Drug costs

New CMS Rules to Increase Transparency and Lower Drug Costs

The Centers for Medicare and Medicaid Services (CMS) recently published a final rule intended to increase transparency and lower drug prices. This announcement has been in the works since CMS first posted their proposal in November 2018. Now that the final ruling has arrived, it’s important for health plans to understand what’s changed and how the rule may affect their business. Tier 1 is available to consult with health plans about these important updates. In the meantime, here’s a brief look at what this final rule means for health plans and the health care industry more generally.

What Does the Final Rule Mean for Your Health Plan?

If you’ve been following along with this blog, this topic will already be familiar to you—we’ve been keeping you posted about its various updates since the proposal was first announced. Published on May 23, the CMS’s final rule is formally entitled, “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses.” As the title suggests, the amendments within the final rule pertain to both Part C (Medicare Advantage program) and Part D (Prescription Drug Benefit program) regulations. The amendments aim to help health plans negotiate for lower drug prices and reduce out-of-pocket costs for enrollees of Part C and Part D programs. The CMS ruling achieves this aim by improving regulatory frameworks and facilitating the development of products that meet patient needs while also reducing their fees. Health plans only want the best for their members—and reducing patients’ out of pocket costs help minimize the expenditures of Part C and Part D programs.

What Does the Final Rule Say that Your Health Plan Needs to Know?

On the same day they published their final rule, CMS posted a helpful fact-sheet outlining significant changes that your health plan needs to consider moving forward. Key takeaways include:

  • Part D policy relating to six classes of drugs has now been codified.
  • Part D plans are now required to adopt one or more electronic Real Time Benefit Tools that have the capability to inform prescribers when lower-cost therapies are available under their drug benefit.
  • Policy is now being finalized that would allow Medicare Advantage plans to implement step therapy for Part B drugs as a recognized utilization management tool.
  • CMS will now require Part D plans to inform members of drug price increases and lower-cost therapeutic alternatives in their Explanation of Benefits.
  • A new prohibition against gag clauses in pharmacy contracts now restricts Part D sponsors from prohibiting or penalizing a pharmacy from disclosing a lower cash price to an enrollee.

About Tier 1 

Tier 1 Pharmacy Consulting is a Denver, Colorado-based pharmacy benefit consulting firm offering customized services to healthcare plans that offer prescription drug benefits. Whether your health plan is big or small, Tier 1 offers strategic, cost-saving solutions that boost the plan’s overall value and help its members by providing high quality care.

Tier 1’s founder is a clinical pharmacist with more than a decade of experience in pharmacy benefit management. We are passionate about collaborating and developing effective strategies to improve health plan outcomes.

Tier 1 offers health plans a new perspective on how to manage their pharmacy benefit. Our team is made up of experts who strive to make effective plans even stronger and fill in any gaps due to a lack of time or resources.

Drop us a note at info@tieronepc.com. Let’s get connected.

HHS proposes removing safe harbor for drug rebates

Prescription drug prices have risen every year for nearly a decade at rates that are higher than the U.S. inflation rate.

The costs of brand name oral drugs nearly doubled between 2008 and 2016, according to an ABC news report earlier this year. The increase was five times that of the inflation rate.

Generic oral medications saw a smaller increase – yet it was still double the rate of inflation. Specialty medications rose 13 times faster than inflation during the same period.

OIG Proposal

A few weeks after this and similar news stories broke, the U.S. Department of Health and Human Services issued a proposal to remove drug rebates for PBMs. Under the umbrella of the federal Anti-Kickback statute, the HHS Office of Inspector General said the move could ban rebates ­on brand-name prescriptions, which benefit drug sellers, and protect discounts and services that benefit patients.

The proposed change “may curb list price increases, reduce financial burdens on beneficiaries, lower or increase federal expenditures, remove transparency and reduce the likelihood that rebates would serve to inappropriately induce business payable by Medicare Part D and Medicaid MCOs (managed care organizations),” the OIG’s office wrote.

At the same time, the government is also proposing a new safe harbor to protect point-of-sale discounts that drug manufacturers provide directly to patients. HHS also wants s a second new safe harbor to protect certain administrative fees paid by manufacturers to pharmacy benefit managers.

The proposals are in direct response to skyrocketing drug costs. Proponents worry that some patients are not receiving life-saving drugs because they can’t afford them. Pharmacy benefit managers help health plans manage costs and drug utilization. They do that by negotiating with manufacturers and pharmacies to facilitate beneficiary access to appropriate medications, while managing the costs to the plan.

Even so, according to HHS data, the changes could lower beneficiary out-of-pocket costs. Varying from patient to patient, the proposals if implemented could result in higher premiums. That’s something to keep in mind.

Background

The Anti-Kickback Statute is part of the Social Security Act of 1972. Amended five years later, it made it a crime to receive money or rewards for services offered by Medicare or another federal healthcare program.

Meanwhile, the Ant-Kickback “Safe Harbors” statute of 1987 exempts certain transactions from penalties. They include bona fide employment relationship, personal service arrangements, lease or rental of office space or equipment, referral services and a few more.

HHS makes clear it does not intend to remove protection from rebates required by law, such as rebates under the Medicaid drug rebate program. HHS also intends for protection to continue for drug discounts offered to entities such as wholesalers, hospitals, physicians, pharmacies, and third-party payors in other federal health care programs.

The agency is soliciting comments on whether the proposed amendments to the safe harbor regulation would exclude from protection any price reductions “not contemplated by the proposed amendment.”

The effective date of the proposed update to the safe harbor regulation would be Jan. 1 of next year.

About Tier 1 

Tier 1 Pharmacy Consulting is a Denver, Colorado-based pharmacy benefit consulting firm offering customized services to healthcare plans that offer prescription drug benefits. Whether your health plan is big or small, Tier 1 offers strategic, cost-saving solutions that boost the plan’s overall value and help its members by providing high quality care.

Tier 1’s founder is a clinical pharmacist with more than a decade of experience in pharmacy benefit management. We are passionate about collaborating and developing effective strategies to improve health plan outcomes.

Tier 1 offers health plans a new perspective on how to manage their pharmacy benefit. Our team is made up of experts who strive to make effective plans even stronger and fill in any gaps due to a lack of time or resources.

Drop us a note at info@tieronepc.com. Let’s get connected.