By Lauren Flynn Kelly

Medicare Advantage and Part D plan sponsors submitting bids for the 2020 plan year faced a considerable amount of uncertainty compared with recent years. On the Part D side, there was “not only one but two pending regulations — both of which would have had a significant impact on bids — and it was difficult for carriers to know 1) how they should bid and 2) how others might be bidding,” observes Shelly Brandel, a principal and consulting actuary in the Milwaukee office of Milliman.

Perhaps creating the most uncertainty was when HHS would finalize a January proposed rule that would eliminate safe-harbor protections for rebates paid by manufacturers to plan sponsors under Medicare Part D and Medicaid. CMS in Part D bidding guidance posted May 20 confirmed what it had hinted at in an April memo on how bids should be prepared: the rule would not be finalized before the June 3 bid deadline.

If the so-called rebate rule were to be effective Jan. 1, 2020, as HHS proposed, “I think carriers would want to have sufficient time to incorporate those requirements into their contracting for 2020, which obviously would be difficult the later that rule is released,” suggests Brandel.

Meanwhile, CMS on May 16 issued a final rule on MA and Part D drug pricing in which it did not follow through on a proposal to pass through pharmacy pricing concessions in the form of direct and indirect remuneration (DIR) fees to patients through reduced cost sharing. That gave Part D sponsors needed clarity on how pharmacy DIR should be reported in bids, says Brandel.