The issue of cost sharing in preferred versus nonpreferred pharmacy networks of Medicare Part D plans clearly has landed on CMS’s radar screen. The preliminary 2013 Medicare Advantage and Part D call letter issued by CMS Feb. 17 cites both beneficiary and pharmacy “confusion over whether preferred cost sharing is available at individual pharmacies.” The call letter says CMS is changing its online Medicare Plan Finder to require beneficiaries using it to select a pharmacy for purposes of getting cost estimates that reflect the store’s status as preferred or nonpreferred in a Part D plan’s network.

The change is one of many regarding Part D that are in the call letter and suggest more emphasis on regulation of Part D plans in the coming years. Among other indicators of that change is a lengthy new section in the call letter on medication therapy management (MTM), and tables increasing the minimum differences Part D sponsors must have among their product options.

Moreover, CMS indicated in the call letter that for 2014 it may use an approach for stand-alone Medicare Prescription Drug Plans (PDPs) similar to that it has employed for MA the past two years to limit beneficiary costs. “We are considering using an out-of-pocket (OOPC) or market basket approach to set thresholds for increases in cost-sharing and premiums whereby we would deny Part D plan bids with significant increases in either,” the agency said.

“This was a surprise,” and it could be a problem, especially for new entrants that can’t predict as well as continuing plans can what their costs and risks are, contends Pat Dunks, principal and consulting actuary at Milliman, Inc.

Dunks also notes that for 2013 CMS is proposing boosts in the minimum of what it calls “meaningful differences” in OOPC among PDPs to $24 (from $22 for 2012) between the basic and first enhanced plans and to $29 between the first and second enhanced plans. The hikes are “surprising,” he tells MAN, especially since CMS increased both amounts last time. The agency didn’t give a reason for the new boosts, and there is speculation that CMS might be trying to get rid of the second enhanced plans as part of moves to simplify product options for beneficiaries.

In the same table in the call letter, CMS also added maximum coinsurance requirements for both generic and brand Part D drugs. This new mandate, according to Dunks, will have the effect of limiting how low generic copayments may get.

The biggest immediate issue, however, is preferred networks, and the steps CMS is taking this year might just be the start, according to actuary Kirk Twiss, vice president at the OptumInsight unit of UnitedHealth Group. “People don’t know what their cost share will be” now because Part D plans increasingly have divided their network pharmacies into preferred and nonpreferred ones, each with separate cost-sharing requirements.

CMS is not moving to “shut down” this concept, notes Twiss’ colleague, Senior Vice President Stephen Wood. But it does say “a primary source of this confusion [among beneficiaries regarding cost sharing] arises when beneficiaries do not select a specific pharmacy when they compare Part D plans using the Medicare Plan Finder.”

The agency adds that it intends to require sponsors of plans with preferred and nonpreferred cost sharing on Part D to “clearly designate their pharmacy contracts — including their standard terms and conditions available to any willing pharmacy — as either preferred or nonpreferred Part D network contracts to improve transparency around these arrangements.”

Twiss cautions that if CMS concludes these steps are not enough to clarify the pharmacy network situation, it might do something more restrictive in subsequent years.

On the plus side for plans, points out actuary Brian Weible, president of Wakely Consulting Group, CMS proposed not making any changes for 2013 in the “risk corridors” that limit Part D sponsors’ exposure to unexpected drug expenses. The agency explained in the call letter that while sponsors have improved in their ability to predict Part D expenditures, “risk sharing amounts continue to vary significantly for Part D sponsors. In addition, the aggregate risk sharing amount paid by CMS varies significantly from year to year.”

The resulting decision to maintain the existing risk corridors “works as a safety net for new plans” and is good news for them, Weible tells MAN.

MTM Section Shows Developing Issue

Perhaps the “sleeper” in this year’s call letter regarding Part D is the 10-page section on MTM and drug utilization review. CMS noted the standardized format that it developed and Part D sponsors must use starting next January for the action plan and summary given to beneficiaries after their comprehensive medication review (CMR) will be posted on its MTM website “no later than April 2012.”

“Targeted beneficiaries,” according to the call letter, “are auto-enrolled, so sponsors should not wait for program or CMR acceptance from the beneficiary to provide the required minimum MTM services.” CMS goes on to say its standardized format “requires certain minimum service levels for the CMR,” and points out it is developing an MTM star-rating quality measure that may be included on the 2013 “display page” but not yet used in star scoring.

Starting in 2013, CMS adds, Part D sponsors “will be required to have a link on their website to MTM program information.” Sponsors also annually “must submit an MTM program description to us for review and approval through the Health Plan Management System,” the agency says. And since its expectations that more Part D beneficiaries would be eligible for MTM following changes to eligibility criteria in 2010 have not panned out so far, CMS says it is concerned that plan sponsors are seeking to limit the number and percentage of beneficiaries who qualify for MTM and must be offered CMRs. The agency asserts that it therefore may make changes in the eligibility criteria. In 2013, it is adding Alzheimer’s disease and end-stage renal disease requiring dialysis to the core chronic diseases for targeting MTM programs.

One industry insider who asks not to be identified theorizes that the overall increased MTM requirements could be a prelude to new CMS audits and “secret shopping,” perhaps starting as early as this summer.

View the 2013 CMS call letter by clicking on “Announcements and Documents” at www.cms.hhs.gov/MedicareAdvtgSpecRateStats.

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