CMS Final Rule Aims to Lower Medicare Prescription Drug Costs

April 03, 2018 - CMS is planning to lower Medicare prescription drug costs through a final rule that allows members to purchase less expensive biosimilars and generic drugs and increases the potential value of Medicare Advantage (MA) and Part D plans.

CMS Administrator Seema Verma and other CMS leaders told members of the media in a conference call that the final rule will remove burdensome regulations for MA and Part D. CMS argues removing these regulations would allow health plans to lower costs and improve quality.

The agency estimates that Medicare beneficiaries are going to save $10 million on prescription drug costs due to the changes.

The final rule removes “meaningful difference” requirements for MA plans and allows MA plan sponsors to provide supplemental benefits to their members.

Verma and CMS leaders emphasized that removal of meaningful difference regulations allows MA sponsors to provide a greater variety of health plans and improve health plan quality.

“CMS is concerned the current requirement may result in organizations reducing the value of certain benefit offerings in order to make their benefit packages comply with these unnecessary limits,” CMS said. “This may include instances where differences in benefit packages exist but are not incorporated in the agency’s evaluation (e.g., unique benefit packages based on enrollee health conditions).”

The rule adds a new open enrollment period for Medicare Advantage, starting in 2019. The new enrollment period allows Medicare beneficiaries to choose between MA or original Medicare from January 1 to February 14 each year.

CMS is also allowing MA plans to provide supplemental benefits and adjust cost-sharing amounts under the new rule. MA plans would have the ability to provide additional member benefits within plan offerings based on the health conditions of member populations.

CMS’s final rule expands generic and biosimilar access for Part D beneficiaries by eliminating certain drug-tiering provisions. Part D plans would be unable to exclude generic drugs from tiering considerations. CMS will add a framework that tiers drugs by brand name, generic, and biosimilar categories.

“By removing certain Part D requirements, we are giving plans the flexibility to give patients more choice,” Verma asserted.

The rule also requests stakeholder feedback about possible policy updates that apply pharmacy rebates for beneficiary drug prices at the point of sale.

Verma said that CMS is updating rules related to the “any willing provider” standards that would increase pharmacy access for Part D members.

The rule will incorporate opioid safety initiatives to address opioid use disorder risks within vulnerable beneficiary populations.  

These initiatives include “lock-in” programs for at-risk beneficiaries. The lock-in programs limit opioid access to one prescriber or one pharmacy based on certain member risk factors.

CMS will require Medicare-sponsored plans implement a real-time opioid care coordination safety program to educate providers and patients about opioid risks during the prescribing process.  

In addition, the final rule contains plans to expand the use of the overutilization monitoring system (OMS) and limit opioid prescriptions for acute pain to seven-day supplies.

The final rule advances the Patients over Paperwork Initiative, which is a series of administrative deregulations to make prescription drug benefit data more transparent for members.

Medicare plans will be allowed to use electronic notices to meet disclosure requirements when providing large documents to Medicare beneficiaries. The initiative also streamlines federal review of a health plan’s marketing collateral.

The final rule changes are likely to create financial opportunities for the Medicare program and Medicare health plan sponsors, CMS predicted.

While the proposed rule expected Medicare Advantage revenues to grow by 1.84 percent in 2019, the final rule contains estimates that suggests these revenues are now likely to increase by 3.4 percent.  

The Medicare program estimates that the final rule changes will generate savings of $295 million per year from 2019 to 2023. The agency concluded that Medicare will use the savings to provide members lower premiums and additional benefits.