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Tara Dwyer is Of Counsel in the firm’s Washington, DC office. Tara focuses on advising private and public health care services entities, including managed care organizations, pharmaceutical services providers such as PBMs, and integrated delivery systems, on mergers and acquisitions, joint ventures, and complex service arrangements. She works closely with Medicare Advantage Organizations (MAOs) and Medicare Part D Plan Sponsors, including Employer Group Waiver Plans (EGWPs), and first tier and downstream entities to address regulatory and compliance matters that arise as a result of participating in Medicare Parts C and D.

Today is the deadline for interested parties to submit comments to CMS regarding the proposed contract year 2019 Medicare Advantage and Part D regulations.  The proposed rule focuses on many issues.  In addition to the changes that CMS formally proposes, CMS has also included a request for information. CMS often uses a “request for information” in order to gain insight on an issue so that it can decide whether to formally make proposed changes relating to the issue in the future.  CMS’s request for information relates to the application of manufacturer rebates and pharmacy price concessions to drug prices at the point of sale.  CMS has been gathering information regarding these topics for many years.  You can read more here, here, here, and here.

CMS asks stakeholders to comment on CMS’s proposal: (a) to require that a percentage of manufacturer rebates be passed through at the point of sale, and (b) to require pharmacy price concessions (such as performance-based pharmacy adjustments) be reflected at the point of sale.  CMS specifically requests that all commenters provide quantitative analytical support for their responses wherever possible. Continue Reading In Proposed Regulations CMS Requests Information on Changes to Part D Negotiated Prices

On January 9th, the Senate Committee on Finance conducted its nomination hearing of Alex Michael Azar II, President Trump’s nominee for Secretary of Health and Human Services. Under President George W. Bush, Mr. Azar served in HHS, first as general counsel to HHS and then as deputy secretary. Mr. Azar was more recently an executive at Eli Lilly and Company. As summarized here, Mr. Azar received many questions regarding Medicaid, CHIP, the Affordable Care Act, and most notably and often, drug prices. Continue Reading Azar’s Nomination Hearing Highlights Medicare Negotiation of Part B Drug Prices

Medicare Part D plan sponsors and pharmacies are often confused by the program’s any willing pharmacy (AWP) requirements. Since the inception of the Medicare Part D program, the Centers for Medicare & Medicaid Services (CMS) has required Part D plan sponsors to: (i) have standard terms and conditions that are “reasonable and relevant;” and (ii) allow any pharmacy willing to accept the terms and conditions to participate in the sponsor’s network (AWP Requirements). The “standard terms and conditions” requirement does not require that Part D plan sponsors offer the same reimbursement terms to all pharmacies. Although CMS has tried to clarify these requirements through Call Letters and memos, CMS has not substantially updated these regulations over the past 10 years. Continue Reading Proposed Medicare Advantage and Part D Regulations for CY 2019 – CMS Tries to Clarify Any Willing Pharmacy Rules

The rising cost of drugs in the U.S. is frequently in the news. So it is not surprising that in its contract year 2019 Proposed Medicare Advantage and Part D Regulations (Proposed Rule), the Centers for Medicare & Medicaid Services (CMS) seeks to address Part D drug prices. CMS proposes making certain changes that might lower drug costs (for Plan Sponsors and beneficiaries) and requests information regarding avenues to potentially lower Medicare beneficiaries’ point-of-sale drug costs. The three provisions in the Proposed Rule that most directly relate to drug pricing address: (1) generic drug formulary placement, (2) cost-sharing for follow-on biological products, and (3) whether and how to reduce point-of-sale drug prices based on manufacturer rebates and pharmacy price concessions that a Plan Sponsor might receive months after the beneficiary receives the drugs. We will concentrate on the first two provision in this post. The third provision, which is a request for information, will be discussed in a later post.  Continue Reading Proposed Medicare Advantage and Part D Regulations for CY 2019 – CMS Takes Aim at Drug Prices

Last Thursday, November 17, 2017, the Centers for Medicare & Medicaid Services (CMS) released its proposed contract year 2019 Medicare Advantage and Part D regulations. The proposed rule is scheduled to be published in the Federal Register on November 28, 2017.

The proposed rule focuses on many issues including but not limited to:

  • Implementing certain parts of the Comprehensive Addiction and Recovery Act of 2016, aimed at establishing additional methods that Part D plans can use to reduce abuse or misuse of frequently abused drugs;
  • Changes to certain Medicare Advantage provisions relating to marketing and delivery of information;
  • Establishing “preclusion lists” under Medicare Advantage and Part D to limit when a Medicare Advantage organization and Part D plan sponsor may pay for a service or drug based on the provider who prescribed or furnished the service or drug;
  • Part D Network requirements relating to any willing provider, including defining mail-order pharmacy;
  • Part D beneficiaries’ access to generic drugs and follow-on biological products;
  • Changes to medical loss ratio calculation and reporting; and
  • Updates to the Medicare Advantage and Part D Star Rating System.

Within the proposed rule, CMS also included a request for information regarding the application of manufacturer rebates and pharmacy price concessions to drug prices at the point of sale. CMS has been gathering information regarding this topic for a number of years but appears to be seeking more detailed information in this request.

In the coming weeks we will be issuing detailed posts on these topics as well as others.

Based on the significance and number of the changes proposed, we anticipate that CMS will receive many comments from all segments of industry and beneficiary groups that may be affected by the proposed changes.  Comments are due to CMS before 5:00 pm on January 16, 2018.

CMS has completed the 2016 Final Part D Payment Reconciliation. Each Medicare Part D plan sponsor’s reconciliation reports will be available on October 12, 2017.

By way of background, the Medicare Part D reconciliation process is intended to ensure that the federal government pays each Part D plan sponsor appropriately. To arrive at the reconciliation report, CMS : (1) reviews data provided by the plan sponsor and other sources throughout the year, (2) considers what a plan sponsor paid for drugs during the plan year, what direct and indirect remuneration (DIR) a plan sponsor paid to or received from outside parties, and the total value of prospective payments made by CMS to the plan sponsor for the plan year, and (3) determines whether additional money is owed to or from the plan sponsor. Continue Reading CMS Completes Final Medicare Part D Reconciliation for 2016

On Friday, June 23, 2017, CMS released the Final Medicare Part D DIR Reporting Requirements for 2016.  Part D sponsors may begin submitting their DIR information on June 30, 2017 and must finish their submissions by the end of July 31, 2017.  As explained in our earlier post, CMS publishes Part D DIR Reporting requirements each year and sets the deadline for DIR submissions.

These DIR Reporting Requirements are the first to require Part D plan sponsors to report as DIR price concessions from and additional contingent payments to network pharmacies that could not reasonably be determined at the point of sale.  This change is caused by the update to the definition of “negotiated prices” that was effective January 1, 2016.  Not surprisingly, most of the comments and responses included in CMS’s Reporting Requirements focus on this change.  Additional topics addressed in the comments and responses include, but are not limited to: (i) plan sponsors no longer being able to report negative amounts in the rebate fields, (ii)  the timeliness of the DIR data submitted by July 31, 2017; and (iii) confidentiality of DIR data reported to CMS.

Yesterday, CMS released the Proposed Part D DIR (Direct and Indirect Remuneration) Reporting Requirements for 2016 and postponed the 2016 DIR Reporting deadline.

Each year, CMS releases Proposed Part D DIR Reporting Requirements for interested parties to review and comment on. The DIR Reporting Requirements tend to change slightly from year-to-year as the Part D program has developed and CMS gains further understanding of rebates and price concessions that a Part D plan sponsor may receive or pay.  Additionally, some changes in DIR Reporting Requirements are the result of changes to Part D regulations.  After reviewing the comments, CMS publishes the Final Part D DIR Reporting Requirements, typically in late May, and then plan sponsors submit their DIR Report by June 30th.

These Proposed DIR Reporting Requirements are the first that reflect the change in the definition of “negotiated prices” as set forth at 42 C.F.R. § 423.100. Although the discussion regarding changing the definition of negotiated prices started multiple years ago and was finalized in 2014, the change was not effective until January 1, 2016.  CMS’s proposed changes related to the updated definition of negotiated prices are captured in Summary DIR Report columns DIR #8 and DIR #9.

The deadline for submitting comments is June 2, 2017.

Typically, Part D plan sponsors must submit their DIR reports to CMS by June 30th of the year following the close of the plan year (June 30, 2017 for 2016 DIR).  CMS is postponing the deadline for 2016 DIR submission so that it has time to review the comments it receives and so that Part D plan sponsors have adequate time to analyze and categorize their data in the manner required by the upcoming Final Part D DIR Reporting Requirements.  CMS will announce the 2016 DIR submission deadline in the Final Part D DIR Reporting Requirements for 2016 and it appears that plan sponsors will have approximately 30 days to analyze and categorize their data.

shutterstock_428983732Last week, the California Assembly Committee on Business and Professions voted in favor of Assembly Bill 315.  AB 315 seeks to amend the California Business and Professions Code: (a) to require PBMs to obtain licensure from the Board of Pharmacy, (b) to state that PBMs have fiduciary duties to their “purchaser” clients (i.e., health plans), and (c) to require PBMs to disclose to their purchaser clients data regarding drug costs, rebates, and fees earned. The favorable vote moves the bill to the Committee on Appropriations.

California is not the only state that is considering adopting a PBM “transparency” law.  New York’s Governor Cuomo released a proposal that seeks to require PBMs to both register with the State and obtain a license (from the Department of Financial Services) as well as disclose financial incentives or benefits for promoting the use of certain drugs and financial arrangements that affect customers.  The Governor would also like to impose price controls on pharmaceutical manufacturers.  New York has a long history of regulating PBMs through a handful  of systems because the services that PBMs offer often result in a PBM needing to hold a specific non-PBM license and to adopt a specific corporate structure.  In addition, Senator Wyden (D-Ore.) introduced the C-THRU Act to the Senate Finance Committee in March.  The C-THRU Act seeks to make PBM rebate data publicly available, require the Secretary of HHS to adopt a minimum percentage of drug rebates that a PBM would need to pass through to certain of its health plan clients, and amend the definition of “negotiated prices” under the Medicare Part D Program.  Continue Reading California Advances PBM Licensing and “Transparency” Law

As described in last week’s post, Senator Wyden has introduced the C-THRU Act that seeks to require public disclosure of PBM rebate amounts, establish a minimum rebate percentage that PBMs must pass on to Part D and Exchange Plan clients, and intends to change the definition and/or application of “negotiated prices” under the Part D program.  This post focuses on the portion of the C-THRU Act that relates to Part D negotiated prices.

According to the Summary of The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act (“Summary”) released by the Senate Finance Committee prior to the release of the actual bill, Part D enrollee cost-sharing is based off the price at which the pharmacy acquires the drug.  The Summary provides the following example:  “a drug maker sets a drug[‘]s price at $100.  Under current law, Part D beneficiaries pay co-insurance based on the $100 price, not the lower price, say, $80, that a PBM negotiates with a drug maker.  Seniors in Medicare ought to benefit from these negotiations.”  This example is inaccurate, ignores the definition of and parties involved in negotiated prices as defined under the Part D regulations, and assumes that Medicare seniors currently do not benefit from manufacturer rebates.  In fact, CMS recently recognized that manufacturer rebates are helping keep Part D enrollee premiums down. Continue Reading C-THRU’s Proposed Changes to Negotiated Prices – A Demonstration of the Part D Program’s Complexities and Misunderstandings