Medicare Advantage Part B Plans Can Use Drug Step Therapy

August 13, 2018 - CMS is allowing Medicare Advantage (MA) health plans to implement step therapy protocols in order to decrease prescription drug spending.

On January 1, 2019, MA health plans can apply step therapy guidelines for physician-administered medications. Step therapy requires beneficiaries to use condition-based prefered medications before using more expensive drugs. MA plans can also cross-manage prescriptions from Medicare Part B and D, which allows health plans to provide beneficiaries with the most cost-effective prescriptions.

CMS estimates that Medicare Advantage payers spend $12 billion a year on Part B drugs, and believes the implementation of step therapy can help MA plans control spending and reduce beneficiaries’ out-of-pocket costs.

“As soon as next year, drug prices can start coming down for many of the 20 million seniors on Medicare Advantage, with more than half of the savings going to patients,” said HHS Secretary Alex Azar in a press release.

“Consumers will always retain the power to choose the plan that works for them: If they don’t like their plan, they don’t have to keep it. We look forward to seeing the results of tougher negotiation within Medicare, and expanding successful negotiation tools throughout our programs.”

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In a memo to MA plans, CMS stated that MA plans must disclose step therapy use within a plan’s Notice of Change (ANOC) and Evidence of Coverage (EOC) documents. Plans that have already released these documents to beneficiaries can send out an official addendum that explains new step therapy guidelines.

Medicare Advantage plans can only apply step therapy requirements to new prescriptions that enrollees did not previously use, which means that MA plans can’t disrupt a beneficiary’s current prescription treatments. Beneficiaries must also have the ability to receive expedited step therapy prescriptions when the patient has an immediate medical need for the drug.

CMS suggested that step therapy should align with care coordination programs that help address an individual’s specific healthcare needs. CMS advised MA plans to conduct interactive medication reviews with enrollees, provide education to enrollees about prescription effects and step therapy, and coordinate medication adherence programs for beneficiaries. The agency emphasized a need for patient engagement strategies to support step therapy programs.

“Patient engagement is essential to a successful care coordination program,” CMS said. “To ensure adequate access to Part B drugs, it is necessary, under CMS’s interpretation of its regulations, that MA plans opting to apply step therapy encourage enrollees to participate in such a drug management care coordination program by offering rewards in exchange for enrollee participation.”

In addition, CMS asked MA health plans to seek out qualified Part D pharmacy and therapeutics (P&T) committees when developing step therapy guidelines. P&T committees help set step therapy protocols within the Part D program and can help plans improve decision making.

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CMS Administrator Seema Verma said that the changes will help promote a more cost-effective drug environment for MA health plans.

“For too long, Medicare Advantage plans have not had the tools to negotiate a better deal for patients,” Verma said. “Today we begin lifting those barriers so plans can use private-sector tools to drive down the cost of expensive drugs while also offering new care coordination and drug adherence programs, to ensure that patients are getting high quality care at lower cost.”

The new step therapy policy for MA has received mixed reactions from industry stakeholders.

AHIP CEO Matt Elyes issued a statement that expresses the organization's full support of the CMS’s decision.

“We commend CMS for their leadership to strengthen the private sector’s ability to implement market-based solutions that can lower the cost of high-priced drugs for consumers,” Eyles said. “This approach empowers Medicare Advantage plans to negotiate lower drug prices – so that health insurance providers can reduce costs for patients and hardworking taxpayers. We look forward to working with CMS and the Administration on these changes, and are strongly committed to protecting patients and bringing down the price of medications for every American.”

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However, the American College of Rheumatology (ACR) expressed significant concerns about the policy, arguing that expanding step therapy across Medicare Advantage would create barriers to patient access. The ACR believes step therapy is a form of prior authorization that adds administrative burdens and creates patient safety risks.

“Put simply, this policy change is a gross affront to America’s sickest Medicare patients – individuals living with diseases like inflammatory arthritis and cancer – who depend on timely access to safe, affordable, and high-quality treatments,” said David Daikh, PhD, MD, President of ACR.

“Utilization management techniques like step therapy prevent and delay important treatments for rheumatic disease patients, which can result in irreversible joint or organ damage,” Daikh continued. “We urge CMS to reconsider this policy and ensure that all Americans continue to have access to the most appropriate and effective therapy as determined by their health care team.”