The Biden administration on Tuesday ended a Trump-era policy that would have allowed Medicare Part D plans to cover fewer drugs under a new pay model.
When CMS’ Center for Medicare and Medicaid Innovation requested Part D Payment Modernization applications for 2022 in January, it said that plans participating in the model wouldn’t have to cover all drugs in five of the six protected drug classes: anticonvulsants, immunosuppressants, antidepressants, antipsychotics and antineoplastics. It also allowed Part D plans to only include one drug per class in their formulary instead of two drugs, as currently required, and paused the 10% downside risk requirement for model participants during the 2022 plan year.
The Trump administration hoped the additional flexibilities would encourage more plans to take part in the model, which aims to lower overall prescription drug spending and beneficiaries’ out-of-pocket drug costs. According to actuarial and healthcare consultancy Wakely, the removal of downside risk for 2022 also defended plan sponsors against the uncertainty surrounding Medicare drug rebates and their effect on federal reinsurance subsidies.
CMMI said it decided not to move forward with the changes based on stakeholder feedback and other considerations. Patient advocates and many providers opposed the additional flexibilities, warning that they could put beneficiaries’ health at risk by denying them access to some medications. The agency probably reinstated downside risk for the 2022 plan year because of a court-mandated change in the effective date Medicare drug rebate rule, which removed safe harbor protections for drug manufacturer rebates under the anti-kickback statute. The rule is scheduled to take effect Jan. 1, 2023, a year later than HHS originally planned.
Nearly 70 members of Congress asked HHS and CMS to get rid of the new flexibilities in a letter earlier this month.
“When CMS implemented Medicare Part D fifteen years ago, it identified six classes and categories of medicines where patients could face serious risks, complications, and negative health outcomes without access to these medicines. CMS required Part D plans to cover all or substantially all medications within these six classes, which help treat patients with epilepsy, organ transplants, cancer, HIV and mental health conditions,” the letter said.
The Medicare Payment Advisory Commission and other experts have recommended several Medicare Part D changes, including additional flexibilities for plan formularies.
“Plan sponsors’ inability to exclude products from a plan’s formulary limits sponsors from using competitive pressure among alternative drug therapies to negotiate manufacturer rebates. We also recommend that plans be allowed to establish preferred and nonpreferred tiers for specialty-tier drugs to encourage their enrollees to use lower-priced therapies,” MedPAC wrote in its June 2020 report to Congress.
Applications for the model’s 2022 plan year are due April 16.