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CMS Proposes Changes to Medicare Advantage and Part D Formulary Requirements

November 30, 2018—The Centers for Medicare and Medicaid Services (CMS) Nov. 26 released a proposed rule that would establish exceptions to formulary requirements for protected drug categories and classes under Medicare Advantage (MA) and Medicare Part D, as well as expand the use of step therapy and prior authorization. CMS also proposed requiring the inclusion of drug pricing information in the Part D Explanation of Benefits that beneficiaries receive. 

Current law requires MA and Part D plans to include in their formularies all drugs in six protected categories or classes: antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals, and antineoplastics. The proposed rule would allow broader use of prior authorization and step therapy for these drugs, including allowing indication-based utilization management. Plans would be able to exclude from their formularies a new formulation of an existing single-source drug or biologic, even if the existing drug were not on the market. Plans also would be able to exclude a protected class drug if the drug’s price were to increase beyond the rate of inflation based on the Consumer Price Index for all Urban Customers (CPI-U). 

The proposed rule would allow MA plans to apply step therapy as a utilization management tool for Part B drugs, but such therapy could only apply to a new initiation (new start) of medication. For the purpose of increasing price transparency and thereby encouraging enrollees in Part D plans to use lower-cost drugs, CMS proposes to require Part D plans to include drug pricing and lower-cost therapeutic alternatives in the Explanation of Benefits the plans send to their enrollees. 

Finally, to implement the Know the Lowest Price Act of 2018 (P.L. 115-262), CMS seeks to amend pharmacy contracting regulations in order to prohibit inclusion of a “gag clause” in contracts by Part D sponsors. A “gag clause” restricts pharmacists’ ability to discuss with plan enrollees the availability of lower-cost prescription drugs options. 

The AAMC will submit comments on the proposed rule, which are due Jan. 25, 2019.

Contact:

Mary Mullaney
Director, Hospital Payment Policies
Telephone: 202-909-2084
Email: mmullaney@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org