselves” for managed long-term services and supports, as states sharpen their focus on rebalancing their long-term care populations and shift more of the responsibility to managed care organizations.

A review of the new D-SNP offerings for 2020 indicates that larger players such as Anthem, Inc., Centene Corp., Humana Inc., Molina Healthcare, Inc. and UnitedHealthcare are leading the charge, but numerous plans have been introduced on a local level.

For instance, UCare, the largest provider of SNPs in Minnesota, said it is expanding its UCare Connect + Medicare plans to mirror the 62-county UCare Connect service area. And Priority Health is preparing to launch its first D-SNP, which will serve all 68 counties of Michigan’s lower peninsula.

Perspectives on Preferred Cost-Sharing Pharmacy Networks

December 12, 2019

In the Medicare Part D market in 2020, preferred cost-sharing pharmacy networks continue to be king. But because independent pharmacies often find themselves shut out of such arrangements, recently introduced legislation is seeking to change that dynamic.

In the Medicare Part D market in 2020, preferred cost-sharing pharmacy networks continue to be king. But because independent pharmacies often find themselves shut out of such arrangements, recently introduced legislation is seeking to change that dynamic.

“The Part D plans have fully adopted preferred networks over the last few years,” Adam Fein, Ph.D., president of Pembroke Consulting, Inc., and CEO of Drug Channels Institute, tells AIS Health. “The [retail] chains obviously have some different strategies but are looking for the foot traffic” that comes from offering lower cost sharing as part of a preferred network.

Meanwhile, many independent pharmacies and the pharmacy services administrative organizations (PSAOs) that represent them in negotiations with health plans are moving away from preferred Part D networks.

Fein says they “have concluded that the incremental traffic they’re going to get is not worth the profit they’re going to sacrifice.”

Ultimately, “I think the open question is, will this create access problems to preferred networks, and does CMS care?” he says.

The National Community Pharmacists Association (NCPA) isn’t counting on regulatory intervention. The organization is supporting a bill — introduced last month by U.S. Reps. Peter Welch (D-Vt.) and Morgan Griffith (R-Va.) — which would allow any pharmacy located in an underserved area to participate in a Part D preferred network as long as that pharmacy accepts the terms and conditions.

“We’re not asking for different terms and conditions, [or] higher reimbursement; we’re just asking to be able to see what the terms and conditions are to be in the preferred network and then make our best decision if we want to participate or not,” says Ronna Hauser, the president of policy and government affairs operations at NCPA.

The Pharmaceutical Care Management Association opposes the bill.

“The proposed any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering costs,” says as statement from the PBM trade group.