Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses, 23832-23884 [2019-10521]
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Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 422 and 423
[CMS–4180–F]
RIN 0938–AT92
Modernizing Part D and Medicare
Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule amends the
Medicare Advantage (MA) program (Part
C) regulations and Prescription Drug
Benefit program (Part D) regulations to
support health and drug plans’
negotiation for lower drug prices and
reduce out-of-pocket costs for Part C and
D enrollees. These amendments will
improve the regulatory framework to
facilitate development of Part C and Part
D products that better meet the
individual beneficiary’s healthcare
needs and reduce out-of-pocket
spending for enrollees at the pharmacy
and other sites of care.
DATES: These regulations are effective
on January 1, 2020, except for the
amendments to §§ 422.629, 422.631,
422.633, 423.128, and 423.160, which
are effective January 1, 2021.
FOR FURTHER INFORMATION CONTACT:
Joella Roland, (410) 786–7638 or
Christian Bauer, (410) 786–6043, Part D
Issues.
Marty Abeln, (410) 786–1032, Jelani
Murrain, (410) 786–2274, or Brandy
Alston, (410) 786–1218, Part C Issues.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Executive Summary and Background
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A. Purpose
This final rule amends regulations to
support Medicare health and drug
plans’ negotiation for lower drug prices
and to reduce out-of-pocket costs for
Part C and D enrollees. Although
satisfaction with the MA and Part D
programs remains high, these provisions
are responsive to input we received
from stakeholders while administering
the programs, as well as through our
requests for comment.
The Trump Administration Blueprint
to Lower Drug Prices and Reduce Outof-Pocket Costs (May 16, 2018, 83 FR
22692) sought to find out more
information about lowering drug pricing
using these four strategies: Improved
competition, better negotiation,
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incentives for lower list prices, and
lowering out-of-pocket costs. We are
finalizing a number of provisions that
implement these four strategies in an
attempt to lower out-of-pocket costs.
There is also a particular focus in this
final rule on strengthening negotiation
leverage for MA and Part D plans and
increasing competition in the market for
prescription drugs. We are finalizing
policies that provide more tools to MA
plans that negotiate with manufacturers
of Part B drugs, so these plans are
equipped with similar negotiation
capabilities that group health plans and
issuers have in the commercial market.
We sought to drive robust competition
among health plans and pharmacies, so
consumers can shop based on quality
and value. These provisions align with
the Administration’s focus on the
interests and needs of beneficiaries,
providers, MA plans, and Part D
sponsors. We are also finalizing policies
that will increase transparency of drug
pricing and drug price increases, giving
beneficiaries and prescribers tools to
help improve adherence, lower
prescription drug costs, and minimize
beneficiary out-of-pocket costs.
B. Summary of the Major Provisions
1. Providing Plan Flexibility To Manage
Protected Classes (§ 423.120(b)(2)(vi))
Except in limited circumstances,
current Part D policy requires Part D
sponsors to include on their formularies
all Part D drugs in six categories or
classes: (1) Antidepressants; (2)
antipsychotics; (3) anticonvulsants; (4)
immunosuppressants for treatment of
transplant rejection; (5) antiretrovirals;
and (6) antineoplastics. We proposed
three exceptions to this protected class
policy that would allow Part D sponsors
to: (1) Implement broader use of prior
authorization (PA) and step therapy (ST)
for protected class Part D drugs,
including to determine use for protected
class indications; (2) exclude a
protected class Part D drug from a
formulary if the drug represents only a
new formulation of an existing singlesource drug or biological product,
regardless of whether the older
formulation remains on the market; and
(3) exclude a protected class Part D drug
from a formulary if the price of the drug
increased beyond a certain threshold
over a specified lookback period. This
regulatory provision finalizes one of the
three proposed exceptions with
modifications: The first exception
related to PA and ST.
The first exception permits Part D
sponsors to use PA and ST for protected
class Part D drugs. We are finalizing this
exception with modifications. As
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modified, the exception is a codification
of existing policy and does not place
additional limits on beneficiary access
to medications. Specifically, the
exception will permit PA and ST only
for new starts (that is, enrollees
initiating therapy), including to confirm
the use is for a protected-class
indication, for five of the six protected
classes (that is, all protected classes
except for antiretroviral medications).
PA and ST will not be permitted for
antiretrovirals under this exception.
This exception will permit indicationbased formulary design and utilization
management for new starts in five of the
six protected classes, allowing Part D
sponsors to exclude a protected class
Part D drug in these five classes from
the formulary for non-protected class
indications only. As is required for all
other Part D drug categories or classes,
these formulary design and utilization
management edits will be subject to
CMS review and approval as part of our
annual formulary review and approval
process, which includes reviews of PA
and ST edits that restrict access, ST
criteria, PA outliers, and PA criteria.
(For an extensive description of our
annual formulary checks see section
II.A.1. of this final rule.)
The second exception would have
permitted Part D sponsors to exclude
from the formulary a protected class
Part D drugs that is a new formulation
of a protected class Part D drug, even if
the older formulation is removed from
the market. That is, Part D sponsors
would have been permitted to exclude
from their formularies a protected class
Part D drug that is a new formulation
that does not provide a unique route of
administration, regardless of whether
the older formulation remains on the
market. Based on comments, we are not
finalizing this exception.
The third exception would have
permitted Part D sponsors to exclude
from the formulary any protected class
Part D drug whose price increases,
relative to the price in a baseline month
and year, beyond the rate of inflation
calculated based on the Consumer Price
Index for all Urban Consumers (CPI–U).
Based on comments, we are not
finalizing this exception.
2. E-Prescribing and the Part D
Prescription Drug Program; Updating
Part D E-Prescribing Standards
(§ 423.160)
This final rule requires under section
1860D–4(e)(2)(D) of the Social Security
Act (Act) that Part D plan sponsors
implement an electronic real-time
benefit tool (RTBT) capable of
integrating with at least one prescriber’s
electronic prescribing (eRx) system or
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electronic health record (EHR). We
believe that this requirement is
appropriate given the Act’s support of
interactive real-time standards
whenever feasible, and for standards
that improve the cost-effectiveness of
the Part D benefit. RTBTs currently used
in the industry have the ability to make
beneficiary-specific drug coverage and
cost information visible to prescribers
who want to consider that information
at the point-of-prescribing. Because
there currently are no industry-wide
electronic standards for RTBTs, we are
finalizing a requirement that each Part
D plan implement at least one RTBT of
its choosing that is capable of
integrating with at least one prescriber’s
eRx system or EHR to provide
prescribers who care for its enrollees
complete, accurate, timely and
clinically appropriate patient-specific
real-time formulary and benefit (F&B)
information (including cost, formulary
alternatives and utilization management
requirements) by January 1, 2021.
However, we strongly encourage plans
to start implementing this provision
prior to 2021.
3. Medicare Advantage and Step
Therapy for Part B Drugs (§§ 422.136,
422.568, 422.570, 422.572, 422.584,
422.590, 422.618, and 422.619)
This final rule provides requirements
under which MA plans may apply step
therapy as a utilization management
tool for Part B drugs and adopts new
adjudication timeframe requirements for
organization determinations and plan
reconsiderations related to requests for
Part B drugs. In addition, CMS will
incorporate the shorter adjudication
timeframes for Part B drug requests into
the contract deadlines that apply to Part
C Independent Review Entity (IRE)
reconsiderations under § 422.592(b). In
this final rule, we reaffirm MA plans’
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existing authority to implement
appropriate utilization management and
prior authorization programs (meaning
policies and procedures) for managing
Part B drugs to reduce costs for both
beneficiaries and the Medicare program.
The use of utilization management
tools, such as step therapy, for Part B
drugs enhances the ability of MA plans
to negotiate Part B drug costs and
ensures that taxpayers and MA enrollees
face lower per unit costs or pay less
overall for Part B drugs while
maintaining access to medicallynecessary Medicare-covered services
and drugs. In order to make sure
enrollees maintain access to all
medically necessary Part B covered
drugs, we are modifying the Part C
adjudication time periods for
organization determinations and
appeals involving Part B drugs.
C. Summary of Costs and Benefits
TABLE 1—COSTS AND BENEFITS FOR THE MAJOR PROVISIONS
Provision
Providing Plan Flexibility to
Manage Protected Classes
(§ 423.120(b)(2)(vi)).
E-Prescribing and the Part D
Prescription Drug Program;
Updating Part D E-Prescribing Standards
(§ 423.160).
Part D Explanation of Benefits
(§ 423.128).
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Medicare Advantage and Step
Therapy for Part B Drugs
(§§ 422.136, 422.568,
422.570, 422.572, 422.584,
422.590, 422.618, and
422.619).
Description
We allow the following exception related to
protected class Part D drugs: Use of PA
and ST for new starts of five of the six protected classes, including to determine use
for protected class indications.
We require each Part D plan sponsor to implement one or more RTBTs of its choosing
that are capable of integrating with at least
one provider’s e-Rx system or EHR and delivering complete, accurate, timely and clinically appropriate patient-specific real- time
F&B information beginning on 01/01/2021.
We require the inclusion of negotiated drug
pricing information and lower cost alternatives in the Part D Explanation of Benefits beginning on 01/01/2021. The intent of
the provision is to provide enrollees with
greater transparency, thereby encouraging
lower costs.
We added certain new requirements for when
MA plans may apply step therapy as a utilization management tool for Part B drugs.
D. Background
In the proposed rule titled
‘‘Modernizing Part D and Medicare
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We estimate neither cost nor savings from this provision.
This provision is scored as a qualitative savings. Based on
commenter response we do not believe there will be significant cost to implement RTBT since i) Based on informal
conversations with plans and commenter response, 30 percent–90 percent of plans are estimated as already supporting an RTBT tool and ii) plans that do not have it are
most likely to use existing intermediaries. Commenters
were overwhelmingly enthusiastic on the savings potential
due to reduced drug costs arising from cheaper alternatives. The Trust Fund and enrollees will save. However,
this savings is classified as a transfer since a cheaper drug
is being substituted for a more expensive one. Because of
the complexity of prescription drug usage we are unable to
meaningfully quantify this savings.
There is an estimated cost of $4.7 million in the first year of
implementation for programmers to update systems. There
is an annual estimated cost in all years (including the first)
of $5.7 million arising from the cost of paper, printer toner,
and postage for mailing one extra page in the Part D EOB
with added information about alternatives.
The estimated savings to enrollees due to reduced out-ofpocket costs are between $5 and $8 million for 2020–2029
resulting in an aggregate savings of $62 million over 10
years. The savings to the Trust Fund are between $145
and $240 million for 2020–2029, resulting in an aggregate
savings over 10 years of 1.9 billion. There is a modest cost
to the government and its contractors of $1 to $1.3 million
in 2020–2029 due to a projected increased in appeals, resulting in an aggregate cost of $11.2 million cost over 10
years. These estimates reflect the impact of allowing step
therapy for MA organizations in 2020 and future years.
Advantage to Lower Drug Prices and
Reduce Out-of-Pocket Expenses’’ which
appeared in the November 30, 2018
Federal Register (83 FR 62152 through
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62201), we proposed revisions to the
Medicare Advantage program (Part C)
regulations and Prescription Drug
Benefit program (Part D) regulations that
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will have the effect of lowering the cost
of medications and reducing out-ofpocket costs for enrollees in the Part C
and D programs. The changes, as
finalized in this rule, will also
streamline different aspects of the Part
D program and reduce associated
burden on the government and
sponsoring organizations of MA plans
and Part D plans.
In response to the proposed rule, we
received 7,898 timely pieces of
correspondence containing multiple
comments each. Although we are not
finalizing all of our proposals to provide
plan flexibility to manage protected
classes, we are finalizing all other
provisions with changes varying from
minor clarifications to more significant
modifications, based on the comments
received. We also sought comment on
the possibility of adopting a new
definition of ‘‘negotiated price’’ under
which plan sponsors would be required
to pass through all pharmacy price
concessions at the point of sale. We will
carefully review all input received from
stakeholders on this issue as we
continue our efforts to meaningfully
address rising prescription drug costs
for beneficiaries. We also note that some
of the public comments received were
outside of the scope of the proposed
rule. These out-of-scope public
comments are not addressed in this final
rule. Summaries of the public comments
that are within the scope of the
proposed rule and our responses to
those public comments are set forth in
the various sections of this final rule
under the appropriate headings.
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II. Provisions of the Proposed Rule and
Analysis of and Responses to Public
Comments
A. Providing Plan Flexibility To Manage
Protected Classes (§ 423.120(b)(2)(vi))
Section 1860D–4(b)(3)(G) of the Act
requires Part D sponsors to include in
their formularies all covered Part D
drugs in classes and categories of
clinical concern identified by the
Secretary using criteria established
through rulemaking. The statute
specifies that until such time as the
Secretary establishes the criteria to
identify drug categories or classes of
clinical concern through rulemaking,
the following drug categories or classes
shall be identified as categories or
classes of clinical concern:
Anticonvulsants, antidepressants,
antineoplastics, antipsychotics,
antiretrovirals, and
immunosuppressants for the treatment
of transplant rejection. This policy is
frequently called the ‘‘protected class’’
policy in the Part D program, with the
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drug categories or classes of clinical
concern being the ‘‘protected classes.’’
Section 1860D–4(b)(3)(G) of the Act
permits the Secretary to establish
exceptions that permit a Part D sponsor
to exclude from its formulary (or to
otherwise limit access to such a drug,
including through PA or utilization
management) a particular covered Part
D drug that is otherwise required to be
included in the formulary. The
Secretary must engage in rulemaking to
establish these exceptions. Section
423.120(b)(2)(vi) currently provides
three regulatory exceptions to the
protected class policy that permit Part D
sponsors to: (1) Exclude from their
formulary therapeutically equivalent
drugs, (2) apply utilization management
(UM) edits for safety, and (3) exclude
other drugs that CMS specifies through
a medical and scientific process which
also permits public notice and
comment.
The protected class policy, inclusive
of its current limitations on PA, is
unique to the Medicare Part D program
and does not appear elsewhere in other
Federal programs, such as the Veterans
Health Administration (VA), TRICARE,
the Federal Employees Health Benefits
Program (FEHBP), the Patient Protection
and Affordable Care Act Essential
Health Benefits (EHB) Benchmark Plans,
or in commercial private health plans.
We are concerned that requiring
essentially open coverage of certain
drug categories or classes in Part D
presents both enrollee cost and welfare
concerns, as well as increased costs for
the Part D program as a result of
overutilization (for example,
antipsychotics used for sedation) and
increased drug prices due to lack of
competition between manufacturers to
achieve inclusion on plan formularies.
In our January 2014 proposed rule
entitled, ‘‘Medicare Program; Contract
Year 2015 Policy and Technical
Changes to the Medicare Advantage and
the Medicare Prescription Drug Benefit
Programs’’ (79 FR 1918, hereinafter
referred to as the ‘‘January 2014
proposed rule’’), we detailed concerns
that the policy potentially facilitates the
overutilization of drugs within the
protected classes (79 FR 1938). Despite
some formulary flexibility and ability to
use drug UM techniques for protected
class Part D drugs, Part D sponsors are
not able to negotiate rebates across the
protected classes at levels
commensurate with other Part D drugs
or prescription drugs covered in the
commercial market.
Consequently, although we did not
propose to eliminate any of the
protected classes, we proposed to use
the authority under section 1860D–
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4(b)(3)(G) of the Act to revise
§ 423.120(b)(2)(vi). Specifically, we
proposed to use the authority under
section 1860D–4(b)(3)(G) of the Act to
establish additional exceptions to the
requirement that all drugs in a protected
class be included in the formulary and
to permit additional use of UM. We
proposed to revise § 423.120(b)(2)(vi) to
permit Part D sponsors to implement PA
and ST requirements for protected class
Part D drugs for broader purposes than
allowed currently. We also proposed to
allow Part D sponsors to exclude
specific protected class Part D drugs
from their formularies if they are a
single-source drug or biological product
for which the manufacturer introduces a
new formulation with the same active
ingredient or moiety that does not
provide a unique route of
administration or to exclude singlesource drugs or biological products that
have certain price increases beyond a
certain threshold over a specified look
back period. However, we noted that
these exceptions will apply only to the
requirement that the drug be included
on the formulary because it is a
protected class Part D drug. In other
words, an exception from the protected
class policy will not supersede our other
formulary requirements in
§ 423.120(b)(2).
We received the following comments
and our response follows:
Comment: Many commenters stated
that all three of our proposals greatly
compromised access to needed therapy
(that is, delays and/or interruptions in
therapy) for patients taking protected
class Part D drugs, which would lead to
adverse health outcomes for these
enrollees, and, in the case of HIV,
endanger public health.
Response: In considering whether to
propose these exceptions, CMS took our
other enrollee access protections into
account, which have successfully
protected beneficiary access to needed
medications in the more than 12 years
the Part D program has been
operational. There are five such enrollee
protections, which include formulary
transparency, formulary requirements,
reassignment formulary coverage
notices, transition supplies and notices,
and the expedited coverage
determination and appeals processes.
The first protection is our requirement
for formulary transparency to
beneficiaries. Part D sponsors are
required to provide comprehensive
formulary drug listings to the public
through their own websites and printed
materials, as well as to CMS for access
through the online interactive drug plan
comparison tool, the Medicare Plan
Finder (Plan Finder). Beneficiaries or
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their representatives can complete a
personalized search on the Plan Finder
to locate and select a Part D plan that
covers their drugs. Thus, beneficiaries
who review plan formularies can select
plans that cover their current
medications.
The second type of protection is the
Part D formulary requirements
(§ 423.120(b)(2)). Our annual formulary
review and approval process is designed
to ensure that Part D formularies do not
substantially discourage enrollment by
certain beneficiaries and that the
formularies include adequate
representation of all necessary Part D
drug categories or classes for the
Medicare population. The formulary
review and approval process includes
the following:
• Category and Class Review
(§ 423.272(b)(2)). Distinct from our
other formulary checks, CMS reviews
and approves drug lists that are
consistent with best practice formularies
currently in widespread use today. CMS
evaluates the sufficiency of a Part D
sponsor’s formulary drug categories or
classes in conjunction with the plan’s
formulary drug list to ensure that the
formulary provides access to an
acceptable range of Part D drug choices.
• Two Drugs Requirement
(§ 423.120(b)(2)(i)). Each submitted
formulary is reviewed for the inclusion
of at least two distinct drugs from each
of the submitted categories or classes,
except as provided in
§ 423.120(b)(2)(ii).
• Formulary Tier Review (Medicare
Prescription Drug Benefit Manual,
Chapter 6, section 30.2.7). The tiering
structure of each formulary is reviewed
to ensure that each category or class
generally has at least one drug in a
preferred tier.
• Common Medicare Drugs Review
(§ 423.120(b)(2)(iii)). Formularies are
reviewed for inclusion of the drugs or
drug classes that are most commonly
utilized by the Medicare population. We
use prior years’ data to identify the
drugs or drug classes with the highest
utilization in Medicare Part D, and use
these drugs or drug classes as the basis
for our review in this area.
• Treatment Guidelines 1 Review
(§ 423.120(b)(2)(iii)). We analyze
formularies to determine whether
appropriate access is afforded to drugs
1 The World Health Organization (WHO) defines
a standard treatment guideline as a systematically
developed statement designed to assist practitioners
and patients in making decisions about appropriate
health care for specific clinical circumstances
(available at https://www.who.int/medicines/
technical_briefing/tbs/10-PG_Standard-TreatmentGuidelines_final-08.pdf).
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or drug classes included in widely
accepted treatment guidelines.
• Vaccines Review (§ 423.100). Each
formulary submission is reviewed to
ensure the formulary includes Part D
vaccines.
• Specialty Tier Review
(§ 423.578(a)(7)). For formularies using
a specialty tier, we perform an extensive
review of the composition of each
specialty tier. We apply a standard
outlined in the annual Call Letter to
determine whether drugs placed in
specialty tiers meet the relevant cost
criteria.
• Quantity Limits (QL) Amount
Review (§ 423.153(b)). QL restrictions
are reviewed for appropriateness. The
standard for the review is generally
based on the maximum recommended
dose when such dosage limits are
identified in the Food and Drug
Administration (FDA)—approved
labeling.
• Restricted Access Review
(§ 423.153(b)). Formularies are reviewed
for use of PA and ST edits across drug
categories or classes. We decline to
approve UM for entire drug classes,
other than for those categories or classes
where the UM edits are considered to be
consistent with best practices, for
example, for erythropoietin stimulating
agents (ESAs), due to the high
likelihood of Part B versus Part D
coverage issues, as well as a boxed
warning in the FDA labeling that warns
of significant adverse events when these
drugs are used outside of their approved
indications and therapeutic targets.
• Step Therapy Criteria Review
(§ 423.153(b)). The ST requirements are
reviewed to ensure that the ST
algorithms are consistent with best
practices, including prerequisite drugs,
current industry standards and
appropriate treatment guidelines.
• Prior Authorization Criteria Review
(§ 423.153(b)). We review the criteria for
drugs requiring PA on the formulary
submissions. We look to existing best
practices, current industry standards,
and appropriate treatment guidelines to
check that the Part D plans’ use of PA
is consistent with such best practices.
Submitted criteria are also compared to
recognized compendia (that is, those
compendia described in section
1927(g)(1)(B)(i) of the Act: American
Hospital Formulary Service Drug
Information and DRUGDEX Information
System) and FDA-approved indications.
• Mid-year formulary change
restrictions (§ 423.120(b)(5)); Chapter 6
of the Medicare Prescription Drug
Benefit Manual, section 30.3.3). Except
when: (1) The FDA deems a Part D drug
unsafe, (2) a manufacturer removes a
Part D drug from the market, or (3) in
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the circumstances described under
§ 423.120(b)(5)(iv) when a new generic
drug becomes available, a Part D
sponsor may not remove a covered Part
D drug from its formulary, or make any
adverse change in preferred or tiered
cost-sharing status of a covered Part D
drug, between the beginning of the
annual coordinated election period
described in § 423.38(b) and 60 days
after the beginning of the contract year
associated with the annual coordinated
election period. However, prescription
drug therapies are constantly evolving,
and new drug availability, medical
knowledge, and opportunities for
improving safety and quality in
prescription drug use at a lower cost
will inevitably occur over the course of
the year. As recognized in regulation,
these new developments may require
formulary changes during the year in
order to provide high-quality, affordable
prescription drug coverage. Moreover,
CMS will not approve mid-year
changes, other than the three types of
changes listed here, unless the Part D
sponsor grandfathers coverage for the
remainder of the plan year for enrollees
that are already taking the drug being
removed (or subjected to an adverse
change in preferred or tier cost sharing)
at the time of the change.
Thus, in summary, our formulary
rules both ensure that all Part D
formularies contain sufficient drugs to
treat all disease states in the Medicare
population and protect enrollees from
significant changes in formularies
during the course of a coverage year.
The third type of enrollee protection
is the annual notice to reassigned
enrollees required under section 3305 of
the Patient Protection and Affordable
Care Act (PPACA, Pub. L. 111–148).
Effective January 1, 2011, we provide
individuals who receive the Low
Income Subsidy (LIS individuals) who
are reassigned to a different Part D plan
with information on the differences
under the new plan formulary, as well
as information on the enrollee’s
grievance and appeal rights in the new
plan. Thus, (in order to maintain access
to a $0 premium) any individual who
has his or her plan selection decision
made through our reassignment process
receives detailed coverage status
information for each drug for which he
or she filled a prescription between
January and August of the previous
year. With regard to the new plan, this
notice describes for each drug whether
it is on the formulary, whether the
brand or generic version is covered, and
whether UM may be applied. Moreover,
the notice also provides a list of other
available plans into which the enrollee
can enroll with no premium if they
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would prefer not to remain in the plan
where they were reassigned. We send
notices after the individual’s
reassignment and in time to allow for
the LIS individual to make a voluntary
selection of another plan effective
January 1. Thus, any reassigned LIS
individual receives advance notice of
any change in formulary coverage of
their medications in plenty of time to
work with their prescribers if they wish
to remain in the new plan, or to select
a different Part D plan.
The fourth type of enrollee protection
is our unique transition supply and
notice requirements. A Part D sponsor
must provide for an appropriate
transition process for Part D drugs that
are not on its formulary with respect to:
(1) The transition of new enrollees into
prescription drug plans following the
annual coordinated election period; (2)
the transition of newly-eligible
Medicare beneficiaries from other
coverage; (3) the transition of
individuals who switch from one plan
to another after the start of the contract
year; and (4) in some cases, current
enrollees affected by formulary changes
from one contract year to the next (see
§ 423.120(b)(3) Chapter 6 of the
Medicare Prescription Drug Benefit
Manual, section 30.4). Within the first
90 days of an enrollee’s enrollment in a
new plan, plans must provide a
temporary fill of at least an approved
month’s supply when the enrollee
requests a fill of a non-formulary drug
or a Part D drug that is on a plan’s
formulary but requires PA or ST under
a plan’s UM rules. This requirement
applies beginning on an enrollee’s first
effective date of coverage, regardless of
whether this is within the first 90 days
of the contract year. Additionally, if a
Part D sponsor cannot determine at the
point of sale (POS) whether an enrollee
is currently taking a drug (for example,
a new enrollee filling a prescription for
the first time), we instruct the Part D
sponsor to provide the enrollee with a
transition supply.
A successful transition process is
contingent not only upon providing the
transitional drug supply, but also upon
informing affected enrollees, their
caregivers, and their prescribers about
the enrollee’s options for ensuring that
his or her medical needs are safely
accommodated within a Part D
sponsor’s formulary. For this reason,
when providing a temporary supply of
non-formulary Part D drugs or Part D
drugs that are on a plan’s formulary but
require PA or ST under a plan’s UM
rules, Part D sponsors must provide
enrollees and their prescribers with
written notice within three business
days after adjudication of the temporary
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fill that they are receiving a transition
supply and that they must take action.
The temporary fill and written notice
provide enrollees with a reasonable
amount of time during which they and
their prescribers can address the issue
(by requesting a formulary exception or
transitioning to a formulary drug) and
prevents them from having to abruptly
change or go without their medication
(see Transition notice requirements (to
enrollees and providers)
[§ 423.120(b)(3)(iv and v); Chapter 6 of
the Medicare Prescription Drug Benefit
Manual, section 30.4.10]). Thus all
enrollees and their prescribers have
advance notice of any issue with
continued coverage of a previously
initiated therapy and sufficient time to
resolve those issues without any lapse
in appropriate therapy. The preceding
formulary review and transition
requirements are described in Chapter 6
of the Medicare Prescription Drug
Benefit Manual (located at https://
www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCov
Contra/Downloads/Chapter6.pdf).
The fifth enrollee protection we took
into account is the requirement for a
robust coverage determination and
appeal process, including the right of an
enrollee or his or her prescriber to
request an exception to the plan’s UM
criteria, tiered cost-sharing structure, or
formulary. Part D sponsors are required
to issue a coverage decision and notify
the enrollee (and the prescriber, as
appropriate) in writing in accordance
with strict regulatory timeframes. In
general, consistent with § 423.578, a
plan must grant a tiering or formulary
exception (for example, provide
coverage for a non-formulary drug or a
formulary exception to the UM criteria)
when it determines that the requested
drug is medically necessary, consistent
with the prescriber’s supporting
statement indicating that preferred
alternatives(s) would not be as effective
and/or would have adverse effects.
We have established by regulation
both an expedited adjudication
timeframe if the plan or prescriber
believes that applying the standard
timeframe may jeopardize the enrollee’s
health, and a requirement that plans
must issue all coverage decisions as
expeditiously as the enrollee’s health
condition requires. The requirements at
§ 423.568 for coverage determinations
and § 423.572 for expedited coverage
determinations state that the plan must
notify the enrollee ‘‘as expeditiously as
the enrollee’s health condition requires,
but no later than [72 or 24 hours,
respectively] after receiving the request,
or, for an exceptions request, the
physician’s or other prescriber’s
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supporting statement.’’ That is to say, if
an enrollee’s health condition requires a
response in less than 24 hours, the plan
is obligated to provide one.
If, based on the initial review of the
request, the Part D sponsor expects to
issue a partially or fully adverse
decision based on medical necessity, the
coverage determination must be
reviewed by a physician or other
appropriate health care professional
with sufficient medical and other
expertise, including knowledge of
Medicare coverage criteria, before the
Part D sponsor issues the decision on
the coverage determination. If the Part D
sponsor makes an adverse coverage
determination, the required written
notice must explain the specific
reason(s) for the denial and include a
description of the enrollee’s right to a
standard or expedited redetermination
by the plan, and the rest of the five-level
appeals process, including the right to
request independent review. At the
redetermination level of appeal, when
the issue is the denial of coverage based
on a lack of medical necessity, the
redetermination must be made by a
physician with expertise in the field of
medicine that is appropriate for the
services at issue. If a plan fails to make
a coverage decision and notify the
enrollee within the required timeframe,
the request must be forwarded to the
independent review entity (IRE) to be
adjudicated.
Moreover, while we do not treat a
claim transaction as a coverage
determination, we require Part D
sponsors to arrange with network
pharmacies to provide enrollees with a
written copy of the Office of
Management and Budget (OMB)approved standardized pharmacy notice
(‘‘Notice of Denial of Medicare
Prescription Drug Coverage,’’ CMS–
10146) when the enrollee’s prescription
cannot be filled under the Part D benefit
and the issue cannot be resolved at the
point-of-sale (POS). The notice instructs
the enrollee on how to contact his or her
plan and explains the enrollee’s right to
request a coverage determination. Thus,
all enrollees immediately receive clear,
concise instructions on how to pursue
their right to request a coverage
determination when a prescription
cannot be filled at POS. For additional
information on the coverage
determination, appeals, and grievance
process, including information about
the pharmacy notice, see 42 CFR part
423, subparts M and U, and the Parts C
& D Enrollee Grievances, Organization/
Coverage Determinations, and Appeals
Guidance, available at https://
www.cms.gov/Medicare/Appeals-and-
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CMS will be monitoring appeals
activity to ensure Part D enrollees’
requests are appropriately evaluated.
Additionally, we also plan to implement
a protected class-specific Complaints
Tracking Module (CTM) monitoring
project in 2020 to monitor access to
protected class Part D drugs. Finally, as
discussed elsewhere in this final rule,
CMS is taking steps in 2020 and future
rulemaking to include e-prescribing
improvements such as real time benefit
tools (RTBTs) and Part D electronic
prior authorization (ePA) as required by
section 6062 of the SUPPORT for
Patients and Communities Act (Pub. L.
115–271), which could reduce the need
for coverage determinations and
appeals. Taken together, these
initiatives and the five beneficiary
access protections described previously
will help to protect enrollees from any
unnecessary or inappropriate delay in
access to medically necessary drugs.
Comment: Several commenters stated
that Part D sponsors already have
enough tools to manage protected class
Part D drugs, including PA on new
starts, formulary tiering, and generic
utilization. Some commenters added
that by using these tools, Medicare
currently only covers two-thirds of
protected class Part D drugs, and plans
already use PA on nearly one half of
protected class Part D drugs. However,
many other comments that we received
expressed support for additional
formulary management tools.
Response: It is unclear on what basis
commenters are making the assertions
regarding Medicare only covering twothirds of protected class Part D drugs
and plans already using PA on nearly
one-half of protected class Part D drugs,
as plans are required to include all
protected class Part D drugs on their
formularies, with limited exceptions as
specified at § 423.120(b)(2)(vi), and the
use of PA has been limited to new starts
under our existing policy. Although we
are not able to speak to the actual rebate
values, our internal analyses of rebate
data reported by Part D sponsors
generally support the assertion that Part
D sponsors obtain substantially smaller
rebates for protected class Part D drugs
than they do for non-protected class Part
D drugs. Due to restrictions on
disclosure of rebate data, CMS is not
able to release this analysis to the
public.
Comment: Some commenters claimed
that proposing exceptions without
previously or concurrently proposing
clinical criteria is out of order, and not
allowed by the plain reading of the
statute.
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Response: Section 1860D–
4(b)(3)(G)(ii) of the Act specifies that
subject to section 1860D–4(b)(3)(G)(iv)
of the Act, the Secretary ‘‘shall identify,
as appropriate,’’ categories or classes the
Secretary determines are of clinical
concern, using criteria the Secretary
establishes. Section 1860D–
4(b)(3)(G)(iv) of the Act states that until
such time as the Secretary establishes
the criteria, the existing protected class
categories ‘‘shall be identified’’ under
section 1860D–4(b)(3)(G)(ii) of the Act.
The statute clearly contemplates that the
existing protected classes—that is, those
set forth in section 1860D–4(b)(3)(G)(iv)
of the Act—are the identified classes for
purposes of section 1860D–
4(b)(3)(G)(ii)(II) of the Act, as well as
section 1860D–4(b)(3)(G)(i)(I) of the Act,
and therefore the Secretary need not
establish criteria for identifying new or
different protected classes before
establishing exceptions.
Comment: Some commenters claimed
that CMS’s protected class proposals
violate the statutory non-discrimination
provision, particularly with respect to
enrollees who take high-cost drugs in
the protected classes. Other commenters
asserted that HIV patients, LIS enrollees,
and dually-eligible enrollees
(particularly children) would be
disproportionately affected by our
proposals.
Response: The non-discrimination
provision and the protected class
provision are not at odds. Nondiscrimination applies to all Part D
enrollees, while the protected class
provision establishes additional
requirements for drugs in protected
classes. Section 1860D–4(b)(3)(G) of the
Act authorizes formulary exclusion and
UM for protected class Part D drugs,
which indicates that non-discriminatory
formulary exclusion and UM are
contemplated by the statute. Therefore,
excluding a protected class drug from
the formulary or imposing UM criteria
would not be discriminatory in itself.
Our approach to approving PA and ST
criteria for protected class Part D drugs
will be consistent with our
discrimination analysis for all other
categories or classes—that is, to ensure
that these criteria, as applied, would not
substantially discourage enrollment by
certain Part D eligible individuals. As
described previously, we conduct a
discrimination review to ensure that
plans’ formulary designs are not likely
to substantially discourage enrollment
by certain Part D eligible individuals.
We will conduct the same review with
respect to the protected class drugs that
plans wish to exclude from the
formulary or for which they wish to
impose PA or ST, in each case only as
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23837
permitted under the exceptions we are
finalizing in this rule. Moreover, there
are other, non-protected categories and
classes of drugs that consist of high-cost
therapies (for example, drugs used to
treat hepatitis C) for which CMS has
been able to ensure a benefit design that
is not likely to substantially discourage
enrollment by certain Part D eligible
individuals.
Comment: Some commenters asserted
that CMS’s proposals are inconsistent
with Congressional intent and in
conflict with our regulation.
Specifically, commenters pointed to the
language we adopted at
§ 423.120(b)(2)(vi)(C) specifying that any
exception to the criteria is based upon
scientific evidence and medical
standards of practice (and, in the case of
antiretroviral medications, is consistent
with the Department of Health and
Human Services Guidelines for the Use
of Antiretroviral Agents in HIV–1infected Adults and Adolescents).
Response: Section 1860D–
4(b)(3)(G)(i)(II) of the Act specifically
allows the Secretary to establish
exceptions that permit a Part D sponsor
to exclude from its formulary a
particular covered Part D drug in a
category or class that is otherwise
required to be included in the
formulary, or to otherwise limit access
to such a drug, including through PA or
UM. Our existing exception at
§ 423.120(b)(2)(vi)(C) was adopted after
enactment of the Medicare
Improvements for Patients and
Providers Act (MIPPA) (section 176 of
Pub. L. 110–275). However, the PPACA
(section 3307 of Pub. L. 111–148)
removed this statutory requirement.
While our existing regulations at
§ 423.120(b)(2)(vi)(C) discuss an
exception for protected class Part D
drugs that is ‘‘based upon scientific
evidence and medical standards of
practice (and in the case of antiretroviral
medications is consistent with the
[HHS] Guidelines for the Use of
antiretroviral Agents in HIV–1 Infected
Adults and Adolescents),’’ this is a
separate and distinct exception from the
exceptions proposed in this rulemaking.
In other words, these exceptions can
exist contemporaneously, and are not in
conflict with each other.
Comment: Stakeholders provided
alternative policies to lower drug prices,
such as allowing copay assistance cards
for Part D enrollees and other federal
healthcare program beneficiaries,
encouraging Part D plans to institute
benefit designs that include ‘‘select
care’’ tiers that would cover drugs with
low or no patient cost sharing
(including antineoplastic drugs),
exploring new ways to encourage Part D
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plans to offer supplemental benefits for
enrollees, further developing
demonstration models that provide
supplemental benefits or reduced cost
sharing for patients with specific
conditions or needs, or proposing an
exception that would permit Part D
sponsors to exclude protected class Part
D drugs when therapeutic alternatives
exist.
Response: We thank commenters for
their suggestions.
We are finalizing our proposal to
redesignate the existing paragraph that
appears at § 423.120(b)(vi)(C) that
permits CMS to exempt other drugs that
CMS specifies. However, because we are
not finalizing our proposed exceptions
regarding new formulations and price
increases, paragraph § 423.120(b)(vi)(C)
will be redesignated as paragraph (D),
instead of (F) as originally proposed.
1. Broader Use of Prior Authorization
for Protected Class Part D Drugs
Under section 1860D–4(b)(3)(G)(i)(II)
of the Act, the Secretary can establish
exceptions to permit a Part D sponsor to
exclude from its formulary, or otherwise
limit access through PA or UM, a
particular Part D drug that is otherwise
required to be on the formulary because
it is in a protected class. This authority
is specific to Part D drugs, and
moreover, applies without regard to
whether an enrollee is initiating therapy
(new starts) or is currently taking a drug
(existing therapy).
Part D coverage is limited to those
drugs that meet the definition of a Part
D drug in § 423.100. Therefore,
regardless of a drug’s potential status as
a protected class drug, Part D sponsors
are responsible for ensuring that
coverage is limited to Part D drugs. In
order to accomplish this, Part D
sponsors use PA 2 on drugs that have a
high likelihood of: (1) Coverage that is
available under Parts A or B (versus D)
for the drug as prescribed and dispensed
or administered; (2) exclusion from Part
D coverage (for example, a drug or drug
class or its medical use that is excluded
from coverage or otherwise restricted
under Part D as defined in section
1927(d)(2) of the Act); or (3) use other
than for a medically accepted indication
as defined in section 1860D–2(e)(4) of
the Act, in the Part D sponsor’s
experience or as directed by CMS,
consistent with sections 10.6 and
30.2.2.3 of Chapter 6 of the Medicare
2 Consistent with section 10.6 of Chapter 6 of the
Medicare Prescription Drug Benefit Manual, Part D
sponsors should consistently use prior
authorization (PA) for those drugs with the highest
likelihood of non-Part D covered uses unless plans
are able to reliably use tools other than PA to
determine appropriate coverage for the drug.
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Prescription Drug Benefit Manual.
Additionally, relative to medically
accepted indications, consistent with
section 10.6.1 of Chapter 6 of the
Medicare Prescription Drug Benefit
Manual, Part D sponsors may
retrospectively identify and confirm—
either as part of their retrospective
review programs required under
§ 423.153, or incident to another UM
review—that a dispensed drug,
including when dispensed as a
transition supply, was not prescribed for
a medically accepted indication for a
particular individual. CMS does not
consider the use of CMS-approved PA
requirements for these purposes to be
subject to section 1860D–4(b)(3)(G) of
the Act because section 1860D–
4(b)(3)(G) of the Act is specific to Part
D drugs. Consequently, consistent with
current policy, CMS will continue to
permit Part D sponsors to apply PA for
potential protected class drugs to
determine whether such drugs can be
covered under Part D, for both new
starts and existing therapy, for those
drugs with a high likelihood of being
excluded from Part D for the reasons
provided previously, subject to CMS
review and approval.
Using the authority under section
1860D–4(b)(3)(G)(i)(II) of the Act, which
applies without regard to new starts or
existing therapy, we proposed to permit
Part D sponsors to apply PA and ST
requirements to new starts and existing
therapy of protected class Part D drugs
that are implemented to confirm use is
intended for a protected class
indication, ensure clinically appropriate
use, promote utilization of preferred
formulary alternatives, or a combination
thereof, subject to CMS review and
approval. We also solicited comment on
whether PA and ST of protected class
Part D drugs should be limited to new
starts only.
We received the following comments
and our response follows:
Comment: A number of commenters
supported the proposal to expand the
use of PA and ST for protected class
Part D drugs from new starts only to
new starts and existing therapy to
confirm use is intended for a protected
class indication, ensure clinically
appropriate use, promote utilization of
preferred formulary alternatives, or a
combination thereof, subject to CMS
review and approval.
Response: We thank the commenters
for their support.
Comment: Many commenters asserted
that treatments in the protected classes
are neither interchangeable nor ‘‘onesize-fits-all,’’ adding that patients need
access to the full range of therapies in
these classes, and prescribers need the
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autonomy to make the best decision for
each patient as an individual. Several
commenters asserted that while clinical
practice guidelines are publicly
available, they are not intended to drive
policy decisions. These commenters
further added that while guidelines are
important to give clinicians a starting
point in the care of patients, it is
ultimately up to the clinician who
knows the full history of the individual
patient to tailor treatments that will
result in the best outcomes for that
patient. Some commenters added that
PA and ST policies intended to restrict
access to physician-directed care
unnecessarily prolong ineffective
treatment and prevent individuals from
immediately starting the treatment their
prescribers believe is best. Some
commenters suggested that ST
requirements should not be ironclad,
but instead should be suggested clinical
care pathways to provide clinical
decision support. Other commenters
added that the lack of autonomy
damages the doctor-patient relationship.
Response: Consistent with
§ 423.120(b)(2)(iii) and § 423.153(b),
CMS conducts treatment guideline, ST
criteria, and PA criteria reviews as part
of the annual formulary review and
approval process. CMS uses the FDAapproved labeling and widely accepted
treatment guidelines to determine
clinical appropriateness before
approving PA or ST criteria. As
discussed previously in this preamble,
we will only approve PA and ST criteria
that are clinically supported. These
beneficiary protections, and specifically
the limits we place on Part D sponsors’
ability to apply PA and ST, differentiate
Part D from other prescription drug
benefits and help prevent the negative
consequences (that is, prolongation of
ineffective therapy and delaying
accesses to appropriate therapy)
suggested by the commenters and are
designed to preserve the doctor-patient
relationship. Moreover, ST requirements
are not ironclad because, consistent
with § 423.578, prescribers can request
a formulary exception, and provided it
meets the requirements at § 423.578, the
supporting statement provided by a
physician or other prescriber is given
great weight when reviewing an
exception request.
Comment: Some commenters
expressed concern that CMS has not
provided specificity about the clinical
criteria that will be applied to its
formulary review or any additional
oversight and monitoring that would be
appropriate to ensure the well-being of
Part D enrollees with chronic
conditions. Commenters recommended
a system whereby CMS signs off on ST
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programs for protected classes based on
certain defined criteria, including that
the program is evidence-based, or for
areas where adequate evidence is
lacking, is based on accepted standards
or best clinical practice. Additionally,
commenters suggested CMS should
create a specialty council with expertise
in the fields of the various protected
class indications to review formulary
decisions.
Response: As noted in response to the
previous comment, consistent with
§ 423.120(b)(2)(iii) and § 423.153(b),
CMS conducts treatment guideline, ST
criteria, and PA criteria reviews as part
of the annual formulary review and
approval process. CMS uses the FDAapproved labeling and widely accepted
treatment guidelines to determine
clinical appropriateness before
approving PA or ST criteria. We will
only approve PA or ST criteria that are
clinically supported. Please see section
II.A. of the preamble to this final rule for
an extensive description of our
formulary review process. Consistent
with § 423.578, prescribers can also
request a formulary exception if a
desired outcome is not met with current
formulary alternatives. Additionally, the
CMS formulary team reviewing Part D
formularies and related PA and ST
criteria is composed of pharmacists who
are board-certified pharmacotherapy
specialists with extensive clinical
experience reviewing PA and ST
criteria. These pharmacists use the FDAapproved labeling and widely accepted
treatment guidelines when considering
PA and ST criteria for disease states.
Comment: A number of commenters
expressed concern that PA and ST
policies can lead to patients’ not filling
their prescriptions or underutilizing
medications, which leads to nonadherence. Commenters expressed
concern that non-adherence, in turn,
can lead to interruptions in therapy
across the six classes, and in the case of
HIV, would endanger public health
because it is a communicable disease
which can rapidly mutate and become
resistant to therapy.
Response: CMS acknowledges that PA
and ST requirements can potentially
cause the issues cited when they are
implemented without the protections
provided under the Part D program.
However, we believe such concerns
have been mitigated in Part D based
upon our more than 12 years of
experience with the Part D program,
including our existing policy that allows
for PA and ST for new starts of
protected class Part D drugs (except
antiretrovirals), and the other unique
Part D protections that are more robust
than in comparable programs. For
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example, in all other Part D drug
categories and classes, where wide use
of PA and ST has been allowed since
the beginning of the Part D program,
subject to our other formulary
requirements, we have no evidence to
suggest that Part D enrollees routinely
experience interruptions in therapy as a
result of PA and ST requirements.
Moreover, CMS is advancing
improvements in price transparency,
interoperability, and e-prescribing, such
as RTBTs and Part D ePA as required by
section 6062 of the SUPPORT for
Patients and Communities Act (Pub. L.
115–271), that could help mitigate the
kinds of administrative burdens
sometimes associated with PA and ST
that commenters claim could lead to
underutilization.
Comment: Several commenters
asserted that the PA process is
complicated and labor intensive, and
also, given the high approval rate—
particularly for protected class Part D
drugs—PA requirements do not reduce
medication utilization and thus simply
impose unnecessary burdens on patient
care. Some commenters added that this
proposal is counter to CMS’s Patients
over Paperwork initiative.
Response: We are concerned that the
current policy potentially facilitates the
overutilization of drugs within the
protected classes, particularly
antipsychotics.3 4 5 By limiting the
ability of Part D sponsors to implement
UM tools (for example, PA or ST
requirements) for an entire category or
3 A May 2011 Department of Health and Human
Services Office of Inspector General report found
that of 2.1 million elderly persons who lived in
nursing homes in the first 6 months of 2007, almost
305,000 had a prescription for at least one atypical
antipsychotic drug. Eighty-eight percent of these
prescriptions were for off-label, medically
unacceptable uses and/or were associated with a
specific FDA Black Box warning against their use
by elderly persons with dementia. In all,
unapproved uses and improperly documented
claims for these drugs cost Medicare $116 million
in one 6-month period. Medicare Atypical
Antipsychotic Drug Claims for Elderly Nursing
Home Residents. OEI–07–08–00150. https://
oig.hhs.gov/oei/reports/oei-07-08-00150.pdf
Accessed April 17, 2019.
4 The percentage of long-term nursing home
residents being given antipsychotic drugs dropped
from about 24 percent in late 2011 to under 15 in
the third quarter of 2018. National Partnership to
Improve Dementia Care in Nursing Homes:
Antipsychotic Medication Use Data Report (January
2019). https://www.nhqualitycampaign.org/files/
Antipsychotic_Medication_Use_Report.pdf.
Accessed May 10, 2019.
5 Advocates say even the lower rate of
antipsychotic usage is excessive, given federal
warnings that elderly people with dementia face a
higher risk of death when treated with such drugs.
February 5, 2018. Crary D. Associated Press. ‘‘New
Report Details Misuse of Antipsychotics in Nursing
Homes’’ https://www.statnews.com/2018/02/05/
antipsychotics-nursing-homes-elderly/ Accessed
May 10, 2019.
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23839
class, we also limit their ability to
prevent the misuse or abuse of drugs
that are not medically necessary.
Inappropriate use of Part D drugs can
lead to adverse effects that can harm the
enrollee and require medical treatment
that will otherwise not have been
necessary, thus increasing overall
Medicare costs.6 We remain concerned
there may be a link between the
profitability of products not subject to
normal price negotiations as the result
of protected class status, such as
antipsychotics, and overutilization,
particularly off-label overutilization, of
some of these drugs. Additionally, as
discussed elsewhere in this final rule,
CMS is advancing improvements in
price transparency, interoperability, and
e-prescribing, such as RTBTs, and Part
D ePA as required by section 6062 of the
SUPPORT for Patients and Communities
Act (Pub. L. 115–271), that could help
mitigate the kinds of administrative
burdens sometimes associated with PA
and ST and aligns this proposal with the
Patients over Paperwork initiative.
Comment: Commenters were divided
over whether we should continue to
allow PA and ST for UM purposes for
new starts only. Some commenters
strongly supported the idea. Many
commenters expressed concern that
requiring enrollees to undergo ST
requirements after they have already
been stabilized on a treatment regimen
can cause disruptions to the overall
success of the enrollee’s treatment and
create negative treatment health care
outcomes. However, other commenters
opposed to limiting PA and ST for new
starts only, as contrasted to permitting
PA and ST for new starts and existing
therapy, expressed concern that data
limitations for PDP sponsors to discern
new starts from existing therapy at the
POS would create operational issues
that would ultimately cause them not to
use this exception, which would
sufficiently undermine the exception
and render it ineffective.
Some commenters suggested that
rebate differences between the protected
classes would yield greater cost savings
for some protected classes, such as
antipsychotics, antidepressants, and
anticonvulsants, than the other
protected classes (antiretrovirals,
antineoplastics, and
immunosuppressants). These
commenters asserted that certain
protected classes, like antiretrovirals to
6 Prescription Drug Workgroup; American
Academy of Actuaries. Issue Brief: Prescription
Drug Spending the in US Healthcare System, an
Actuarial Perspective. March 2018. https://
www.actuary.org/content/prescription-drugspending-us-health-care-system Accessed April 12,
2019.
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treat HIV, do not have significant
branded competition and therefore
would not be expected to see significant
rebating, even absent the protected
classes policy.7 Other commenters
suggested that CMS should introduce
automatic permission for a 7-day
temporary supply while approval is
sought.
Response: CMS’ current policy
permits PA and ST for new starts only
for protected class Part D drugs, except
antiretroviral medications.
We proposed to broaden the
permissible use of PA and ST for
protected class Part D drugs by
permitting PA and ST for enrollees on
existing therapy. Our goal was to
provide additional flexibility so that
Part D sponsors could better manage the
benefit from a clinical as well as a cost
savings perspective. We believe that the
existing beneficiary protections,
including our extensive clinical
formulary review and approval process,
would adequately protect enrollees from
the inappropriate application of PA and
ST requirements. Moreover, we would
effectively limit most ST criteria to new
starts as best practice, except when a
change in therapy is clinically
supported by the recognized compendia
or widely accepted treatment
guidelines. When step therapy is
applied, we would expect to approve
PA or ST requirements with initial
treatment that is comparably supported
by recognized compendia or widely
accepted treatment guidelines.
Nevertheless, CMS is persuaded by
comments that expressed significant
concern for the potential disruption of
ongoing therapy of protected class Part
D drugs used for protected class
indications and, after considering all the
comments, we conclude that the risks
associated with inappropriately
interrupting therapy for stabilized
patients receiving protected class drugs
for protected class indications by
potentially subjecting them to PA or ST
requirements outweighs the potential
clinical benefits that some enrollees
could gain from switching therapies that
might be more appropriate and the
potential cost savings that would
accompany the additional formulary
management flexibility. Therefore, we
are finalizing a codification of existing
policy that allows Part D sponsors to
apply PA and ST requirements for
protected class Part D drugs, except for
antiretroviral medications, only for new
7 See PEW Comments on Proposals to Modernize
Medicare Drug Payments. https://
www.pewtrusts.org/en/research-and-analysis/
speeches-and-testimony/2019/01/25/pewcomments-on-proposals-to-modernize-medicaredrug-payments Accessed April 12, 2019.
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starts, to determine if a drug’s intended
use is for a protected class indication,
ensure clinically appropriate use,
promote utilization of preferred
formulary alternatives, or a combination
thereof, subject to CMS review and
approval. PA and ST will continue to be
prohibited for antiretroviral
medications. Because the statutory
protected class provision applies only to
Part D drugs, Part D sponsors may
continue to use coverage
determinations, including PA or other
reliable tools, to determine a drug’s
status as a Part D drug irrespective of
such drug’s status as a new start or
existing therapy. However, we clarify
that for enrollees on existing therapy,
Part D sponsors may not require PA to
confirm that a drug’s intended use is for
a protected class indication if the drug
otherwise does not have a high
likelihood of use intended for a nonmedically accepted indication that
would not be coverable under Part D. In
other words, sponsors generally will
need to rely on alternative approaches,
such as retrospective DUR, to confirm
the intended use is for a protected class
indication for enrollees on existing
therapy.
CMS thanks the commenters for their
suggestion about the 7-day supply.
However, because of our transition
policy, which requires at least a month’s
approved supply, a 7-day supply is not
necessary.
Comment: Some commenters
expressed concern that expanded use of
PA and ST will limit access to protected
class Part D drugs for important uses
that may not be considered a protected
class indication, for example, enrollees
who take various protected class Part D
drugs for conditions like chronic pain or
lupus. Commenters asserted that access
limitations based on purported
‘‘protected’’ versus ‘‘non-protected’’
uses would be divorced from the
clinical realities that exist for patients
with complex and chronic conditions.
Some commenters expressed concern
that expanded use of PA and ST will
limit access to protected class Part D
drugs that have more than one protected
class indication, for example,
antidepressants with dual use as
anxiolytics (antianxiety medications) or
antipsychotics and vice versa, or as
another example, anticonvulsants with
use as adjunct anxiolytics or
antidepressants. Other commenters
added that the proposal does not protect
off-label prescribing within a protected
class, for example, tacrolimus for lung
transplants.
Response: A number of protected
class Part D drugs have medically
accepted indications for non-protected
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class uses. As discussed in the proposed
rule, we are clarifying that we consider
medically accepted indications
consistent with the identified drug
categories or classes of the protected
classes to be ‘‘protected class
indications.’’ In other words, when a
Part D drug is used for a protected class
indication, we consider it to be a
protected class Part D drug. Using the
commenter’s example, tacrolimus for
lung transplants would still be
considered to be used for a protected
class indication if use in lung transplant
is a medically accepted indication. In
addition, Part D drugs with multiple
medically accepted protected class
indications are protected for each such
protected class indication, even if the
indications are in more than one
protected class. For example,
aripiprazole has an FDA-labeled
indication for acute and maintenance
treatment of schizophrenia, and an
FDA-labeled indication for adjunctive
treatment of major depressive disorder;
both of these uses are considered to be
protected class indications.
As discussed in the proposed rule at
83 FR 62158, CMS is concerned that
unless a Part D sponsor can use PA to
determine the indication for which the
drug has been prescribed, there is the
potential to increase Part D program
costs when there may be a less
expensive alternative available to treat a
particular non-protected indication that
would be clinically appropriate.
Therefore, we will permit Part D
sponsors to use PA only for new starts
in the protected classes, except for
antiretrovirals, to determine if such
drugs’ intended use is for non-protected
class indications. For those drugs that
have both protected class and nonprotected class indications, we may
permit different PA requirements or
formulary inclusion for non-protected
class indications than those used for
protected class indications, depending
upon the clinical appropriateness and
consistent with the July 25, 2018 and
August 29, 2018 HPMS memos about
indication-specific UM and formulary
design. Additionally, to the extent that
treatment guidelines for non-protected
class indications include drugs with
both protected class and non-protected
class indications, plans will still be
required to meet all established Part D
formulary criteria regarding access to
such drugs for non-protected class uses.
For example, for an enrollee who is a
new start on topiramate, an
anticonvulsant, the PA criteria used for
topiramate could determine coverage
and establish appropriate use in the
following scenarios:
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• If use is for weight loss (an
excluded, use under Part D), the Part D
sponsor would deny coverage. (We
remind Part D sponsors that they may
deny coverage for excluded use under
Part D irrespective of the enrollee’s
status as a new start or continuing
existing therapy);
• If use is as an anticonvulsant (a
protected class indication), the plan
would cover the drug; or
• If use is for migraine prophylaxis (a
non-protected class, indication), the Part
D sponsor could—
++ Deny coverage (if this use is not on
formulary) and require the enrollee to
seek an exception to obtain coverage; or
++ Apply another set of PA or ST
requirements for this indication.
We expect that all such issues or
questions would be addressed during
the coverage determination to avoid the
possibility of enrollees needing to
submit multiple coverage determination
requests for the same drug.
Application of PA criteria to
determine use for weight loss, as an
anticonvulsant, or for migraine
prophylaxis would be consistent with
our July 25, 2018 Health Plan
Management System (HPMS)
memorandum entitled, ‘‘IndicationBased Utilization Management’’ and our
August 29, 2018 HPMS memorandum
entitled, ‘‘Indication-Based Formulary
Design Beginning in Contract Year (CY)
2020.’’
Finally, in their formulary materials,
we would expect Part D sponsors to
note differential formulary inclusion for
drugs with regard to protected class
versus non protected class indications.
Comment: A few commenters
suggested that, while they did not
support our proposal to allow broader
use of UM for protected class Part D
drugs, one area in which they did
support the use of such tools in the
protected classes was to reduce the
inappropriate prescribing of
antipsychotics in the long-term care
setting.
Response: We share the commenters’
concerns about inappropriate
prescribing of antipsychotics in the
long-term care setting. Allowing PA and
ST for new starts of antipsychotics will
help to limit overutilization of these
drugs for non-protected class
indications (for example, antipsychotic
use for sedation in nursing homes).
Comment: Some commenters
expressed concern that expanded use of
PA and ST will limit or delay access to
more than one drug for an indicated use,
asserting that individuals sometimes
require more than one drug, or a specific
combination of drugs, for a particular
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condition, and that this is particularly
salient within the protected classes.
Response: To the extent that the FDA
labeling, recognized compendia, or
treatment guidelines discuss the use of
multiple drugs, or a particular
combination of drugs, within the
protected classes for a given protected
class indication, consistent with our
existing formulary requirements, plans
will still be required to provide coverage
of such drugs for those patients.
Additionally, UM and retrospective
drug utilization review (DUR) can be
used to ensure that combinations are
clinically appropriate and comport with
treatment guidelines, even if such
combination is not first-line therapy, for
example, retrospective DUR to ensure
the use of combination therapies of HIV
medications comport with the HHS HIV
Guidelines.
Comment: Several commenters
expressed concern that ST is not
appropriate for protected class Part D
drugs, particularly antineoplastics,
antiretrovirals, and
immunosuppressants.
Response: We agree that in most
circumstances of clinically appropriate
care, ST would not be appropriate for
protected class Part D drugs. However,
as a general statement, we disagree with
the commenters. Our more than 12 years
of experience with the Part D program
has provided evidence of inappropriate
prescribing within the protected classes,
across all of the classes, and particularly
for antipsychotics. Additionally, we
have recently seen evidence of
fraudulent prescribing and diversion of
antiretrovirals. Although we are taking a
more limited approach to our
application of PA and ST than we
proposed and excluding antiretrovirals
from the exception we are finalizing at
§ 423.120(b)(vi)(C), we continue to
believe that PA and ST are important
tools to ensure clinically appropriate
use of drugs, including those in the
protected classes.
Comment: Some commenters
suggested that CMS should require
plans to list all drugs that require PA
and ST.
Response: Plans are required to
submit this information in their bids.
Additionally, this information is
available when beneficiaries search for
plans by inputting their drugs into the
Medicare Plan Finder. This information
is also required to be available in the
printed formulary, on the formulary on
the plan’s website, and available by
calling the plan.
Comment: Some commenters noted
that the Emergency Medical Treatment
and Labor Act (EMTALA) requirements
preclude emergency physicians from
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23841
asking patients about their insurance
coverage before a medical screening
examination is completed, and
therefore, emergency physicians do not
know which type of plan and formulary
the patient may have at the point of
prescribing. These commenters asserted
that the urgency of treatment in the
emergency setting requires emergency
services personnel to provide
medications that may not be on a Part
D plan’s formulary and suggested that
CMS exempt prescriptions that originate
in emergency settings from this
exception.
Response: Part D enrollees may be
started on non-formulary medications as
inpatients or in emergency settings that
are subject to PA or ST requirements if
continued upon discharge. If an enrollee
who presented to the pharmacy a new
prescription was started on protected
class drugs in such a scenario, we
would expect Part D sponsors to
consider such enrollee to be continuing
existing therapy. Additionally, as
detailed previously, our transition
requirements and exceptions and
appeals process provides the necessary
protection for enrollees that need to
remain on such medications. Although
Part D enrollees and prescribers may
need to avail themselves of our
exceptions and appeals processes, as
discussed previously in this preamble
and consistent with section 30.4.7 of
Chapter 6 of the Medicare Prescription
Drug Benefit Manual, we remind Part D
sponsors that they are required to make
coverage determinations and
redeterminations as expeditiously as the
enrollee’s health condition requires.
Comment: A commenter requested
that CMS allow MA plans, through a
step therapy edit, to require the use of
a Part B drug prior to the use of a
protected class Part D drug starting in
2020.
Response: We noted in the proposed
rule that the combination of our
proposal to specify additional
exceptions to the formulary
requirements for protected class Part D
drugs (section II.A. of the proposed rule,
‘‘Broader Use of Prior Authorization for
Protected Class Part D Drugs’’) and our
proposal for step therapy for Part B
drugs (section II.F of the proposed rule,
‘‘Medicare Advantage and Step Therapy
for Part B Drugs’’) would allow MA–PD
plans to require step therapy of a Part
B drug before a Part D drug. However,
step therapy of a Part B drug before a
Part D protected class drug would be
allowed only under the circumstances
outlined in this regulation (for example,
only for new starts of five of the six
protected classes) and subject to our
Part D formulary review process.
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We thank stakeholders for their
comments on the proposed expansion of
PA and ST for protected class drugs. We
are redesignating the existing paragraph
at § 423.120(b)(2)(vi)(C) as paragraph (D)
and adding a new exception at
paragraph (C), which we are modifying
in response to comments: For enrollees
that are not on existing therapy on the
protected class covered Part D drug, and
except for antiretroviral medications,
PA and ST requirements that are
implemented to confirm that the
intended use is for a protected class
indication, to ensure clinically
appropriate use, to promote utilization
of preferred formulary alternatives, or a
combination thereof, subject to CMS
review and approval. As modified, the
exception is a codification of existing
policy and does not place additional
limits on beneficiary access to
medications.
2. New Formulations
We proposed two changes to our
protected class exceptions to address
new formulations. First, we proposed a
change to the existing exception at
§ 423.120(b)(2)(vi)(A) to reflect the
forthcoming introduction of
interchangeable biological products to
the market by specifying drug or
biological products that are rated as—(1)
therapeutically equivalent (under the
FDA’s most recent publication of
‘‘Approved Drug Products with
Therapeutic Equivalence Evaluations,’’
also known as the Orange Book); or (2)
interchangeable (under the FDA’s most
recent publication of the Purple Book:
Lists of Licensed Biological Products
with Reference Product Exclusivity and
Biosimilarity or Interchangeability
Evaluations).’’ Second, we proposed to
add a new exception at new paragraph
§ 423.120(b)(2)(vi)(D) that would have
specified that, in the case of a singlesource drug or biological product for
which the manufacturer introduces a
new formulation with the same active
ingredient or moiety that does not
provide a unique route of
administration, the new formulation
may be excluded from a Part D
sponsor’s formulary. Under our existing
policy, Part D sponsors are not required
to include a new formulation of a drug
on their formularies when the older
formulation is still available.
We received the following comments
and our response follows:
Comment: Many commenters
requested that CMS define the term
‘‘new formulation.’’
Response: We declined to propose a
definition for ‘‘new formulation’’
because we believe Part D sponsors will
be better able to make these
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determinations more quickly, and we
saw merit and benefit in providing Part
D sponsors with the flexibility to
determine whether they will exclude
the drug or negotiate with the
manufacturer for formulary inclusion
and placement.
Comment: A few commenters asked
CMS to expand the application of the
proposed exception for new
formulations beyond brand drugs to
include generic drugs.
Response: Multiple-source drugs that
are therapeutic equivalents already can
be excluded from the formulary in
accordance with the existing exception
at § 423.120(b)(5)(vi)(A).
Comment: Several commenters
wanted CMS and not, as we proposed,
Part D sponsors, to track which drugs
would be eligible for exclusion under
this exception and to publish a list of
applicable drugs. Manufacturers largely
wanted to limit the applicability of the
exception, and plans generally wanted
CMS to make the determinations for
them.
Response: We did not propose that
CMS publish a list of such drugs
because we believed Part D sponsors
will be better able to make these
determinations more quickly, and we
saw merit and benefit in providing Part
D sponsors with the flexibility to
determine whether they will exclude
the drug or negotiate with the
manufacturer for formulary inclusion
and placement.
Comment: Some commenters
expressed concern that CMS was
attempting to fix a problem that has not
happened yet, as there have been no
instances of new formulations that that
meet the proposed criteria for an
exception within the protected classes.
Other commenters further suggested
that, while they understood CMS’s
attempts to fix a potential problem, our
proposal, if finalized, would leave
vulnerable enrollees without access to
needed drugs.
Response: The purpose of our
proposed exception was to specify that
even if a new formulation of a singlesource drug or biological product in the
protected class became the only
formulation available, Part D sponsors
would have been able to exclude it from
their formularies, except as required by
our other formulary requirements in
§ 423.120(b)(2) and subject to our review
and approval, as part of our annual
formulary review process. Under our
existing policy, which will still apply,
Part D sponsors are not required to
include a new formulation of a drug on
their formularies when the older
formulation is still available. CMS was
persuaded by the commenters’ argument
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because under our proposed policy, in
a scenario where our other formulary
requirements did not require Part D
sponsors to have the new formulation
on their formulary, a Part D enrollee
who is stable on the old formulation
could be left without access to the new
formulation. Consequently, we decline
to finalize this exception.
Comment: Several commenters
asserted that the exception for new
formulations is unnecessary if the
exception for PA and ST is finalized.
Response: We thank the commenters
for their suggestion. We note that we are
not finalizing the new formulations
exception.
Receiving no comments on the
proposed change to the existing
exception at § 423.120(b)(2)(vi)(A) to
reflect the forthcoming introduction of
interchangeable biological products to
the market, we are finalizing a change
to § 423.120(b)(2)(vi)(A) to allow an
exception for interchangeable biological
products, in addition to our existing
policy of an exception for
therapeutically equivalent generic
drugs. We are not finalizing the
proposed exception to specify that, in
the case of a single-source drug or
biological product for which the
manufacturer introduces a new
formulation with the same active
ingredient or moiety that does not
provide a unique route of
administration, the new formulation
may be excluded from a Part D
sponsors’ formulary.
3. Pricing Threshold for Protected Class
Part D Drug Formulary Exclusions
To address Part D sponsors’ assertion
that they have limited ability to
negotiate manufacturer rebates and
achieve appreciable savings relative to
drugs within the protected classes, as
well as price increases for such drugs,
CMS proposed, effective for plan years
starting on or after January 1, 2020, to
permit Part D sponsors to exclude from
their formularies any single-source drug
or biological product that is a protected
class Part D drug whose price increases,
relative to the price in a baseline month
and year, beyond the rate of inflation.
We proposed the rate of inflation would
be calculated using the Consumer Price
Index for all Urban Consumers (CPI–U),
and the price would be defined as the
Wholesale Acquisition Cost (WAC).
We received many comments
regarding this proposal, including
commenters that supported this
proposed exception, and agreed with
CMS that this flexibility would allow
plans more negotiation power with
manufacturers on protected class Part D
drugs. However, we also received many
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comments urging us not to finalize this
proposed exception highlighting
concerns with beneficiary access, and
inability to adequately address rising
launch prices, among other concerns.
Based on the comments and responses
summarized below, we are not
finalizing this proposed exception.
We received the following comments
and our response follows:
Comment: Several commenters
supported this exception, and agreed
with CMS that this flexibility would
allow plans more negotiation power
with manufacturers on protected class
Part D drugs.
Response: While we are not finalizing
the exception, we thank commenters for
their support.
Comment: Many commenters stated
that all three of our proposals greatly
compromised access to needed therapy
(that is, delays and/or interruptions in
therapy) for patients taking protected
class Part D drugs, which would lead to
adverse health outcomes for these
enrollees, and, in the case of HIV,
endanger public health.
Response: In considering whether to
propose these exceptions, CMS took our
other enrollee access protections into
account, which have successfully
protected beneficiary access to needed
medications in the more than 12 years
the Part D program has been
operational. There are five such enrollee
protections, which include formulary
transparency, formulary requirements,
reassignment formulary coverage
notices, transition supplies and notices,
and the expedited coverage
determination and appeals processes.
While we believe our current enrollee
access protects are sufficient, we
appreciate commenters concerns
regarding beneficiary access and
protections and as a result we are not
finalizing the pricing threshold
exception.
Comment: Several commenters
asserted that this proposed exception,
since it is based on cost considerations
rather than scientific evidence, medical
standards, or clinical practice,
represents an unexplained departure
from established policy that would
create discrimination in Part D.
Commenters further asserted that basing
exceptions to the protected classes on
cost considerations is neither supported
by statute nor our existing regulations at
§ 423.120(b)(2)(vi)(C).
Response: While a price increase
could have triggered a formulary
exclusion, the exception we proposed
would not have superseded our other
formulary requirements, including our
annual clinically and scientifically
based formulary review and approval
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process, which includes extensive
checks to ultimately ensure adequate
representation of all necessary Part D
drug categories or classes for the
Medicare population.
We would also like to clarify that we
do not view an exception based on a
pricing threshold as a departure from
current policy. While our existing
regulations at § 423.120(b)(2)(vi)(C)
discuss an exception for protected class
Part D drugs that is ‘‘based upon
scientific evidence and medical
standards of practice (and in the case of
antiretroviral medications is consistent
with the [HHS] Guidelines for the Use
of Antiretroviral Agents in HIV–1Infected Adults and Adolescents),’’ this
is a separate and distinct exception from
the exceptions we proposed in this
rulemaking. In other words, these
exceptions can exist
contemporaneously, and are not in
conflict with each other.
Finally, we remind commenters that
CMS conducts a discrimination review
to ensure that plans’ formulary designs
are not likely to substantially discourage
enrollment by certain Part D eligible
individuals.
Comment: Some commenters
suggested that this exception policy was
based on the erroneous belief that prices
of protected class Part D drugs are
increasing rapidly and that plans need
additional leverage to negotiate prices
for protected class Part D drugs, citing
evidence from MedPAC’s March 2017
report 8 that shows plans’ ability to
adequately manage utilization of
protected class Part D drugs and drive
enrollees toward use of generic drugs.
Response: MedPAC’s finding that Part
D plans ‘‘have had success at moving
enrollees toward generic drugs, which
helps to slow the growth in prices, even
when a drug has protected status,’’ does
not negate the unsustainable growth in
protected class Part D drug prices or a
Part D sponsor’s limited ability to
negotiate rebates for such drugs. For
example, in addition to Part D sponsors’
limited ability to negotiate rebates for
protected class drugs, internal CMS
analysis has also shown price trends for
brand drugs are consistently higher for
drugs in protected classes than such
drugs in non-protected classes. On the
whole, protected class drug prices have
increased more than other, nonprotected drug classes between 2012
and 2017. More recently, the allowed
cost per days’ supply increased by 24
percent for protected class brand drugs
between 2015 and 2016 and by 14
percent between 2016 and 2017. In
8 MedPAC, Report to the Congress: Medicare
Payment Policy (March 2017). p. 412.
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23843
contrast, the allowed cost per days’
supply increased by 16 percent for nonprotected class brand drugs from 2015
to 2016, and showed no growth for such
drugs from 2016 to 2017. In addition, in
the March 2017 MedPAC report,
MedPAC also stated ‘‘[the drug’s
protected class status] may limit the
amount of rebates plan sponsors are able
to obtain from manufacturers in these
classes,’’ which supports the basis for
which we proposed this exception.
Although we are not finalizing the
proposed exception, we remain
concerned about the pricing dynamics
for protected class drugs.
Comment: Some commenters
suggested that if CMS finalized the
exception to broaden use of PA and ST
in the protected classes, then finalizing
the exception based on a pricing
threshold would not be necessary.
Response: As discussed earlier in this
rule, we are only finalizing the
exception that exists under current
policy, related to the use of utilization
management in the protected classes,
which we believe will continue to
provide Part D sponsors with the
flexibility to use PA and ST in the
protected classes and help them achieve
negotiating leverage to realize cost
savings for their enrollees. We agree
that, at that this time, the pricing
threshold exception is not a necessary
addition to the exceptions we are
finalizing.
Comment: A commenter suggested
this policy exception was dangerously
close to price fixing.
Response: Although we are not
finalizing, this proposed policy would
not have placed restrictions on how
manufacturers may price their products.
We also note that Part D sponsors would
not have been required to exclude a
protected class Part D drug from
formulary under this exception, rather,
we were simply proposing to provide
the sponsor the flexibility to do so.
However, as discussed further below,
concern over whether Part D sponsors
would be motivated to exercise this
flexibility is one reason why we are not
adopting this exception in this final
rule.
Comment: Several commenters agreed
with the proposal, but noted it would
not limit growth in the launch prices of
new drugs, which have been found to
drive spending increases among
specialty drugs, and might even lead to
higher launch prices moving forward.
Commenters also noted the potential for
gaming by manufacturers to circumvent
their drug being eligible for formulary
exclusion under this exception.
Response: We agree with commenters
that there may be an incentive for
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manufacturers to come in at higher
launch prices for protected class Part D
drugs as a result of this exception. In
light of this concern and others noted
previously, we are not finalizing this
exception.
Comment: A commenter noted that
Part D sponsors’ contracts with
manufacturers may include price
protections, and as such, may be
protected from any change in WAC
during the contract year. Thus, Part D
sponsors’ motivation to apply this
exception may be muted.
Response: We understand that all Part
D sponsors may not be motivated to use
this exception, particularly considering
the limited savings associated with this
exception. In light of this comment, we
are not finalizing this exception as
proposed.
Comment: We received many
comments in response to these requests
for comment on several specific
technical and operational elements of
the exception, some in support of the
proposed operational and technical
components of the exception, and others
that suggested alternative approaches to
those proposed.
Response: We thank commenters for
their responsiveness to the comment
solicitation, but we are not finalizing
this proposed exception.
Comment: A commenter suggested
that, in order to discourage potential
gaming for drugs not yet on the market
as of September 1, 2019, CMS establish
a reference baseline price for drugs new
to the market consistent with the
inflation-adjusted launch prices of
leading therapeutic alternatives in the
class rather than allowing the
manufacturer to establish its own
baseline price.
Response: CMS shares the
commenter’s concern over the risk of
potential gaming, and, thus, we are not
finalizing this exception while we
continue to consider how best to align
incentives to encourage manufacturers
to keep drug prices low of their own
volition, as was intended with the
proposed exception.
Comment: A commenter
recommended that CMS apply this
exception more broadly to include all
National Drug Codes (NDCs) assigned to
single-source brand drugs, single-source
generic drugs, and generic drugs, as well
as both protected class and nonprotected class Part D drugs and
biological products. The commenter
asserted that if only protected class Part
D drugs are excluded based upon price
increases beyond a certain threshold,
that over time, manufacturers will have
the ability to apply egregious price
increases to an NDC that applies to more
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than one drug, as well as non-protected
classes in order to make up for any lost
compensation.
Response: While we are not finalizing
this exception, we remind the
commenter that Part D sponsors already
have the flexibility to exclude nonprotected class Part D drugs from their
formularies or apply PA and ST
requirements to such drugs, unless the
drug is required to be on formulary to
be compliant with our formulary
requirements. As discussed earlier in
the preamble, this exception—which
would have applied only to the
requirement that all protected class Part
D drugs be included on the formulary—
does not supersede our formulary
requirements at § 423.120(b)(2).
Regarding multiple-source generic
drugs, as discussed in the proposed rule
(83 FR 62160), we declined to apply this
exception to such drugs given the wide
use of maximum allowable cost (MAC)
pricing for such drugs which yields
changes in list prices such as WAC
meaningless.
Regarding potential price increases for
an NDC related to multiple drugs, it is
unclear what the commenter means by
referring to ‘‘an NDC that applies to
more than one drug’’ because an NDC is
specific to a drug, the manufacturer,
strength, dosage form, and quantity.
However, if the commenter simply
means that manufacturers will increase
prices for multiple other non-protected
class Part D drugs to offset limiting price
increases on a specific protected class
drug or drugs to the cumulative change
in CPI–U, we share those concerns.
Based on the comments received, we are
not finalizing this proposed exception.
4. Solicitation of Comment for Special
Considerations
In considering whether exceptions to
the added protections afforded by the
protected class policy are appropriate,
we took other enrollee protections in the
Part D program into account. As
detailed earlier in section II.A of this
final rule, there are five such enrollee
protections which include formulary
transparency, formulary requirements,
reassignment formulary coverage
notices, transition supplies and notices,
and the expedited exception, coverage
determination, and appeals processes.
Our formulary review and approval
process includes a formulary tier
review, and for PA and ST, we also
conduct restricted access, ST criteria,
PA outlier, and PA criteria reviews.
Additionally, our formulary review and
approval process takes into
consideration the applicable indication,
proposed applicability to new or
continuing therapy, and likelihood of
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comorbidities when reviewing PA and
ST criteria submitted to CMS by Part D
sponsors. We noted that best practice
UM practices do not require an enrollee
who has been stabilized on an existing
therapy of a protected class Part D drug
for a protected class indication to
change to a different drug in order to
progress through ST requirements, and
we would not have expected Part D
sponsors to require, nor would CMS
have been likely to approve such
requirements, unless clinically
warranted (for example, an enrollee was
started on clinically inappropriate
therapy or received second- or third-line
therapy for initial treatment of a
condition, as described by the
recognized compendia). Moreover, we
believe our current approach, which
ensures at least one drug within the
class is offered on a preferred tier and
free of PA and ST, is working well and
should be maintained. Currently, Part D
formularies frequently have more than
one protected class Part D drug at a
preferred cost sharing level, especially
in classes with significant generic
penetration, without any PA or ST
requirement, and we do not expect that
this policy will prompt Part D sponsors
to stop including protected class Part D
drugs on tiers with preferred cost
sharing.
Finally, our transition policy will
continue to require Part D sponsors to
provide all new enrollees with at least
an approved month’s supply if the Part
D sponsor cannot determine at the point
of sale whether the enrollee is currently
taking such protected class Part D drug.
(For a detailed discussion of our
transition requirements, see section II.A.
of this final rule and regulations at
§ 423.120(b)(3).)
Nonetheless, it was our intent to make
certain that the three proposed
exceptions to the protected class policy
(that is, broader use of PA, new
formulations, and pricing thresholds)
would not introduce interruptions for
enrollees on existing therapy of
protected class Part D drugs for
protected class indications.
We solicited comment on whether
there are additional considerations that
will be necessary to minimize: (1)
Interruptions in existing therapy of
protected class Part D drugs for
protected class indications during PA
processes; and (2) increases in overall
Medicare spending from increased
utilization of services secondary to
adverse events from interruptions in
therapy. These could include, but are
not limited to, for example, special
transition considerations for onformulary protected class Part D drugs
for which the Part D sponsor has
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established PA requirements, or as
another example, for transitioning some
enrollees taking protected class Part D
drugs for protected class indications to
alternative Part D drugs. If so, we sought
comment on why our current
requirements and protections are
inadequate, or could be improved. In
addition, we solicited comment on what
specific patient population(s),
individual patient characteristic(s),
specific protected class Part D drugs or
individual protected drug classes will
require such additional special
transition or other protections and how
such population(s) can be consistently
identified. Finally, we solicited
comment on other tools that could be
used to minimize interruptions in
existing therapy of protected class Part
D drugs for protected class indications
during PA processes, for example, wider
use of diagnosis codes on prescriptions,
ePA during e-prescribing, targeting
protected class Part D drugs in
Medication Therapy Management
(MTM) programs, or, as another
example, expanded use of a data-sharing
tool to exchange information for
enrollees transitioning from one plan to
another.
We received the following comments
and our response follows:
Comment: Several commenters
expressed concerns that our proposals
would increase costs for Medicare Part
D enrollees, the Part D program, and
Medicare overall due to increased
utilization of other healthcare services,
for example, emergency department
visits and inpatient admissions. Some
commenters requested that we exempt
various protected class indications or
enrollees in LTC settings or served by
LTC pharmacies from the application of
the proposed exceptions, asserting these
enrollees will have higher hospital
admission and readmission rates due to
complications from ineffective
medications and consequent needs for
additional treatment.
Response: CMS solicited comment on
whether there are additional
considerations that will be necessary to
minimize increases in overall Medicare
spending from increased utilization of
services secondary to adverse events
from interruptions in therapy but did
not receive suggestions, apart from
exempting virtually all of the applicable
enrollees from the exceptions, to abate
these concerns.
We understand the importance of
access and continuity of care with these
as well as all classes and will take that
into consideration when approving PA
and ST criteria. Our annual formulary
review and approval process includes
extensive checks to ensure appropriate
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representation of drugs for all necessary
Part D drug categories or classes for the
Medicare population. Our process has
been working well to ensure that
enrollees have access to the drugs they
need for their medical conditions.
Formularies will still be subject to the
entire CMS formulary review criteria,
and our formulary review criteria look
at widely accepted treatment guidelines.
As discussed previously, we are
finalizing one exception to the protected
classes formulary inclusion
requirements. We are finalizing an
exception, consistent with current
policy, to allow Part D sponsors to apply
PA and ST requirements for protected
class Part D drugs, except
antiretrovirals, for new starts only to
confirm intended use is for a protected
class indication, ensure clinically
appropriate use, promote utilization of
preferred formulary alternatives, or a
combination thereof. Under this
exception, PA and ST will continue to
be prohibited for antiretroviral
medications. Any PA or ST
requirements implemented under this
exception will be subject to CMS review
and approval.
Comment: Several commenters
expressed support for our existing
transition requirements.
Response: We thank the commenters
for their support.
Comment: We received comments in
support of our suggestions on other
tools that could be used to minimize
interruptions in existing therapy of
protected class Part D drugs for
protected class indications during PA
processes, for example, wider use of
diagnosis codes on prescriptions, ePA
during e-prescribing, targeting protected
class Part D drugs in Medication
Therapy Management (MTM) programs
(including mandatory MTM for Part D
enrollees in nursing homes on protected
class Part D drugs), or, as another
example, expanded use of a data-sharing
tool to exchange information for
enrollees transitioning from one plan to
another. Additionally, a commenter
urged improvements to electronic health
records and claims processing.
Response: We thank the commenters
for their support. As discussed
previously, CMS is taking steps to
provide e-prescribing improvements
such as RTBTs, and Part D electronic
prior authorization as required by
section 6062 of the SUPPORT for
Patients and Communities Act (Pub. L.
115–271). CMS could explore the
generation of reports through data
sharing platforms. Regarding electronic
health records and claims processing,
we thank the commenter and welcome
more input on this suggestion.
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Comment: A number of commenters
claimed that existing protections do not
reliably ensure access to medically
appropriate protected class Part D drugs.
Some commenters in support of the
proposals also encouraged CMS to
improve enrollee protections, namely
the appeals and exceptions processes.
Commenters disputed our claim that our
appeals and exceptions processes are
mature and have proven workable,
asserting that Medicare Part D enrollees
afflicted with conditions addressed by
protected class drugs continue to have
considerable difficulty in navigating
Part D, even after the improvements that
CMS has recently taken to assist
Medicare beneficiaries with selecting a
plan and navigating the appeals and
grievance processes. Commenters added
that this is particularly concerning given
that the proposal does not make
mention of any additional CMS
resources (such as additional staff or
appropriations) to ensure that enrollees
who need access to drugs within the
protected classes are able to obtain their
medications in a timely manner. Some
commenters suggested that CMS should
establish an expedited exceptions
process that functions in less than 24
hours. Other commenters added that
broader PA and ST should not be
implemented without improvements to
electronic health records (EHRs) and
claims processing.
Response: CMS disagrees with the
assertion that existing appeals processes
are inadequate to ensure access to
needed to medically-appropriate
protected class Part D drugs, and
commenters provided no evidence to
support statements that Part D enrollees
with protected class indications have
difficulty navigating Part D. To that end,
under the exceptions we are finalizing
in this rule, the appeals process will
work as it does today. If the enrollee’s
plan will not cover a drug the enrollee
needs, or it will cover the drug at a
higher cost than they believe they are
required to pay, the enrollee or their
prescriber can request a coverage
determination (for example, a PA or
tiering exception) from their plan. If
their plan denies their request, they
have the right to appeal that decision to
obtain a redetermination. Additionally,
the requirements at § 423.568 for
coverage determinations and § 423.572
for expedited coverage determinations
state that the plan must notify the
enrollee ‘‘as expeditiously as the
enrollee’s health condition requires, but
no later than [72 or 24 hours,
respectively] after receiving the request,
or, for an exceptions request, the
physician’s or other prescriber’s
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supporting statement.’’ That is to say, if
an enrollee’s health condition requires a
response in less than 24 hours, the plan
is obligated to provide one. Therefore,
our existing appeals requirements
already provide for timeframes of less
than 24 hours when warranted.
CMS will continue to closely monitor
appeals activity through audits and our
Complaints Tracking Module (CTM) to
ensure enrollees’ requests are
appropriately evaluated and that Part D
sponsors are adhering to regulations.
While we have confidence in our
appeals process, CMS continues to take
steps to improve the Part D Appeals
process. Additionally, e-prescribing
improvements such as real-time benefit
tools (RTBTs) and Part D electronic
prior authorization as required by
section 6062 of the SUPPORT for
Patients and Communities Act (Pub. L.
115–271) could reduce the need for
appeals. CMS will take steps to further
improve and strengthen the appeals
process in response to any issues that
arise.
Finally, CMS does not foresee a need
to augment its clinical review staff
because we already review PA and ST
in the protected classes for new starts.
Comment: Some commenters claimed
that the existing formulary review and
approval process is inadequate to ensure
non-discriminatory PA and ST
requirements that would limit access to
protected class Part D drugs, and the
only way to ensure access to drugs in
these classes is to maintain the policy as
it exists today. Commenters asserted
that our outlier analysis is an
insufficient tool to provide oversight
against potential discriminatory
practices, particularly against enrollees
who take high-cost drugs in these
classes, HIV patients, LIS enrollees, and
dually-eligible enrollees (particularly
children). Commenters added that an
outlier analysis is simply a test to
determine if a certain plan is being more
discriminatory than other plans but
would not identify common
discriminatory practices across plans.
However, other commenters highlighted
industry practices that are not currently
allowed in Part D and were concerned
that such practices would be allowed in
Part D under our proposed
modifications to the protected class
policies. For example, some
commenters expressed concern that we
would allow PA for Truvada® which is
indicated for prevention of HIV
transmission. Other commenters cited
commercial plans’ requirements to use
multi-tablet regimens for HIV, which are
known to reduce medication adherence.
Response: We conduct a
discrimination review consistent with
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§ 423.272(b)(2) to ensure that plans’
formulary designs are not likely to
substantially discourage enrollment by
certain part D eligible individuals. Our
clinical checks are intended to ensure
that formularies are robust and do not
substantially discourage enrollment by
certain beneficiaries. Our outlier
analysis is an additional step that allows
us to further question why a specific
formulary either has additional or fewer
UM requirements than most other plans
(for example, an outlier because a Part
D sponsor has not imposed PA where
most other Part D sponsors require PA,
or an outlier because a Part D sponsor
requires PA when most other Part D
sponsors do not). Being an outlier in
and of itself does not mean a formulary
substantially discourages enrollment (it
might be just the opposite), but rather
ensures the plan can justify the basis for
its additional or fewer UM requirements
compared to other plans.
All of our formulary requirements,
when taken together, have resulted in
CMS’ ability, in its twelve-year
experience implementing the benefit, to
prevent formularies that are likely to
substantially discourage enrollment by
certain Part D-eligible individuals under
plans. This includes protected class Part
D drugs, due to our existing allowance
of PA and ST for new starts. We do not
anticipate that adoption of this policy
will change our ability to prevent
formularies that are likely to
substantially discourage enrollment by
certain Part D-eligible individuals under
plans now. We are not aware of any
industry-wide practices that would
result in formularies that are likely to
substantially discourage enrollment by
certain Part D-eligible individuals under
plans that would also meet the totality
of our formulary requirements.
Comment: Some commenters
expressed frustration that coverage
determinations, exceptions, and appeal
approvals are usually only granted for
the duration of 1 plan year. Other
commenters added that
immunosuppressant approvals,
specifically, should be extended to
match the life of the transplanted organ.
Response: Part D benefits operate on
a plan year for 1 calendar year. While
extended-duration (that is, longer than 1
calendar year) approvals may be
possible for Part D enrollees who stay
with a plan across multiple plan years,
we recognize such approvals present
challenges when Part D enrollees switch
plans. CMS has instituted the
Additional Beneficiary Information
Initiatives (ABII) web portal to facilitate
data sharing from Medicare Part A
claims data relative to Medicare-covered
transplants to aid Part D sponsors in
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making these determinations; plans may
request access to ABII to receive this
information about their enrollees. If a
Part D enrollee switches plans, the
transition policy would apply and plans
would be required to provide the
medication for at least an approved
month’s supply. As discussed
previously, CMS could explore the
generation of additional pertinent
reports through secure data-sharing
platforms.
Comment: Related to the pricing
threshold exception, a commenter
suggested that enrollees doing well on a
therapy should not lose their ability to
take that therapy, and enrollees on an
existing therapy should be
grandfathered such that they do not lose
the ability to continue on that therapy.
In addition, for enrollees not eligible for
grandfathering, Part D sponsors should
be required to notify enrollees of their
decision to exclude a therapy any time
they do so pursuant to this exception.
Response: We appreciate the concerns
raised by these commenters and, as
noted previously, will not be finalizing
this proposal.
We are finalizing the first exception
with the modification to allow Part D
sponsors to apply PA and ST
requirements for protected class Part D
drugs, except antiretrovirals, only for
new starts to confirm intended use is for
a protected class indication, to ensure
clinically appropriate use, to promote
utilization of preferred formulary
alternatives, or a combination thereof,
subject to CMS review and approval. PA
and ST will continue to be prohibited
for antiretroviral medications under this
exception. As such, we also allow
indication-based formulary design and
utilization management for new starts of
protected class Part D drugs, which
would allow Part D sponsors to exclude
the protected class Part D drug from the
formulary for non-protected class
indications. As is required for all other
Part D drug categories or classes, these
formulary design and utilization
management edits will be subject to
CMS review and approval as part of our
annual formulary review and approval
process, which includes reviews of PA
and ST edits that will restrict access,
step therapy criteria, PA outliers, and
PA criteria. (For an extensive
description of our annual formulary
checks see section II.A.1. of this final
rule.) We also are finalizing a change to
permit exclusion of interchangeable
biological products. As modified, the
exception is a codification of existing
policy and does not place additional
limits on beneficiary access to
medications.
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In response to comments, we are not
finalizing the proposed exceptions to (1)
allow Part D sponsors to exclude a
protected class Part D drug from a
formulary if it is a new formulation of
a single-source drug or biological
product with the same active ingredient
of moiety that does not provide a unique
route of administration, regardless of
whether the other formulation is
removed from the market; and (2) to
permit Part D sponsors to exclude from
their formularies any single-source drug
or biological product that is a protected
class Part D drug whose price increases,
relative to the price in a baseline month
and year, beyond the rate of inflation.
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B. Prohibition Against Gag Clauses in
Pharmacy Contracts (§ 423.120(a)(8)(iii))
In October 2018, Congress enacted the
‘‘Know the Lowest Price Act of 2018’’
(Pub. L. 115–262). The measure, which
amends section 1860D–4 of the Act by
adding a paragraph (m), prohibits
Medicare Part D plan sponsors from
restricting their network pharmacies
from informing their Part D plan
enrollees of the availability of
prescription drugs at a cash price that is
below what that the enrollee will be
charged (either the cost sharing amount
or the negotiated price when it is less
than the enrollee’s cost sharing amount)
for the same drug under the enrollee’s
Part D plan. In effect, the legislation
prohibits Part D sponsors from
including in their contracts with their
network pharmacies ‘‘gag clauses’’, a
term used within the prescription drug
benefit industry that refers to provisions
of drug plan pharmacy contracts that
restrict the ability of pharmacies to
discuss with plan enrollees the
availability of prescriptions at a cash
price that is less than the amount the
enrollee will be charged when obtaining
the prescription through their
insurance. The measure becomes
effective with the plan year starting
January 1, 2020.
To make the Part D regulations
consistent with the statute governing the
Part D program, we proposed to
incorporate the new requirement into
the Part D regulations. Specifically, we
proposed to amend the set of pharmacy
contracting requirements at
§ 423.120(a)(8) by adding a paragraph
(iii) that provides that a Part D sponsor
may not prohibit a pharmacy from, nor
penalize a pharmacy for, informing a
Part D plan enrollee of the availability
at that pharmacy of a prescribed
medication at a cash price that is below
the amount that the enrollee will be
charged to obtain the same medication
through the enrollee’s Part D plan.
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Comment: A number of commenters
expressed strong support and
appreciation for our effort to incorporate
into the Part D regulations the
provisions of the ‘‘Know the Lowest
Price Act’’ promptly after enactment of
the legislation.
Response: We thank the commenters
for their support.
Comment: Several commenters
requested that CMS address additional
issues related to beneficiaries’ opting to
purchase their prescriptions outside
their Part D plan. Specifically, they
suggested that CMS adopt policies to
make it easier for plan enrollees to have
their cash purchases reported
electronically and automatically to their
Part D plan sponsors, allowing the
payment amounts to be counted toward
beneficiaries’ TrOOP and benefit
deductible accumulations. Commenters
also expressed their concern that
prescriptions obtained outside the Part
D benefit are not subject to plans
sponsors’ drug utilization review and
medication therapy management tools,
creating potential health and safety risks
for beneficiaries who pay out of pocket
for a covered medication. Some of these
commenters urged CMS to take steps to
ensure beneficiaries are made aware of
this particular risk.
Response: We thank the commenters
for their perspectives, though their
suggestions are outside the scope of this
rule. We have previously advised in
sub-regulatory guidance (Chapter 5,
Section 30.1 of the Medicare
Prescription Drug Benefit Manual) that
sponsors should accept paper claims for
prescriptions their enrollees obtain
without using their Part D benefit so
that the sponsor can make the
appropriate determinations concerning
reimbursement, total gross covered drug
cost, and TrOOP. Also, in our guidance,
we have affirmed that it is in the best
interests of beneficiaries to have their
claims processed through their Part D
sponsor so that concurrent drug
utilization review can be performed
(Chapter 14, Section 50.4.3 of the
Medicare Prescription Drug Benefit
Manual). We will continue to evaluate
the impact on the Part D program of Part
D plan enrollees filling their
prescriptions outside their benefit plan
and may consider proposing regulatory
changes to address identified concerns
in the future.
Comment: A commenter noted that
the language of the proposed rule did
not exactly mirror the language of the
underlying statute. Specifically, the
statute states that a sponsor may not
restrict a pharmacy from informing a
beneficiary of a ‘‘lower price the
individual would pay for the drug’’ if
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obtained without using insurance while
the rule refers to a ‘‘cash price’’ that is
below the amount that would be
charged to obtain the drug through
insurance. The commenter states that
the term ‘‘cash price’’ is not used in the
statute and therefore, to promote
uniformity in practical application of
the requirement throughout the payer
and provider industry, it should not be
used in the corresponding rule.
Response: We appreciate the
comment, though we believe that while
a rule must reflect the meaning of its
underlying statute, it need not simply
re-state the statutory language. The
commenter has not indicated how the
use of the term ‘‘cash price’’ changes the
meaning of the statute or could create
confusion in its application. We have
used the term ‘‘cash price’’ in previous
Part D guidance addressing the issue of
beneficiaries obtaining drugs outside
their Part D benefit plans, including
manual chapters and the May 2018
memorandum issued by the
Administrator advising Part D sponsors
that they should not include gag clauses
in their pharmacy contracts. The term
‘‘cash price’’ is a term understood
within the industry to mean a price
charged by a pharmacy to customers not
using insurance to obtain a prescription
drug and its use in the rule promotes
clarity in the statement of the new
prohibition.
For the reasons sets forth in the
proposed rule and our response to the
related comments, we are finalizing the
proposed regulation at
§ 423.120(a)(8)(iii) without
modification.
C. E-Prescribing and the Part D
Prescription Drug Program; Updating
Part D E-Prescribing Standards
(§ 423.160)
1. Legislative Background
Section 101 of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173) requires the adoption of
Part D E-Prescribing (eRx) standards.
Prescription Drug Plan (PDP) sponsors
and Medicare Advantage (MA)
organizations offering Medicare
Advantage Prescription Drug Plans
(MA–PD) are required to establish
electronic prescription drug programs
that comply with the e-prescribing
standards that are adopted under this
authority. There is no requirement that
prescribers or dispensers implement
eRx. However, prescribers and
dispensers who electronically transmit
and receive prescription and certain
other information for covered drugs
prescribed for Medicare Part D eligible
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beneficiaries, directly or through an
intermediary, are required to comply
with any applicable standards that are
in effect.
For a further discussion of the
statutory basis for this final rule and the
statutory requirements at section
1860D–4(e) of the Act, please refer to
section I. of the eRx and the Prescription
Drug Program February 2005 proposed
rule (70 FR 6256).
2. Regulatory History
Part D eRx standards are periodically
updated to take new knowledge,
technology, and other considerations
into account. CMS currently requires
providers and dispensers to utilize the
National Council for Prescription Drug
Programs (NCPDP) SCRIPT standard,
Implementation Guide Version 10.6,
which was approved November 12,
2008, to provide for the communication
of a prescription or prescription-related
information for certain named
transactions. However, as of January 1,
2020, prescribers and dispensers will be
required to use the NCPDP SCRIPT
standard, Implementation Guide
Version 2017071, which was approved
July 28, 2017 to provide for the
communication of prescription or
prescription-related information
between prescribers and dispensers for
the old named transactions and a
handful of new transactions named at
§ 423.160(b)(2)(iv). We also currently
require (under § 423.160(b)(5))
Medicare Part D plan sponsors and
prescribers to convey electronic
formulary and benefits information
amongst themselves using Version 3
Release 0 (Version 3.0), from April 2012
of the NCPDP Formulary and Benefits
Standard Implementation Guides. (For a
detailed discussion of the regulatory
history of eRx standards see the
November 2017 proposed rule (82 FR
56437 and 56438)).
The NCPDP SCRIPT eRx standards
(SCRIPT) and the NCPDP Formulary
and Benefits standards (F&B) have
become critical components of the Part
D program. In the 2018 calendar year,
over 66 percent of Part D prescriptions
were transmitted electronically using
the applicable SCRIPT standard, and all
Part D plans implemented electronic
F&B files using the adopted standard.
Prescribers can use electronic F&B
transactions during the eRx process.
F&B is a batch mode transaction
standard by definition, and therefore
does not provide real-time information.
A batch transaction allows plans to send
the information nightly, weekly or even
monthly. As plans make routine
changes in their formularies, they may
or may not be captured on the batch
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formulary files. In addition, F&B
provides information on a contract
level, rather than a patient level, and
consequently could not provide out-ofpocket costs for a given patient at a
given point in time, since costs and
applicability of utilization management
could vary significantly for individual
beneficiaries depending on a variety of
factors. For example, a contract may
have a prior authorization (PA)
requirement on a drug and that
requirement would be listed on F&B
data. However, if a particular
beneficiary has already completed that
PA requirement, RTBT would
erroneously indicate that PA would be
required in order for the plan to pay for
the drug as prescribed. Likewise, F&B
data could display outdated information
about beneficiary-specific out-of-pocket
costs based on the applicable phase of
the benefit. For example, it would not
indicate the out of pocket costs for a
particular beneficiary when the
deductible has been exhausted.
We proposed a real-time benefit tool
(RTBT) to serve as a critical adjunct to
the existing SCRIPT and F&B electronic
standards. Should prescribers chose to
implement electronic prescribing, the
existing SCRIPT standard allows them a
means to conduct electronic prescribing,
while the F&B standard allows a
prescriber to see what is on the plan’s
formulary. However, neither of those
standards can convey patient-specific
real-time cost or coverage information
that includes formulary alternatives or
utilization management data to the
prescriber at the point of prescribing.
We proposed RTBT to be layered on top
of F&B data to gain a more complete
view of the beneficiary’s prescription
benefit information. It can augment the
information available in F&B because,
though F&B is useful, it is a batch mode
transaction standard by definition and
therefore does not provide real-time
information.
As described in more detail in the
next section, we believe requiring plans
to make one or more RTBTs available to
prescribers will lead to higher prescriber
use of F&B information during the eRx
process. To be eligible for selection by
a Part D sponsor, we proposed to require
that the RTBT be capable of integrating
with at least one prescriber’s eRx and
EMR system(s) the latter of which will
hereinafter be referred to as an
electronic health record or EHR for
consistency with current Departmental
terminology) and providing patientspecific coverage information at the
point of prescribing to enable the
prescriber and patient to collaborate in
selecting a medication based on clinical
appropriateness, coverage and cost.
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We believe that furthering
prescription price transparency is
critical to lowering overall drug costs
and patients’ out-of-pocket costs, and
anticipate improved medication
adherence, as well as support for the
MMA objectives of patient safety,
quality of care, and efficiencies and cost
savings in the delivery of care.
3. Adoption of a Real-Time Benefit Tool
As we explained in the proposed rule
(83 FR 62152), the Medicare Part D
program allows contracted entities that
offer coverage through the program
latitude to design plan benefits,
provided these benefits comply with all
relevant requirements. This flexibility
results in variation in Part D plans’
benefit design, cost-sharing amounts,
utilization management tools (that is,
prior authorization, quantity limits, and
step therapy), and formularies (that is,
covered drugs). We are aware of several
Part D prescription drug plans that have
begun to offer RTBT inquiry and
response capabilities to some physicians
to make beneficiary-specific drug
coverage and cost data visible to
prescribers who wish to use such data
at the point-of-prescribing. We have
reviewed multiple RTBT software
solutions and have found that they are
generally designed to provide patientspecific clinically appropriate
information on lower-cost alternative
therapies through the prescribers’ eRx or
EHR systems, if available, under the
beneficiary’s prescription drug benefit
plan. However, for those software
solutions that are capable of providing
such decision support, based on our
current experience, we understand that
the prescribers will only embrace the
technology if the prescriber finds the
information to be readily useful. Thus,
we stated in the proposed rule that to
ensure success, we believe that the Part
D sponsor must present prescribers with
formulary options that are all clinically
appropriate and accurately reflect the
costs of their patient’s specific
formulary and benefit options under
their drug benefit plan. In addition, as
stated in the proposed rule, those who
use plans’ current RTBT technology
report that prescribers are most likely to
use the information available through
RTBT transactions if the information is
integrated into the eRx workflow and
electronic health record (EHR) system.
This will allow the prescriber and
patient, when appropriate, to choose
among clinically acceptable alternatives
while weighing coverage and costs.
Since eRx is generally performed within
the provider’s EHR system, integration
of the RTBT function within the EHR
generally, and the eRx workflow
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specifically, appears to be critical for the
successful implementation of the
technology. However, we recognize that
without an industry standard for RTBT,
prescribers may be offered multiple
technologies, which may overwhelm
and create burden for EHR vendors. We
also recognized that without a standard,
the RTBT tool provided may not be
integrated with a prescriber’s EHR, thus
limiting its utility.
As stated in the proposed rule (83 FR
62152), we are interested in fostering
the use of these real-time solutions in
the Part D program, given their potential
to lower prescription drug spending and
minimize beneficiary out-of-pocket
costs. Not only can program spending
and beneficiary out-of-pocket costs be
reduced, but evidence suggests that
reducing medication cost also yields
benefits in patients’ medication
adherence. As mentioned in the
proposed rule, a 2012 review of studies
found that 85 percent of studies
demonstrated that increasing patient
cost-share for a medication was
associated with a significant decrease in
medication adherence.9 This review
also revealed that 86 percent of these
studies demonstrated that increased
medication adherence was associated
with improved clinical outcomes. With
respect to studies that directly measured
the impact of out-of-pocket costs on
outcomes, 76 percent found that
increased medication out-of-pocket
costs was associated with adverse nonmedication related outcomes such as
additional medical costs, office visits,
hospitalizations, and other adverse
events. Subsequently published studies
continue to reflect similar findings.10 11
Therefore, we proposed that each Part
D sponsor be required to implement one
or more RTBT capable of integrating
with at least one prescriber’s eRx and
EHR systems to provide complete,
accurate, timely, clinically appropriate
and patient-specific real-time formulary
and benefit information to the
prescriber. We also encouraged plans to
use RTBTs to promote full drug cost
transparency by showing each drug’s
full negotiated price (as defined in
§ 423.100), in addition to the
9 Eaddy, M. T., Cook, C. L., O’Day, K., Burch, S.
P., & Cantrell, C. R. (2012). How Patient CostSharing Trends Affect Adherence and Outcomes: A
Literature Review. Pharmacy and Therapeutics,
37(1), 45–55.
10 Hershman, D.L., Tsui, J., Meyer, J., et al. (2014).
The change from brand-name to generic aromatase
inhibitors and hormone therapy adherence for
early-stage breast cancer. Journal of the National
Cancer Institute. 106(11), dju319.
11 Chen SY, Shah SN, Lee YC, et al. (2014).
Moving branded statins to lowest copay tier
improves patient adherence. American Journal of
Managed Care. 20, 34–42.
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beneficiary’s out-of-pocket cost
information.
We also stated that health care
providers using the RTBT should ensure
that individuals are aware that
information about services or treatment,
such as a future prescription, may be
disclosed to the plan by the tool, and
effectuate the individual’s disclosure
restriction request by refraining to use
the tool in instances in which the
patient intends to self-pay in full. We
encouraged covered health care
providers to discuss with the individual
whether the individual desires the
prescriber to use the RTBT as doing so
will generally eliminate the
beneficiary’s ability to request
disclosure restrictions as the plan will
already be in possession of the query
data regarding the desire to prescribe
something for a specified condition.
We sought comments on our proposal,
including the feasibility for plans to
meet the proposed January 1, 2020
deadline, and how our proposal may or
may not expedite our goal of giving each
Part D enrollee and the clinicians who
serve them access to meaningful
decision support through RTBT. We
also sought relevant feedback about
RTBT standardization efforts; this
includes the planned fulfillment of any
milestones that standardization bodies
have already met, or are likely to meet
in advance of the proposed January 1,
2020 deadline. We noted that we would
consider retraction of our rule if we
received feedback indicating that it
would be contrary to advancing RTBT
within Part D, or if a standard has been
voted upon by an accredited Standard
Setting Organization or there were other
indications that a standard would have
been available before the proposed 2020
effective date. In such case, we
indicated that we would review such
standard, and if we find it suitable for
the Part D program consider proposal of
that standard as a requirement for
implementation in our 2021 rulemaking,
effective January 1, 2021. We also
solicited comments regarding the
impact of the proposal on plans and
providers, including overall
interoperability and the impact on
medical record systems. Finally, we
solicited comments regarding the
impact of the proposed effective date on
the industry and other interested
stakeholders.
We received approximately 194
comments on this proposal. Following
are summaries of the comments we
received and responses to these
comments.
Comment: Commenters expressed
widespread conceptual support for our
proposal as a way to accelerate use of
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electronic Real-time Benefit Tools
(RTBT) in the Part D program. These
commenters believed that the provision
of patient-specific price and coverage
transparency at the point of prescribing
will enable patients and providers to
make more informed decisions about
medication therapy.
Response: We thank commenters for
their support.
Comment: We received numerous
comments relating to the proposed
January 1, 2020 implementation date.
Although several commenters stated
that the 2020 deadline was achievable,
the majority of comments expressed
concern. Most commenters believed that
it would be prudent to delay the
implementation date until an industry
standard was available with some
commenters characterizing the proposed
time frame as overly aggressive or
unrealistic given the level of effort
required to implement RTBT.
Response: These comments have
persuaded us that implementing RTBT
will take substantial effort and that a
2020 deadline may be too difficult to
achieve for those plans that have not yet
begun to implement a real time solution.
Given the considerable level of effort
involved in developing RTBT we are
delaying the required implementation
date until January 1, 2021. However,
given the potential benefits of RTBT, we
strongly encourage plans to facilitate
earlier use of RTBT when possible and
start implementing prior January 1,
2021.
Comment: Many commenters stated
that requiring RTBT in absence of an
industry standard will impede
integration of real-time information into
EHRs and eRx systems. Many
commenters urged CMS to continue to
work with the industry through the
National Council for Prescription Drug
Programs (NCPDP) to develop a national
standard that could meet the Part D
program’s needs. A few commenters
asked CMS to wait a year or two after
a standard becomes available in order to
give the industry time to implement it.
They noted that the cost of integrating
multiple RTBT systems into EHRs will
be prohibitive and may be passed on to
prescribers through fees to the
providers. A commenter suggested that
CMS require that RTBT be provided to
prescribers free of charge.
Response: CMS continues to support
interoperability as a way to reduce the
burden on health care providers and, as
noted in our proposed rule, we would
have preferred to consider and name a
single industry standard for use in Part
D. However as an industry standard is
not yet available and we wish to bring
the benefits of RTBT to the Part D
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market as soon as feasible, we are
finalizing the provision that each plan
implement an RTBT of its choosing.
Should a suitable RTBT standard
emerge sometime in the future, we can
consider it for future rulemaking. We
also note that prescribers will be
unlikely to use RTBT tools that impose
a significant financial burden on their
practices. We therefore encourage plans
to work with those responsible for their
real-time solutions to make sure that
they present value to prescribers. The
Department of Health and Human
Services will continue to engage with
standards development organizations,
such as NCPDP to encourage the
development of standards.
Comment: Several commenters
cautioned that holding plan sponsors
solely accountable for implementation
of RTBT places an unfair burden on the
plans and will not result in furthering
CMS’s goals of widespread use of the
technology. Other commenters asked if
a Part D sponsor would be considered
compliant with this provision if their
RTBT only integrates with one EHR.
Response: Though we believe that
EHR and eRx providers will adopt welldeveloped RTBT solutions, we
recognize that such acceptance is not
always in the Part D plan’s control. The
proposed and final regulatory language
make it clear that the Part D plan is
responsible for supporting an RTBT
capable of integrating with at least one
EHR or eRX system, but stops short of
placing the responsibility for
widespread prescriber adoption on the
plan. We are only requiring
compatibility with at least one
prescriber’s eRx or EHR, since CMS
realizes that without an industryadopted standard, it would be
operationally unattainable for a plan to
support an RTBT capable of integrating
with all EHR or eRx systems that
prescribers are potentially using. And,
although Part D plans can make sure
that the RTBT system is capable of
integrating with an EHR or eRx system,
the decision to integrate the RTBT with
specific prescriber-facing systems is out
of the plan’s control. Since this rule
addresses Part D requirements, we can
only address the plan’s readiness for
integration at this point.
Comment: Some commenters sought
guidance about what features and
information would satisfy the
requirement for a RTBT. Commenters
suggested that RTBT include
information on the drug that the
physician intends on prescribing along
with formulary alternatives; they asked
if RTBT should include drugs’
applicable cash price, beneficiary
copayment, any drug utilization
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controls, or side effects of alternative
therapies presented. Some commenters
believe that presenting negotiated prices
to the prescriber would provide value to
the RTBT process, while most
commenters believe that that
information was either not relevant or
was considered proprietary information
that should not be widely shared. Some
commenters believed that RTBT should
include information with respect to all
available pharmacy and delivery
options while others believe that only
the prices of alternatives available at
member’s selected pharmacy should be
populated by the RTBT.
Response: Our proposed regulation
indicated that the goal of RTBT is to
provide decision support to prescribers
by presenting them with relevant details
about formulary information and
alternatives to the drug which the
provider intends on prescribing.
Although we encourage the inclusion of
the negotiated price in RTBT, we are not
mandating it at this time as the majority
of commenters opposed its inclusion
stating that the information was
proprietary and overly confusing.
Provider groups opposed its inclusion,
since it was outside the scope of their
responsibility. However, we believe that
RTBT must include some minimal data
points that will enable a prescriber and
patient to make informed medication
choices at the point of prescribing.
These include benefit information about
the drug which the provider intends on
prescribing, enrollee cost-sharing
information, and comparable
information on formulary alternatives
(meaning those medications that may
have a different copayment or
coinsurance amount than the
medication about to be prescribed but
may have the same therapeutic efficacy).
The benefit information should include
patient-specific utilization requirements
(such as prior authorization or step
therapy requirements) that have yet to
be satisfied at the time when the
prescription is written, and copayment
or coinsurance (or negotiated price
values if included) at the patient’s
selected pharmacy.
Comment: Some commenters
expressed concerns that the data
populated in the RTBT would not be
reliable, that the data would be
inaccurate or that it would be used for
purposes other than to provide decision
support to the prescriber. Commenters
stated that existing real-time solutions
vary in their functionality and
reliability. One provider group pointed
out that prescribers are already seeing
that some of the RTBT systems are not
providing useful information. They
report that these systems are causing
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more effort on the part of the prescriber
without providing useful decision
support. Other providers noted that the
quality of the information provided by
multiple vendors is variable, and
suggested that CMS assess the outcomes
of the alternative vendors.
Response: CMS expects that data
presented through RTBT will be patientspecific, timely, and accurate. Part D
plans must make sure that they comply
with these requirements. We are unsure
what commercial purposes were of
concern to commenters and how they
would adversely impact the intended
functionality. Should CMS become
aware that RTBTs are being used in
ways that are contrary to the Part D
program goals, we will address the
issues as they arise. Further, we believe
that Part D plans are in the best position
to assess the effectiveness of the RTBT
solutions, since they have a financial
stake in ensuring that their enrollees
have access to the most cost-effective
medications. We expect that widespread
adoption of RTBT will, over time,
facilitate improved functionality and
administrative ease of using the tools in
clinical practice. However, if such
concerns are not mollified, we would
expect that EHR vendors would offer
feedback to the plans.
Comment: A few commenters
suggested that we refer to RTBTs using
other terms, such as real-time pharmacy
benefit check or real-time pharmacy
benefit transaction to more clearly
describe our proposal. A commenter
requested that we refer to the
technology as a benefit check and not a
tool.
Response: We understand that some
terms may be clearer to certain readers.
However, the ubiquity of the term RTBT
leads us to believe that it is the correct
term to use. In addition, the suggested
terms were sufficiently close to our
proposed term that we are convinced
that RTBT is an accurate description of
our regulatory requirement.
Comment: We received a number of
comments objecting to our proposal that
providers receive explicit patient
consent before reviewing RTBT
solutions. Commenters explained to us
that requiring affirmative consent would
result in providers having to modify
their workflow and systems to capture
such explicit consent. These systematic
changes would require at least 18
months to adopt, implement, test, and
remedy any issues. Educating providers
across the country on this requirement
and implementing the system changes
would take at least another three
months, which calls into question the
ability to fulfill this requirement prior to
January 1, 2020. Though one commenter
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appreciated the proposed level of
protection, all other commenters who
addressed the issue stated that the
proposed requirement would be a
serious obstacle to the real-time process.
For example, making system changes
that normally require at least 18 months
to make, within less than 6 months
would require the hiring of significant
amounts of new staff and put a burden
on their systems to implement prior to
the January 1, 2020 deadline.
Response: We are committed to
ensuring that RTBT implementation
happens as smoothly as possible. The
RTBT regulation requires that each Part
D plan implement one or more real-time
benefit tools, but does not specify the
circumstances under which a prescriber
should use the technology. We expect
that prescribers will only use RTBT
when the information provided is
useful. As the intent of the RTBT is to
help the clinician know if a medication
will be covered under a patient’s
prescription benefit coverage, we do not
expect that prescribers will use the tool
in those rare instances when a patient
has expressed a desire to buy the
medication outside of the insurance
benefit. Yet, given the importance of
protecting an individual from
unauthorized disclosure of health
information, we considered requiring
patient consent before the RTBT was
being used just to make sure that
patients are fully cognizant that RTBT
will be used.
However, on further reflection, under
the current RTBT scheme, we believe
that requiring that patients provide
explicit affirmative consent before each
use of an RTBT is unnecessary. In most
instances, we expect that the choice
about what prescription to prescribe
will happen when a beneficiary is
present, because the current
ePrescribing standard requires the
beneficiary to choose where the
prescription is to be sent. This means
they will be aware that their data will
likely be transmitted to parties other
than the prescriber. Furthermore,
beneficiaries have the opportunity to
ask their prescribers about what data is
being sent over to the pharmacy.
We conducted more detailed research
into how RTBTs would function in the
Part D context, and we discovered that
after the prescriber finishes consulting
with the RTBT, they typically transmit
the prescription to the pharmacy
electronically. If the enrollee decides to
private pay at a pharmacy, the
pharmacy is required to send a failed
claim notice if a beneficiary decides to
pay for the prescription out of pocket,
rather than all the information about the
prescribed medication. This failed claim
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notice satisfies the § 423.120(c)(3)
requirement for pharmacies to submit
claims to the Part D sponsors or its
intermediary whenever the Part D
member ID card is presented or is on file
at the pharmacy, which is a requirement
without RTBT use. Thus, we encourage
providers to discuss with the individual
whether the individual desires to selfpay as after the prescriber uses the
RTBT the patient will no longer be able
to withhold information about the
prescription from their plan under 45
CFR 164.522(a)(1)((vi) (allowing the
beneficiary to request disclosure
restrictions if they pay for their
prescription).
After reviewing the comments, we
weighed these potential privacy
concerns against the potential
disruptions to effective adoption of
RTBT raised by commenters. Especially
since pharmacy benefit information is
generally already available to
prescribers and pharmacies under
typical patient interactions, we believe
that RTBT use will fall within the
category of health care treatment
disclosures making the disclosure of
health care data generally permissible
without patient authorization.
Nonetheless, we encourage prescribers
to use RTBT judiciously and must
always allow an individual enrolled in
a Part D plan to instruct a prescriber not
to use the system for any or all
prescriptions, and prescribers should
heed that instruction.
Comment: Several commenters
suggested that CMS work with the
Office of the National Coordinator for
Health Information Technology (ONC)
to develop incentives for integration of
RTBT products into EHRs.
Response: CMS thanks the
commenters for this suggestion.
However, we do not believe that these
incentives are required. Based on our
research, we believe many EHRs are
moving to integrate RTBTs into
prescribers’ works flows. In addition,
since RTBTs are variable in their
functionality it would be difficult for
ONC to incentivize use of RTBT until an
industry standard is implemented and
tested.
Comment: A few commenters
suggested that the F&B standards are no
longer necessary and others asked us to
clarify the role that the F&B standard
should play in the future.
Response: In our proposed rule we
clarified that F&B remains an important
component of the Part D electronic
prescription standard and plans must
continue to support it. However, the
future interaction between RTBT and
the F&B standards are out of scope of
this regulation.
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Comment: A commenter requested
that long-term care facilities be exempt
from having to use a RTBT.
Response: CMS intends this
regulatory requirement to apply solely
to Part D plans. Although we encourage
the use of RTBTs among providers,
guidance for providers is outside of the
scope of this final rule.
Comment: A few commenters
suggested that CMS require Part D plans
to develop a patient tool to provide
prescription cost information to patients
in addition to, or instead of, the
prescriber facing tool we proposed.
Response: We appreciate the
comments. However, our proposal was
for a prescriber facing tool. A patient
tool is outside the scope of this rule.
We are finalizing the proposal for
each Part D plan to implement an RTBT
of its choosing, effective January 1,
2021. We strongly encourage plans to
start implementing this provision prior
to 2021. We are removing the proposed
requirement that covered health care
providers obtain explicit beneficiary
consent prior to using the RTBT.
D. Part D Explanation of Benefits
(§ 423.128)
Section 1860D–4(a)(4)(A) of the Act
requires Part D sponsors to furnish to
each of their enrollees a written
explanation of benefits (EOB) and, when
the prescription drug benefits are
provided, a notice of the benefits in
relation to the initial coverage limit and
the out-of-pocket threshold for the
current year. We codified this EOB and
notice requirement at § 423.128(e) by
requiring the Part D EOB to include
specific information written in a form
easily understandable to enrollees. Part
D sponsors must provide enrollees with
an EOB no later than the end of the
month following any month in which
the enrollee utilized their prescription
drug benefit.
Information about negotiated price
changes for each of the prescription
drugs covered for a beneficiary,
including information about lower cost
therapeutic alternatives, is not required
to be in the EOB under the current
regulation. Based on comments
received, we are finalizing our proposal
that sponsors must include negotiated
price increases and lower cost
therapeutic alternatives in their
beneficiaries’ Part D EOBs.
The Part D EOB is one of the principal
documents that beneficiaries can rely on
to understand where they are in the
benefit phases and their changing outof-pocket costs throughout the year.
This document is provided to
beneficiaries every month for the
immediately preceding month that the
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Part D benefit is used. As a retroactive
monthly report, the EOB is the means by
which beneficiaries can monitor their
benefit utilization and prescription costs
on a regular and frequent basis.
We received approximately 79
comments on this proposal. We have
included a summary of the comments
and our responses.
Comment: Commenters unanimously
supported increasing drug pricing
transparency for beneficiaries.
Response: We thank the commenters
for their support. Lowering prescription
drug costs is of critical and immediate
concern to beneficiaries and the
Administration.
Comment: Many commenters voiced
concern that including drug pricing
information on the EOB would be
ineffective for the following reasons: (1)
Its retroactive nature makes the price
information not meaningful or
actionable for the beneficiary; (2) its
timing during a benefit year makes it not
actionable by the beneficiary because of
limitations on enrollment changes; (3)
the nature of acute prescriptions means
the information is not useful for shortterm medications; and (4) this
information is not discernable without
being read with the prescriber. While
asserting different reasons, these
commenters generally agreed that the
drug cost information would not be
meaningful, actionable or useful for the
beneficiary due to the enumerated
circumstances.
Response: Despite the EOB being a
retroactive report, the information
provided will allow beneficiaries to
engage with their prescriber at their next
point of care and discuss their choices
in medication. This may lead to
beneficiaries switching to a lower cost
drug. Even if a beneficiary is not able to
change plans mid-year based on the
EOB information, the information may
still be useful to the beneficiary in the
situation we just described—to engage
with their prescriber about their
medication choices within their existing
plan. To address the comments
concerning acute prescriptions, we note
that on the EOB as it is written today an
acute prescription filled one time is not
carried over on multiple EOBs.
However, we believe there is no harm in
including a negotiated price increase
and a lower cost alternative for an acute
prescription claim, when available. This
additional information empowers the
beneficiary and provides them with a
holistic approach when reviewing their
Part D benefit. We believe this, in turn,
will ultimately spark dialogue between
the beneficiary and their prescriber(s)
about lower cost therapeutic alternatives
in the future. Thus, we conclude that
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the EOB will empower the beneficiary
with information about drug costs that
the beneficiary does not currently have.
This initiative will support CMS’
commitment to promoting drug price
transparency in the Medicare Part D
program.
Comment: Many commenters
suggested that drug pricing information
will be more useful if provided through
a prospective tool, such as a real-time
benefit tool (RTBT) at the time of
prescribing, rather than the EOB. They
highlighted that beneficiary knowledge
would be more accurate with real-time
information on which decisions could
be made with their prescriber at the
point of care.
Response: Implementing a real-time
benefit tool for beneficiaries is an
effective way to provide beneficiaryspecific information about drug costs
(for additional discussion about RTBTs,
please see the previous section of this
final rule). However, the EOB provides
a different method of communicating
drug pricing information directly to
beneficiaries. Both are valuable price
transparency tools.
Comment: Multiple commenters were
concerned that displaying the
percentage change in negotiated price
would not be a helpful metric for
beneficiaries when evaluating their Part
D benefits. The commenters asserted
that the negotiated price is not the
correct price to display as it may not
change throughout the benefit year, or if
it does change, it may not impact the
cost-sharing for the beneficiary.
However, commenters did not provide
alternative pricing that would be of
greater impact to the beneficiary.
Response: We do not agree and
believe providing this information to the
beneficiary is valuable. The negotiated
price information required to be
included in the EOB is the percentage
increase in the total cost for each
prescription, when there is an increase,
since the first claim of the current
benefit year for each prescription drug
claim in the EOB, which would display
under each medication. Currently and
under this new requirement, the EOB
would still display the price paid by the
beneficiary, plan and any other payer.
While increases in negotiated prices
may or may not be directly
proportionate to a change in a
beneficiary’s cost-sharing for a variety of
reasons, we believe that ensuring
beneficiary access to information about
changes in drug pricing in the context
of their specific use of the benefit will
allow them to better assess the value
they receive from their Part D benefit.
Comment: Multiple commenters
pointed out the Part D EOB is meant to
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be a brief document but is lengthy and
complex. As such, these commenters
pointed out that including additional
details would only make the document
longer, thereby paradoxically making a
beneficiary less inclined to read the
document thoroughly. Therefore, our
EOB proposal would defeat the intent of
requiring additional information in it.
Some commenters also mentioned that
the EOB is not the appropriate
document to disseminate the pricing
information and will inevitably lead to
increased beneficiary confusion.
Commenters suggested improving the
functionality of the Medicare Plan
Finder and other beneficiary-facing
tools to convey this information.
Response: We find the current
structure of the EOB to be well-suited to
include additional information on
individual prescription drug claims.
Other beneficiary materials are
delivered on an annual basis, and are
geared toward assisting Part D
beneficiaries make enrollment decisions
whether to remain with their current
prescription drug plan or switch to
another. By including these negotiated
price increases and lower cost
alternatives on a monthly basis in EOBs,
beneficiaries will be in greater control of
their prescription drug benefits and,
with their prescribers, will be able to
make more informed decisions about
their care. Beneficiaries will have
documented drug pricing information
and will be able to seek assistance from
their prescribers, pharmacists, SHIPs,
and family members.
Comment: A few commenters
believed that the proposed rule did not
provide sufficient definition of a lower
cost therapeutic alternative.
Response: The lower cost therapeutic
alternatives will be determined by the
sponsor based on its formulary, not by
CMS. As such, any drug may be
identified as a lower-cost therapeutic
alternative for another drug if a Part D
sponsor reasonably determines it to be
so. As stated in the preamble of the
proposed rule, lower-cost therapeutic
alternatives (meaning drugs with lower
cost-sharing or lower negotiated prices)
will not be limited to therapeuticallyequivalent generic drugs if the original
prescription fill is for a brand drug.
Comment: A few commenters wrote
that the estimated implementation cost
with respect to this proposal was
understated in the proposed rule. These
commenters also provided an estimate
of their increased costs, citing that the
programming would be more than CMS
estimated, and also that these changes
would contribute to increasing the
length of the EOB document, thereby
increasing printing and mailing costs for
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plans. Commenters did not provide
alternative solutions for including the
drug pricing information and/or lowercost therapeutic alternatives.
Response: We thank the commenters
for providing us with their cost
estimates. We have revised the
estimated cost to implement the EOB
updates; however, we still believe that
these updates are necessary for adhering
to the Administration’s goal of drug
price transparency and lowering
beneficiary out-of-pocket costs. We will
work with stakeholders to improve the
model EOB to include this information
in the most efficient and effective
manner for beneficiaries and sponsors.
Comment: Many commenters wrote
that amending the Part D EOB to
include this information for the
upcoming contract year, beginning
January 1, 2020, was unreasonable and
too burdensome.
Response: We thank the commenters
for their concerns, and acknowledge
that there will be administrative and
programmatic costs to implement these
changes. Given the level of effort
involved in updating the Part D EOB,
we are delaying the implementation
date until January 1, 2021. However,
given the potential benefits of these
changes, we strongly encourage plans to
begin implementing this requirement
prior to January 1, 2021.
After consideration of comments
received, we are finalizing the
reassignment of paragraphs (e)(5) and
(e)(6) of § 423.128(e) as paragraphs (e)(6)
and (e)(7) to add a new paragraph (e)(5)
that will require sponsors to include
information about negotiated price
increases, if any, and lower-cost
therapeutic alternatives in the Part D
EOBs. Based on comments received, as
to information about negotiated drug
price increases, we will require that Part
D sponsors include the cumulative
percentage increase, if any, in the
negotiated price since the first claim of
the current benefit year for each
prescription drug claim in the EOB.
Second, CMS will require that Part D
sponsors provide information about
drugs that are therapeutic alternatives
with lower cost-sharing, from the
applicable approved plan formulary for
each prescription drug claim, when
such therapeutic alternative are
available as determined by the plan.
Also, the plan may include therapeutic
alternatives with the same copayments
if the negotiated price is lower.
Part D sponsors will be permitted and
encouraged by CMS to take into
consideration relevant beneficiaryspecific information, such as diagnosis,
the indication for the prescription and
completed step therapy or exception
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requests, when providing formulary
therapeutic alternatives in the EOB that
have lower cost-sharing. For example, if
a plan is aware that a beneficiary has
already fulfilled step therapy
requirements and the beneficiary’s
physician has attested that the
beneficiary is not able to tolerate a
formulary alternative, that formulary
alternative does not need to be included
on the EOB for that beneficiary.
E. Medicare Advantage and Step
Therapy for Part B Drugs (§§ 422.136,
422.568, 422.570, 422.572, 422.584,
422.590, 422.618, 422.619, 422.629,
422.631, 422.633)
1. Medicare Advantage and Step
Therapy for Part B Drugs: General
Requirements
In a HPMS memo released August 7,
2018,12 CMS announced that under
certain conditions beginning in contract
year 2019, MA plans may use utilization
management tools such as step therapy
for Part B drugs; such utilization
management tools, including prior
authorization, can be used by MA
organizations to both prevent
overutilization of medically
unnecessary health services and control
costs. CMS proposed requirements
under which MA plans may apply step
therapy as a utilization management
tool for Part B drugs and affirmed, based
on our reinterpretation of the applicable
statute, MA plans’ authority to
implement appropriate utilization
management tools, including prior
authorization, for managing Part B drugs
in a manner to reduce costs for both
enrollees and the Medicare program.
Under Part B, traditional Medicare
generally pays based on a statutory
formula—average sales price plus a 6percent add-on—for drugs and
biological products that are not usually
self-administered, such as injections
and infusions. We stated in the
proposed rule how we believe there is
minimal negotiation between MA plans
and drug manufacturers to reduce the
price of these drugs. Prior to the August
7, 2018, HPMS memo and subsequent
FAQs, 13 CMS interpreted existing law
to prohibit MA plans from using step
therapy for Part B drugs because there
was a concern that such utilization
management tools could have created an
unreasonable barrier to coverage of and
access to Part B benefits that MA plans
12 Prior Authorization and Step Therapy for Part
B Drugs in Medicare Advantage (August 2018).
https://www.cms.gov/Medicare/Health-Plans/
HealthPlansGenInfo/Downloads/MA_Step_
Therapy_HPMS_Memo_8_7_2018.pdf.
13 Available online at: https://dpapportal.lmi.org/
DPAPMailbox/Documents/Part%20B%20Step
%20Therapy%20Questions%20FAQs_8-29-18.pdf.
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23853
must provide under the law. However,
as we explained in the proposed rule,
CMS recognizes that utilization
management tools, such as step therapy,
can provide the means for MA plans to
better manage and negotiate the costs of
providing Part B drugs. Based on this
and for the reasons explained in more
detail in this final rule, CMS rescinded
the prior guidance prohibiting step
therapy for Part B drugs and services in
MA, and we are finalizing our proposal
to allow MA plans to use step therapy
for Part B drugs, subject to certain
parameters. In the proposed rule, we
explained how we believe the flexibility
to use step therapy programs for Part B
drugs would considerably assist MA
plans in negotiating on behalf of
enrollees to get better value for Part B
drug therapies. Using internal bid data,
excluding MA employer group plans,
CMS estimates $9 billion in spending by
MA plans for Part B drugs furnished
during contract year 2018.
As discussed in the proposed rule, we
believe that these tools will better
enable MA organizations to take steps to
ensure that MA plans and MA enrollees
pay less overall or per unit for Part B
drugs which could result in lower MA
capitation payments by the government
to MA organizations and lower average
sales prices for Part B drugs, on which
Medicare FFS payments for such drugs
are based, while also maintaining access
to medically necessary Medicarecovered drugs and services. These
goals—reducing costs across the
Medicare program while ensuring
access to medically-necessary Medicarecovered benefits—underlie this final
rule. We proposed adding a new
regulation, at § 422.136, entitled
‘‘Medicare Advantage and Step Therapy
for Part B Drugs.’’
Sections 1852(c)(1)(G) and (c)(2)(B) of
the Act, and the MA regulations at
§ 422.4(a)(1)(ii) expressly reference a
MA plan’s application of utilization
management tools, like prior
authorization and other ‘‘procedures
used by the organization to control
utilization of services and
expenditures.’’ This indicates that MA
plans are not prohibited by the statute
from implementing utilization
management tools such as step therapy.
In light of this, we proposed to define
step therapy in § 422.2 and adopt
requirements under which MA plans
may apply step therapy as a utilization
management tool for Part B drugs. We
solicited comments concerning the
impact that allowing step therapy for
Part B drugs will have on MA plans and
enrollees.
We clarified that for contract year
2020 and subsequent years, coupling
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drug management coordination with
rewards and incentives was not part of
our proposal. While MA plans may still
offer rewards and incentives programs,
savings realized from Part B step
therapy must be reflected in the plan’s
bid, as such savings would reduce the
revenue necessary for MA plans to
provide basic benefits that MA plans
must furnish enrollees and
supplemental benefits that MA plans
may opt to offer. Additional Part C
rebate dollars associated with the lower
bid, as with all Part C rebate dollars,
must be used to provide supplemental
benefits and/or lower premiums for the
plans’ enrollees.
We noted that existing requirements
in §§ 422.112(b) and 422.152 for care
coordination activities are sufficient to
promote positive health outcomes for
both drugs and services; we relied on
this and did not propose text at
§ 422.136 that an MA plan must offer a
drug management program. We also
recognized that we issued the August 7,
2018 memo that announced our
reinterpretation of the statute after bids
were submitted for the 2019 plan year
and therefore expected plans to utilize
the drug management program as a
means to pass 2019 savings on to
enrollees through rewards and
incentives. Because we are finalizing
this rule prior to the 2020 bid deadline,
MA plans must include savings from
implementing Part B step therapy in
their bids for 2020 and future years, as
the savings will affect the revenue
necessary to provide benefits (see
§ 422.254).
We acknowledged in the proposed
rule the potential for utilization
management tools like step therapy to
create administrative burden and
process challenges for network
providers. We also explained how, in
light of that, we expect MA plans to
work closely with the provider
community and to adopt best practices
that streamline requirements and
minimize burden. We also encouraged
continued development and
advancement of electronic prior
authorization processes to more
efficiently administer this process. We
solicited comment whether our
proposed regulation text imposing
education and information
responsibilities in combination with
existing regulations on care
coordination are sufficient to ensure
that MA organizations specifically
address step therapy programs for Part
B drugs as part of those care
coordination responsibilities and if we
should finalize a provision in § 422.136
that addresses the administrative
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burden imposed on network providers
by MA plans.
We proposed and this final rule
adopts a number of safeguards that
ensure enrollees have timely access to
all medically necessary Medicare Part B
medications. MA plans will be required
to administer the existing organization
determination and appeals processes
under new time frames that are similar
to the timeframes applicable in Part D
for coverage determinations; enrollees
will be able to seek organization
determinations in advance—or when
the MA (or MA–PD) plan first starts the
step therapy protocol for the enrollee—
if the enrollee (typically after
consultation with their health care
provider) believes they need direct
access to a Part B drug that will
otherwise only be available after trying
an alternative drug. We explained that
MA plans will adjudicate these
organization determinations based on
medical necessity criteria. If an enrollee
is dissatisfied with the plan’s
organization determination, the enrollee
has the right to appeal. We noted that
CMS monitors organization
determination and appeals activity
through the audit process and regular
discussions with the Part C Independent
Review Entity (IRE) to ensure enrollee
requests are appropriately evaluated and
processed within applicable timeframes.
As discussed in the proposed rule,
our existing disclosure requirements at
§ 422.111 would require MA plans that
apply step therapy to Part B drugs to
disclose that Part B drugs may be
subject to step therapy requirements in
the plan’s Annual Notice of Change
(ANOC) (when initially adopted or
subsequently changed) and Evidence of
Coverage (EOC) documents. In the
ANOC, this information must be
included under the Changes to Benefits
and Costs for Medical Services. In the
EOC, this information must be included
in the Medical Benefits Chart under
‘‘Medicare Part B prescription drugs.’’
Under existing requirements at
§ 422.202(b), MA plans must establish
policies and procedures to educate and
fully inform contracted health care
providers concerning plan policies on
utilization management, which will
include the plan’s step therapy policies.
We proposed to also include a
requirement at § 422.136(a)(2) for plans
to establish policies and procedures to
educate and inform health care
providers and enrollees specifically
concerning its step therapy policies. We
noted in the proposed rule that
preferred provider organization plans
(PPOs) are required, as part of the
definition of a PPO at section
1852(e)(3)(A)(iv)(II) of the Act and
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under the MA regulation at
§ 422.4(a)(1)(v)(B), to reimburse or cover
benefits provided out of network; while
higher cost sharing is permitted, PPOs
are prohibited from using prior
authorization or preferred item
restrictions in connection with out of
network coverage. As such, PPOs must
provide reimbursement for all plancovered medically necessary services
received from non-contracted providers
without prior authorization or step
therapy requirements. We solicited
comment whether the final rule should
include a specific regulatory provision
clarifying this issue.
We proposed at § 422.136 (a)(3), that
MA plans will be required to use a
Pharmacy and Therapeutics (P&T)
committee to review and approve step
therapy programs (meaning policies and
procedures); we explained that this is
necessary to ensure medically
appropriate implementation of step
therapy for Part B drugs. We explained
how we believe the burden of this
requirement will be limited because
MA–PD plans and MA plans would be
authorized to use any existing Part D
P&T committees established by the MA–
PD plan (or an MA–PD plan under the
same contract as an MA-only plan) to
comply with part 423 requirements for
the Part D benefit. The Paperwork
Reduction Act listing for P&T committee
record keeping is OMB Control Number
0938–0964. We noted that P&T
committee decisions are not public
information. We proposed, in the
introductory text of proposed paragraph
(b), that a MA organization must
establish or utilize an existing P&T
committee prior to implementation of a
Part B step therapy program so that the
P&T committee reviews Part B step
therapy programs. In addition, we noted
in the proposed rule how we continued
to actively consider expanding the role
of MA P&T committees. Therefore, we
solicited comments on our proposal that
MA plans with Part B step therapy
programs will be required to have P&T
committees and, in addition, whether
the requirement for this MA P&T
committee should be expanded to all
MA plans that have any utilization
management policy (such as prior
authorization or dosage limits)
applicable to Part B drugs, and whether
there are other options that will meet
the policy goal of ensuring that Part B
step therapy programs are medically
appropriate underlying the P&T
committee proposal. We proposed to
codify P&T committee requirements for
MA plans in § 422.136(b).
Our proposal for the P&T committee
mirrors the Part D requirements for such
committees currently codified at
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§ 423.120(b) with regard to membership,
scope, and responsibilities. We
explained our position that existing Part
D P&T requirements at § 423.120(b) are
adequate to ensure MA plans implement
step therapy for Part B drugs that is
medically appropriate. We note that if
necessary we may release subregulatory
guidance concerning application of the
P&T committee requirements in the
context of Part B drugs.
We proposed requirements in
§ 422.136(b) that would be consistent
with Part D requirements for a P&T
committee. Specifically, we proposed
that the majority of members comprising
the P&T committee will be required to
be practicing physicians or practicing
pharmacists. The committee will be
required to include at least one
practicing physician member and at
least one practicing pharmacist; these
specific individuals will be required to
be independent and free of conflict with
the MA organization, the MA plan, and
pharmaceutical manufacturers. In
addition, the plan will be required to
include at least one practicing physician
member and one practicing pharmacist
who are experts in the care of elderly
and disabled persons. We also
encourage MA plans to select P&T
committee members representing
various clinical specialties (for example,
geriatrics, behavioral health) to ensure
that all conditions are adequately
considered in the development of step
therapy programs. We proposed
provisions for the responsibilities and
scope of the P&T Committee at
§ 422.136(b)(4) through (11) that would
mirror the current regulation text
applicable to Part D P&T Committees
under § 423.120(b)(1)(iv) through (xi),
with minor revisions to tailor the
proposed MA regulation to the Part B
drug step therapy programs offered by
MA plans. We reiterated in the
proposed rule how our proposal was to
substantially align the requirements of a
P&T committee reviewing Part B drugs
with Part D requirements because the
Part D requirements have proved
sufficient in ensuring that plans
implement medically appropriate step
therapy and utilization management
protocols in Part D.
CMS proposed, as a beneficiary
protection, to limit Part B step therapy
requirements to only new starts of Part
B drug therapies. CMS explained in the
proposed rule that we believe new step
therapy requirements should not disrupt
ongoing Part B drug therapies for
enrollees. In order to ensure that step
therapy requirements do not disrupt
ongoing Part B drug therapies, we
proposed under § 422.136(a)(1), that
step therapy may not disrupt enrollees’
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ongoing Part B drug therapies.
Specifically, we proposed that step
therapy only be applied to new
prescriptions or administrations of Part
B drugs for enrollees who are not
actively receiving the affected
medication; we proposed to require MA
plans to use a lookback period of 108
days, in order to be consistent with
established Part D policy with respect to
transition requirements for new
prescriptions, to determine if the
enrollee is actively taking a Part B
medication. In the proposed rule, we
explained how the Part D lookback
period was created with clinical and
pharmaceutical input and that CMS
believed the same criteria were
appropriate to use in setting a lookback
period for Part B drugs. We proposed
that an MA plan would have to use the
lookback period when an enrollee elects
a new MA plan (regardless of whether
previously enrolled in a MA plan,
traditional Medicare, or new to
Medicare) to determine whether the
enrollee has taken the Part B drug (that
will otherwise be subject to step
therapy) within the past 108 days.
We explained that under our
proposal, if the enrollee is actively
taking the Part B drug, such enrollee
will be exempted from the plan’s step
therapy requirement concerning that
drug. We proposed to allow MA plans
flexibility in implementing step therapy
for Part B drugs within specific
parameters. Specifically, we proposed
that MA plans would be able to use a
step therapy program to ensure that an
enrollee who is newly diagnosed with a
particular condition will begin
treatment with a cost-effective biological
product licensed under section 351(k) of
the Public Health Service Act or generic
medication before progressing to a more
costly drug therapy if the initial
treatment is ineffective or if there are
adverse effects. We did not propose that
§ 422.136 specifically address the
standard for exemptions or movement
within a step therapy program because,
as we explained in the proposed rule,
we interpret the MA plan’s
responsibility to provide all medically
necessary covered services and items
covered under the original Medicare
program to mean that ineffectiveness or
adverse effects of a treatment required
in a step therapy program would be
sufficient basis to grant an exemption or
move an enrollee to a higher step in the
protocol.
Consistent with existing Part D
guidelines, we proposed at § 422.136(c)
to permit MA plans to require an
enrollee to try and fail an off-label
medically accepted indication (that is,
an indication supported by one or more
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23855
citations in the statutory compendia)
before providing access to a drug for an
FDA-approved indication (on-label
indication). However, we proposed that
using off-label drugs in step therapy will
only be permitted in cases where the
off-label indication is supported by
widely used treatment guidelines or
clinical literature that CMS considers
best practices. We solicited comments
on our proposal to permit MA plans to
use off-label drugs in a Part B step
therapy program only when such drugs
are supported by widely used treatment
guidelines or clinical literature that
CMS considers to represent best
practices.
We also proposed, at § 422.136(d),
that a step therapy program must not
include as a component of a step
therapy protocol or other condition or
requirement any drugs not covered by
the applicable MA plan as a Part B drug
or, in the case of an MA–PD plan, a Part
D drug. Specifically, we proposed
§ 422.136(d) to prohibit an MA
organization from using a non-covered
drug as a step in the step therapy
program (that is, as a condition to
coverage). Under our proposal, each
step in a step therapy program would
have to be another drug covered by the
MA plan (another Part B drug) or MA–
PD plan (another Part B drug or a Part
D drug) to ensure that step therapy
programs are not, intentionally or
unintentionally, barriers to services that
must be covered by the MA plan
pursuant to section 1852 of the Act.
Therefore, at § 422.136(d), we proposed
regulation text to clarify that only
Medicare covered Part B drugs (plus for
MA–PD plans, Part D drugs) may be
used in a step therapy program. We
explained in the proposed rule that we
intended to permit an MA plan to
require one Part B drug be used before
a different Part B drug and to permit MA
plans that also offer prescription drug
coverage (also known as ‘‘MA–PD
plans’’) to use step therapy to require a
Part D drug therapy prior to allowing a
Part B drug therapy because the Part D
drug will be covered by the plan.
Additionally, we noted in the
proposed rule that the combination of
our proposal to specify additional
exceptions to the formulary
requirements for protected class Part D
drugs (section II.A.1 of the proposed
rule, ‘‘Broader Use of Prior
Authorization for Protected Class Part D
Drugs’’) and our proposal for step
therapy for Part B drugs (section II.F. of
the proposed rule, ‘‘Medicare Advantage
and Step Therapy for Part B Drugs’’)
would allow MA–PD plans to require
use of a Part B drug before a Part D drug
as part of a step therapy program. Our
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proposal about Part D protected class
drugs is being finalized with
modifications in this final rule. As
noted previously, we are permitting the
use of step therapy for protected class
Part D drugs (other than antiretrovirals)
for enrollees that are not already using
the drug for a protected class indication
(that is, ‘‘new starts’’), and therefore
MA–PD plans may, starting in 2020,
require step therapy of Part B drugs
before Part D drugs for the protected
classes as well, consistent with the
requirements we are adopting at
§ 423.120(b)(2)(vi)(C). MA–PD plans that
use cross-benefit step therapy programs
must ensure that these requirements are
clearly outlined in the Part D prior
authorization criteria for the affected
Part D drugs and are otherwise
consistent with Part D requirements. We
also stated in the preamble, as is
required for all other drug categories or
classes in Part D coverage, that Part D
step therapy requirements will be
subject to CMS review and approval, as
part of our annual Part D formulary
review and approval process, which
includes formulary tier review, and
relative to prior authorization and step
therapy, restricted access, step therapy
criteria, prior authorization outlier, and
prior authorization criteria reviews.
We also solicited comments on the
following aspects of our proposal:
• The restriction of step therapy to
new starts of Part B drugs.
• The new requirement for a P&T
committee for MA plans that implement
step therapy and the use of that P&T
committee.
• The prohibition on using noncovered drugs, and in certain
circumstances, off-label drugs, in the
step therapy programs.
We thank commenters for helping
inform CMS’s Medicare Advantage and
Step Therapy for Part B drugs policy.
We received approximately 153
comments on this proposal; we
summarize them and our responses
follow:
Comment: Some commenters strongly
encouraged CMS to issue operational
guidance for allowing step therapy for
Part B drugs more quickly following the
finalization of the Medicare Advantage
and Step Therapy for Part B drugs final
rule. These commenters argued that
quickly finalizing this rule will allow
for better compliance with CMS
requirements.
Response: CMS appreciates
commenters concerns regarding
finalizing this rule and issuing
operational guidance in a timely
manner. The step therapy regulation we
are finalizing here will be effective for
plan years and coverage beginning on
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and after January 1, 2020. We will
continue to work with MA stakeholders
to ensure that any additional Part B step
therapy program guidance, which may
follow the rule, is timely, transparent,
and geared to producing positive health
care outcomes for enrollees.
Comment: Many commenters
expressed concern that the step therapy
for Part B drugs proposal would lead to
negative health outcomes as a result of
restricted access to care or delayed care.
Commenters also expressed concern
that CMS has not demonstrated how it
will ensure that plans’ step therapy
policies are clinically appropriate and
do not impede access to needed care.
Some commenters urged CMS to study
the effectiveness of step therapy on cost
savings and its impact on health
outcomes before finalizing this policy. A
few commenters supported allowing
step therapy as a cost effective
utilization management tool.
Response: CMS appreciates
commenters’ feedback regarding the
impact of this rule, including those who
expressed concern that the Part B step
therapy program will lead to negative
health outcomes as a result of restricted
access to care or delayed care. MA plans
must comply with the statutory
requirement that they provide enrollees
with access to all medically necessary
Part A and Part B benefits available in
Original Medicare, as provided at
section 1852(a)(1) of the Act. This final
rule does not change or limit this
requirement for MA plans. Accordingly,
step therapy or other utilization
management policies may not be used
as an unreasonable barrier to deny
coverage of medically necessary services
or as a means to eliminate access to
medically necessary Part B covered
benefits. CMS has included a number of
safeguards to ensure that access to
medically necessary Part B services is
maintained for MA enrollees who are
subject to step therapy for Part B drugs.
We note that consistent with MA
regulations at 42 CFR 422.206, MA
plans may not restrict the ability of a
treating physician to advise enrollees
about their treatment options. Thus, if a
treating physician believes, based on
their own medical judgment, that an
MA enrollee should not be subject to
step therapy for a Part B drug for
medical reasons, the health care
provider can furnish advice consistent
with that and advocate on behalf of the
enrollee. The treating physician can
request an organizational determination
under § 422.566(c) and the MA plan will
make a formal determination of medical
necessity that if denied, will require that
the enrollee be notified of their right to
a timely appeal. Pre-service
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reconsiderations of a plan denial may
also be requested by a treating physician
under § 422.578.
CMS appreciates commenters’
recommendations that more study is
needed to ensure that enrollees’ health
is not compromised. Although we are
finalizing the step therapy policies, we
will continue to monitor MA plan’s use
of Part B step therapy policies and will
conduct oversight to ensure compliance
with these rules. CMS will conduct
audits that target pre-service
organization determination and appeal
cases related to requests for Part B
drugs, monitor the Complaints Tracking
Module (CTM) for access concerns, and
closely monitor the implementation and
operation of step therapy programs.
We believe that this final rule also
contains adequate protections to ensure
that step therapy policies are clinically
appropriate and do not impede access to
medically necessary care. This final rule
will require that P&T committees have
a majority of members who are
practicing physicians or pharmacists in
order to bring adequate clinical
experience to the committee. The P&T
committee requirements finalized at
§ 422.136(b)(2) require that P&T
committee members must be free of
conflict relative to the MA organization,
the MA plan, and pharmaceutical
manufacturers. Further, pursuant to
§ 422.136(b)(5), clinical decisions of the
P&T committee must be based on the
strength of scientific evidence and
standards of practice, including
assessing research literature and data as
appropriate. We believe P&T committee
requirements finalized at paragraph
(b)(6) will help ensure MA plans’ Part
B step therapy policies are based on
objective decisions that meet the needs
of enrollees, by considering whether a
Part B drug included in a step therapy
program has therapeutic advantages in
terms of safety and efficacy, while
allowing practicing providers a role in
developing and implementing Part B
step therapy program guidance. This
final rule, at § 422.136(b)(8), requires an
annual reevaluation and analysis of the
step therapy protocols and procedures.
P&T committees must, pursuant to
§ 422.136(b)(9), document their
decisions, which we believe must show
how the committee complies with the
regulation. These requirements will
ensure that P&T committees’ decisions
with respect to Part B step therapy are
conducted in a manner that is
documented, evidenced-based, free from
conflict of interest, and subject to CMS
oversight. Finally, CMS will hold plans’
P&T committees accountable by
requesting written documentation, as
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needed, regarding the development and
revision of step therapy programs.
Comment: Some commenters
expressed concern that MA plan step
therapy policies would focus more on
cost (as opposed to clinical
appropriateness), interfere in
personalized care, and interfere with
provider autonomy. A few commenters
expressed concern that this proposal
would lead to increased administrative
burden, which will frustrate physicians
and cause them to leave the practice of
medicine.
Response: CMS acknowledges the
potential for step therapy programs to
create administrative burden and
process challenges for network
providers. We remind readers that MA
PPO plans may not impose limits like
prior authorization or step therapy on
benefits furnished by out-of-network
providers. In a previous rulemaking (70
FR 4616 through 4617), CMS interpreted
section 1852(e)(3)(A)(iv) of the Act and
42 CFR 422.4(a)(1)(v)(B) as precluding
PPO plans from requiring enrollees to
obtain as a condition of coverage precertification or pre-authorization, or a
coverage determination before receiving
a covered service out-of-network. The
requirement that both local and regional
PPO plans cannot require prior
authorization as a condition for out-ofnetwork coverage of services is also
described in CMS guidance in Chapter
4, § 110.4 of the Medicare Managed Care
Manual. We expect MA plans to work
closely with providers to adopt best
practices that streamline operations and
minimize burden. We consider such
efforts consistent with the obligation,
under § 422.202, of MA plans to
establish a mechanism to consult with
the physicians who have agreed to
provide services under the MA plan
offered by the organization, regarding
the organization’s medical policy,
quality improvement programs and
medical management procedures. We
also encourage continued development
and advancement of electronic prior
authorization processes to more
efficiently administer Part B step
therapy programs.
With respect to clinical concerns and
interference with provider care, we
reiterate that step therapy or other
utilization management policies may
not be used as unreasonable means to
deny coverage of medically necessary
services or to eliminate access to
medically necessary Part B covered
drugs. The requirements in this rule, in
combination with current MA program
regulations, ensure access to Part B
drugs and limit the potential for step
therapy policies to interfere with
medically necessary care. Specifically,
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MA plans must ensure access,
consistent with the requirements at
§ 422.100(a) and § 422.101(a) and (b), to
all medically necessary Part A and Part
B benefits that are available in Original
Medicare. Further, we are not changing
or eliminating the existing requirements
that MA plans must comply with
national and local coverage
determinations and guidelines.
Organizations have been and remain
subject to the MA regulations and must
comply with national and applicable
local coverage determinations. Step
therapy protocols cannot be stricter than
an NCD or LCD with specified step
therapy requirements. Based on how
§§ 422.100 and 422.101 will interact
with § 422.136, if an NCD or LCD
prohibits or establishes step therapy
programs in connection with coverage
of a Part B drug, the MA plan must
comply with the applicable NCD or
LCD.
As finalized in § 422.136(a)(1), Part B
drug step therapy requirements may not
apply to ongoing courses of Part B drug
therapies. This limitation is designed to
prevent interference with the provision
of care to patients who have already
started a drug treatment. As noted in the
proposed rule, we recognize that
negative health outcomes can arise from
disruptions in existing treatment
regimens and wish to avoid such
occurrences.
Further, the MA regulation at
§ 422.206 prohibits an MA plan from
interfering with health care
professionals’ medical advice to
enrollees. Therefore, a provider’s
statement in support of a pre-service
organization or appeal for access to a
Part B drug cannot be prohibited by an
MA plan. We expect MA plans to give
weight to a provider’s medical judgment
and expertise when making organization
determinations and deciding appeals
related to access to Part B drugs that are
subject to step therapy protocols; we
remind MA plans that under
§§ 422.566(d) and 422.590(g)(2), all
denials of coverage based on medical
necessity—which we expect will be the
crux of requests by enrollees to avoid
step therapy programs—must be
reviewed by a physician or other
appropriate health care professional
with sufficient medical and other
expertise, including knowledge of
Medicare coverage criteria, before the
MA organization issues the organization
determination decision. We note as well
that under this final rule, the
adjudication time periods for Medicare
Advantage organization determinations
are being shortened for cases related to
coverage of Part B drugs. The ability for
providers and enrollees to receive a pre-
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23857
service decision regarding coverage on a
Part B drug on this shortened timeframe
will greatly reduce the potential for
delay in access to medically necessary
Part B drugs.
Furthermore, MA plans using step
therapy must ensure that step therapy
programs are clinically appropriate
under this rule and existing rules
governing the MA program. Pursuant to
§ 422.202(b)(1), MA organizations must
formally consult with contracted
physicians when developing utilization
management guidelines, so that policies
like step therapy are based on
reasonable medical evidence or
consensus of medical professionals,
consider the needs of enrollees, and are
reviewed and updated; taken together
these standards mean that step therapy
programs, like other utilization
management policies, are clinically
appropriate. As we stated previously,
we are requiring that P&T committees
must have a majority of members who
are participating physicians or
pharmacists and they must follow the
requirements at § 422.136(b)(5) through
(10) in review, evaluation and approval
of step therapy policies. We believe this
will help ensure that a MA plan’s Part
B step therapy policies will be clinically
driven and that practicing providers,
including network providers, will have
a voice as practice guidelines are
developed and implemented.
Comment: Some commenters stated
Part B Step Therapy conflicted with
section 1852(a)(1) of the Act.
Specifically, these commenters argued
that section 1852(a)(1) of the Act which
requires MA plans to cover all Part A
and Part B benefits (except for
specifically excluded benefits like
hospice), means that MA plan coverage
policies not be more restrictive than
Original Medicare and that CMS cannot
allow plans to impose additional
restrictions to Part B drug coverage. The
commenters argued step therapy
amounts to a denial of access to Part B
benefits.
Response: As referenced in the
proposed rule, CMS’s reinterpretation of
section 1852 of the Act means that MA
plans’ may implement appropriate
utilization management tools, including
prior authorization and step therapy, for
managing Part B drugs in a manner to
reduce costs for both enrollees and the
Medicare program while not denying
access to medically necessary services.
Section 1852(a)(1) of the Act requires
MA plans to provide coverage of items
and services for which benefits are
available under parts A and B of the
Medicare statute, except for hospice
care and, beginning 2021, excludes
organ acquisitions costs for kidney
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transplants. Although CMS previously
interpreted this as requiring MA
coverage of Part A and Part B benefits
to be no more restrictive than coverage
in Original (FFS) Medicare, the need to
control drug costs prompted our review
of the authority and CMS changed this
interpretation with respect to utilization
management programs applied to Part B
drugs upon more careful consideration
of the statute as a whole. As discussed
in the proposed rule, we expect the use
of step therapy for Part B drugs to lead
to lower costs for the government and
Medicare beneficiaries; lowered costs
are undoubtedly a means to ensure the
continued health of the Medicare
program and a reasonable basis for
revisiting the statute to evaluate
whether there is authority to provide
more flexibility to MA plans in
connection with utilization management
policies.
Section 1852, in imposing the
requirement that MA plans furnish or
cover Part A and Part B benefits, does
not expressly prohibit the use of
utilization management. To the
contrary, sections 1852(c)(1)(G) and
(c)(2)(B) of the Act expressly reference
an MA plan’s application of utilization
management tools, like prior
authorization and other ‘‘procedures
used by the organization to control
utilization of services and
expenditures.’’ This clearly indicates
that MA plans are not expressly
prohibited by the statute from
implementing utilization management
tools such as step therapy. Although
some commenters disagreed that step
therapy is a utilization management
tool, characterizing it instead as a
limitation or restriction on coverage, we
believe that it is such a tool and that the
reasonable limits these protocols place
on when a drug is covered are the
means of controlling utilization and
cost. All Part B drugs must be covered
by the MA plan when medically
necessary, for example, when a stepped
drug is not effective or appropriate for
the patient, the patient must be allowed
direct access to an alternative Part B
drug. We disagree with commenters that
characterize these limits as meaning that
certain Part B drugs are no longer
covered by the MA plan; these limits on
coverage do not eliminate coverage,
rather they ensure the most cost
effective, clinically appropriate
treatment is provided. This is consistent
with our current interpretation of the
requirement in section 1852 of the Act
that MA plans must furnish or cover
medically necessary Part A and Part B
services, excluding hospice and,
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beginning 2021, excluding kidney
acquisition costs.
Further, we do not believe that the
statute must list every possible
procedure or policy that controls
utilization of services or expenditures
for the statute to authorize their use.
Section 1860D–4(c) of the Act does not
expressly refer to step therapy, but
because it is an appropriate method for
managing drug costs, we have
historically permitted Part D plans to
use step therapy as a utilization
management program authorized by the
statute. Section 1852(c)(1)(G) and
(c)(2)(B) of the Act contemplates that
MA plans will use utilization
management policies that are not used
in Original Medicare. If the statute
permitted only prior authorization,
requiring disclosure of ‘‘procedures
used by the organization to control
utilization of services and
expenditures’’ would be unnecessary
because subsection (c)(1)(G) already
requires disclosure of prior
authorization policies. Our
interpretation gives meaning to both
provisions and reasonably interprets the
reference to controlling utilization of
services and costs as including step
therapy policies.
Further, we have explained our
reinterpretation consistently. In the
August 7, 2018 HPMS memo 14 and
subsequent FAQs,15 CMS recognized
that utilization management tools, such
as step therapy, can provide the means
for MA plans to better manage and
negotiate the costs of providing Part B
drugs. In the proposed rule, we
explained how we do not believe that
MA plans subject to our prior guidance
and interpretation engaged in
negotiation over the cost of Part B drugs.
As previously noted using internal bid
data, excluding MA employer group
plans, CMS estimates $9 billion in
spending by MA plans for Part B drugs
during contract year 2018. By providing
a basis on which MA plans may more
effectively negotiate the price they pay
for Part B drugs, this reinterpretation of
the statute allows for more cost-effective
coverage of these drugs. Further, by
using policies that promote the use of
more cost effective drugs first when
such drugs adequately and appropriate
treat an enrollee’s condition, step
therapy programs can result in lower
14 Available online at: https://www.cms.gov/
Medicare/Health-Plans/HealthPlansGenInfo/
Downloads/MA_Step_Therapy_HPMS_Memo_8_7_
2018.pdf.
15 Available online at: https://dpapportal.lmi.org/
DPAPMailbox/Documents/Part%20
B%20Step%20Therapy%20Questions%20FAQs_829-18.pdf.
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utilization while ensuring consistent
beneficial outcomes.
Because the statute contemplates MA
plans use of utilization management
policies and procedures and because
Part B drugs are accessible and covered
when medically necessary (such as if
other medications that are used first in
a step therapy program are not
effective), we have concluded that an
MA plan may fulfill its obligations to
furnish Part B benefits even if a step
therapy program is used. As discussed
elsewhere in response to comments,
new § 422.136 contains beneficiary
protections and limits on how step
therapy can be used in order to ensure
access to medically necessary Part B
drugs. CMS reiterates that MA plans
must comply with the statutory
requirement that they provide enrollees
with access to all medically necessary
Part A and Part B benefits available in
Original Medicare, as provided section
1852(a)(1) of the Act. This final rule
does not contravene this statutory
requirement for MA plans.
Comment: Several commenters
expressed concerns that the proposal
did not include adequate oversight from
CMS. Several commenters argued that
CMS cannot guarantee consistent
enforcement and provide enrollees
clinically appropriate Part B
medication. Some commenters
recommended CMS establish
procedures, similar to Part D, in which
plans are required to submit step
therapy policies for CMS review and
approval prior to implementation and
use. Commenters also recommended
that CMS actively monitor plans to
ensure that plan policies and
procedures are implemented in a
manner that does not violate CMS rules.
Commenters also suggested CMS closely
monitor the extent to which
organization determinations and
appeals are being sought so that CMS
can assess the need for additional
patient protections.
Response: Although § 422.136 does
not explicitly address monitoring and
enforcement, CMS will leverage its
existing oversight programs to include
targeted monitoring of the Part B step
therapy programs implemented by MA
plans.
CMS will monitor beneficiary
complaints and organization
determinations and appeals related to
Part B drug step therapy programs. CMS
has regularly scheduled meetings with
the Part C IRE contractor; during these
meetings, CMS and the IRE contractor
identify and evaluate systemic problems
with coverage decisions that rise to the
IRE based on denials at the plan level.
When systemic coverage issues are
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identified, CMS takes steps with the MA
plan, or the industry as a whole, to
ensure correction of the problem. CMS
will also monitor compliance with
organization determination and appeal
adjudication timeframes, both existing
and those adopted in this final rule, by
MA plans. When MA plans are selected
for audit, CMS will target sample preservice organization determination and
appeals related to requests for Part B
drugs to ensure compliance with
§ 422.136, particularly the beneficiary
protection requirements like the
lookback period and the requirements to
educate and inform health care
providers and enrollees concerning its
step therapy policies. CMS will also
monitor step therapy related complaints
it receives from stakeholders to learn
how MA plans are implementing step
therapy programs, including whether
plan communications explaining the
program and involvement of contracted
providers, as we have outlined
elsewhere in this final rule, are
consistent with program requirements.
Finally, when CMS identifies concerns
about a step therapy program, CMS may
request written documentation from the
plan’s P&T committee under authority
in § 422.136(b)(9) and any other related
plan information CMS deems necessary,
in accordance with § 422.504(f)(2), in
order to assess and evaluate the MA
plan’s step therapy program and ensure
compliance with CMS requirements.
We note that CMS interprets its
authority to review Part C bids and plan
designs as the authority under which we
could review MA plans use of Part B
drug step therapy programs. However,
given all of these oversight means and
tools, we believe CMS can effectively
monitor MA plan step therapy programs
without reviewing all of the coverage
policies and procedures an MA plan
adopts for step therapy in advance. As
discussed elsewhere in the final rule,
P&T committees are responsible for
reviewing and implementing Part B step
therapy programs that are clinically
appropriate and are based in scientific
evidence and standards of practice.
CMS does not review other utilization
management practices (that is, prior
authorization) for Part B items or
services in advance of implementation
by an MA plan. We will continue to
hold plans accountable for ensuring
coverage of medically necessary
Medicare covered items and services
through CMS’s oversight activities.
CMS solicited comment on the rule’s
restriction to new medication starts
only.
Comment: Some commenters
requested CMS remove the new start
restriction and allow step therapy for all
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Part B drug therapies. Several
commenters requested that CMS
increase the lookback period to
determine if the enrollee is actively
taking a Part B medication from 108 to
365 days to better ensure uninterrupted
care. These commenters pointed out
that there are many clinical differences
in the drugs covered under Part B
compared to those covered under Part D
and noted that the FDA-approved
dosage period for many Part B drugs
exceeds 108 days. One commenter
highlighted the following drugs (and
their dosage periods) specifically:
• Zoledronic acid for osteoporosis is 1
year
• Denosumab for osteoporosis is 6
months
• Hyaluronic acid injections for knee
osteoarthritis are 6 months
• Rituximab for rheumatoid arthritis is
dosed at two infusions repeated every
4 to 6 months
Given these examples, these
commenters and others recommended a
365-day lookback period to better
ensure uninterrupted care, noting that a
disruption in therapy could result in
poorer disease control including relapse
of symptoms and other bad outcomes,
such as hospitalization and death,
depending on the drug and condition.
Commenters also reasoned that a 108
day lookback period may not be
clinically appropriate for some disease
states, as many patients receive less
frequent infusions that may not be
captured in this short time period.
Response: Although we proposed that
MA plans would be required to have a
lookback period of 108 days to
determine if the enrollee is actively
taking a Part B medication, we
explained in the proposed rule how the
purpose of the look back period was to
determine if an enrollee were actively
taking a Part B drug. We stated our
belief that consistency with the Part D
lookback period, which was created
with clinical and pharmaceutical input,
would be appropriate. As commenters
have pointed out that the FDA-approved
dosage periods for some Part B drugs
exceeds 108 days, we now believe that
in order to fully ensure that an MA
enrollee is not already taking a Part B
drug, a longer lookback period is
appropriate and necessary. Therefore, in
order to ensure continuity of care, we
are finalizing § 422.136(a)(1) with a
lookback period of 365 days as
recommended by commenters. Based on
this information about the dosage
periods for Part B drugs, the justification
for the 108-day lookback period used for
Part D drugs is not applicable to Part B
drugs. In Part D, 108 days is a
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23859
considered sufficient because PDPs are
allowed to provide 90-day supplies. The
108 day period allows for some
flexibility beyond 90 days (18 days or
20% of 90 days) if the beneficiary does
not refill a prescription exactly 90 days
after the first fill. This scenario is not
applicable to Part B drugs because Part
B drugs are not administered based on
a 90-day supply and, as the commenters
indicated, may have dosage periods of
up to a year. As discussed in the
proposed rule, CMS believes new step
therapy requirements must not disrupt
ongoing Part B drug therapies for
enrollees. In order to ensure that step
therapy requirements do not disrupt
ongoing Part B drug therapies, we
proposed, and are finalizing at
§ 422.136(a)(1), that step therapy may
not disrupt enrollees’ ongoing Part B
drug therapies. The regulation, at
§ 422.136(a)(1), permits MA plans to
apply a step therapy program only to
new administrations of Part B drugs,
using a minimum lookback period. We
believe a 365 day look back period will
mean that MA plans identify enrollees
who may be using a drug with a longer
dosage period and thus better ensure
uninterrupted care. Therefore, the final
regulation text specifies a 365 day
lookback period.
Comment: Commenters also stated
that new start protections must be
allowed for new MA enrollees as well
as enrollees who switch MA plans.
Response: We agree that step therapy
programs should be limited to new
administrations for all enrollees. We
proposed that step therapy should not
be permitted to disrupt enrollees’
ongoing Part B drug therapies and noted
in the proposed rule how we intended
the restriction to new starts and the use
of the look back period to apply to
current enrollees and when an enrollee
elects a new MA plan. We clarify here
that an enrollee’s ongoing Part B drug
therapy may not be disrupted even
when an enrollee switches plans. MA
plans must use the lookback period
when an enrollee elects a new MA plan
(regardless of whether previously
enrolled in a MA plan, traditional FFS
Medicare, or new to Medicare) to
determine whether the enrollee has
taken the Part B drug (that will
otherwise be subject to step therapy)
within the past 365 days. We are
finalizing the requirement in
§ 422.136(a)(1) that step therapy only be
applied to new prescriptions or
administrations of Part B drugs, using a
365 day lookback period. This
limitation must be applied to all
enrollees and means step therapy for a
Part B drug may be used only for an
enrollee who is not receiving the
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medication currently or has not
previously received the medication
within the lookback period. MA plans
must therefore take steps to request and
review information as necessary to
identify whether an enrollee has used
the applicable Part B drug during the
lookback period.
Comment: Several commenters urged
CMS to include in the final rule an
exemption or waiver policy for
individuals subject to Part B step
therapy. Commenters argued that some
beneficiaries have conditions that are
too sensitive to be subject to the
increased restrictions that step therapy
would impose. Commenters reasoned
that in some cases a patient being
required to first ‘‘fail’’ on a plan
preferred medication or to wait through
a delay due to an appeal can to lead to
adverse health outcomes, especially if
the patient’s condition is stable due to
the enrollees’ use of prescription drugs
already selected by the prescribing
health provider. Commenters stated that
step therapy requirements prevent
patients from adhering to their
treatment plans and, therefore, are not
in their best interests. Commenters also
suggested CMS develop a more
expansive exemption or waiver policy
for individuals that should not be
subject to Part B drug step therapy
requirements.
Response: We reiterate that plans
cannot deny medically necessary care
and enrollees and/or providers may
request a pre-service organization
determination in order to receive plan
approval to bypass the step therapy
requirement, but we are not adopting
specific regulation text to create
additional exemptions from step
therapy other than the limits we
proposed (meaning, the limits regarding
new administrations of a Part B drug,
use of only covered drugs, and use of
off-label indications). We believe that a
request for a pre-service determination,
particularly in light of the amendments
to the deadlines for responding to
requests for organization determinations
about coverage of Part B drugs, is an
adequate safeguard to ensure enrollee
access to medically necessary care. In
addition, an enrollee may request an
expedited organization determination
and reconsideration if necessary. We are
also requiring that step therapy be
limited to new starts with a 365 day
look back period so continuing
treatments are not affected. CMS limited
step therapy to new starts because a
disruption in successful MA enrollee
therapy could result in poorer disease
control, relapse of symptoms and other
bad outcomes including hospitalization
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and death, depending on the drug and
condition.
This final rule includes a number of
safeguards that ensure timely access to
all medically necessary Part B
medications, including the following:
(1) Requiring that step therapy only be
applied to new prescriptions or
administrations of Part B drugs for
enrollees who are not actively receiving
the affected medication with a lookback
period of 365 days to determine if the
enrollee is actively or during the
lookback period was taking a Part B
medication; (2) requiring that MA plans
issue organization determinations and
decisions on appeals under timeframes
similar to those used in the Part D
program when the issue is about
coverage of a Part B drug; and (3)
requiring that plans use a P&T
committee to review and approve step
therapy programs to ensure medically
appropriate implementation of step
therapy for Part B drugs.
Comment: Some commenters urged
CMS to require that step therapy
protocols be aligned with clinical
practice guidelines and adhere to
recognized standards of care. Other
commenters urged CMS to require MA
plans to establish processes to evaluate
the clinical appropriateness of their step
therapy protocols. Some commenters
suggested that plan step therapy policies
should be supported by evidence-based
clinical guidelines and best practices
that are based on robust research and
publicly available overutilization data.
Response: CMS appreciates
commenters’ feedback about requiring
P&T committees to establish processes
to evaluate the step therapy policies
developed by MA plans and that these
policies be supported by evidence-based
clinical guidelines and best practices.
We believe that our proposal for P&T
committees and the standards they
would be required to use in reviewing
and approving step therapy programs
for Part B drugs are consistent with the
commenters’ recommendations. CMS is
finalizing its proposal at § 423.136(b)(5),
that requires P&T committees base
clinical decisions on the strength of
scientific evidence and standards of
practice, including assessing peerreviewed medical literature,
pharmacoeconomic studies, outcomes
research data, and other information as
is determines appropriate. This
regulation will allow P&T committees
discretion to determine the scientific
evidence and standards of practice on
which their clinical decisions are based,
although CMS can monitor this process
through review of P&T committee
records. CMS is also finalizing
regulation text at § 423.135(b)(9) that
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each P&T committees must document in
writing its decisions regarding the
development and revision of and
utilization management activities and
make this document available to CMS
upon request. Accordingly, CMS may
monitor compliance with (and, as
necessary take enforcement and/or
compliance action regarding) the P&T
committee requirements in § 422.136(b)
through requesting written
documentation regarding Part B step
therapy programs and evaluating
whether clinical decisions and criteria
are evidence-based and appropriate in
terms of safety and efficacy. We may
also release subregulatory guidance
concerning the application of the P&T
committee requirements in the context
of Part B drugs.
Comment: A few commenters
requested that CMS carefully consider
the development of further guidance on
how step therapy should align with
existing care coordination programs.
Response: We evaluated existing
requirements in §§ 422.112 and 422.152
that require care coordination activities
and determined that changes to these
rules are not needed to include care
coordination activities related to Part B
step therapy. We may consider further
requirements in the future, as needed,
and note that CMS is not finalizing a
requirement in § 422.136 that an MA
plan must offer a drug management care
coordination program in conjunction
with Part B step therapy. We believe full
disclosure to enrollees regarding a
plan’s Part B step therapy program and
good communication between providers
and enrollees undergoing step therapy
are important features of care
coordination. We expect this disclosure
to include informing enrollees of their
appeal rights and confirming whether
enrollees have used the stepped
medication within the last year. While
all of the care coordination
requirements are important, we
emphasize that plans should ensure that
treating providers consider beneficiary
input into the provider’s proposed
treatment plan, as described at 42 CFR
422.112(a)(6)(iii). We also expect MA
plans to ensure that providers closely
monitor patients undergoing step
therapy to ensure that the prescribed
medication is meeting clinical
expectations.
Comment: Some commenters
expressed concern that the additional
education and information
responsibilities in this proposal are
insufficient and do not adequately
inform enrollees and providers of plan
step therapy policies. These
commenters encouraged CMS to provide
greater transparency to enrollees and
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providers of step therapy policies by
requiring that plans disclose the name
of each Part B drug subject to step
therapy in the annual notice of changes
(ANOC) and explanation of benefits
(EOC).
Response: With regard to the
comments on the sufficiency of our
proposal regarding education and
information provided to providers and
enrollees, CMS believes transparency
and informed beneficiaries and
providers are critical to a wellcoordinated and efficient utilization
management program. We are finalizing
the requirement that MA plans establish
policies and procedures to educate and
inform health care providers and
enrollees concerning step therapy
policies at § 422.136(a)(2). In addition,
we note that existing disclosure
requirements in § 422.111 will apply to
step therapy programs. We are still
considering how to apply and interpret
the requirements in § 422.111 regarding
the ANOC and EOC to step therapy
programs in light of the new
requirement we are finalizing here at
§ 422.136(a)(2), that MA plans establish
policies and procedures to educate and
inform providers and enrollees about
step therapy programs. Subregulatory
guidance will be provided §§ 422.111
and 422.136(a)(2) and CMS intends to
seek comment in its development of
such guidance about whether step
therapy requirements should be
displayed in a drug-specific manner in
the ANOC/EOC documents provided to
beneficiaries.
Comment: Some commenters
expressed concern that the requirements
under this proposal are burdensome and
not necessary to administer a drug
benefit.
Response: CMS appreciates
commenters concerns regarding the
administrative burden imposed on
network providers by MA plans. CMS
encourages MA plans to work closely
with providers to adopt best practices
that streamline operations and minimize
burden. We also encourage continued
development and advancement of
electronic prior authorization processes
to more efficiently administer Part B
step therapy programs and potentially
minimize burden on health care
providers. CMS believes that Part B step
therapy programs can reduce medical
costs by replacing more expensive drugs
with less costly drugs when it is
medically appropriate to do so.
Comment: Several commenters
expressed concern about the disclosure
requirements and argued that
beneficiaries should receive more
detailed information about drugs subject
to Part B step therapy. Commenters
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suggested that beneficiaries should be
able to review step therapy protocols
and medications subject to step therapy
prior to enrolling in the plan.
Commenters recommended increased
transparency of plan step therapy
requirements, including having plans
explain why step therapy is required for
a specific medication, how the process
works, and what recourse the
beneficiary has to appeal. Furthermore,
several commenters urged CMS to
prohibit mid-year additions to step
therapy programs or mid-year
implementation of step therapy, noting
that such restrictions should only be
established in advance of a plan year so
that beneficiaries will have access to all
plan information prior to making
enrollment decisions.
Response: As previously discussed,
CMS believes transparency and
informed beneficiaries and providers are
critical to a well-coordinated and
efficient utilization management
program. The regulation at § 422.111
requires that MA plans disclose
information covered by the plan,
including applicable conditions and
limitations, premiums, cost-sharing, and
any other conditions associated with
receipt or use of benefits in the plan’s
ANOC (when initially adopted or
subsequently changed) and EOC
documents, which are provided
annually to plan enrollees. In the past,
we interpreted the regulation to mean
that plans must identify that covered
services may be subject to utilization
management tools, like prior
authorization. In light of the comments
regarding transparency and the need for
enrollees to have detailed information
about step therapy programs, we are
considering whether § 422.111 should
be interpreted to require more detailed
disclosure, particularly as we are
finalizing a requirement at
§ 422.136(a)(2) that MA plans establish
policies and procedures to educate and
inform providers and enrollees about
step therapy programs. We intend to
seek comment through sub-regulatory
guidance as to whether step therapy
requirements should be displayed in a
drug-specific manner in the ANOC/EOC
documents and how MA plans should
be required to display this information
so that enrollee elections can be made
based on all necessary information.
With respect to mid-year changes to
implementation of step therapy
programs, we note that under
§ 422.111(d)(3), MA plans must inform
all enrollees at least 30 days before the
intended effective date of changes in
plan rules. Utilization management
tools like prior authorization and step
therapy are plan rules within the scope
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of this provision so MA plans must
inform enrollees of changes to rules
described in the ANOC/EOC consistent
with § 422.111(d).
Comment: Some commenters
supported the use of P&T committees as
an effective mechanism to ensure that
step therapy and other utilization
policies are clinically appropriate. Other
commenters noted that MA plans utilize
a Medical Policy committee, which
reviews and evaluates drugs covered
under the medical, rather than the
pharmacy benefit. The commenters
suggested CMS should allow MA plans
to utilize these committees to develop
and review plan step therapy policies
instead of a P&T committee, which
reviews and approves the Part D drug
benefit.
Response: CMS appreciates
commenters who shared both
opposition and support of the P&T
committee requirement. CMS will
require MA plans that elect to use Part
B step therapy programs to have a P&T
committee review and approve such
step therapy programs. This regulation
affirms our reinterpretation of section
1852 of the Act, and the MA regulations
governing benefit coverage and
utilization management policies (for
example, § 422.4(a)(1)(ii)) to allow MA
plans to use utilization management
tools such as step therapy for Part B
drugs to prevent overutilization of
medically unnecessary health services
and control costs, subject to limitations
finalized in § 422.136. We are finalizing
the paragraph (b) provisions requiring
use of P&T committees, but are limiting
the P&T committee responsibilities to
review and approval of Part B step
therapy programs only. Our proposed
regulation text in paragraphs (b)(6),
(b)(7), and (b)(9) referred to utilization
management policies and programs and
proposed paragraph (b)(10) referred to
‘‘clinical prior authorization criteria;’’
we are not finalizing these references,
but are limiting the regulation text to
step therapy programs. The final rule
does not require P&T committee review
and approval of Part B utilization
management policy other than step
therapy programs; MA plans are
permitted to use P&T committees more
broadly to review and approve other
utilization management programs and
protocols, but are not required to by
§ 422.136 as finalized here. Limiting
P&T committee responsibilities to step
therapy programs is in line with our
proposal. As explained in the proposed
rule, § 422.136 is specific to step
therapy programs applicable to Part B
drugs, our reinterpretation permitting
such programs, and the appropriate
limits on MA plans using such
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programs. Our proposal was not
explicitly to impose new limits on
existing utilization management
programs. Although we solicited
comments, we did not receive any
comments recommending that P&T
committee requirements be extended to
other programs.
We believe the P&T committee
requirements being finalized in this rule
are necessary to ensure medically
appropriate implementation of step
therapy for Part B drugs. P&T
committees will promote safe, effective,
and cost-effective Part B drug therapy by
reviewing and approving the policies
and procedures for step therapy. CMS is
not adopting any requirements for use of
Medical Policy committees because, as
discussed in the proposed rule, we
believe it is appropriate to substantially
align the requirements of a P&T
committee reviewing Part B drugs with
Part D requirements for administrative
efficiency between Part C and Part D
programs. P&T committee membership
and regulatory requirements are
specifically designed to ensure that
adequate standards and considerations
be used in reviewing step therapy
programs for drugs. A medical policy
committee’s scope would not
necessarily be limited to Part B drug
review and, therefore, impose
unnecessary burden to MA plans.
Additionally, Part D requirements for
P&T committees have proven sufficient
in ensuring that plans implement
medically appropriate step therapy and
utilization management protocols in
Part D.
Comment: Some commenters
expressed concern about CMS’s
requirements regarding the sufficiency
of the P&T committee’s composition.
These commenters believe MA plans
should require, rather than encourage,
P&T committees to include more
specialists, nurse practitioners, and
beneficiary representation.
Response: CMS appreciates
commenters concerns regarding P&T
committee composition. In response to
commenters’ suggestions that P&T
committee composition include more
specialists, practitioners, and
beneficiary representation, CMS notes
that this final rule requires P&T
committees include a majority of
members who are practicing physicians
or pharmacists. Although P&T
committees must include a majority of
members who are physicians and
pharmacists, plans have the discretion
to include specialists, nurse
practitioners, and beneficiaries as
members. We do not believe that
adopting different or revised
composition requirements will
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necessarily further our goals for the use
of the P&T committee while they could
impose additional burden on MA plans,
which would not be able to immediately
implement use of an existing P&T
committee established for the Part D
program, if additional members must be
added to the committee. As noted in the
proposed rule, we believe that using the
same rules as apply in the Part D
program are appropriate because of the
demonstrated success in that context.
Comment: A few commenters
expressed concern that this proposal
would lead to higher out-of-pocket
(OOP) costs for beneficiaries. Some
expressed concern that allowing plans
to step a Part D drug before a Part B drug
would lead to increased OOP costs for
beneficiaries due to the differences in
cost sharing rules between Part B and
Part D drugs. A few commenters urged
CMS to allow plans to cross-manage
Part B and Part D drugs to enable plans
to better manage Part B and Part D drug
costs.
Response: CMS acknowledges that in
some narrow instances beneficiaries
may be financially disadvantaged and
experience higher cost sharing if for
example, a Part B step therapy program
uses a Part D drug as a step to the Part
B drug for an enrollee who had reached
their MA plans maximum out-of-pocket
limit (MOOP). MA enrollee out-ofpocket costs for Part D drugs are not
included in the MOOP limit imposed on
enrollee out of pocket costs under
§§ 422.100(f) and 422.101(d), but
enrollee costs for Part B drugs are;
therefore, an enrollee who has reached
the catastrophic limit would not have
any cost sharing charged for a Part B
drug, but would have to pay cost
sharing for a Part D drug. However, we
believe the majority of MA enrollees
will realize reduced cost sharing as a
result of the step therapy policy
finalized in this rule because the
enrollees will be directed to a clinically
appropriate and more cost effective drug
treatment. We expect that the
implementation of step therapy will
result in lower plan bids, because the
cost of furnishing Part A and Part B
benefits will be lower. If a plan reduces
its bid relative to the benchmark, the
plan should be able to charge a lower
premium or provide supplemental
benefits at a lower (or potentially no)
premium.
Comment: Some commenters
recommended that CMS permit plans to
provide a two-tiered Part B preferred
drug list with differential cost-sharing
and requested that CMS use its
authority through the Annual Rate
Notice and Call Letter to permit MA
plans to establish non-preferred Part B
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drug cost sharing greater than 20
percent.
Response: We thank commenters for
their suggestions. We note that CMS
does not have the authority to make
such changes through the annual Call
Letter. Section 3202 of the Affordable
Care Act amended section 1852 of the
Act to establish new standards for MA
plans’ cost sharing. Specifically, section
1852(a)(1)(B) of the Act was amended by
the addition of new clause (iii) that
limits cost sharing under MA plans so
that it cannot exceed the cost sharing
imposed under Original Medicare for
specific services identified in new
clause (iv). New section 1852(a)
(1)(B)(iv) of the Act lists the three
service categories for which cost sharing
in MA plans may not exceed that
required in Original Medicare
(chemotherapy administration services,
renal dialysis services, skilled nursing
care) and section 1852(a)(1)(B)(iv)(IV) of
the Act specifies that this limit on cost
sharing also applies to such other
services that the Secretary determines
appropriate. CMS must use rulemaking
to identify additional services to which
this provision would apply to limit how
much cost sharing is charged to an MA
enrollee.
As stated in the CY 2012 Call Letter,
MA plans and 1876 Cost Plans may not
charge enrollees higher cost sharing
than is charged under Original Medicare
for chemotherapy administration
including chemotherapy drugs and
radiation therapy integral to the
treatment regimen, skilled nursing care,
and renal dialysis services
(§§ 417.454(e) and 422.100(j)). In
addition, in order to ensure that cost
sharing is consistent with both
§§ 422.254(b)(4) and 422.100(f)(2) and
(6), CMS evaluates actuarial equivalent
cost sharing limits separately for all Part
B drugs. Therefore, the 20 percent limit
applies to both Part B drugs-Chemo and
Part B Drugs-Other.
Comment: Some commenters also
suggested CMS allow plans’ utilization
management protocols to supersede
national coverage determinations
(NCDs) and local coverage
determinations (LCDs). Specifically, it
was suggested that CMS provide
guidance that grants plans flexibility in
implementing step therapy on Part B
drugs with LCDs or NCDs. We also
received a comment that encouraged
CMS to review NCDs and revise those
policies that impose barriers on the
utilization of biosimilars.
Response: MA organizations have
been and remain subject to § 422.101(b),
which requires compliance with
national and in some cases, local,
coverage determinations. Part B step
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therapy protocols for a given drug
cannot be stricter than the step therapy
provisions specified in an NCD or LCD.
For example, if the NCD or LCD has
specified Part B step therapy
requirements for that particular drug,
then the Part B step therapy protocols of
an MA plan cannot be stricter than
those protocols. We would further note
that when NCDs or LCDs do not
preclude MA step therapy, we believe
that Part B step therapy can be an
effective utilization management tool.
Where an LCD or NCD addressing
coverage of a Part B drug does not
address or include a step therapy
protocol, this regulation will permit the
MA plan to adopt a step therapy for that
Part B drug. As we have discussed
elsewhere in this final rule, one
significant policy goal in allowing Part
B step therapy is to enable MA plans to
reduce unnecessary drug spending and,
in turn, reduce costs for beneficiaries
and the Medicare program. MA plans
must provide coverage of all Part A and
Part B benefits, therefore, MA plans
must provide coverage of all Part B
drugs. If an NCD specifies that a
biosimilar is not covered under Part B,
it cannot be used under the Part B drug
step therapy program.
Comment: Some commenters
requested CMS clarify whether all of the
projected savings resulting from step
therapy may be incorporated in the bid
amount, instead of offering incentives
only to those enrollees subject to step
therapy who completed specified care
management activities, beginning in
2020.
Response: Effective January 1, 2020,
MA plans must incorporate anticipated
savings in the plan’s bid amount;
therefore, coupling step therapy with
rewards and incentives will not be a
requirement in 2020 or future years for
MA plans (as it is in 2019) that use a
step therapy program for one or more
Part B drugs. Pursuant to § 422.254(b),
MA bids for the basic benefit are
required to reflect the revenue
requirements for an MA plan to cover
all Part A and Part B benefits; when use
of a step therapy program means that
the MA plan projects lower utilization
or lower pricing (such as due to pricing
negotiation with drug manufacturers),
that will necessarily result in lower
revenue needs to provide the Part B
drugs that are subject to the step therapy
program. CMS reminds plans that
additional Part C rebate dollars
associated with the lower bid, as with
all Part C rebate dollars, must be used
to provide supplemental benefits and/or
lower premiums for the plans’ enrollees.
We explained in the proposed rule
how preferred provider organization
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plans (PPOs), because of the
requirement in § 422.4(a)(1)(v)(B) to
reimburse or cover benefits provided
out of network without use of
restrictions on coverage, would not be
able to impose prior authorization or
step therapy requirements on out-ofnetwork provision of Part B drugs. We
solicited comment on whether the final
rule should include a specific regulatory
provision clarifying whether preferred
provider organization plans (PPOs) can
apply step therapy out of network.
Comment: Some commenters
requested that CMS allow PPOs to apply
step therapy out of network.
Response: We clarify that PPOs are
required, as part of the definition of a
PPO at section 1852(e)(3)(A)(iv)(II) of
the Act and under the MA regulations
at § 422.4(a)(1)(v)(B), to reimburse or
cover benefits provided out of network;
while higher cost sharing is permitted,
PPOs are prohibited from using prior
authorization or preferred items
restrictions in connection with out of
network coverage. (70 FR 4616 through
4617). As such, PPOs must provide
reimbursement for all plan-covered
medically necessary services received
from non-contracted providers without
prior authorization or step therapy
requirements. Therefore, PPO plans may
only use step therapy or prior
authorization when a Part B drug is
provided by an in-network provider.
Comment: Some commenters
requested that all step therapy policy,
including CMS operational guidance, be
subject to advance public notice and an
opportunity to provide comment.
Response: CMS thanks commenters
for the suggestion and will consider
soliciting comment on draft operational
guidance related to § 422.136 and its
requirements for Part B step therapy in
the future. However, we do not believe
that we are required to do so. Because
of timing factors, as well as other policy
considerations, we may release
guidance without first soliciting
comment.
Comment: Some commenters urged
CMS to evaluate and revise existing
subregulatory guidance and update
relevant Medicare manual chapters to
maximize the time plans have to design
and implement step therapy programs
and incorporate them in their bid
applications for CY 2020.
Response: CMS will continue to
evaluate and update Part B and Part D
subregulatory guidance to ensure
accuracy and consistency with new
regulations. CMS appreciates that plans
need to prepare bid submission and will
work to provide additional Part B
subregulatory guidance in a timely
manner. This final rule provides
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significant discussion of § 422.136 and
the requirements for Part B step therapy.
Additional guidance before the bid
deadline for CY2020 may not be
possible.
Comment: Some commenters
supported the proposal to permit MA
plans to use off-label drugs in a step
therapy program only when such drugs
are supported by widely used treatment
guidelines or clinical literature that
CMS considers to represent best
practices. Some commenters requested
that CMS clarify what it considers to be
‘‘best practices’’ or ‘‘widely used
treatment and clinical literature’’ in this
regard. Others expressed caution that
the use of off-label drugs as proposed
could limit further investment in
developing therapies and could provide
disincentives to seeking FDA approval
of additional indications. Some
commenters expressed concern that the
proposed regulation text does not
explicitly require that an off-label use
meet the definition of a medically
accepted indication. Commenters also
expressed concern that reliance upon
compendia standards as the criteria for
off-label coverage is insufficient to
determine clinical appropriateness and
could undermine the FDA and its role
to review and approve investigational
uses of approved drugs. Other
commenters recommended CMS
prohibit step therapy through an offlabel medicine, particularly if there is
an on-label medicine available.
Response: We thank commenters for
their feedback. In order to ensure the
medically appropriate use of off-label
drugs, CMS’s finalized rule prohibits an
MA plan from including in step therapy
protocols a drug supported only by an
off-label indication unless the off-label
indication is supported by widely used
treatment guidelines or clinical
literature. For example, an example of
widely used treatment guidelines that
would be relevant for Part B drugs
would be the National Cancer Center
Network (NCCN), which has separate
guidelines for different types of cancer,
as well as a compendium for cancer
drugs.
Comment: A commenter asked
whether the policies in our proposed
rule allow a MA plan to require the use
of a Part D protected class drug prior to
the use of a Part B drug (that is., as a
step to a Part B drug on a Part B step
therapy program). The commenter also
asked how the Part B step therapy
program would impact enrollees’ access
to Part D protected class drugs.
Response: This final rule, at
§ 422.136(d), provides that only
Medicare covered Part B drugs (and, for
MA–PD plans, also Part D drugs) may be
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used in a step therapy program for a Part
B drug. A Part B step therapy program
used by an MA plan must not include
as a step or other component of the
program any drugs not covered by the
MA plan as a Part B drug, or, in the case
of an MA–PD plan, a Part D drug. In
addition to requiring one Part B drug be
used before a different Part B drug, MA
plans that also offer prescription drug
coverage (MA–PD plans) may use step
therapy to require a Part B drug or a Part
D drug therapy, including a protected
class Part D drug, prior to allowing a
Part B drug therapy because the Part D
drug will also be covered by the plan.
MA–PD plans may also apply step
therapy to require a Part B drug therapy
prior to allowing a Part D drug therapy,
including, for new starts only, a
protected class Part D drug (other than
an antiretroviral), as part of a Part D step
therapy program or utilization
management program; however, MA–PD
plans must ensure that these
requirements are clearly outlined in the
Part D prior authorization criteria for the
affected Part D drugs and are otherwise
consistent with Part D requirements,
including the requirements for the use
of prior authorization and step therapy
for protected class Part D drugs that we
are finalizing elsewhere in this rule.
As discussed previously, after careful
consideration of all comments received,
and for the reasons set forth in the final
rule and in our responses to the related
comments, we are adopting a new
regulation at § 422.136, substantially as
proposed but with some modifications.
Specifically, we are making the
following changes from the proposal:
• In the proposed regulation text
§ 422.136(a) (1), we are finalizing a
lookback period of 365 days instead of
108 days.’’ Thus, § 422.136(a) (1) reads
as follows: ‘‘Apply step therapy only to
new administrations of Part B drugs,
using at least a 365 day lookback
period.’’
• In the introductory text in
§ 422.136(b), we are correcting a
typographic error in the proposed
regulation text to use ‘‘an existing Part
D P&T committee’’ in place of ‘‘an
existing Part D P&T committees.’’
We are also amending the P&T
committee requirements at § 422.136(b)
to clarify that P&T committee
responsibilities apply to review and
approval of Part B drug step therapy
programs, and do not extend to all
utilization management policies for Part
B items or services. Therefore, we are
making the following modifications:
• In the regulation text
§ 422.136(b)(6), we are replacing ‘‘a
utilization management programs, such
as’’ with ‘‘program’’. Thus, we are
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finalizing § 422.136(b)(6) to read as
follows: ‘‘Consider whether the
inclusion of a particular Part B drug in
a step therapy program has any
therapeutic advantages in terms of
safety and efficacy.’’
• In the regulation text
§ 422.136(b)(7), we are not finalizing the
language ‘‘utilization management
processes, including drug utilization
review, quantity limits, generic
substitution, and therapeutic
interchange’’ and are finalizing language
that refers to step therapy. Thus, we are
finalizing § 422.136(b)(7) as follows:
‘‘Review policies that guide exceptions
and other step therapy processes.’’
• In the regulation text
§ 422.136(b)(9), we are not finalizing
‘‘and’’ and ‘‘utilization management.’’
Thus, we are finalizing § 422.136(b)(9),
to read as follows: ‘‘Document in
writing its decisions regarding the
development and revision of step
therapy activities and make this
documentation available to CMS upon
request.’’
• In the regulation text
§ 422.136(b)(10), we are removing
‘‘clinical prior authorization criteria’’
and ‘‘protocols and quantity limit
restrictions.’’ Thus we are revising
§ 422.136(b)(10), to read as follows:
‘‘Review and approve all step therapy
criteria applied to each covered Part B
drug.’’
2. Medicare Advantage and Step
Therapy for Part B Drugs: Adjudication
Timeframes
We proposed to amend a number of
regulations related to the timeframe for
an MA plan to make expedited and
standard organization determinations
and reconsiderations regarding coverage
of Part B drugs. We also received
comments on our proposal that requests
for Part B drugs, including Part B drugs
subject to step therapy, be processed
under the same adjudication timeframes
as used in the Part D drug program. As
we stated in the proposed rule, we
believe the clinical circumstances that
typically accompany requests for Part B
drugs warrant application to coverage
decisions regarding Part B drugs of the
shorter adjudication timeframes that
apply in Part D. In keeping with this
rationale, we did not propose to permit
MA plans to extend adjudication
timeframes for organization
determinations and appeals related to
Part B drug requests. We explained that
our proposal to change the adjudication
timeframes applies through the Part C
IRE level of review. We did not propose
to change how Part C appeals, whether
for Part A, Part B or supplemental
benefits, are processed by the Office of
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Medicare Hearings and Appeals
(OMHA) and the Medicare Appeals
Council (Council) which is housed
within the Departmental Appeals Board
(DAB).
Specifically, we proposed the
following amendments regarding the
organization determination and appeal
procedures for Part B drugs:
• Add adjudication timeframes at
§§ 422.568, 422.572(a), and 422.590(c)
and (e)(2) for, respectively, standard
organization determinations, expedited
organization determinations, standard
reconsiderations, and expedited
reconsiderations related to coverage of
Part B drugs that are the same as the
timeframes for these appeal stages for
Part D drugs under §§ 423.568, 423.572,
and 423.590.
• Add references to determinations
regarding Part B drugs to §§ 422.568(d)
and (e)(4), 422.584(d), 422. 618(a) and
(b), and 422.619(a), (b) and (c).
• Specify in §§ 422.568(b)(2),
422.572(a), and 422.590(c) and (e)(2)
that the rules related to extending the
adjudication timeframe related to
requests for medical services and items
(at §§ 422.568(b)(1)(i), 422.572(b) and
redesignated § 422.590(f)) do not apply
to the timeframes for resolving standard
organization determinations, expedited
organization determinations, standard
reconsiderations, and expedited
reconsiderations for Part B drugs.
• Make conforming changes that
reference the applicable proposed
timeframes and deadlines for
determinations regarding Part B drugs
and update cross-references in
§§ 422.570(d)(1), 422.584(d)(1), and
422.618(a).
• Add a reference to an ‘‘item’’ to
regulation text to clarify that the scope
covers services and items at
§§ 422.568(b), (d), and (e); 422.572(a)
and (b), 422.590(a), (e), and (f); and
422.619(a) and (b).
• Redesignate existing regulatory
paragraphs at § 422.568(b)(1) and (2) to
§ 422.568(b)(1)(i) and (ii), at
§ 422.590(c)–(f) to § 422.590(d)–(f), and
at § 422.619(c)(2) to § 422.619(c)(3),
without substantive change.
We explained in the proposed rule
our intent to balance goals of cost
savings and efficiencies with enrollee
access, enhanced quality of care, and
due process protections. We also
solicited comments on our proposals
related to organization determination
and appeals timelines and processes
that will be applicable to Part B drugs.
Specifically, we solicited comments on
our proposal to not permit MA
organizations to extend the proposed
timeframes for requests for Part B drugs
and whether we overlooked an appeal
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procedure or timeframe that should also
be addressed in order to meet our goal
of aligning organization determinations
and appeals related to Part B drugs with
the procedures and timeframes
currently applicable to coverage
determinations and appeals for Part D
drugs under part 423. For more detail
about the proposal, we direct readers to
the proposed rule, 83 FR 62171 through
62174.
We explained in our proposal that, in
a separate proposed rule, CMS–4185–P,
entitled ‘‘Medicare and Medicaid
Programs; Policy and Technical Changes
to the Medicare Advantage, Medicare
Prescription Drug Benefit, Program of
All-inclusive Care for the Elderly
(PACE), Medicaid Fee-For-Service, and
Medicaid Managed Care Programs for
Years 2020 and 2021’’ and appeared in
the Federal Register on November 1,
2018 (83 FR 54982), we proposed
integrated grievance and appeal
provisions for certain D–SNPs with
aligned enrollment with Medicaid
managed care plans. We also solicited
comment on whether the proposed
timeframes for organization
determinations and appeals of coverage
of Part B drugs should be incorporated
into the integrated appeals procedures
for certain D–SNPs.
We received 13 comments on our
proposal related to organization
determination and appeals timeframes
for Part B drug requests:
Comment: Several commenters
expressed support for the proposal to
mirror Part D adjudication timeframes
for Part B drug requests. Commenters
stated that they appreciate CMS’ efforts
to clarify the appeals process and to
establish greater consistency in how
Part B and Part D drug requests are
adjudicated. In expressing support for
the adjudication timeframes for Part B
drugs, one commenter stated that delays
in treatment can have devastating health
implications and noted that requiring
plans to meet the Part D timeframe of 72
hours for standard organization
determinations and 24 hours for
expedited organization determinations
will help ensure that these adverse
outcomes are avoided.
Response: We thank the commenters
for their support for this proposal. CMS
believes that applying Part D
adjudication timeframes to requests for
Part B drugs establishes greater clarity
and consistency in the coverage
determination and appeals processes
across the two programs. We believe the
approach of applying shorter
adjudication timeframes affords the
most protection for beneficiaries. In
addition, utilizing the timeframes that
already exist in the Part D program
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minimizes changes to program
operations for many plans since MA–PD
plans are already familiar with and use
the Part D timeframes.
Comment: Several commenters
supported the proposed changes to the
adjudication timeframes, but expressed
concern that these beneficiary
safeguards may not be strong enough to
counter the negative effects of the
proposed use of step therapy and
utilization management tools. These
commenters believe use of utilization
management tools undermine patient
access to clinically necessary and
critical drugs, treatments, and therapies.
Response: We thank the commenters
for sharing these concerns. CMS
believes that mirroring the Part B
adjudication timeframes with those
shorter timeframes in Part D provides
the best protection for enrollees who
need a Part B drug. In all cases, the MA
organization must notify the enrollee,
and the physician or other prescriber
involved, of its decision as
expeditiously as the enrollee’s health
condition requires, but no later than the
applicable adjudication timeframe. As
we stated in the proposed rule, the rules
on disclosure of utilization management
requirements and individualized
medical necessity determinations,
coupled with the right to request an
organization determination, ensure that
an enrollee is informed about applicable
step therapy requirements and has an
opportunity for an individualized
medical necessity determination related
to a Part B drug step therapy
requirement. Further, an MA
organization has the discretion to
establish an evaluation process for the
appropriateness of enforcing its step
therapy protocols on an enrollee when
the enrollee’s healthcare provider’s
assessment of medical necessity for the
Part B drug indicates that the lower or
earlier steps in the step therapy protocol
are not clinically appropriate for that
enrollee; this final rule does not prohibit
MA organizations from working with
their network providers to develop
processes that eliminate the necessity
for an enrollee to file a request for an
organization determination in such
cases. However, to the extent an MA
organization develops an evaluation
process for the appropriateness of
enforcing its Part B step therapy
protocols as described previously, the
MA organization must ensure that the
right of the enrollee to request an
organization determination is not
circumvented by such a process and
that organization determination requests
are processed in accordance with the
requirements in Part 422, Subpart M.
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23865
Comment: Some commenters stated
that they do not believe the appeals
process is adequately responsive to
patients with urgent treatment needs as
it can be burdensome and slow for
patients and their providers attempting
to obtain drugs that are not on
formulary. Other commenters noted
concern about the complexity of the MA
appeals process and how the process
may be difficult for some beneficiaries
to navigate. One commenter stated that
the Part D appeals process is too deeply
flawed to serve as a model for adopting
changes to the MA appeals process for
the purpose of providing protections to
enrollees affected by plans’ use of step
therapy programs for Part B drugs.
Another commenter stressed that,
unlike Part D drugs, Part B drugs are
almost exclusively administered to the
sickest patients and require a patient to
go to their doctor to receive treatment.
This commenter indicated that it is
critical that any request for direct access
to a Part B drug that would otherwise
only be available after trying an
alternative drug be addressed as
promptly as possible, and suggested that
MA plans be required to make all
decisions about Part B drugs within a
24-hour timeframe rather than a 72 hour
timeframe as proposed.
Response: We thank commenters for
their concerns and suggestions. We
believe that application of shorter
adjudication timeframes to requests for
Part B drugs compared to the
adjudication deadlines for other MAcovered services affords the best
protection to enrollees who have an
urgent need for the requested drug. As
finalized in this rule, the MA
organization must notify the enrollee,
and the physician or other prescriber
involved, of its decision regarding
coverage of a Part B drug as
expeditiously as the enrollee’s health
condition requires, but no later than 24
hours for expedited organization
determination requests and 72 hours for
standard organization determination
requests for a Part B drug. We believe
this medical exigency standard, coupled
with the shorter timeframes, constitute
meaningful beneficiary protections for
those with urgent treatment needs. We
believe that applying the same
adjudication timeframes to all drug
requests will increase consistency in the
Part C and Part D coverage decision
processes.
We disagree with the comment that
every Part B drug request be adjudicated
in a 24-hour period. We believe it is
important to provide some flexibility in
how MA plans allocate resources so that
truly urgent requests are given the
requisite level of consideration. As
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noted in the proposed rule, we believe
applying the 72-hour timeframe to
standard Part B drug requests affords
appropriate protection for enrollees and
we reiterate that, in all cases, the plan
must notify the enrollee of its decision
as expeditiously as the enrollee’s health
condition requires. In other words, the
plan must notify an enrollee of a
decision even more quickly in a case
where there is a medical need to do so
and we expect plans to triage requests
in a manner that ensures that this
medical exigency standard is satisfied.
In addition, under existing rules, an
enrollee or a physician may request that
an MA organization expedite an
organization determination if an
enrollee is waiting to receive a drug. For
a request made by an enrollee, the MA
organization must provide an expedited
decision if it determines that applying
the standard timeframe could seriously
jeopardize the life or health of the
enrollee or the enrollee’s ability to
regain maximum function. For a request
made or supported by a physician, the
MA organization must provide an
expedited decision if the physician
indicates that applying the standard
timeframe could seriously jeopardize
the life or health of the enrollee or the
enrollee’s ability to regain maximum
function.
Comment: One commenter stated that
they believed that the current review
time for Part B drugs is appropriate and
allows for adequate physician
coordination of services and drugs
concurrently, and that expediting the
Part B determinations would pose no
advantage. In a similar vein, another
commenter was opposed to the
proposed changes to the adjudication
timeframes and noted a preference to
keep timeframes for Part B and Part D
distinct and separate to maintain
consistency with current processes; this
commenter also indicated that
restricting the ability to extend the
timeframes would severely constrain
their capacity to obtain the necessary
and appropriate information to make
informed determinations, exacerbating
denial rates and adding costs to plans
through increased administrative
burdens.
Response: We thank the commenters
for sharing their perspectives, but
believe that the clinical circumstances
that typically accompany requests for
Part B drugs warrant application of the
shorter adjudication timeframes that
apply in Part D. As stated in the
proposed rule, applying the shorter Part
D adjudication timeframes to requests
for Part B drugs establishes greater
clarity and consistency in the coverage
determination and appeals processes
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across the two programs and affords
appropriate protections for enrollees
requesting Part B drugs, including those
subject to step therapy or other
utilization management requirements.
In keeping with the rationale that the
clinical circumstances that typically
accompany requests for Part B drugs
warrant application of shorter
adjudication timeframes, this final rule
does not permit extension of the
adjudication timeframes for Part B drug
requests, as is allowed for other Part B
organization determinations and
appeals. With respect to the comment
on increased administrative burdens, we
believe utilizing the timeframes that
already exist in the Part D program will
minimize administrative burdens and
changes to program operations for many
plans since MA–PD plans are already
familiar with and use the Part D
timeframes.
We did not receive comments specific
to our solicitation regarding whether to
finalize different timeframes for Part B
drug coverage decisions made as part of
the integrated grievance and appeal
provisions for certain D–SNPs with
aligned enrollment with Medicaid
managed care plans. As explained
below, we are finalizing provisions to
require applicable integrated plans to
use the same Part B organization
determination and appeals timeframes
set forth in this rule. CMS finalized
integrated appeals procedures for
certain D–SNPs with aligned enrollment
with Medicaid managed care plans in
the final rule CMS–4185–F, Policy and
Technical Changes to the Medicare
Advantage, Medicare Prescription Drug
Benefit, Programs of All-Inclusive Care
for the Elderly (PACE), Medicaid FeeFor-Service, and Medicaid Managed
Care Programs for Years 2020 and 2021.
This final rule appeared in the April 16,
2019 Federal Register (84 FR 15680). A
significant part of the rationale for
finalizing certain timeframes for the
unified appeals processes for certain
applicable integrated plans in that final
rule was to provide consistency with
existing timeframes in MA appeals
procedures. In order to ensure that D–
SNPs using the integrated appeals
procedures operate consistently with
other MA plans and provide protection
of shorter timeframes for decisions
regarding coverage of Part B drugs, we
are finalizing here regulation text to
require applicable integrated plans to
use the same Part B organization
determination and appeals timeframes
finalized in this rule. Specifically, we
are finalizing here the following
amendments to the noted regulations:
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• In § 422.629(a), text to require
applicable integrated plans to use the
Part B drug rules;
• In § 422.631(a), text to specify the
applicability of Part B drug rules to
integrated organization determinations;
and
• In § 422.633(f), text to specify the
applicability of Part B drug
reconsideration timelines to the
integrated reconsideration process.
We note that § 422.634(d) requires
that when an applicable integrated plan
completely reverses its integrated
organization determination involving a
Part B drug, the applicable integrated
plan authorize or furnish the Part B drug
within 72 hours. Because the 72-hour
timeframe established in § 422.634(d)
applies to all integrated
reconsiderations involving benefit,
including Part B drugs, that were not
furnished while an appeal was pending,
we do not believe that any amendment
or revision is appropriate to make it
consistent with the amendment
finalized here at § 422.618(a)(3).
Therefore, we are not amending
§ 422.634(d).
Based on the comments we received
on the proposal that requests for Part B
drugs be processed under the same
adjudication timeframes as used in the
Part D drug program and for the reasons
provided in the proposed rule and our
responses to comments, we are
finalizing without substantive
modification the following proposed
changes to the regulatory provisions at
Part 422, Subpart M:
• Add adjudication timeframes at
§§ 422.568, 422.572(a), and 422.590(c)
and (e)(2) for, respectively, standard
organization determinations, expedited
organization determinations, standard
reconsiderations, and expedited
reconsiderations related to coverage of
Part B drugs.
• Specify in §§ 422.568(b)(2),
422.572(a), and 422.590(c) and (e)(2)
that the rules related to extending the
adjudication timeframe for requests for
medical services and items (at
§§ 422.568(b)(1)(i) and 422.572(b), and
at redesignated § 422.590(f),
respectively) do not apply to the
timeframes for resolving standard and
expedited organization determinations
and reconsiderations for Part B drugs.
• Make conforming changes that
reference the applicable proposed
timeframes and deadlines for
determinations regarding Part B drugs
and update cross-references in
§§ 422.570(d)(1), 422.584(d)(1), and
422.618(a).
• Add a reference to an ‘‘item’’ to
regulation text to clarify that the scope
covers services and items at
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§§ 422.568(b), (d), and (e); 422.572(a)
and (b), 422.590(a), (e), and (f); and
422.619(a) and (b).
• Add references to determinations
regarding Part B drugs to §§ 422.568(d)
and (e)(4), 422.584(d), 422. 618(a) and
(b), and 422.619(a), (b) and (c).
• Redesignate existing regulatory
paragraphs at § 422.568(b)(1) and (2) to
§ 422.568(b)(1)(i) and (ii), at
§ 422.590(c)–(f) to § 422.590(d)–(f), and
at § 422.619(c)(2) to § 422.619(c)(3),
without substantive change.
We are finalizing § 422.572(b)(1) with
a slight modification to clarify that the
rule for extending the timeframe for an
MA plan to make its decision only
applies if an extension to the timeframe
is otherwise permitted; this clarification
is necessary because we are finalizing,
at § 422.572(a)(2), regulation text to
prohibit the extension of the 24 hour
timeframe for an MA plan to decide an
expedited organization determination
regarding coverage of a Part B drug. In
addition, we are amending §§ 422.629,
422.631(a) and 422.633(f) to adopt the
same timeframes for decisions related to
coverage of Part B drugs made by
integrated applicable plans.
Finally, as we previously noted, CMS
will incorporate the shorter adjudication
timeframes for Part B drug requests into
the deadlines specified in the Part C
IRE’s contract per § 422.592(b).
F. Pharmacy Price Concessions in the
Negotiated Price (§ 423.100)
In the proposed rule, we sought
comment on a potential policy approach
for requiring that all pharmacy price
concessions be applied to drug prices at
the point of sale under Part D. We
received over 4,000 comments on this
potential policy approach. We thank the
commenters for their detailed responses.
We will carefully review all input
received from stakeholders on this issue
as we continue our efforts to
meaningfully address rising prescription
drug costs for seniors.
III. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.),
we are required to provide 30-day notice
in the Federal Register and solicit
public comment before a ‘‘collection of
information’’ requirement is submitted
to the Office of Management and Budget
(OMB) for review and approval. For the
purposes of the PRA and this section of
the preamble, collection of information
is defined under 5 CFR 1320.3 of the
PRA’s implementing regulations. In
order to fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the PRA requires that we solicit
comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
23867
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
In our November 30, 2018 (83 FR
62152) rule, we solicited public
comment on our proposed information
collection requirements, burden, and
assumptions. As discussed in section
III.B.4. of this final rule, we received
comments related to our EOB burden
estimates and revised our estimates as a
result of those comments. We have also
revised our business operations
specialist-related cost estimates based
on internal review (see sections III.A
and III.B.5.).
A. Wage Data
To derive average costs we used data
from the U.S. Bureau of Labor Statistics’
(BLS’s) May 2017 National
Occupational Employment and Wage
Estimates for all salary estimates (https://
www.bls.gov/oes/2017/may/oes_
nat.htm). In this regard, Table 2 presents
the mean hourly wage, the upward
adjustment to wages to account for the
cost of benefits and overhead
(calculated at 100 percent of salary), and
the resulting adjusted hourly wage.
TABLE 2—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES
Occupation
code
Occupation title
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Business Operation Specialist .........................................................................
Pharmacist .......................................................................................................
Software Developers and Programmers .........................................................
As indicated, we are adjusting our
employee hourly wage estimates by a
factor of 100 percent. This is necessarily
a rough adjustment, both because
benefits and overhead costs vary
significantly from employer to
employer, and because methods of
estimating these costs vary widely from
study to study. We believe that doubling
the hourly wage to estimate the total
cost is a reasonably accurate estimation
method.
As previously mentioned, we have
corrected the occupation code for
business operations specialists from 13–
0000 to 13–1199. The correction adds
$1.88/hr. (mean) to our proposed
business operations specialist-specific
cost estimates and $3.76/hr. (adjusted).
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13–1199
29–1051
15–1130
The cost under section III.B.5. of this
final rule is affected by this change.
We are not making any changes to our
Pharmacist (BLS occupation code 29–
1051 at $117.04/hr.) or Software
Developers and Programmers (BLS
occupation code 15–1130 at $98.54/hr.)
respondent types.
B. Information Collection Requirements
(ICRs)
1. ICRs Regarding the Provision of Plan
Flexibility To Manage Protected Classes
(§ 423.120(b)(2)(vi)(C))
As described in section II.A. of this
rule, the new paragraph at
§ 423.120(b)(2)(vi)(C) implements the
authority granted to CMS by section
1860D–4(b)(3)(G) of the Act to establish
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Mean
hourly wage
($/hr.)
$36.42
58.52
49.27
Benefits and
overhead
($/hr.)
$36.42
58.52
49.27
Adjusted
hourly wage
($/hr.)
$72.84
117.04
98.54
exceptions that permit a Part D sponsor
to exclude from its formulary (or to
otherwise limit access to such a drug,
including through prior authorization or
utilization management) a particular
Part D drug that is otherwise required to
be included in the formulary. For the
exception that addresses the use of prior
authorization and step therapy for
protected class drugs, the burden
consists of the time and effort for Part
D sponsors to submit their formularies
to CMS under the active (or currently
approved) annual submission process.
The aforementioned provisions are
active under OMB control number
0938–0763 (CMS–R–262) and will not
impose any new or revised information
collection requirements or burden.
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Consequently, the provisions are not
subject to the PRA.
We received no comments on our
proposed information collection
requirements, burden estimates, and
assumptions associated with these
exceptions and are finalizing them for
the PA and ST exception without
modification. We are not finalizing the
proposed pricing threshold exception,
or the proposed collection of
information requirements associated
with that exception.
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2. ICRs Regarding the Prohibition
Against Gag Clauses in Pharmacy
Contracts (§ 423.120(a)(8)(iii))
This final rule codifies a ban on
contract provisions that prohibit
network pharmacies from informing
Part D enrollees about instances where
the pharmacy has a cash price for a
prescribed drug that is lower than the
out-of-pocket cost that would be
charged to the enrollee. Since the
codification will not change any
existing practice and the provisions do
not have any information collection
implications, the provisions are not
subject to the PRA. We received no
comments on this assumption. As a
result, we are finalizing this provision
as proposed.
3. ICRs Regarding E-Prescribing and the
Part D Prescription Drug Program;
Updating Part D E-Prescribing Standards
(§ 423.160)
We proposed that each Part D plan
sponsor adopt one or more Real Time
Benefit Tools (RTBTs) that are capable
of integrating with at least one
e-prescribing (eRx) and electronic
medical record (EMR) system(s) (the
latter of which will hereinafter be
referred to as an electronic health record
or EHR for consistency with current
Departmental terminology) for use in
Part D eRx transactions beginning on or
before January 1, 2020. As discussed
earlier in this preamble, we understand
that some PBMs and a few prescription
drug plans have already begun to use
RTBT tools capable of meeting the
specifications listed in our preamble
discussion, which includes providing
beneficiary-specific drug coverage and
out-of-pocket cost information at the
point-of-prescribing.
After giving a high-level description
of the impact of this provision (83 FR
62185 through 621877), we solicited
comment on the burden for
implementing this provision since we
had advanced the provision with
unclear costs and impacts (83 FR 62185
through 62187).
While we received a few comments
relative to the collection of information
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requirements as initially proposed, the
input was not sufficient to help us
reliably quantify the burden associated
with the RTBT provisions.
Consequently, we continue to maintain
our inability to reliably score the RTBT
burden as it pertains to the PRA. In this
regard we are in the process of
publishing stand-alone 60- and 30-day
Federal Register notices that will be
subject to the regular non-rule PRA
process. Because of the uncertainty, the
purpose would be to revisit the burden
issues, solicit public comment, quantify
the burden, and obtain OMB approval.
The RTBT requirements and burden
will be submitted to OMB for approval
under control number 0938–0763
(CMS–R–262). Subject to renewal, it was
last approved on November 28, 2018,
and remains active.
A summary of the public comments
and our responses are as follows:
Comment: Some commenters stated
that a growing number of plans are
already using RTBT due to the savings
gained from enrollees switching to
cheaper drugs as a result of information
provided by the RTBT.
Response: We are pleased to see that
the industry is moving in this direction
and appreciate the feedback confirming
that our understanding was correct.
Comment: Commenters provided
various estimates of the prevalence of
RTBT. The range was 70 percent to 90
percent of current plans are using RTBT
or could easily transition to the
technology with relative ease.
Response: We thank commenters for
their responses, but point out that the
range in estimate makes it difficult to
estimate the total plan burden for RTBT
use. Additionally, prior to publication
of the proposed rule, one stakeholder
suggested that only 30 percent were
using RTBT. This range, 30 percent to
90 percent, which includes
conversations prior to publication of the
NPRM as well as comments on the
NPRM received during the public
comment period is one part of our
justification for why no impact is
provided.
Comment: Several commenters and
without dissenting commenters
commented that existing third party
software was sufficient to meet the
needs of RTBT.
Response: We thank these
commenters for pointing this out. Based
on this comment, we are dropping our
estimate of software burden since we do
not expect plans to develop their own
software.
We are not quantitatively scoring this
provision for the following reasons: (i)
As just indicated the estimates of how
many plans are using RTBT is 30
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percent to 90 percent, implying that
between 10 percent to 70 percent will
need to implement RTBT. (ii) Based on
the previously presented comments, we
are not assuming any plans will develop
their own software. (iii–iv) Based on
internal CMS data there are 1.4 billion
PDEs per year. Based on conversations
with industry, for large volume, the cost
of transactions for RTBT would be $0.01
per transaction. (iii) However, we have
no basis to ascertain how many of the
1.4 billion PDE will have RTBT applied
to them. (iv) Similarly, we have no way
of estimating the volume of transactions
for each type of drug. Consequently, we
have no reliable way of quantifying
impact.
4. ICRs Regarding Part D Explanation of
Benefits (§ 423.128)
The requirements and burden related
to the explanation of benefits (EOB) will
be submitted to OMB for approval under
control number 0938–0964 (CMS–
10141). Subject to renewal, the control
number is currently set to expire on
November 30, 2021. It was last approved
on November 28, 2018, and remains
active.
In accordance with § 423.128(e)(5) of
this rule, sponsors will be required to
include the cumulative percentage
change in the negotiated price since the
first day of the current benefit year for
each prescription drug claim in the
EOB. Sponsors will also be required to
include information about drugs that are
therapeutic alternatives with lower costsharing. The intent is to provide
enrollees with greater transparency with
respect to drug prices, leading to lower
costs. Since plans use formularies, they
already have the negotiated drug price
and the lower cost alternatives in an
existing information system. The cost of
this provision consists of: Programming
systems to calculate and connect
information to the Part D EOB
production, and the cost of paper, toner,
and postage.
In the proposed rule, we assumed it
would take 4 hours per contract at
$98.54/hr. for a software programmer to
link alternative prices to the EOB
Model. However, commenters pointed
out that there might be numerous
systems to update. As a result, we are
revising our 4 hour estimate to 160
hours. The change now estimates it will
take two software programmers 8 hours
(16 hours total) to revise 10 systems at
the same hourly wage.
In the proposed rule we considered
separate work for each contract. Upon
internal review we now believe it is
more appropriate to estimate burden by
each parent organization since it is
typically more efficient for major system
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changes to be performed once at the
parent organizational level with the
contracts of that parent organization
sharing the updated system.
Based on bid information and trends
we expect 295 Part D Sponsors and PDP
parent organizations for 2020. In
aggregate, our revised one-time burden
estimate for updating systems is 47,200
hours (160 hr per response × 295
responses) at a cost of $4,651,088
(47,200 hr × $98.54/hr) or $15,766 per
respondent ($4,651,088/295 sponsors
and organizations). Over the course of
OMB’s anticipated 3-year approval
period, we estimate an annual burden of
15,733 hours (47,200 hr/3 years) at a
cost of $1,550,363 ($4,651,088/3 years).
We are annualizing the one-time labor
estimate since we do not anticipate any
additional burden after the 3-year
approval period expires.
As discussed, commenters pointed
out that there would be an added
ongoing burden since EOBs would
contain additional information about
alternatives possibly requiring more
printed pages per EOB. Based on
internal bid information and projection
we expect 47.6 million Part D enrollees
in 2020. For our estimates of paper,
toner, and postage we are adopting the
same estimates that we used on April
16, 2018 (83 FR 16440) for our CY 2019
MA (Part C)/Prescription Drug Benefit
(Part D) final rule (CMS–4182–F, RIN
0938–AT08) found on page 16695.
However, we are revising the postage
rate to the updated 2019 bulk mailing
rates. Although our regulations allow
electronic submission of Part D EOBs
upon request, informal communication
from stakeholders indicates small usage.
We are therefore assuming mailings to
all enrollees. Since we do not require
first class postage for Part D EOBs, we
are assuming that Part D sponsors will
use the least expensive option, namely,
the use of bulk mailing rates. We also
assume that the added information
about alternatives is not started on a
separate page as that could be costly;
accordingly we assume the current Part
D EOB on average ends mid-page and
that adding 1–2 pages would on average
add 1.5 pages of print requiring at most
1 page of paper (since the other half
page of print would go on an already
printed page). Furthermore, we assume
that the Part D EOB is double-sided. In
some cases the extra 1.5 pages may fit
on the last printed page and on its other
side not necessitating more paper. Bulk
mailing rates vary by vendor; an
informal survey on the web suggests
$0.19 for 2019 rates for 50 pounds
(envelope weight is normally
considered negligible when citing these
rates). Other assumptions are possible
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but the main drivers of our added cost
are paper and toner as opposed to
postage. The following breaks down
those costs:
• Paper costs $0.005 per sheet ($2.50
for a ream of paper with 500 sheets).
• Toner costs $0.005 per sheet ($50
for a toner cartridge lasting 10,000
sheets).
• Postage costs are $0.000038 per
page since—
++ A sheet of paper weights 0.16
ounces (5 pounds/500 sheets × 16
ounces/pound).
++ Commercial bulk postage rates for
2019 are $0.19 for 200 pieces (50
pounds).
++ There are 16 ounces in one pound.
++ Postage cost per page is therefore
$0.000038 ([$0.19 × 0.16 ounces per
page]/[50 pounds × 16 ounces/pound]).
Thus, the total cost per page is
$0.010038 ($0.005 for paper + $0.005 for
toner + $0.000038 for postage). Finally,
we note that Part D EOBs are sent out
once per month to each enrollee
summarizing drug transactions for the
previous month. Thus we estimate an
annual cost of $5,733,706 (47.6 million
enrollees × 12 months × 1 page ×
$0.010038 per page). We believe that
after appropriate programming (as
discussed previously) the 47.6 million
mailings will be performed
automatically and will not require extra
staff time.
Combining the estimates for system
updates and mailing we obtain an
annual estimated cost of $7,284,069
($1,550,363 for updating systems +
$5,733,706 for paper, printing, and
mailing)
A summary of the public comments
and our response follow:
Comment: Commenters disagreed
with our burden analysis. They pointed
out that multiple systems would have to
be updated and disagreed with our
estimates regarding template creation.
Finally, one sponsor provided a $4.5
million estimate for set-up costs and a
$6 million dollar estimate for mailing.
Response: We thank the commenters
for this insight. Based on these
comments, we revised our estimated
time for sponsors to update their
systems. Also, we note that our revised
estimate assumes Part D sponsors will
update their systems to obtain
information for the template. Finally,
our estimates for initial costs are $4.7
million for system updates $5.7 million
for mailing costs. Our estimates, which
were independently developed, are very
close to the proposed impacts provided
by the commenter.
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23869
5. ICRs Regarding Medicare Advantage
and Step Therapy for Part B Drugs
(§§ 422.136, 422.568, 422.570, 422.572,
422.584, 422.590, 422.618, and 422.619)
The requirements and burden related
to the establishment and use of a P&T
Committee will be submitted to OMB
for approval under control number
0938–0964 (CMS–10141). Subject to
renewal, the control number is currently
set to expire on November 30, 2021. It
was last approved on November 28,
2018, and remains active.
This rule provides protections to help
ensure that beneficiaries maintain
access to medically necessary Part B
drugs while permitting MA plans to
implement step therapy protocols that
support stronger price negotiation and
cost and utilization controls. In order to
implement a step therapy program for
one or more Part B drugs, this rule
requires that an MA plan establish and
use a P&T Committee to review and
approve step therapy programs used in
connection with Part B drugs. The P&T
Committee requirements are similar to
the requirements applicable to Part D
plans under § 423.120(b). This rule
allows MA–PD plans to use the Part D
P&T Committee to satisfy the new
requirements related to MA plans and
Part B drugs. For MA plans that do not
cover Part D benefits already, they may
use the Part D P&T Committee of an
MA–P&D plan under the same contract.
Under § 422.4(c), every MA contract
must have at least one plan offering Part
D. Because of the small amount of work
needed annually, we believe it is
reasonable to assume that no new
committees will be formed and that the
added work will be performed by the
existing P&T Committees.
The finalized § 422.136(b)(4) and (9)
requires that the P&T Committee
‘‘clearly articulate and document
processes,’’ We estimate it would take 1
hour at $72.84/hr. for a P&T Committee
business specialist to perform certain
tasks and review and retain
documentation and information. This 1
hour estimate reflects half of the Part D
P&T Committee burden (or 2 hours) that
is currently approved by OMB under
control number 0938–0964 (CMS–
10141). We are estimating 1 hour since
the MA P&T committee work for Part B
step therapy programs is significantly
less than the Part D P&T committee
work; more specifically; per Section
30.1 of Chapter 6 of the Prescription
Drug Benefit Manual,16 the Part D P&T
committee work has seven tasks, two of
which, namely, formulary management
16 https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/
Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.
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and formulary exceptions, do not apply
to the mandatory MA P&T committee
work. The MA P&T committee work,
under finalized § 422.136, is limited to
review and approval of step therapy
programs for Part B drugs (and not other
types of utilization management
programs). We lack quantitative data on
the amount of work attributed to each of
the seven tasks of the Part D P&T
committee work. Therefore, we assumed
a 50 percent reduction in the amount of
work since two of the seven Part D P&T
committee tasks are not required under
Part B. In aggregate, we estimate an
annual burden of 634 hours (1 hr. × [697
plans ¥ 63 Prescription Drug plans
which do not offer Part B]) at a cost of
$46,181 (634 hr. × $72.84/hr.).
We received no comments on our
proposed requirements and burden
analysis and are finalizing this
provision without modification.
We are also finalizing, without
modification, our proposed beneficiary
protection measure related to shorter
adjudication timeframes for
organization determinations and
reconsiderations for requests for Part B
drugs. Under this final rule, the
adjudication timeframes applicable to
requests for Part B drugs will, as
proposed, be shorter than the
timeframes that apply to requests for
other covered medical items and
services. At the time of the proposed
rule’s publication date (November 30,
2018) we did not finalize the necessary
revisions to our Notice of Denial of
Medical Coverage form and instructions
(approved by OMB under control
number 0938–0892; CMS–10003).
Therefore, we did not set out such
burden or solicit comment. Since that
time, however, we have published a
stand-alone 60-day Federal Register
notice (April 10, 2019; 84 FR 14383)
that sets out the revised form and form
instructions. In compliance with the
standard PRA process, we will also be
publishing a stand-alone 30-day Federal
Register notice (when ready). Please
note that the revised form and
instructions have no impact on this
rule’s burden estimates. Instead, the
revision would include the Part B drug
adjudication timeframes within the form
and update the CFR citations within the
instructions.
C. Summary of Information Collection
Requirements and Burden
TABLE 3—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
Hours per
respondent
Total hours
Labor cost
($/hr)
Total annual
cost
($)
295
160
15,733
$98.54
$1,550,363
295
571,200,000
n/a
n/a
n/a
* 5,733,706
0938–0964 (CMS–10141) .....
634
634
1
634
72.84
46,181
...............................................
634
571,200,929
Varies
16,367
Varies
7,330,250
Regulatory reference
Provision brief title
Control No.
(CMS ID No.)
§ 423.128 ...................
Part D Explanation of
Benefits (Updating
Systems).
Part D Explanation of
Benefits (Extra
mailings) *.
Part B Step Therapy
(use of PT Committee).
0938–0964 (CMS–10141) .....
295
0938–0964 (CMS–10141) .....
....................................
§ 423.128 ...................
§§ 422.136, 422.568,
422.570, 422.572,
422.584, 422.590,
422.618, and
422.619.
Total ...................
Respondents
Total
responses
* Non-labor requirements and costs.
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IV. Regulatory Impact Analysis
A. Statement of Need
This final rule supports Medicare
health and drug plans’ negotiation for
lower drug prices and reduce out-ofpocket costs for Part C and D enrollees.
Although satisfaction with the MA and
Part D programs remains high, these
proposals are responsive to input we
received from stakeholders while
administering the programs, as well as
through our requests for comment.
HHS Blueprint to Lower Drug Prices
and Reduce Out-of-Pocket Costs (May
16, 2018, 83 FR 22692) sought to find
out more information about lowering
drug pricing using these four strategies:
Improved competition, better
negotiation, incentives for lower list
prices, and lowering out-of-pocket costs.
We proposed a number of provisions
that implement these four strategies in
an attempt to lower out-of-pocket costs
with a particular focus on strengthening
negotiation for Part D plans and
increasing competition in the market for
prescription drugs. We proposed to offer
more tools to MA and Part D plans that
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negotiate with drug companies on
behalf of beneficiaries, so these plans
are equipped with similar negotiation
capabilities as group health plans and
issuers have in the commercial market.
We sought to drive robust competition
among health plans and pharmacies, so
consumers can shop based on quality
and value. These provisions align with
the Administration’s focus on the
interests and needs of beneficiaries,
providers, MA plans, and Part D
sponsors.
B. Overall Impact
We examined the impact of this final
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Social
Security Act (the Act), section 202 of the
Unfunded Mandates Reform Act of 1995
(UMRA) (March 22, 1995; Pub. L. 104–
4), Executive Order 13132 on
Federalism (August 4, 1999), the
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Congressional Review Act (5 U.S.C.
804(2)), and Executive Order 13771 on
Reducing Regulation and Controlling
Regulatory Costs (January 30, 2017).
The RFA, as amended, requires
agencies to analyze options for
regulatory relief of small businesses, if
a rule has a significant impact on a
substantial number of small entities. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small governmental
jurisdictions.
This final rule affects MA plans and
Part D sponsors (NAICS category
524114) with a minimum threshold for
small business size of $38.5 million
(https://www.sba.gov/content/smallbusiness-size-standards). This final rule
additionally affects hospitals (NAICS
subsector 622) and a variety of provider
categories, including physicians,
specialists, and laboratories (subsector
621).
To clarify the flow of payments
between these entities and the federal
government, note that MA organizations
submit bids (that is, proposed plan
designs and projections of the revenue
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needed to provide those benefits,
divided into three categories—basic
benefits, supplemental benefits, and
Part D drug benefits) in June 2019 for
operation in contract year 2020. These
bids project payments to hospitals,
providers, and staff as well as the cost
of administration and profits. These
bids in turn determine the payments
from the Medicare Trust Fund to the
MA organizations that pay providers
and other stakeholders for their
provision of covered benefits to
enrollees. Consequently, our analysis
will focus on MA organizations.
There are various types of Medicare
health plans, including MA plans, Part
D sponsors, demonstrations, section
1876 cost plans, prescription drug plans
(PDPs), and Program of All-Inclusive
Care for the Elderly (PACE) plans. Fortythree percent of all Medicare health
plan organizations are not-for-profit,
and 31 percent of all MA plans and Part
D sponsors are not-for-profit. (These
figures were determined by examining
records from the most recent year for
which we have complete data, 2016.)
There are varieties of ways to assess
whether MA organizations meet the
$38.5 million threshold for small
businesses. The assessment can be done
by examining net worth, net income,
cash flow from operations, and
projected claims as indicated in their
bids. Using projected monetary
requirements and projected enrollment
for 2018 from submitted bids, 32
percent of the MA organizations fell
below the $38.5 million threshold for
small businesses. Additionally, an
analysis of 2016 data—the most recent
year for which we have actual data on
MA organization net worth—shows that
32 percent of all MA organizations fall
below the minimum threshold for small
businesses.
If a final rule may have a significant
impact on a substantial number of small
entities, the final rule must discuss
steps taken, including alternatives, to
minimize burden on small entities.
While a significant number (more than
5 percent) of not-for-profit organizations
and small businesses are affected by this
final rule, the impact is not significant.
To assess impact, we use the data in
Table 11C, which show that the raw (not
discounted) net effect of this final rule
over 10 years is $73.19 million.
Comparing this number to the total
monetary amounts projected to be
needed just for 2020, based on plan
submitted bids, we find that the impact
of this final rule is significantly below
the 3 to 5 percent threshold for
significant impact. Had we compared
the 2020 impact of the final rule to
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projected 2020 monetary need, the
impact will be still less.
Consequently, the Secretary has
determined that this final rule will not
have a significant economic impact on
a substantial number of small entities,
and we have met the requirements of
the RFA. In addition, section 1102(b) of
the Act requires us to prepare a
regulatory analysis for any final rule
under title XVIII, title XIX, or Part B of
Title XI of the Act that may have
significant impact on the operations of
a substantial number of small rural
hospitals. We are not preparing an
analysis for section 1102(b) of the Act
because the Secretary certifies that this
final rule will not have a significant
impact on the operations of a substantial
number of small rural hospitals.
Section 202 of UMRA also requires
that agencies assess anticipated costs
and benefits before issuing any rule
whose mandates require spending in
any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2019, that threshold is approximately
$154 million. This final rule is not
anticipated to have an effect on state,
local, or tribal governments, in the
aggregate, or on the private sector of
$150 million or more.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a final
rule that imposes substantial direct
requirement costs on state and local
governments, preempts state law, or
otherwise has federalism implications.
Since this final rule does not impose
any substantial costs on state or local
governments, the requirements of
Executive Order 13132 are not
applicable.
If regulations impose administrative
costs on reviewers, such as the time
needed to read and interpret this final
rule, then we should estimate the cost
associated with regulatory review. There
are currently 750 MA contracts (which
also includes PDPs), 50 State Medicaid
Agencies, and 200 Medicaid Managed
Care Organizations (1,000 reviewers
total). We assume each entity will have
one designated staff member who will
review the entire rule. Other
assumptions are possible and will be
reviewed after the calculations.
Using the wage information from the
Bureau of Labor Statistics (BLS) for
medical and health service managers
(code 11–9111), we estimate that the
cost of reviewing this rule is $107.38 per
hour, including an upward adjustment
to wages to account for overhead and
benefits. (https://www.bls.gov/oes/
current/oes_nat.htm). Assuming an
average reading speed, we estimate that
it will take approximately 7.6 hours for
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23871
each person to review this final rule. For
each entity that reviews the rule, the
estimated cost is therefore, $816 (7.6
hours * $107.38). Therefore, we estimate
that the total cost of reviewing this
regulation is $816,000 ($816 * 1000
reviewers).
Note that this analysis assumed one
reader per contract. Some alternatives
include assuming one reader per parent
entity or assuming (major) pharmacy
benefit managers (PBMs) will read this
rule. Using parent organizations instead
of contracts will reduce the number of
reviewers to approximately 500
(assuming approximately 250 parent
organizations), and this will cut the total
cost of reviewing in half. However, we
believe it is likely that reviewing will be
performed by contract. The argument for
this is that a parent organization might
have local reviewers; even if that parent
organization has several contracts that
might have a reader for each distinct
geographic region, to be on the lookout
for effects of provisions specific to that
region.
As for PBMs, it is reasonable that only
the major PBMs will review this rule.
There are 30–50 major PBMs, and this
will increase the estimate by 0.3 to 0.5
percent. Reviewing the source of
comments on the proposed rule, we find
about 300 distinct organizations
commenting including health plans,
universities and colleges, congressionalrelated entities, patient-centered
associations, medical associations,
pharmaceutical companies and
manufacturers. Considering the wide
source of comments and the wide use of
drugs it is very reasonable that the total
number of associations reading this is
comparable to the number of health
plans. This would double our estimate.
Using these alternate considerations, we
can safely say that the cost of reviewing
is between half a million (50 percent *
$816,000) and two million (2 *
$816,000). Thus, we consider the $1
million a reasonable midpoint figure to
estimate review cost.
In accordance with the provisions of
Executive Order 12866, this rule was
reviewed by the Office of Management
and Budget (OMB).
We received no comments on our
estimates of impact on small businesses
and other items mentioned in the
overall impact section.
C. Anticipated Effects
1. Providing Plan Flexibility To Manage
Protected Classes (§ 423.120(b)(2)(vi))
In this rule, we are finalizing an
exception to the protected class policy
to allow Part D sponsors to apply PA
and ST requirements for protected class
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Part D drugs, except antiretrovirals, only
for new starts to confirm intended use
is for a protected class indication, and
to ensure clinically appropriate use,
promote utilization of preferred
formulary alternatives, or a combination
thereof, subject to CMS review and
approval. We also are finalizing a
technical change to permit exclusion of
interchangeable biological products.
Since under this exception, these
utilization management tools (that is,
PA and ST for new starts only, except
for antiretrovirals) are already permitted
today under similar circumstances for
the protected classes for new treatment
regimens, we do not anticipate any
material impacts from the use of these
tools for the five classes where it will be
allowed. For antiretroviral drugs, we do
not believe that utilization management
would generate returns for plan
sponsors’ increased administrative
burden, as these drug have narrower
indications, clinical criteria, and range
of products that curtail inappropriate
use. As a result, we estimate no material
impact from this provision as well.
Formally recognizing Part D sponsors’
utilization management flexibility
provides them with negotiating power.
Additionally, utilization management
will promote substitution when
appropriate and reduce wasteful or
inappropriate prescriptions. For
example, if an antipsychotic drug is
prescribed to a beneficiary and the
beneficiary does not have a protected
class indication that requires such a
drug, these additional tools will allow
Part D sponsors to better manage
utilization of that drug. We did not
assume any interactions with Part D
sponsors’ ability to use indication-based
coverage, as no experience on that
coverage is currently available.
At this time, we do not anticipate any
adverse effects upon enrollee access to
drugs in the protected classes. The
reasons for this are two-fold. First, we
did not propose to change or remove
any of the protected classes identified in
section 1860D–4(3)(G)(iv) of the Act.
Second, in considering whether
exceptions to the added protections
afforded by the protected class policy
are appropriate, we took into account
the many other enrollee protections in
the Part D program, which are mature
and have proven workable. These
protections include: Formulary
transparency, formulary requirements,
reassignment formulary coverage
notices, transition supplies and notices,
and the expedited exception, coverage
determination, and appeals processes.
Comment: Commenters generally
agreed with our assessment of the
impact of this provision. One
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commenter questioned why the impact
analysis in this final rule sees more
generic opportunity in the protected
classes than MedPAC.
Response: While MedPAC has cited
that the overall level of generic use in
the antidepressant, antipsychotic, and
anticonvulsant categories was similar to
the overall generic use within Part D,
our analysis of the drug level data using
internal CMS files, on which MedPAC
has not specifically commented,
indicated that there was significant
brand usage with the potential to shift
to generic drugs under new utilization
management practices. Comparing classlevel generic use against overall generic
use can also be misleading, as the
availability of generics differs widely
from class to class and over time.
Comment: Several commenters
suggested that the estimated savings
from these proposals were too limited to
justify modifications to the protected
classes policy.
Response: We disagree. While we are
not finalizing modifications to the
existing policy (but codifying existing
policy), we continue to believe that it is
possible that certain Part D sponsors
may be able to use additional flexibility
to improve their negotiating position
and/or the effectiveness of their
utilization management actions, thereby
producing savings that we will not be
able to quantify until after the policy
takes effect. Additionally, we believe it
is incumbent upon us to be a good
steward of taxpayer dollars, no matter
how modest the savings.
Comment: Some commenters
encouraged us to consider manufacturer
rebates across other Federal programs,
including Medicaid, the VA and the
340B Drug Pricing Program (340B)
before implementing our exceptions.
Response: While we appreciate the
commenters’ concerns, we are unable to
quantify savings to the Part D program
taking other Federal programs into
account. Additionally, specific to 340B,
with the exception of claims split-billed
through AIDS Drug Assistance Programs
(ADAPs), CMS does not collect
information on which claims were
processed under 340B.
Comment: A number of commenters
expressed concern that PA and ST
policies can lead to patients’ not filling
their prescriptions or underutilizing
medications, which leads to nonadherence. Commenters expressed
concern that non-adherence, in turn,
can lead to interruptions in therapy
across the six classes, and in the case of
HIV, would endanger public health
because it is a communicable disease
which can rapidly mutate and become
resistant to therapy.
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Response: CMS acknowledges that PA
and ST could potentially cause the
issues cited when they are not
implemented properly. However, we
believe that based upon our more than
12 years of experience with the Part D
program, including our existing policy,
which allows for PA and ST for new
starts of protected class Part D drugs
(except antiretrovirals), and the unique
protections we have in place, which are
more robust than in other comparable
programs, demonstrate that such
concerns have been mitigated in Part D.
For example, in the categories and
classes of drugs not covered by the
protected class policy, that is, all other
Part D drug categories and classes,
where wide use of PA and ST have been
allowed since the beginning of the Part
D program, subject to our other
formulary requirements, we have no
evidence to suggest that Part D enrollees
routinely experience interruptions in
therapy as a result of PA and ST
requirements. Moreover, CMS is
advancing improvements in price
transparency, interoperability, and eprescribing improvements, such as a
real-time benefit tool (RTBTs) and Part
D electronic prior authorization as
required by section 6062 of the
SUPPORT for Patients and Communities
Act (Pub. L. 115–271), that could help
mitigate the kinds of administrative
burdens sometimes associated with PA
and ST that commenters claim could
lead to underutilization. As such, we
did not account for any decreases in
utilization in our estimate.
2. Prohibition Against Gag Clauses in
Pharmacy Contracts (§ 423.120(a)(8)(iii))
This provision proposed to codify
existing practice and therefore is
expected to produce neither savings nor
cost.
3. E-Prescribing and the Part D
Prescription Drug Program; Updating
Part D E-Prescribing Standards
(§ 423.160)
This provision proposed that each
Part D plan sponsor adopt one or more
Real Time Benefit Tool (RTBT) tools
that are capable of integrating with at
least one e-prescribing (eRx) and
electronic health record (EHR) systems
(the latter of which will hereinafter be
referred to as an electronic health record
or EHR for consistency with current
Departmental terminology) for use in
Part D E-Prescribing (eRx) transactions
beginning on or before January 1, 2020.
As discussed earlier in this preamble,
we understand that some PBMs and a
few prescription drug plans have
already begun to use RTBT tools capable
of meeting the specifications listed in
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our preamble discussion, which
includes providing beneficiary-specific
drug coverage and out-of-pocket cost
information at the point-of-prescribing.
CMS sought to accelerate the use of
such real time solutions in the Part D
program so as to realize their potential
to improve adherence, lower
prescription drug costs, and minimize
beneficiary out-of-pocket cost sharing.
These tools have the capability to
inform prescribers when lower-cost
alternative therapies are available under
the beneficiary’s prescription drug
benefit. We are interested in fostering
the use of these real-time solutions in
the Part D program, given their potential
to lower prescription drug spending and
minimize beneficiary out-of-pocket
costs. Not only can program spending
and beneficiary out-of-pocket costs be
reduced, but (as discussed above)
evidence suggests that reducing
medication cost also yields benefits in
patients’ medication adherence.
We first give a high-level description
of impact. The major savings of this
provision will be use of RTBT to
encourage prescribing of lower tier cost
sharing drugs. This will result in a
dollar savings to the Medicare Trust
Fund. However, because of both lack of
data and complexity of data, we are
qualitatively scoring this provision and
are therefore scoring this provision as a
qualitative savings. In the NPRM we
solicited comments from stakeholders
on certain data. In response to our
solicitation, the following assumptions
and complications were pointed out:
• Current usage: Commenters
confirmed our belief that some plans are
already using RTBT. Commenter
estimates ranged from 70 percent to 90
percent. Informal conversations with
plans prior to publication of the NPRM
provided an estimate of 30 percent. This
combined wide range, 30 percent to 90
percent, shows both that RTBT is being
adopted, that there is uncertainty on the
extent of adoption.
• Cost if this Provision is Finalized:
Software costs: Commenters seem to
reject the idea that any plans would
create their own RTBT software. They
believe that the existing opportunities
from intermediaries was sufficient to
satisfy new regulatory requirements. As
a result of these comments, we are
withdrawing in the Final Rule the
estimates made in the NPRM on
software costs.
Developing substitution logic. Many
commenters cautioned that
development of the logic to determine
which formulary alternatives should be
presented to a prescriber in a given
situation will impose new burdens on
plans. While IT programming can be
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leveraged across plans variable
formularies require that each plan
develop its own individual logic about
which alternative drugs are available for
use in RTBT scenarios. Plans must
decide how many potential formulary
substitutions should be presented to
prescribers and must ensure that the
prescriber is not overly burdened with
choices.
Lower tier cost sharing substitution:
CMS believes the primary source of
RTBT savings to arise from the ability of
providers to prescribe lower tier cost
sharing drugs. While there are also
savings from substitutions of generics
for brands, many of these substitutions
already are currently already being done
by pharmacy benefit administrators. The
commenters generally agreed with this
assessment.
• Implementation date and
Standardization:
We received numerous comments
relating to the proposed January 1, 2020
implementation date. Although several
commenters stated that the 2020
deadline was achievable, the majority of
comments expressed concern. Most
commenters, believe that it would be
prudent to delay the implementation
date until an industry standard was
available with some commenters
characterizing the proposed time frame
as overly aggressive or unrealistic given
the level of effort required to implement
RTBT.
We understand that implementing
RTBT requires time and resources for
those plans that have not yet begun to
implement a real time solution As a
result, we are delaying the
implementation date until January 1,
2021. However, given the potential
benefits of RTBT, we strongly encourage
plans to start implementing this
requirement prior to January 1, 2021.
• Cost to providers: Some
commenters were concerned about the
cost of implementing multiple RTBT
systems within EHRs. However, other
commenters made it clear that plans
who have implemented RTBT make the
technology available to prescribers at no
cost. Some commenters cautioned that
RTBT may add time to a medical office
visit but did not specify the potential
cost impact of the additional time
involved. Others commenters stated that
while RTBT may add time to a medical
office visit, it may provide enhanced
benefits in terms of patient adherence to
medication therapies which may save
time in the long run. These divergent
views left us unable to gain a definitive
picture whether providers are negatively
affected by the finalized provision. As a
result, we lack data with which to
reliably estimate and include provider
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23873
costs in our analysis of the impact of
this proposal.
CMS further notes that most plans are
already making sure that prescribers are
not bearing the cost of implementing
RTBT tools. Indeed RTBT systems are
being implemented by some plans
because of the resulting cost savings.
• Savings vs Cost: Nearly all
commenters were very enthusiastic
about the concept of the proposed
provision. They largely believed that
any implementation costs incurred
would be offset by costs savings. One
commenter who has been using RTBT
for about a year and noted that when
presented with a lower cost, clinically
appropriate alternatives, enrollees are
receiving a lower cost medication 45
percent of the time, and saving an
average of $130 per fill in out of pocket
costs compared to the drug originally
requested. CMS is unable to confirm
these savings but these reported results
suggest that RTBT can be instrumental
in reducing drug costs. We recognize
that it may take plans time to develop
an RTBT infrastructure such as
developing formulary alternatives and
relationships with RTBT vendors.
We are finalizing the proposal for
each Part D plan to support an RTBT of
its choosing, effective January 1, 2021.
We are removing the proposed
requirement that covered health care
providers get explicit beneficiary
consent prior to using the RTBT.
We point out that any savings arising
from this provision if finalized would be
classified as a transfer since there is (at
least as a primary impact) no reduction
in consumption of goods (prescription
drugs) but rather a transfer of expense
from one drug to another. However, this
transfer (between manufacturers of
drugs) would result in reduced dollar
spending by Part D Sponsors and
enrollees and would result in reduced
spending by the Medicare Trust Fund.
4. Part D Explanation of Benefits
(§ 423.128)
In section III. of this final rule, we
have detailed the cost to Part D sponsors
to update their EOB templates.
Additionally, CMS Central Office staff
will have to develop the model language
to be used by the Part D sponsors.
Significant effort goes into developing
a model, including developing
instructions and obtaining clearance.
Therefore, we estimate that it would
take two GS–13-Step 5 employees a
month, each working a half a day, or
160 hours (2 employees * 4 hours a day
* 5 days a week * 4 weeks) to develop
the templates. It would additionally take
a supervisory GS–15 staff, 5 hours to
give approval.
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Wages for 2018 for CMS staff may be
obtained from the OPM website at
https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/
salary-tables/pdf/2018/DCB_h.pdf. We
estimate a total burden of $17,583 (160
hours * $52.66/hr for GS–13, Step 5 staff
* 2 ((for an upward adjustment to wages
to account for overhead and benefits)).)
+ 5 hours * $73.20/hr for GS–15, Step
5 staff * 2 (for an upward adjustment to
wages to account for overhead and
benefits)).
As estimated in the Collection of
Information Section of this Final Rule,
the Part D EOB incurs a first year cost
of $4.65 million for updating systems
and ongoing costs in all years, including
the first, of $5.73 million for additional
mailings. Thus the total first year cost is
$10.40 million (4.65+5.73+0.18 (the
$17,583 cost for CMS staff to create a
template)) and cost in subsequent years
is $5.73 million.
5. Medicare Advantage and Step
Therapy for Part B Drugs (§§ 422.136,
422.568, 422.570, 422.572, 422.584,
422.590, 422.618, 422.619, 422.629,
422.633 and 422.634)
Step therapy is a type of utilization
management (for example, prior
authorization) for drugs that begin
medication for a medical condition with
the most preferred drug therapy and
progress to other therapies only if
necessary, promoting more cost effective
therapies, potentially better clinical
decisions, and lower costs for treatment.
The lower costs of treatment primarily
benefit MA enrollees and plans and are
transferred to the government as
savings.
A further source of savings is
negotiations. If an MA plan offers all
Part B drugs, then it typically will
purchase drugs at market price. If the
MA plan is allowed to use step therapy,
then when there is more than one drug
that has the same effect on a medical
condition but the drugs differ
significantly in price, drug
manufacturers in their negotiations with
MA plans, have an incentive to lower
the cost of their drug so that their drug
is selected by the MA plan as the first
drug in the plan’s step therapy protocol.
However, it is difficult to numerically
estimate the savings from increased
negotiations because, unlike other
impact events, negotiations vary.
Furthermore, we do not have access to
negotiation data as this is proprietary
information between MA plans and
manufacturers and is not submitted in
the MA bid. For these two reasons (lack
of data and volatility) we are leaving the
negotiation of increased savings as a
qualitative, rather than a quantitative
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event. We believe that the potential
savings from negotiations is significant,
but have no way of quantifying the
effect.
We note that although we are not
estimating the savings from front-end
negotiations, we do estimate the savings
from back-end negotiations, more
specifically, from the rebates
manufacturers give plans with favorable
drug management practices. Such
rebates also occur on the Part D side and
we have the data to estimate their effect.
This is done in this section of this final
rule when discussing the impact on the
Medicare Trust Fund and beneficiary
cost sharing due to step therapy.
Although CMS believes that step
therapy can promote more cost effective
therapies, potentially better clinical
decisions, and lower costs for treatment
for the reasons earlier discussed, we
acknowledge that there are various
studies suggesting that step therapy may
be costly either economically or healthwise. There are two primary reasons for
this.17
• Discontinuation: Several studies
show that there is the potential for
enrollees to become discouraged when
step therapy is used. This is called
discontinuation. Discontinuation means
a portion of members with a claim
rejection at the point of service go on to
not have claims in that class of
medications. In other words, an
unwanted effect of step therapy is
‘‘giving up’’ and not seeking medical
treatment. There are several studies of
discontinuation.18 Consequently, when
discussing step therapy, it is important
to address possible unwanted side
effects such as discontinuation.
• Effects of delay: The idea of step
therapy is that if the initial drug ‘‘fails
first’’ then a provider will prescribe the
drug they had originally wanted to
prescribe. However, when the initially
given drug does not work, this creates
a delay in the patient receiving the
necessary drug and consequently the
delay may cause both a worsening of
conditions and increased medical costs.
Several studies on Part B drugs show
this. For example, a study comparing
spending in Georgia’s Medicaid program
found that while there were savings in
the cost of medications when step
therapy was used, the program spent
more money on outpatient services
because less-effective medications often
led to higher health costs later.19 Similar
studies have been done on— legislation
to protect people from certain harms of
step therapy.20 However, the MA
program has many beneficiary
protections and a robust appeals process
to ensure that beneficiaries have access
to the medications and health services
they need. For example, we expect
providers and enrollees who are
concerned about the adverse effects of
delay or that a drug on the initial step
may not be the best or proper course of
treatment, to seek pre-service
organization determinations that permit
use of the ultimate Part B drug and to
appeal any denials by the MA plan.
Since plan appeal rates are monitored
by CMS, this creates a strong incentive
for plans to use step therapy wisely and
not exacerbating illness.
Summary: Step therapy can result in
both savings and costs. While at the
time of initiation of the step therapy
there is initial savings arising from
reduced drug costs, this savings may
end up costing in the long run because
of worsening conditions arising from the
delay in receiving the proper drug
resulting in increased medical costs.
However, we believe the MA beneficiary
protections and appeals process coupled
with periodic CMS review and
monitoring of MA plans is robust
enough to ameliorate or eliminate the
possible adverse effects of step therapy.
In addition to the complications in
estimating the health savings from step
therapy, some step therapy savings arise
from negotiations, which are difficult to
quantify. We can however, estimate the
effect on the Medicare Trust Fund and
on enrollee cost sharing.
The estimate of the impact on the
Medicare Trust Fund includes the—(1)
backend negotiations, rebates from
manufacturers to plans; (2) use of less
17 Article 1: Patrick P Gleason, PharmD, FCCP,
BCPS, ‘‘Assessing Step Therapy Programs: A step in
the right direction,’’ Journal of Managed Care
Pharmacy, 13(3), 2007. Article 2: Adams AS, Zhang
F, LeCates RF, et al. Prior authorization for
antidepressants in Medicaid: Effects among
disabled dual enrollees. Arch Intern Med. 2009;
169(8):750–756. Article 3: Zhang Y, Adams AS,
Ross-Degnan D, Zhang F, Soumerai SB. Effects of
prior authorization on medication discontinuation
among Medicaid beneficiaries with bipolar
disorder. Psychiatr Serv. 2009; 60(4):520–527.
18 S. Shoemaker, R. Subramanian, D. Mauch, (Abt
Associates). ‘‘Effect of 6 Managed Care Pharmacy
Tools: A Review of the Literature,’’ Journal of
Managed Care Pharmacy, Supplement, July 2010,
Vol 16(6a), page s7.
19 Retrospective assessment of Medicaid step
therapy prior authorization antipsychotic
medications. Clin Ther. 2008; 30(8):1524–39;
discussion 1506–7. doi: 10.1016/
j.clinthera.2008.08.009.
20 Iowa passed a rule restricting the use of Step
Therapy in Medicaid after patients encountered
medical complications such as stomach ulcers and
increased pain in cases where past efforts to find
more cost-effective drugs or to try lower priced
drugs were not considered by the plans. See https://
www.thegazette.com/subject/news/health/iowa-billwould-allow-exemptions-from-fail-first-insurancedrug-practices-20170318. In the absence of
safeguards, such as requiring consideration of what
works for patients, a grandfathering policy on
existing therapies is advisable.
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expensive biological products approved
under section 351(k) of the Public
Health Service Act (for example,
biosimilars); and, (3) the choice of less
expensive drugs with therapeutically
equivalent effect. However, we do not
discuss other quantitative effects of step
therapy. The articles cited previously
lay out many pros and cons of step
with step therapy. Furthermore, the
concerns expressed in this RIA section
are not unique to Federal insurance
programs such as Medicare Parts C and
D. Eighteen states have enacted laws on
the use of step therapy.21 These laws
vary widely and typically provide
protections to beneficiaries against the
misuse of step therapy.
therapy as well as the need for more
studies to ascertain the true impact of
step therapy.
CMS acknowledges that step therapy
is a widely accepted tool for utilization
management. Sixty percent of
commercial insurers were using step
therapy in 2010; in 2014, 75 percent of
large employers offered enrollees plans
TABLE 4—ESTIMATED SAVINGS TO MEDICARE TRUST FUND AND BENEFICARIES FROM STEP THERAPY
Year
Enrollment
(thousands)
Part B Rx
allowed pmpm
with growth
by medical
inflation
Number
of months
per year
Adjustment
for plans
for proposed
step therapy
(%)
Assumed
rebate
percentage
Backing
out of
Part B
premium
(%)
(A)
(B)
(C)
(D)
(E)
(F)
Savings to
medicare
trust funds
Cost
sharing
percentage
Adjustment for
enrollees
for proposed
step therapy
(%)
(G) ($ millions)
(H)
(I)
(J) ($ millions)
(G) = (A) * (B) * (C)
* (D) * (E) * (F)
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2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
..................................
..................................
..................................
..................................
..................................
..................................
..................................
..................................
..................................
..................................
23,181
24,062
24,972
25,858
26,708
27,549
28,375
29,161
29,913
30,590
$58.72
60.21
61.73
63.30
64.90
66.55
68.23
69.96
71.74
73.55
12
12
12
12
12
12
12
12
12
12
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.6
66
66
66
66
66
66
67
67
67
67
86
86
86
86
86
86
85
85
85
85
Savings to
beneficiaries
(J) = (A) * (B) * (C)
* (H) * (I)
$145
154
164
174
185
195
207
218
229
240
13
13
13
13
13
13
13
13
13
13
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
$5
5
5
6
6
6
7
7
7
8
The provision at § 422.136 will allow
MA plans to use this utilization
management tool for Part B drugs
subject to some limits in the regulation.
MA plans may explore the most
effective ways to use step therapy to
achieve savings while also ensuring
access to medically necessary treatment
options.
In the remainder of this section we
estimate the impact on the Medicare
Trust Fund and enrollee cost sharing,
and explain the calculations which are
summarized in Table 4.
We obtained projected MA enrollment
from the 2018 Medicare Trust Fund
report. This is presented in Column (A)
of Table 4.
• 2016 is the most recent year for
which we have Part B drug spending
and utilization from the CMS data
systems. Column (B) presents the
average amount that MA enrollees pay
per month on Part B drugs. This amount
is trended (from 2016) to reflect medical
inflation (5.2 percent a year) with
ordinary inflation (2.6 percent) carved
out. The inflation factors are obtained
from the Medicare Trust Fund report.
The product of MA enrollment and
average Part B spending per month
provides the aggregate MA Part B
spending per month.
• The Part B spending per month is
multiplied by 12 (Column (C)) to obtain
the aggregate spending on Part B drugs
annually.
• We estimate that, because of this
step therapy provision, plans will save
1.6 percent (Column (D)) on the
aggregate annual cost of Part B drugs.
There are several points about this 1.6
percent. First, it represents the effect of
the proposed provision (proposed
§ 422.136) in this final rule. As
discussed earlier in this rule’s preamble,
an HPMS memo was issued by CMS in
August 2018 rescinding an earlier memo
prohibiting step therapy.22 However,
because this memo was published in
late 2018, we do not have enough data
to analyze the impact to 2019 claims at
this point, so our estimate of 1.6 percent
is based on prior experience. The 1.6
percent savings is independent, and not
impacted, by the provisions in the
August 2018 HPMS memo; rather, the
1.6 percent savings represents the
estimated effects of the finalized
provision versus a baseline (zero
percent savings) which does not include
the proposed provision nor the effects of
the HPMS memo.
This finalized proposal surpasses the
HPMS memo for periods beginning
January 1, 2020 and it is the effects of
this provision that the 1.6 percent
captures. The 1.6 percent represents
three factors contributing to savings
from Step Therapy:
• Drugs for which there will be a less
expensive biological product approved
under section 351(k) of the Public
Health Service Act in 2020, such as
Remicade or Herceptin.
• Pairs of drugs which are clinically
comparable but differ significantly in
price. For example, Avastin®, Eylea®,
and Lucentis® for the treatment of
macular degeneration.
• Drugs for which the manufacturer
gives a rebate to MA plans with
favorable management patterns. This
happens in drugs with sufficient
competition, particularly in the
treatment of rheumatoid arthritis. Using
our experience on manufacturers
providing rebates on Part D drugs, we
are able to estimate the savings effects
of similar rebates on Part B drugs. As
mentioned previously, this corresponds
to a savings in step-therapy from backend negotiations.
• The multiplication of enrollment,
average Part B cost per member per
month, number of months per year and
1.6 percent represents the total dollar
savings from this provision.
• We use this total dollar savings to
estimate separately savings to the
Medicare Trust Fund and savings to
enrollees in cost sharing.
• To obtain savings to the Medicare
Trust Fund we multiply the aggregate
savings from step therapy by the average
rebate percentage and the average
backing out of part B premium
representing the expected percentage
reduction to Part B premium arising
from savings. These percentages are
found in Columns (E) and (F). The
numbers in these columns are obtained
by trending our experience with plan
21 https://www.aad.org/advocacy/state-policy/
step-therapy-legislation.
22 Available online at: https://www.cms.gov/
Medicare/Health-Plans/HealthPlansGenInfo/
Downloads/MA_Step_Therapy_HPMS_Memo_8_7_
2018.pdf.
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submitted bids over the next 10 years.
Column (G), the product of all previous
columns, represents the dollar savings
to the Medicare Trust Fund.
• To obtain savings to beneficiaries,
we used the 2019 projected bid data
submitted by MA plans to CMS in June
2018. These data show that on average
13 cents of every dollar paying for Part
B drugs goes to cost sharing. We
obtained this number by dividing the
cost sharing for Part B drugs by the total
cost of Part B drugs. This percentage is
found in Column (H).
• We next have to adjust the savings
due to step therapy. Recall that Column
(D) indicates that step therapy will save
1.6 percent, the 1.6 percent arising from
three factors listed previously. Of those
three factors, enrollees do not benefit
from manufacturer rebates. To illustrate
this, consider a $20 drug for which the
beneficiary pays a 20 percent copay
($4). At the end of the year,
manufacturers and pharmacists give a
rebate to plans that have used their
products. Let us suppose (for purposes
of illustration) that the rebate is $3.
Theoretically the enrollee should get 60
cents of this $3 (20 percent copay * $3).
However, the enrollee does not get a
portion of the rebate. We estimate that
1.6 percent savings has a 1.4 percent
component from manufacturer rebates
and a 0.2 percent rebate from the other
factors listed previously. It follows that
for the enrollee, the savings from step
therapy are 0.2 percent, not 1.6 percent.
This is listed in Column (I).
• To obtain aggregate annual
beneficiary savings we multiply MA
enrollment (Column (A)), average cost of
prescription drugs per month (Column
(B)), number of months per year
(Column (C)) and the 0.2 percent, the
savings to enrollees from this step
therapy provision (Column (I)). This
gives the total dollar savings, of which
enrollees pay 13 percent (Column (H)).
The result is presented in Column (J).
The results of our calculations are
summarized for 2020–2029 in Columns
(G) and (J) of Table 4. The savings to
enrollees are between $5 and $8 million;
the savings to the Medicare Trust Fund
are between $145 and $240 million.
These projected dollar savings to the
Medicare Trust Fund are classified as
transfers because the money on brand
drugs would instead be spent on generic
drugs. While brand drugs are more
expensive, the primary driver of this
expense is the research and
development (R&D) that went into them,
and for drugs that are already on the
market R&D has already been done and
would not change. In other words,
although this regulatory provision
would reduce the return on drug
development because enrollees who are
expected to purchase the brand and thus
pay for the initial R&D would instead
purchase generics, this reduced return
would be experienced after the initial
R&D has been completed; consequently,
any immediate reduction in R&D
services would not impact the
availability of new drugs until later.
There would also be no reduction in
production of drugs, since generic
manufacturers rather than brand
manufacturers would produce the drugs
consumed by enrollees. However, the
cost to the enrollee and the Medicare
Trust Fund would be significantly less
because the enrollee and Medicare Trust
Fund would no longer pay for the initial
R&D. In conclusion, this provision
would not reduce activities of
production but rather transfers the
performance of those services from
brand manufacturers to generic
manufacturers; however, as a
consequence, the enrollees and
Medicare Trust Fund would experience
reduced dollars spent.
The allowance of step therapy for Part
B drugs in MA could result in a higher
appeal rate. We estimate the aggregate
increase in cost in 2016 due to expected
increased appeals as $0.8 million.
Details are presented in Table 5. The
following narrative explains this table.
TABLE 5—ESTIMATED INCREASE IN APPEALS ALL LEVELS DUE TO STEP THERAPY
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Total number
of appeals
in 2016
Estimated
number of
appeals
involving
step therapy
Hours per
appeal
Hourly
wages of
physicians
Total cost
(1)
(2)
(3)
(1) × (2) × (3)
Reconsiderations ...........................................................
IRE .................................................................................
Administrative Law Judge (ALJ) ....................................
328,857
58,023
3,481
3913
690
41
0.8
0.8
0.8
$203.26
203.26
203.26
$636,350
112,277
6,737
Estimated Cost for 2016 .........................................
........................
........................
........................
........................
755,363
Data for appeals are reported by MA
plans. It typically takes 2 years for CMS
to validate these data. Hence the latest
year for which we have complete data
is 2016. Appeals can happen at various
levels. The first level is reconsiderations
where an appeal is made for a plan to
reconsider a decision. If this is denied,
the case goes on to the IRE (a CMS
contractor) to be reviewed. If this is also
denied, the case can be appealed to an
administrative law judge (ALJ) if the
amount in controversy is met.
For 2016, there were 328,857 and
58,023 reconsiderations and IRE cases
respectively in the MA program. We
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estimate that in general 6 percent of
cases reaching the IRE go on to an ALJ.
Based on data pulled from the
Medicare Appeals System for part D
appeals, 1.19 percent of plan level
appeals involving step therapy were
denied. We use this as a proxy for the
percent of cases involving part B drugs
subject to step therapy that we expect to
be appealed since we have no other
basis. We believe it is reasonable to
consider Part D appeals data related to
cases that involve drugs subject to step
therapy in developing these estimates.
We also use the 1.19 percent as a proxy
for the percent of reconsiderations and
ALJ cases that involve step therapy. We
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acknowledge that percentages might be
different at different appeal levels but
the 1.19 percent is the only proportion
we have.
Having derived the expected number
of appeals involving step therapy we
note that section 1852(g)(2) of the Act
requires a reconsideration by a MA plan
to deny coverage on the basis of medical
necessity to be reviewed by a physician
with the appropriate expertise; CMS has
adopted two MA regulations
(§§ 422.566(d) and 422.590(g)(2)) that
implement this requirement for denials
based on medical necessity
determinations. We believe it is
reasonable to assume that a decision to
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deny coverage for a drug subject to step
therapy will typically involve a medical
determination whether the drug would
be ineffective or cause adverse effects
for the enrollee. A decision on a drug
subject to step therapy is also likely to
involve evaluation of a healthcare
provider’s assessment of medical
necessity for the Part B drug; for
example, the health care provider may
indicate that the lower or earlier steps
in the step therapy protocol are not
clinically appropriate for that enrollee
(such as in cases of allergy or a prior
unsuccessful use of the preferred drug).
Therefore, this estimate accounts for
physician review of reconsiderations.
Based on the BLS website at https://
www.bls.gov/oes/current/oes_nat.htm,
the mean hourly wage of physicians is
$203.26. Our contractor experience with
appeals suggests that the average time to
process an appeal is 48 minutes, or, 0.8
hour.
Multiplying the number of appeals *
0.8 hour per appeal * $203.26 cost per
hour we arrive at total cost for each
appeal level. Adding these together we
obtain the $0.8 million estimate, based
on 2016 data.
Factors that enter into appeal rates
include enrollment rates and changes in
plan benefit packages. Appeal rates
change from year to year. One major
factor in appeal rates is enrollment. If
enrollment increases by 10 or 20 percent
then it is very reasonable that the
number of appeals will approximately
increase by that amount.
Thus to obtain estimates of cost for
2018 we will multiply the $0.8 million
by the ratio of enrollment in 2018 to
2016. Similarly to obtain estimates for
2020 to 2024 we multiply by ratios of
enrollment.
The ratio of 2018 to 2016 is 1.1585
based on enrollment figures from the
CMS website. Projected enrollment for
2020 through 2029 may be obtained
from Table IV.C1 in the 2018 Trustee
report. Using these numbers we obtain
the estimated cost of increased appeals
for 2020 through 2029, presented in
Table 6, as $1.0–$1.3 million.
TABLE 6—EXPECTED INCREASE IN APPEAL COSTS DUE TO STEP THERAPY
Year
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Cost of appeals (in millions) ................................................
1.0
1.0
1.0
1.1
1.1
1.1
1.2
1.2
1.2
1.3
We received no comments on impact
estimates of the proposed rule.
D. Expected Benefits
Any relevant expected benefits for
enrollees, stakeholders, and the
government have been fully discussed
in section II. of this final rule.
E. Alternatives Considered
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1. Providing Plan Flexibility To Manage
Protected Classes (§ 423.120(b)(2)(vi))
Previous proposals to address the
protected classes were aimed at
changing both the protected classes and
exceptions to the requirement that
formularies include all drugs in the
protected class. However, we remain
concerned that previous criteria, as
established either by statute under the
MIPPA authority, or by CMS under the
Patient Protection and Affordable Care
Act authority, did not strike the
appropriate balance among enrollee
access, quality assurance, costcontainment, and patient welfare that
we were striving to achieve.
Consequently, we elected not to propose
any changes to the drug categories or
classes that are the protected classes. As
a result, the critical policy decision was
how broadly or narrowly to establish
exceptions to the requirement that all
protected class drugs be included on the
formulary. Overly broad exceptions
might inappropriately limit the products
within the protected classes, thereby
creating access issues for Part D
enrollees. Only narrow exceptions
afford enrollee protections such as
adequate access and improved quality
assurance while also providing an
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incentive for manufacturers to
aggressively rebate their products for
formulary placement in an operationally
feasible manner for Part D sponsors.
2. E-Prescribing and the Part D
Prescription Drug Program; Updating
Part D E-Prescribing Standards
(§ 423.160)
We proposed to require that each Part
D plan select a real time benefit tool
(RTBT) of its choosing by January 1,
2020. We had considered delaying
regulatory action around real time
requirements until the industry has
developed a real time standard that
could be used by all Part D plans.
However, we believe that the benefits
that would come with a real time
standard in the form of cost
transparency are substantial and should
not be further delayed. We also
considered requiring that plans use the
optional fields in the NCPDP Formulary
and Benefit standards (F&B) to provide
much of the cost data that we believe
would be important for prescribers to
know. However, by definition, the F&B
standards are batch standards so that the
information provided is, by definition,
not contemporaneous and are not
specific to each beneficiary. For these
reasons we opted in favor of proposing
RTBT rather than proposing to require
that plans use enhanced F&B standards.
3. Medicare Advantage and Step
Therapy for Part B Drugs (§§ 422.136,
422.568, 422.570, 422.572, 422.584,
422.590, 422.618, 422.619, 422.629,
422.633 and 422.634)
We finalized proposed requirements
under which MA plans may apply step
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therapy as a utilization management
tool for Part B drugs. We finalized our
proposal to confirm authority for MA
plans to implement appropriate
utilization management and prior
authorization tools for managing Part B
drugs and proposed parameters on using
step therapy to ensure it is implemented
in a manner to reduce costs for both
enrollees and the Medicare program.
Our finalized policy includes specific
parameters for how step therapy may be
implemented for Part B drugs, including
requiring review and approval from a
P&T Committee that meets specific
standards and permitting step therapy
only for new administrations of the drug
(subject to at least a 365 day lookback
period). We also finalized our proposal
to require new appeal timeframes and
deadlines for MA plans to adjudicate
and respond to requests concerning Part
B drug coverage. An additional
alternative considered during
development of the proposed regulation
was allowing step therapy for ongoing
prescriptions or administrations of Part
B drugs for enrollees who are actively
receiving the affected medication at the
time the step therapy program is
adopted as well as for new
administrations of a Part B drug.
However, allowing MA plans to
implement step therapy on ongoing
prescriptions and administrations of
Part B drugs would require the
development of a transition process for
affected enrollees and might result in
negative health outcomes as on-going
treatment would be disrupted. We lack
a basis to quantify the impact of these
expected negative health outcomes.
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Furthermore, the estimated costs of
developing a transition process,
including providing enrollees with
appropriate notice regarding their
transition process and providing a
temporary supply of affected drugs
likely outweighs any savings. Moreover,
we recognized the health significance of
many Part B drug regimens (for
example, cancer treatments) and are
working to ensure enrollees will not
encounter unnecessary barriers to
medically necessary drugs or have
disruptions in care. Therefore, under the
finalized regulations at § 422.136(a)(1),
step therapy programs are not permitted
to disrupt enrollees’ ongoing Part B drug
therapies as our finalized regulations
exempted from the plan’s step therapy
requirement concerning that drug.
require that step therapy only be
applied to new prescriptions or
administrations of Part B drugs for
enrollees who are not actively receiving
the affected medication. More
specifically, MA plans must have a look
back period of 365 days instead of the
proposed 108 days, to determine if the
enrollee is actively taking a Part B drug
and, thus, not subject to step therapy for
that Part B drug. Further, when an
enrollee elects a new plan, the plan
would still be required to determine
whether the enrollee has taken the Part
B drug (that would otherwise be subject
to step therapy) within the past 365
days. If the enrollee is actively taking
the Part B drug, such enrollee would be
F. Accounting Statement and Table
The following table summarizes costs,
savings, and transfers by provision.
As required by OMB Circular A–4
(available at https://
obamawhitehouse.archives.gov/omb/
circulars_a004_a-4/), in Table 7, we
have prepared an accounting statement
showing the savings and transfers
associated with the provisions of this
final rule for contract years 2020
through 2029. Table 7 is based on Table
8 which lists savings, costs, and
transfers by provision.
TABLE 7—ACCOUNTING STATEMENT—CLASSIFICATIONS OF ESTIMATED SAVINGS, COSTS, AND TRANSFERS NEGATIVE
NUMBERS INDICATE SAVINGS
Savings
From calendar years 2020 to 2029
[$ in millions]
Discount Rate
Whom is spending or transferring
Period Covered
7%
3%
Net Annualized Monetized Cost ....................
7.46
7.38
CYs 2020–2029
Annualized Monetized Savings .....................
Annualized Monetized Cost. .........................
........................
7.46
........................
7.38
CYs 2020–2029
CYs 2020–2029
Annualized Transfers ....................................
(191.23)
(194.63)
CYs 2020–2029
The following Table 8 summarizes
savings, costs, and transfers by
provision and formed a basis for the
accounting table. For reasons of space,
Table 8 is broken into Table 8A (2020
through 2023), Table 8B (2024 through
2027) and Table 8C (2028 through
2029). In these tables savings are
indicated as negative numbers in
columns marked savings while costs are
indicated as positive numbers in
columns marked costs. Transfers result
in reduced dollar spending by enrollees
and the government and are indicated
by negative numbers. All numbers are in
millions. The row ‘‘aggregate total by
MA Organizations, Part D Sponsors, Contractors for the Federal Government.
MA Organizations, Part D Sponsors, Beneficiaries.
Federal government, MA organizations and
Part D Sponsors, Beneficiaries.
year’’ gives the total of costs and savings
for that year but does not include
transfers. Table 8 forms the basis for
Table 7 and for the calculation to the
infinite horizon discounted to 2016,
mentioned in the conclusion.
khammond on DSKBBV9HB2PROD with RULES2
TABLE 8A—AGGREGATE SAVINGS, COSTS, AND TRANSFERS IN MILLIONS BY PROVISION AND YEAR
Total Savings ............
Total Costs ................
Aggregate Total .........
Total Transfers ..........
Protected Classes,
Government ...........
Protected Classes,
Enrollees ................
Gag Clauses .............
E-Prescribing .............
Part D EOB ...............
Step Therapy, Government ..................
Step Therapy, Enrollees .........................
Step Therapy Appeals
2020
Savings
2020
Cost
2020
Transfers
2021
Savings
2021
Cost
2021
Transfers
2022
Savings
2022
Cost
2022
Transfers
2023
Savings
2023
Cost
2023
Transfers
..............
..............
..............
..............
..............
11.40
11.40
..............
..................
..................
..................
(150.00)
..............
..............
..............
..............
..............
6.73
6.73
..............
..................
..................
..................
(159.00)
..............
..............
..............
..............
..............
6.73
6.73
..............
..................
..................
..................
(169.00)
..............
..............
..............
..............
..............
6.83
6.83
..............
..................
..................
..................
(180.00)
..............
..............
..................
..............
..............
..................
..............
..............
..................
..............
..............
..................
..............
..............
..............
..............
..............
..............
..............
10.40
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
(145.00)
..............
..............
(154.00)
..............
..............
(164.00)
..............
..............
(174.00)
..............
..............
..............
1.00
(5.00)
..................
..............
..............
..............
1.00
(5.00)
..................
..............
..............
..............
1.00
(5.00)
..................
..............
..............
..............
1.10
(6.00)
..................
TABLE 8B—AGGREGATE SAVINGS, COSTS, AND TRANSFERS IN MILLIONS BY PROVISION AND YEAR
Total Savings ............
Total Costs ................
VerDate Sep<11>2014
2024
Savings
2024
Cost
2024
Transfers
2025
Savings
2025
Cost
2025
Transfers
2026
Savings
2026
Cost
2026
Transfers
2027
Savings
2027
Cost
2027
Transfers
..............
..............
..............
6.83
..................
..................
..............
..............
..............
6.83
..................
..................
..............
..............
..............
6.93
..................
..................
..............
..............
..............
6.93
..................
..................
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TABLE 8B—AGGREGATE SAVINGS, COSTS, AND TRANSFERS IN MILLIONS BY PROVISION AND YEAR—Continued
Aggregate Total .........
Total Transfers ..........
Protected Classes,
Government ...........
Protected Classes,
Enrollees ................
Gag Clauses .............
E-Prescribing .............
Part D EOB ...............
Step Therapy, Government ..................
Step Therapy, Enrollees .........................
Step Therapy Appeals
2024
Savings
2024
Cost
2024
Transfers
2025
Savings
2025
Cost
2025
Transfers
2026
Savings
2026
Cost
2026
Transfers
2027
Savings
2027
Cost
2027
Transfers
..............
..............
6.83
..............
..................
(191.00)
..............
..............
6.83
..............
..................
(201.00)
..............
..............
6.93
..............
..................
(214.00)
..............
..............
6.93
..............
..................
(225.00)
..............
..............
..................
..............
..............
..................
..............
..............
..................
..............
..............
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
..............
..............
..............
..............
..............
5.73
..................
..................
..................
..................
..............
..............
(185.00)
..............
..............
(195.00)
..............
..............
(207.00)
..............
..............
(218.00)
..............
..............
..............
1.10
(6.00)
..................
..............
..............
..............
1.10
(6.00)
..................
..............
..............
..............
1.20
(7.00)
..................
..............
..............
..............
1.20
(7.00)
..................
TABLE 8C—AGGREGATE SAVINGS, COSTS, AND TRANSFERS IN MILLION BY PROVISION AND YEAR
khammond on DSKBBV9HB2PROD with RULES2
Total Savings ...................................................................
Total Costs .......................................................................
Aggregate Total ...............................................................
Total Transfers .................................................................
Protected Classes, Government ......................................
Protected Classes, Enrollees ...........................................
Gag Clauses ....................................................................
E-Prescribing ....................................................................
Part D EOB ......................................................................
Step Therapy, Government .............................................
Step Therapy, Enrollees ..................................................
Step Therapy Appeals .....................................................
G. Conclusion
As indicated in the ‘‘Aggregate Total’’
row of Table 8, we estimate that this
final rule generates for each year in 2021
through 2029, net costs of
approximately $7 million, with a first
year cost of approximately $11.4
million. These annual costs primarily
reflect mailing and programming costs
arising from descriptions of alternatives
in the Part D EOB as well as increased
appeals arising from the Step Therapy
provision. This final rule has no
provisions which save.
Although other impacts in this rule
are classified as transfers as discussed in
each provision, the aggregate effect of
these transfers reduce dollar spending
by MA enrollees and the Medicare Trust
Fund:
• Enrollees: Enrollees are estimated to
reduce their spending on cost sharing by
$62 million over 10 years from reduced
cost sharing from Step Therapy.
• Government: The Medicare Trust
Fund in aggregate reduces their dollar
spending by $1.91 billion over 10 years
from the Step Therapy provisions.
H. Reducing Regulation and Controlling
Regulatory Costs
In line with Executive Order 13771, in
Table 9, we estimate present and
annualized values of costs and cost
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2028
Savings
2028
Cost
2028
Transfers
2029
Savings
2029
Cost
2029
Transfers
Raw 10 year
totals
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
6.93
6.93
..............
..............
..............
..............
..............
5.73
..............
..............
1.20
..................
..................
..................
(236.00)
..................
..................
..................
..................
..................
(229.00)
(7.00)
..................
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
7.03
7.03
..............
..............
..............
..............
..............
5.73
..............
..............
1.30
..................
..................
..................
(248.00)
..................
..................
..................
..................
..................
(240.00)
(8.00)
..................
........................
73.19
73.19
(1,973.00)
........................
........................
........................
........................
61.99
(1,911.00)
(62.00)
11.20
savings over an infinite time horizon.
Costs are indicated by positive numbers.
Based on these costs, this Final Rule
would be considered a regulatory action
under Executive Order 13771. As
shown, this final rule generates level
annual costs of $5.9 million over an
infinite horizon in 2016 dollars
discounted at 7 percent.
TABLE 9—E.O. 13771 SUMMARY
TABLE
[In 2016 dollars over a perpetual time horizon]
Item
Present Value of Costs ...........
Present Value of Cost Savings
Present Value of Net Costs ....
Annualized Cost ......................
Annualized Cost Savings ........
Annualized Net Costs .............
Primary
(7%)
Primary
(3%)
84.4
0.0
84.4
5.9
0.0
5.9
217.2
0.0
217.2
6.5
0.0
6.5
List of Subjects
Fmt 4701
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as set forth below:
PART 422—MEDICARE ADVANTAGE
PROGRAM
1. The authority citation for part 422
is revised to read as follows:
■
Authority: 42 U.S.C. 1302 and 1395hh.
2. Section 422.2 is amended by adding
a definition for ‘‘Step therapy’’ in
alphabetical order to read as follows:
■
Definitions.
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Administrative practice and
procedure, Health facilities, Health
maintenance organizations (HMO),
Medicare, Penalties, Privacy, and
Reporting and recordkeeping
requirements.
Frm 00049
Administrative practice and
procedure, Emergency medical services,
Health facilities, Health maintenance
organizations (HMO), Health
professionals, Medicare, Penalties,
Privacy, and Reporting and
recordkeeping requirements.
§ 422.2
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Step therapy means a utilization
management policy for coverage of
drugs that begins medication for a
medical condition with the most
preferred or cost effective drug therapy
and progresses to other drug therapies if
medically necessary.
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information as it determines
appropriate.
(6) Consider whether the inclusion of
§ 422.136 Medicare Advantage (MA) and
a particular Part B drug in a step therapy
step therapy for Part B drugs.
program has any therapeutic advantages
(a) General. If an MA plan implements in terms of safety and efficacy.
a step therapy program to control the
(7) Review policies that guide
utilization of Part B-covered drugs, the
exceptions and other step therapy
MA organization must—
processes.
(1) Apply step therapy only to new
(8) Evaluate and analyze treatment
administrations of Part B drugs, using at protocols and procedures related to the
least a 365 day lookback period;
plan’s step therapy policies at least
(2) Establish policies and procedures
annually consistent with written policy
to educate and inform health care
guidelines and other CMS instructions.
providers and enrollees concerning its
(9) Document in writing its decisions
step therapy policies.
regarding the development and revision
(3) Prior to implementation of a step
of step therapy activities and make this
therapy program, ensure that the step
documentation available to CMS upon
therapy program has been reviewed and request.
approved by the MA organization’s
(10) Review and approve all step
pharmacy and therapeutic (P&T)
therapy criteria applied to each covered
committee.
Part B drug.
(b) Step therapy and pharmacy and
(11) Meet other requirements
therapeutic committee requirements. An consistent with written policy
MA plan must establish a P&T
guidelines and other CMS instructions.
committee prior to implementing any
(c) Off-label drug requirement. An MA
step therapy program. An MA plan must plan may include a drug supported only
use a P&T committee to review and
by an off-label indication in step
approve step therapy programs used in
therapy protocols only if the off-label
connection with Part B drugs. To meet
indication is supported by widely used
this requirement, a MA–PD plan may
treatment guidelines or clinical
utilize an existing Part D P&T committee literature that CMS considers to
established for purposes of
represent best practices.
administration of the Part D benefit
(d) Non-covered drugs. A step therapy
under part 423 of this chapter and an
program must not include as a
MA plan may utilize an existing Part D
component of a step therapy protocol or
P&T committee established by an MA–
other condition or requirement any
PD plan operated under the same
drugs not covered by the applicable MA
contract as the MA plan. The P&T
plan as a Part B drug or, in the case of
committee must—
an MA–PD plan, a Part D drug.
(1) Include a majority of members
■ 4. Section 422.568 is amended by
who are practicing physicians or
revising paragraphs (b), (d), (e)
practicing pharmacists.
introductory text, and (e)(4)(i) to read as
(2) Include at least one practicing
follows:
physician and at least one practicing
§ 422.568 Standard timeframes and notice
pharmacist who are independent and
requirements for organization
free of conflict relative to—
(i) The MA organization and MA plan; determinations.
and
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(ii) Pharmaceutical manufacturers.
(b) Timeframes—(1) Requests for
(3) Include at least one practicing
service or item. Except as provided in
physician and one practicing
paragraph (b)(1)(i) of this section, when
pharmacist who are experts regarding
a party has made a request for a service
care of elderly or disabled individuals.
or an item, the MA organization must
(4) Clearly articulate and document
notify the enrollee of its determination
processes to determine that the
as expeditiously as the enrollee’s health
requirements under paragraphs (b)(1)
condition requires, but no later than 14
through (3) of this section have been
calendar days after the date the
met, including the determination by an
organization receives the request for a
objective party of whether disclosed
standard organization determination.
financial interests are conflicts of
(i) Extensions; requests for service or
interest and the management of any
item. The MA organization may extend
recusals due to such conflicts.
the timeframe by up to 14 calendar days
(5) Base clinical decisions on the
if—
strength of scientific evidence and
(A) The enrollee requests the
standards of practice, including
extension;
assessing peer-reviewed medical
(B) The extension is justified and in
literature, pharmacoeconomic studies,
the enrollee’s interest due to the need
outcomes research data, and other such
for additional medical evidence from a
3. Section 422.136 is added to subpart
C to read as follows:
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noncontract provider that may change
an MA organization’s decision to deny
an item or service; or
(C) The extension is justified due to
extraordinary, exigent, or other nonroutine circumstances and is in the
enrollee’s interest.
(ii) Notice of extension. When the MA
organization extends the timeframe, it
must notify the enrollee in writing of
the reasons for the delay, and inform the
enrollee of the right to file an expedited
grievance if he or she disagrees with the
MA organization’s decision to grant an
extension. The MA organization must
notify the enrollee of its determination
as expeditiously as the enrollee’s health
condition requires, but no later than
upon expiration of the extension.
(2) Requests for a Part B drug. An MA
organization must notify the enrollee
(and the prescribing physician or other
prescriber involved, as appropriate) of
its determination as expeditiously as the
enrollee’s health condition requires, but
no later than 72 hours after receipt of
the request. This 72-hour period may
not be extended under the provisions in
paragraph (b)(1)(i) of this section.
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(d) Written notice for MA organization
denials. The MA organization must give
the enrollee a written notice if—
(1) An MA organization decides to
deny a service or an item, Part B drug,
or payment in whole or in part, or
reduce or prematurely discontinue the
level of care for a previously authorized
ongoing course of treatment.
(2) An enrollee requests an MA
organization to provide an explanation
of a practitioner’s denial of an item,
service or Part B drug, in whole or in
part.
(e) Form and content of the MA
organization notice. The notice of any
denial under paragraph (d) of this
section must—
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(4)(i) For service, item, and Part B
drug denials, describe both the standard
and expedited reconsideration
processes, including the enrollee’s right
to, and conditions for, obtaining an
expedited reconsideration and the rest
of the appeal process; and
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■ 5. Section 422.570 is amended by
revising paragraph (d)(1) to read as
follows:
§ 422.570 Expediting certain organization
determinations.
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(d) * * *
(1) Automatically transfer a request to
the standard timeframe and make the
determination within the 72-hour or 14-
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day timeframe, as applicable,
established in § 422.568 for a standard
determination. The timeframe begins
when the MA organization receives the
request for expedited determination.
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■ 6. Section 422.572 is amended by
revising paragraphs (a), the heading to
paragraph (b), and (b)(1) to read as
follows:
day or 7 calendar day, as applicable,
timeframe established in § 422.590(a)
and (c). The timeframe begins the day
the MA organization receives the
request for expedited reconsideration.
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■ 8. Section 422.590 is revised to read
as follows:
§ 422.572 Timeframes and notice
requirements for expedited organization
determinations.
(a) Standard reconsideration:
Requests for service or item. (1) Except
as provided in paragraph (f) of this
section, if the MA organization makes a
reconsidered determination that is
completely favorable to the enrollee, the
MA organization must issue the
determination (and effectuate it in
accordance with § 422.618(a)) as
expeditiously as the enrollee’s health
condition requires, but no later than 30
calendar days from the date it receives
the request for a standard
reconsideration.
(2) If the MA organization makes a
reconsidered determination that affirms,
in whole or in part, its adverse
organization determination, it must
prepare a written explanation and send
the case file to the independent entity
contracted by CMS as expeditiously as
the enrollee’s health condition requires,
but no later than 30 calendar days from
the date it receives the request for a
standard reconsideration (or no later
than the expiration of an extension
described in paragraph (a)(1) of this
section). The organization must make
reasonable and diligent efforts to assist
in gathering and forwarding information
to the independent entity.
(b) Standard reconsideration:
Requests for payment. (1) If the MA
organization makes a reconsidered
determination that is completely
favorable to the enrollee, the MA
organization must issue its reconsidered
determination to the enrollee (and
effectuate it in accordance with
§ 422.618(a)(1)) no later than 60
calendar days from the date it receives
the request for a standard
reconsideration.
(2) If the MA organization affirms, in
whole or in part, its adverse
organization determination, it must
prepare a written explanation and send
the case file to the independent entity
contracted by CMS no later than 60
calendar days from the date it receives
the request for a standard
reconsideration. The organization must
make reasonable and diligent efforts to
assist in gathering and forwarding
information to the independent entity.
(c) Standard reconsideration:
Requests for a Part B drug. (1) If the MA
organization makes a reconsidered
(a) Timeframes—(1) Requests for
service or item. Except as provided in
paragraph (b) of this section, an MA
organization that approves a request for
expedited determination must make its
determination and notify the enrollee
(and the physician involved, as
appropriate) of its decision, whether
adverse or favorable, as expeditiously as
the enrollee’s health condition requires,
but no later than 72 hours after
receiving the request.
(2) Requests for a Part B drug. An MA
organization that approves a request for
expedited determination must make its
determination and notify the enrollee
(and the physician or prescriber
involved, as appropriate) of its decision
as expeditiously as the enrollee’s health
condition requires, but no later than 24
hours after receiving the request. This
24-hour period may not be extended
under the provisions in paragraph (b) of
this section.
(b) Extensions; requests for service or
item. (1) When timeframe may be
extended. The MA organization may
extend the 72-hour deadline for
expedited organization determinations
for requests for services or items by up
to 14 calendar days if—
(i) The enrollee requests the
extension;
(ii) The extension is justified and in
the enrollee’s interest due to the need
for additional medical evidence from a
noncontract provider that may change
an MA organization’s decision to deny
an item or service; or
(iii) The extension is justified due to
extraordinary, exigent, or other
nonroutine circumstances and is in the
enrollee’s interest.
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■ 7. Section 422.584 is amended by
revising paragraph (d)(1) to read as
follows:
§ 422.584 Expediting certain
reconsiderations.
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(d) * * *
(1) Automatically transfer a request to
the standard timeframe and make the
determination within the 30 calendar
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§ 422.590 Timeframes and responsibility
for reconsiderations.
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determination that is completely
favorable to the enrollee, the MA
organization must issue the
determination (and effectuate it in
accordance with § 422.618(a)(3)) as
expeditiously as the enrollee’s health
condition requires, but no later than 7
calendar days from the date it receives
the request for a standard
reconsideration. This 7 calendar-day
period may not be extended under the
provisions in paragraph (f) of this
section.
(2) If the MA organization makes a
reconsidered determination that affirms,
in whole or in part, its adverse
organization determination, it must
prepare a written explanation and send
the case file to the independent entity
contracted with CMS no later than 7
calendar days from the date it receives
the request for a standard
reconsideration. The organization must
make reasonable and diligent efforts to
assist in gathering and forwarding the
information to the independent entity.
(d) Effect of failure to meet timeframe
for standard reconsideration. If the MA
organization fails to provide the enrollee
with a reconsidered determination
within the timeframes specified in
paragraph (a), (b), or (c) of this section,
this failure constitutes an affirmation of
its adverse organization determination,
and the MA organization must submit
the file to the independent entity in the
same manner as described under
paragraphs (a)(2), (b)(2), and (c)(2) of
this section.
(e) Expedited reconsideration—(1)
Timeframe for services or items. Except
as provided in paragraph (f) of this
section, an MA organization that
approves a request for expedited
reconsideration must complete its
reconsideration and give the enrollee
(and the physician involved, as
appropriate) notice of its decision as
expeditiously as the enrollee’s health
condition requires but no later than 72
hours after receiving the request.
(2) Timeframe for Part B drugs. An
MA organization that approves a request
for expedited reconsideration must
complete its reconsideration and give
the enrollee (and the physician or other
prescriber involved, as appropriate)
notice of its decision as expeditiously as
the enrollee’s health condition requires
but no later than 72 hours after
receiving the request. This 72-hour
period may not be extended under the
provisions in paragraph (f) of this
section.
(3) Confirmation of oral notice. If the
MA organization first notifies an
enrollee of a completely favorable
expedited reconsideration orally, it
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must mail written confirmation to the
enrollee within 3 calendar days.
(4) How the MA organization must
request information from noncontract
providers. If the MA organization must
receive medical information from
noncontract providers, the MA
organization must request the necessary
information from the noncontract
provider within 24 hours of the initial
request for an expedited
reconsideration. Noncontract providers
must make reasonable and diligent
efforts to expeditiously gather and
forward all necessary information to
assist the MA organization in meeting
the required timeframe. Regardless of
whether the MA organization must
request information from noncontract
providers, the MA organization is
responsible for meeting the timeframe
and notice requirements.
(5) Affirmation of an adverse
expedited organization determination.
If, as a result of its reconsideration, the
MA organization affirms, in whole or in
part, its adverse expedited organization
determination, the MA organization
must submit a written explanation and
the case file to the independent entity
contracted by CMS as expeditiously as
the enrollee’s health condition requires,
but not later than within 24 hours of its
affirmation. The organization must
make reasonable and diligent efforts to
assist in gathering and forwarding
information to the independent entity.
(f) Extensions; requests for service or
item. (1) As described in paragraphs
(f)(1)(i) through (iii) of this section, the
MA organization may extend the
standard or expedited reconsideration
deadline for services by up to 14
calendar days if—
(i) The enrollee requests the
extension; or
(ii) The extension is justified and in
the enrollee’s interest due to the need
for additional medical evidence from a
noncontract provider that may change
an MA organization’s decision to deny
an item or service; or
(iii) The extension is justified due to
extraordinary, exigent or other nonroutine circumstances and is in the
enrollee’s interest.
(2) When the MA organization
extends the deadline, it must notify the
enrollee in writing of the reasons for the
delay and inform the enrollee of the
right to file an expedited grievance if he
or she disagrees with the MA
organization’s decision to grant an
extension. The MA organization must
notify the enrollee of its determination
as expeditiously as the enrollee’s health
condition requires, but no later than
upon expiration of the extension.
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(g) Failure to meet timeframe for
expedited reconsideration. If the MA
organization fails to provide the enrollee
with the results of its reconsideration
within the timeframe described in
paragraph (e)(1) or (2) of this section, as
applicable, this failure constitutes an
adverse reconsidered determination,
and the MA organization must submit
the file to the independent entity within
24 hours of expiration of the timeframe
set forth in paragraph (e)(1) or (2) of this
section.
(h) Who must reconsider an adverse
organization determination. (1) A
person or persons who were not
involved in making the organization
determination must conduct the
reconsideration.
(2) When the issue is the MA
organization’s denial of coverage based
on a lack of medical necessity (or any
substantively equivalent term used to
describe the concept of medical
necessity), the reconsidered
determination must be made by a
physician with expertise in the field of
medicine that is appropriate for the
services at issue. The physician making
the reconsidered determination need
not, in all cases, be of the same specialty
or subspecialty as the treating
physician.
■ 9. Section 422.618 is amended by
revising paragraph (a) and adding
paragraph (b)(3) to read as follows:
§ 422.618 How an MA organization must
effectuate standard reconsidered
determinations or decisions.
(a) Reversals by the MA
organization—(1) Requests for service.
If, on reconsideration of a request for
service, the MA organization completely
reverses its organization determination,
the organization must authorize or
provide the service under dispute as
expeditiously as the enrollee’s health
condition requires, but no later than 30
calendar days after the date the MA
organization receives the request for
reconsideration (or no later than upon
expiration of an extension described in
§ 422.590(f)).
(2) Requests for payment. If, on
reconsideration of a request for
payment, the MA organization
completely reverses its organization
determination, the organization must
pay for the service no later than 60
calendar days after the date the MA
organization receives the request for
reconsideration.
(3) Requests for a Part B drug. If, on
reconsideration of a request for a Part B
drug, the MA organization completely
reverses its organization determination,
the MA organization must authorize or
provide the Part B drug under dispute
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as expeditiously as the enrollee’s health
condition requires, but no later than 7
calendar days after the date the MA
organization receives the request for
reconsideration.
(b) * * *
(3) Requests for a Part B drug. If, on
reconsideration of a request for a Part B
drug, the MA organization’s
determination is reversed in whole or in
part by the independent outside entity,
the MA organization must authorize or
provide the Part B drug under dispute
within 72 hours from the date it receives
notice reversing the determination. The
MA organization must inform the
independent outside entity that the
organization has effectuated the
decision.
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■ 10. Section 422.619 is amended by—
■ a. Revising paragraphs (a) and (b);
■ b. Redesignating paragraph (c)(2) as
paragraph (c)(3); and
■ c. Adding a new paragraph (c)(2).
The revisions and addition read as
follows:
§ 422.619 How an MA organization must
effectuate expedited reconsidered
determinations.
(a) Reversals by the MA
organization—(1) Requests for service or
item. If, on reconsideration of an
expedited request for service, the MA
organization completely reverses its
organization determination, the MA
organization must authorize or provide
the service or item under dispute as
expeditiously as the enrollee’s health
condition requires, but no later than 72
hours after the date the MA organization
receives the request for reconsideration
(or no later than upon expiration of an
extension described in § 422.590(f)).
(2) Requests for a Part B drug. If, on
reconsideration of a request for a Part B
drug, the MA organization completely
reverses its organization determination,
the MA organization must authorize or
provide the Part B drug under dispute
as expeditiously as the enrollee’s health
condition requires, but no later than 72
hours after the date the MA organization
receives the request for reconsideration.
(b) Reversals by the independent
outside entity—(1) Requests for service
or item. If the MA organization’s
determination is reversed in whole or in
part by the independent outside entity,
the MA organization must authorize or
provide the service under dispute as
expeditiously as the enrollee’s health
condition requires but no later than 72
hours from the date it receives notice
reversing the determination. The MA
organization must inform the
independent outside entity that the
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organization has effectuated the
decision.
(2) Requests for a Part B drug. If, on
reconsideration of a request for a Part B
drug, the MA organization’s
determination is reversed in whole or in
part by the independent outside entity,
the MA organization must authorize or
provide the Part B drug under dispute
as expeditiously as the enrollee’s health
condition requires but no later than 24
hours from the date it receives notice
reversing the determination. The MA
organization must inform the outside
entity that the organization has
effectuated the decision.
(c) * * *
(2) Reversals of decisions related to
Part B drugs. If the independent outside
entity’s determination is reversed in
whole or in part by an ALJ/attorney
adjudicator or at a higher level of
appeal, the MA organization must
authorize or provide the Part B drug
under dispute as expeditiously as the
enrollee’s health condition requires but
no later than 24 hours from the date it
receives notice reversing the
determination. The MA organization
must inform the outside entity that the
organization has effectuated the
decision.
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■ 11. Effective January 1, 2021,
§ 422.629 is amended by revising
paragraph (a) to read as follows:
for requesting that the applicable
integrated plan make an integrated
organization determination must be the
same for all covered benefits.
Timeframes and notice requirements for
integrated organization determinations
for Part B drugs are governed by the
provisions for Part B drugs in
§§ 422.568(b)(2), 422.570(d)(2), and
422.572(a)(2).
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■ 13. Effective January 1, 2021,
§ 422.633 is amended by revising
paragraph (f) introductory text to read as
follows:
§ 422.629 General requirements for
applicable integrated plans.
Authority: 42 U.S.C. 1302, 1395w–101
through 1395w–152, and 1395hh.
(a) Scope. The provisions in this
section and in §§ 422.630 through
422.634 set forth requirements for
unified appeals and grievance processes
with which applicable integrated plans
must comply. Beginning January 1,
2021, these provisions apply to an
applicable integrated plan in lieu of
§§ 422.564, 422.566(c) and (d), and
422.568 through 422.590, and
422.618(a) and §§ 438.404 through
438.424 of this chapter; provisions
governing Part B drugs in
§§ 422.568(b)(2), 422.570(d)(2),
422.572(a)(2), 422.584(d)(1), 422.590(c),
and 422.590(e)(2) apply to an applicable
integrated plan.
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■ 12. Effective January 1, 2021,
§ 422.631 is amended by revising
paragraph (a) to read as follows:
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§ 422.631 Integrated organization
determinations.
(a) General rule. An applicable
integrated plan must adopt and
implement a process for enrollees to
request that the plan make an integrated
organization determination. The process
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§ 422.633
Integrated reconsideration.
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(f) Resolution and notification. The
applicable integrated plan must make
integrated reconsidered determinations
as expeditiously as the enrollee’s health
condition requires but no later than the
timeframes established in this section.
Integrated reconsidered determinations
regarding Part B drugs must comply
with the timelines governing Part B
drugs established in §§ 422.584(d)(1)
and 422.590(c) and (e)(2).
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PART 423—MEDICARE PROGRAM;
MEDICARE PRESCRIPTION DRUG
PROGRAM
14. The authority citation for part 423
is revised to read as follows:
■
15. Section 423.120 is amended—
a. In paragraph (a)(8)(i) by removing
‘‘and’’ from the end;
■ b. In paragraph (a)(8)(ii) by removing
the ‘‘.’’ and adding in its place ‘‘; and’’;
■ c. Adding new paragraph (a)(8)(iii);
■ d. Revising paragraph (b)(2)(vi)(A);
■ e. Redesignating paragraph
(b)(2)(vi)(C) as (b)(2)(vi)(D); and
■ f. Adding new paragraphs
(b)(2)(vi)(C).
The additions and revisions read as
follows:
§ 423.120
Access to covered Part D drugs.
(a) * * *
(8) * * *
(iii) May not prohibit a pharmacy
from, nor penalize a pharmacy for,
informing a Part D plan enrollee of the
availability at that pharmacy of a
prescribed medication at a cash price
that is below the amount that the
enrollee would be charged to obtain the
same medication through the enrollee’s
Part D plan.
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(b) * * *
(2) * * *
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(vi) * * *
(A) Drug or biological products that
are rated as either of the following:
(1) Therapeutically equivalent (under
the Food and Drug Administration’s
most recent publication of ‘‘Approved
Drug Products with Therapeutic
Equivalence Evaluations,’’ also known
as the Orange Book).
(2) Interchangeable (under the Food
and Drug Administration’s most recent
publication of the Purple Book: Lists of
Licensed Biological Products with
Reference Product Exclusivity and
Biosimilarity or Interchangeability
Evaluations).
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(C) Subject to CMS review and
approval, for enrollees that are not on
existing therapy on the protected class
Part D drug, and except for antiretroviral
medications, prior authorization and
step therapy requirements to confirm
intended use is for a protected class
indication, to ensure clinically
appropriate use, to promote utilization
of preferred formulary alternatives, or a
combination thereof.
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■ 16. Effective January 1, 2021,
§ 423.128 is amended by—
■ a. Redesignating paragraphs (e)(5) and
(6) as paragraphs (e)(6) and (7); and
■ b. Adding a new paragraph (e)(5).
The addition reads as follows:
§ 423.128 Dissemination of Part D plan
information.
*
*
*
*
*
(e) * * *
(5) For each prescription drug claim,
must include the cumulative percentage
increase (if any) in the negotiated price
since the first claim of the current
benefit year and therapeutic alternatives
with lower cost-sharing, when available
as determined by the plan, from the
applicable approved plan formulary.
*
*
*
*
*
■ 17. Effective January 1, 2021,
§ 423.160 is amended by adding
paragraph (b)(7) to read as follows:
§ 423.160 Standards for electronic
prescribing.
*
*
*
*
*
(b) * * *
(7) Real time benefit tools. No later
than January 1, 2021, implement one or
more electronic real-time benefit tools
(RTBT) that are capable of integrating
with at least one prescriber’s ePrescribing (eRx) system or electronic
health record (EHR) to provide
complete, accurate, timely, clinically
appropriate, patient-specific formulary
and benefit information to the prescriber
in real time for assessing coverage under
E:\FR\FM\23MYR2.SGM
23MYR2
23884
Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules and Regulations
the Part D plan. Such information must
include enrollee cost-sharing
information, clinically appropriate
formulary alternatives, when available,
and the formulary status of each drug
presented including any utilization
management requirements applicable to
each alternative drug.
*
*
*
*
*
Dated: April 25, 2019.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: May 8, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human
Services.
[FR Doc. 2019–10521 Filed 5–16–19; 4:15 pm]
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BILLING CODE 4120–01–P
VerDate Sep<11>2014
16:55 May 22, 2019
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]]>Agencies
[Federal Register Volume 84, Number 100 (Thursday, May 23, 2019)]
[Rules and Regulations]
[Pages 23832-23884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10521]
[[Page 23831]]
Vol. 84
Thursday,
No. 100
May 23, 2019
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 422 and 423
Modernizing Part D and Medicare Advantage To Lower Drug Prices and
Reduce Out-of-Pocket Expenses; Final Rule
Federal Register / Vol. 84, No. 100 / Thursday, May 23, 2019 / Rules
and Regulations
[[Page 23832]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 422 and 423
[CMS-4180-F]
RIN 0938-AT92
Modernizing Part D and Medicare Advantage To Lower Drug Prices
and Reduce Out-of-Pocket Expenses
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Medicare Advantage (MA) program
(Part C) regulations and Prescription Drug Benefit program (Part D)
regulations to support health and drug plans' negotiation for lower
drug prices and reduce out-of-pocket costs for Part C and D enrollees.
These amendments will improve the regulatory framework to facilitate
development of Part C and Part D products that better meet the
individual beneficiary's healthcare needs and reduce out-of-pocket
spending for enrollees at the pharmacy and other sites of care.
DATES: These regulations are effective on January 1, 2020, except for
the amendments to Sec. Sec. 422.629, 422.631, 422.633, 423.128, and
423.160, which are effective January 1, 2021.
FOR FURTHER INFORMATION CONTACT: Joella Roland, (410) 786-7638 or
Christian Bauer, (410) 786-6043, Part D Issues.
Marty Abeln, (410) 786-1032, Jelani Murrain, (410) 786-2274, or
Brandy Alston, (410) 786-1218, Part C Issues.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
A. Purpose
This final rule amends regulations to support Medicare health and
drug plans' negotiation for lower drug prices and to reduce out-of-
pocket costs for Part C and D enrollees. Although satisfaction with the
MA and Part D programs remains high, these provisions are responsive to
input we received from stakeholders while administering the programs,
as well as through our requests for comment.
The Trump Administration Blueprint to Lower Drug Prices and Reduce
Out-of-Pocket Costs (May 16, 2018, 83 FR 22692) sought to find out more
information about lowering drug pricing using these four strategies:
Improved competition, better negotiation, incentives for lower list
prices, and lowering out-of-pocket costs. We are finalizing a number of
provisions that implement these four strategies in an attempt to lower
out-of-pocket costs. There is also a particular focus in this final
rule on strengthening negotiation leverage for MA and Part D plans and
increasing competition in the market for prescription drugs. We are
finalizing policies that provide more tools to MA plans that negotiate
with manufacturers of Part B drugs, so these plans are equipped with
similar negotiation capabilities that group health plans and issuers
have in the commercial market. We sought to drive robust competition
among health plans and pharmacies, so consumers can shop based on
quality and value. These provisions align with the Administration's
focus on the interests and needs of beneficiaries, providers, MA plans,
and Part D sponsors. We are also finalizing policies that will increase
transparency of drug pricing and drug price increases, giving
beneficiaries and prescribers tools to help improve adherence, lower
prescription drug costs, and minimize beneficiary out-of-pocket costs.
B. Summary of the Major Provisions
1. Providing Plan Flexibility To Manage Protected Classes (Sec.
423.120(b)(2)(vi))
Except in limited circumstances, current Part D policy requires
Part D sponsors to include on their formularies all Part D drugs in six
categories or classes: (1) Antidepressants; (2) antipsychotics; (3)
anticonvulsants; (4) immunosuppressants for treatment of transplant
rejection; (5) antiretrovirals; and (6) antineoplastics. We proposed
three exceptions to this protected class policy that would allow Part D
sponsors to: (1) Implement broader use of prior authorization (PA) and
step therapy (ST) for protected class Part D drugs, including to
determine use for protected class indications; (2) exclude a protected
class Part D drug from a formulary if the drug represents only a new
formulation of an existing single-source drug or biological product,
regardless of whether the older formulation remains on the market; and
(3) exclude a protected class Part D drug from a formulary if the price
of the drug increased beyond a certain threshold over a specified
lookback period. This regulatory provision finalizes one of the three
proposed exceptions with modifications: The first exception related to
PA and ST.
The first exception permits Part D sponsors to use PA and ST for
protected class Part D drugs. We are finalizing this exception with
modifications. As modified, the exception is a codification of existing
policy and does not place additional limits on beneficiary access to
medications. Specifically, the exception will permit PA and ST only for
new starts (that is, enrollees initiating therapy), including to
confirm the use is for a protected-class indication, for five of the
six protected classes (that is, all protected classes except for
antiretroviral medications). PA and ST will not be permitted for
antiretrovirals under this exception. This exception will permit
indication-based formulary design and utilization management for new
starts in five of the six protected classes, allowing Part D sponsors
to exclude a protected class Part D drug in these five classes from the
formulary for non-protected class indications only. As is required for
all other Part D drug categories or classes, these formulary design and
utilization management edits will be subject to CMS review and approval
as part of our annual formulary review and approval process, which
includes reviews of PA and ST edits that restrict access, ST criteria,
PA outliers, and PA criteria. (For an extensive description of our
annual formulary checks see section II.A.1. of this final rule.)
The second exception would have permitted Part D sponsors to
exclude from the formulary a protected class Part D drugs that is a new
formulation of a protected class Part D drug, even if the older
formulation is removed from the market. That is, Part D sponsors would
have been permitted to exclude from their formularies a protected class
Part D drug that is a new formulation that does not provide a unique
route of administration, regardless of whether the older formulation
remains on the market. Based on comments, we are not finalizing this
exception.
The third exception would have permitted Part D sponsors to exclude
from the formulary any protected class Part D drug whose price
increases, relative to the price in a baseline month and year, beyond
the rate of inflation calculated based on the Consumer Price Index for
all Urban Consumers (CPI-U). Based on comments, we are not finalizing
this exception.
2. E-Prescribing and the Part D Prescription Drug Program; Updating
Part D E-Prescribing Standards (Sec. 423.160)
This final rule requires under section 1860D-4(e)(2)(D) of the
Social Security Act (Act) that Part D plan sponsors implement an
electronic real-time benefit tool (RTBT) capable of integrating with at
least one prescriber's electronic prescribing (eRx) system or
[[Page 23833]]
electronic health record (EHR). We believe that this requirement is
appropriate given the Act's support of interactive real-time standards
whenever feasible, and for standards that improve the cost-
effectiveness of the Part D benefit. RTBTs currently used in the
industry have the ability to make beneficiary-specific drug coverage
and cost information visible to prescribers who want to consider that
information at the point-of-prescribing. Because there currently are no
industry-wide electronic standards for RTBTs, we are finalizing a
requirement that each Part D plan implement at least one RTBT of its
choosing that is capable of integrating with at least one prescriber's
eRx system or EHR to provide prescribers who care for its enrollees
complete, accurate, timely and clinically appropriate patient-specific
real-time formulary and benefit (F&B) information (including cost,
formulary alternatives and utilization management requirements) by
January 1, 2021. However, we strongly encourage plans to start
implementing this provision prior to 2021.
3. Medicare Advantage and Step Therapy for Part B Drugs (Sec. Sec.
422.136, 422.568, 422.570, 422.572, 422.584, 422.590, 422.618, and
422.619)
This final rule provides requirements under which MA plans may
apply step therapy as a utilization management tool for Part B drugs
and adopts new adjudication timeframe requirements for organization
determinations and plan reconsiderations related to requests for Part B
drugs. In addition, CMS will incorporate the shorter adjudication
timeframes for Part B drug requests into the contract deadlines that
apply to Part C Independent Review Entity (IRE) reconsiderations under
Sec. 422.592(b). In this final rule, we reaffirm MA plans' existing
authority to implement appropriate utilization management and prior
authorization programs (meaning policies and procedures) for managing
Part B drugs to reduce costs for both beneficiaries and the Medicare
program. The use of utilization management tools, such as step therapy,
for Part B drugs enhances the ability of MA plans to negotiate Part B
drug costs and ensures that taxpayers and MA enrollees face lower per
unit costs or pay less overall for Part B drugs while maintaining
access to medically-necessary Medicare-covered services and drugs. In
order to make sure enrollees maintain access to all medically necessary
Part B covered drugs, we are modifying the Part C adjudication time
periods for organization determinations and appeals involving Part B
drugs.
C. Summary of Costs and Benefits
Table 1--Costs and Benefits for the Major Provisions
------------------------------------------------------------------------
Provision Description Impact
------------------------------------------------------------------------
Providing Plan Flexibility to We allow the We estimate neither
Manage Protected Classes following cost nor savings
(Sec. 423.120(b)(2)(vi)). exception from this provision.
related to
protected class
Part D drugs:
Use of PA and ST
for new starts
of five of the
six protected
classes,
including to
determine use
for protected
class
indications.
E-Prescribing and the Part D We require each This provision is
Prescription Drug Program; Part D plan scored as a
Updating Part D E-Prescribing sponsor to qualitative savings.
Standards (Sec. 423.160). implement one or Based on commenter
more RTBTs of response we do not
its choosing believe there will
that are capable be significant cost
of integrating to implement RTBT
with at least since i) Based on
one provider's e- informal
Rx system or EHR conversations with
and delivering plans and commenter
complete, response, 30 percent-
accurate, timely 90 percent of plans
and clinically are estimated as
appropriate already supporting
patient-specific an RTBT tool and ii)
real- time F&B plans that do not
information have it are most
beginning on 01/ likely to use
01/2021. existing
intermediaries.
Commenters were
overwhelmingly
enthusiastic on the
savings potential
due to reduced drug
costs arising from
cheaper
alternatives. The
Trust Fund and
enrollees will save.
However, this
savings is
classified as a
transfer since a
cheaper drug is
being substituted
for a more expensive
one. Because of the
complexity of
prescription drug
usage we are unable
to meaningfully
quantify this
savings.
Part D Explanation of Benefits We require the There is an estimated
(Sec. 423.128). inclusion of cost of $4.7 million
negotiated drug in the first year of
pricing implementation for
information and programmers to
lower cost update systems.
alternatives in There is an annual
the Part D estimated cost in
Explanation of all years (including
Benefits the first) of $5.7
beginning on 01/ million arising from
01/2021. The the cost of paper,
intent of the printer toner, and
provision is to postage for mailing
provide one extra page in
enrollees with the Part D EOB with
greater added information
transparency, about alternatives.
thereby
encouraging
lower costs.
Medicare Advantage and Step We added certain The estimated savings
Therapy for Part B Drugs new requirements to enrollees due to
(Sec. Sec. 422.136, for when MA reduced out-of-
422.568, 422.570, 422.572, plans may apply pocket costs are
422.584, 422.590, 422.618, step therapy as between $5 and $8
and 422.619). a utilization million for 2020-
management tool 2029 resulting in an
for Part B drugs. aggregate savings of
$62 million over 10
years. The savings
to the Trust Fund
are between $145 and
$240 million for
2020-2029, resulting
in an aggregate
savings over 10
years of 1.9
billion. There is a
modest cost to the
government and its
contractors of $1 to
$1.3 million in 2020-
2029 due to a
projected increased
in appeals,
resulting in an
aggregate cost of
$11.2 million cost
over 10 years. These
estimates reflect
the impact of
allowing step
therapy for MA
organizations in
2020 and future
years.
------------------------------------------------------------------------
D. Background
In the proposed rule titled ``Modernizing Part D and Medicare
Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses''
which appeared in the November 30, 2018 Federal Register (83 FR 62152
through 62201), we proposed revisions to the Medicare Advantage program
(Part C) regulations and Prescription Drug Benefit program (Part D)
regulations that
[[Page 23834]]
will have the effect of lowering the cost of medications and reducing
out-of-pocket costs for enrollees in the Part C and D programs. The
changes, as finalized in this rule, will also streamline different
aspects of the Part D program and reduce associated burden on the
government and sponsoring organizations of MA plans and Part D plans.
In response to the proposed rule, we received 7,898 timely pieces
of correspondence containing multiple comments each. Although we are
not finalizing all of our proposals to provide plan flexibility to
manage protected classes, we are finalizing all other provisions with
changes varying from minor clarifications to more significant
modifications, based on the comments received. We also sought comment
on the possibility of adopting a new definition of ``negotiated price''
under which plan sponsors would be required to pass through all
pharmacy price concessions at the point of sale. We will carefully
review all input received from stakeholders on this issue as we
continue our efforts to meaningfully address rising prescription drug
costs for beneficiaries. We also note that some of the public comments
received were outside of the scope of the proposed rule. These out-of-
scope public comments are not addressed in this final rule. Summaries
of the public comments that are within the scope of the proposed rule
and our responses to those public comments are set forth in the various
sections of this final rule under the appropriate headings.
II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
A. Providing Plan Flexibility To Manage Protected Classes (Sec.
423.120(b)(2)(vi))
Section 1860D-4(b)(3)(G) of the Act requires Part D sponsors to
include in their formularies all covered Part D drugs in classes and
categories of clinical concern identified by the Secretary using
criteria established through rulemaking. The statute specifies that
until such time as the Secretary establishes the criteria to identify
drug categories or classes of clinical concern through rulemaking, the
following drug categories or classes shall be identified as categories
or classes of clinical concern: Anticonvulsants, antidepressants,
antineoplastics, antipsychotics, antiretrovirals, and
immunosuppressants for the treatment of transplant rejection. This
policy is frequently called the ``protected class'' policy in the Part
D program, with the drug categories or classes of clinical concern
being the ``protected classes.'' Section 1860D-4(b)(3)(G) of the Act
permits the Secretary to establish exceptions that permit a Part D
sponsor to exclude from its formulary (or to otherwise limit access to
such a drug, including through PA or utilization management) a
particular covered Part D drug that is otherwise required to be
included in the formulary. The Secretary must engage in rulemaking to
establish these exceptions. Section 423.120(b)(2)(vi) currently
provides three regulatory exceptions to the protected class policy that
permit Part D sponsors to: (1) Exclude from their formulary
therapeutically equivalent drugs, (2) apply utilization management (UM)
edits for safety, and (3) exclude other drugs that CMS specifies
through a medical and scientific process which also permits public
notice and comment.
The protected class policy, inclusive of its current limitations on
PA, is unique to the Medicare Part D program and does not appear
elsewhere in other Federal programs, such as the Veterans Health
Administration (VA), TRICARE, the Federal Employees Health Benefits
Program (FEHBP), the Patient Protection and Affordable Care Act
Essential Health Benefits (EHB) Benchmark Plans, or in commercial
private health plans. We are concerned that requiring essentially open
coverage of certain drug categories or classes in Part D presents both
enrollee cost and welfare concerns, as well as increased costs for the
Part D program as a result of overutilization (for example,
antipsychotics used for sedation) and increased drug prices due to lack
of competition between manufacturers to achieve inclusion on plan
formularies. In our January 2014 proposed rule entitled, ``Medicare
Program; Contract Year 2015 Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' (79 FR 1918, hereinafter referred to as the ``January 2014
proposed rule''), we detailed concerns that the policy potentially
facilitates the overutilization of drugs within the protected classes
(79 FR 1938). Despite some formulary flexibility and ability to use
drug UM techniques for protected class Part D drugs, Part D sponsors
are not able to negotiate rebates across the protected classes at
levels commensurate with other Part D drugs or prescription drugs
covered in the commercial market.
Consequently, although we did not propose to eliminate any of the
protected classes, we proposed to use the authority under section
1860D-4(b)(3)(G) of the Act to revise Sec. 423.120(b)(2)(vi).
Specifically, we proposed to use the authority under section 1860D-
4(b)(3)(G) of the Act to establish additional exceptions to the
requirement that all drugs in a protected class be included in the
formulary and to permit additional use of UM. We proposed to revise
Sec. [thinsp]423.120(b)(2)(vi) to permit Part D sponsors to implement
PA and ST requirements for protected class Part D drugs for broader
purposes than allowed currently. We also proposed to allow Part D
sponsors to exclude specific protected class Part D drugs from their
formularies if they are a single-source drug or biological product for
which the manufacturer introduces a new formulation with the same
active ingredient or moiety that does not provide a unique route of
administration or to exclude single-source drugs or biological products
that have certain price increases beyond a certain threshold over a
specified look back period. However, we noted that these exceptions
will apply only to the requirement that the drug be included on the
formulary because it is a protected class Part D drug. In other words,
an exception from the protected class policy will not supersede our
other formulary requirements in Sec. 423.120(b)(2).
We received the following comments and our response follows:
Comment: Many commenters stated that all three of our proposals
greatly compromised access to needed therapy (that is, delays and/or
interruptions in therapy) for patients taking protected class Part D
drugs, which would lead to adverse health outcomes for these enrollees,
and, in the case of HIV, endanger public health.
Response: In considering whether to propose these exceptions, CMS
took our other enrollee access protections into account, which have
successfully protected beneficiary access to needed medications in the
more than 12 years the Part D program has been operational. There are
five such enrollee protections, which include formulary transparency,
formulary requirements, reassignment formulary coverage notices,
transition supplies and notices, and the expedited coverage
determination and appeals processes.
The first protection is our requirement for formulary transparency
to beneficiaries. Part D sponsors are required to provide comprehensive
formulary drug listings to the public through their own websites and
printed materials, as well as to CMS for access through the online
interactive drug plan comparison tool, the Medicare Plan Finder (Plan
Finder). Beneficiaries or
[[Page 23835]]
their representatives can complete a personalized search on the Plan
Finder to locate and select a Part D plan that covers their drugs.
Thus, beneficiaries who review plan formularies can select plans that
cover their current medications.
The second type of protection is the Part D formulary requirements
(Sec. 423.120(b)(2)). Our annual formulary review and approval process
is designed to ensure that Part D formularies do not substantially
discourage enrollment by certain beneficiaries and that the formularies
include adequate representation of all necessary Part D drug categories
or classes for the Medicare population. The formulary review and
approval process includes the following:
Category and Class Review (Sec. [thinsp]423.272(b)(2)).
Distinct from our other formulary checks, CMS reviews and approves drug
lists that are consistent with best practice formularies currently in
widespread use today. CMS evaluates the sufficiency of a Part D
sponsor's formulary drug categories or classes in conjunction with the
plan's formulary drug list to ensure that the formulary provides access
to an acceptable range of Part D drug choices.
Two Drugs Requirement (Sec. [thinsp]423.120(b)(2)(i)).
Each submitted formulary is reviewed for the inclusion of at least two
distinct drugs from each of the submitted categories or classes, except
as provided in Sec. [thinsp]423.120(b)(2)(ii).
Formulary Tier Review (Medicare Prescription Drug Benefit
Manual, Chapter 6, section 30.2.7). The tiering structure of each
formulary is reviewed to ensure that each category or class generally
has at least one drug in a preferred tier.
Common Medicare Drugs Review (Sec.
[thinsp]423.120(b)(2)(iii)). Formularies are reviewed for inclusion of
the drugs or drug classes that are most commonly utilized by the
Medicare population. We use prior years' data to identify the drugs or
drug classes with the highest utilization in Medicare Part D, and use
these drugs or drug classes as the basis for our review in this area.
Treatment Guidelines \1\ Review (Sec.
[thinsp]423.120(b)(2)(iii)). We analyze formularies to determine
whether appropriate access is afforded to drugs or drug classes
included in widely accepted treatment guidelines.
---------------------------------------------------------------------------
\1\ The World Health Organization (WHO) defines a standard
treatment guideline as a systematically developed statement designed
to assist practitioners and patients in making decisions about
appropriate health care for specific clinical circumstances
(available at https://www.who.int/medicines/technical_briefing/tbs/10-PG_Standard-Treatment-Guidelines_final-08.pdf).
---------------------------------------------------------------------------
Vaccines Review (Sec. [thinsp]423.100). Each formulary
submission is reviewed to ensure the formulary includes Part D
vaccines.
Specialty Tier Review (Sec. [thinsp]423.578(a)(7)). For
formularies using a specialty tier, we perform an extensive review of
the composition of each specialty tier. We apply a standard outlined in
the annual Call Letter to determine whether drugs placed in specialty
tiers meet the relevant cost criteria.
Quantity Limits (QL) Amount Review (Sec.
[thinsp]423.153(b)). QL restrictions are reviewed for appropriateness.
The standard for the review is generally based on the maximum
recommended dose when such dosage limits are identified in the Food and
Drug Administration (FDA)--approved labeling.
Restricted Access Review (Sec. [thinsp]423.153(b)).
Formularies are reviewed for use of PA and ST edits across drug
categories or classes. We decline to approve UM for entire drug
classes, other than for those categories or classes where the UM edits
are considered to be consistent with best practices, for example, for
erythropoietin stimulating agents (ESAs), due to the high likelihood of
Part B versus Part D coverage issues, as well as a boxed warning in the
FDA labeling that warns of significant adverse events when these drugs
are used outside of their approved indications and therapeutic targets.
Step Therapy Criteria Review (Sec. [thinsp]423.153(b)).
The ST requirements are reviewed to ensure that the ST algorithms are
consistent with best practices, including prerequisite drugs, current
industry standards and appropriate treatment guidelines.
Prior Authorization Criteria Review (Sec.
[thinsp]423.153(b)). We review the criteria for drugs requiring PA on
the formulary submissions. We look to existing best practices, current
industry standards, and appropriate treatment guidelines to check that
the Part D plans' use of PA is consistent with such best practices.
Submitted criteria are also compared to recognized compendia (that is,
those compendia described in section 1927(g)(1)(B)(i) of the Act:
American Hospital Formulary Service Drug Information and DRUGDEX
Information System) and FDA-approved indications.
Mid-year formulary change restrictions (Sec.
[thinsp]423.120(b)(5)); Chapter 6 of the Medicare Prescription Drug
Benefit Manual, section 30.3.3). Except when: (1) The FDA deems a Part
D drug unsafe, (2) a manufacturer removes a Part D drug from the
market, or (3) in the circumstances described under Sec.
423.120(b)(5)(iv) when a new generic drug becomes available, a Part D
sponsor may not remove a covered Part D drug from its formulary, or
make any adverse change in preferred or tiered cost-sharing status of a
covered Part D drug, between the beginning of the annual coordinated
election period described in Sec. [thinsp]423.38(b) and 60 days after
the beginning of the contract year associated with the annual
coordinated election period. However, prescription drug therapies are
constantly evolving, and new drug availability, medical knowledge, and
opportunities for improving safety and quality in prescription drug use
at a lower cost will inevitably occur over the course of the year. As
recognized in regulation, these new developments may require formulary
changes during the year in order to provide high-quality, affordable
prescription drug coverage. Moreover, CMS will not approve mid-year
changes, other than the three types of changes listed here, unless the
Part D sponsor grandfathers coverage for the remainder of the plan year
for enrollees that are already taking the drug being removed (or
subjected to an adverse change in preferred or tier cost sharing) at
the time of the change.
Thus, in summary, our formulary rules both ensure that all Part D
formularies contain sufficient drugs to treat all disease states in the
Medicare population and protect enrollees from significant changes in
formularies during the course of a coverage year.
The third type of enrollee protection is the annual notice to
reassigned enrollees required under section 3305 of the Patient
Protection and Affordable Care Act (PPACA, Pub. L. 111-148). Effective
January 1, 2011, we provide individuals who receive the Low Income
Subsidy (LIS individuals) who are reassigned to a different Part D plan
with information on the differences under the new plan formulary, as
well as information on the enrollee's grievance and appeal rights in
the new plan. Thus, (in order to maintain access to a $0 premium) any
individual who has his or her plan selection decision made through our
reassignment process receives detailed coverage status information for
each drug for which he or she filled a prescription between January and
August of the previous year. With regard to the new plan, this notice
describes for each drug whether it is on the formulary, whether the
brand or generic version is covered, and whether UM may be applied.
Moreover, the notice also provides a list of other available plans into
which the enrollee can enroll with no premium if they
[[Page 23836]]
would prefer not to remain in the plan where they were reassigned. We
send notices after the individual's reassignment and in time to allow
for the LIS individual to make a voluntary selection of another plan
effective January 1. Thus, any reassigned LIS individual receives
advance notice of any change in formulary coverage of their medications
in plenty of time to work with their prescribers if they wish to remain
in the new plan, or to select a different Part D plan.
The fourth type of enrollee protection is our unique transition
supply and notice requirements. A Part D sponsor must provide for an
appropriate transition process for Part D drugs that are not on its
formulary with respect to: (1) The transition of new enrollees into
prescription drug plans following the annual coordinated election
period; (2) the transition of newly-eligible Medicare beneficiaries
from other coverage; (3) the transition of individuals who switch from
one plan to another after the start of the contract year; and (4) in
some cases, current enrollees affected by formulary changes from one
contract year to the next (see Sec. [thinsp]423.120(b)(3) Chapter 6 of
the Medicare Prescription Drug Benefit Manual, section 30.4). Within
the first 90 days of an enrollee's enrollment in a new plan, plans must
provide a temporary fill of at least an approved month's supply when
the enrollee requests a fill of a non-formulary drug or a Part D drug
that is on a plan's formulary but requires PA or ST under a plan's UM
rules. This requirement applies beginning on an enrollee's first
effective date of coverage, regardless of whether this is within the
first 90 days of the contract year. Additionally, if a Part D sponsor
cannot determine at the point of sale (POS) whether an enrollee is
currently taking a drug (for example, a new enrollee filling a
prescription for the first time), we instruct the Part D sponsor to
provide the enrollee with a transition supply.
A successful transition process is contingent not only upon
providing the transitional drug supply, but also upon informing
affected enrollees, their caregivers, and their prescribers about the
enrollee's options for ensuring that his or her medical needs are
safely accommodated within a Part D sponsor's formulary. For this
reason, when providing a temporary supply of non-formulary Part D drugs
or Part D drugs that are on a plan's formulary but require PA or ST
under a plan's UM rules, Part D sponsors must provide enrollees and
their prescribers with written notice within three business days after
adjudication of the temporary fill that they are receiving a transition
supply and that they must take action. The temporary fill and written
notice provide enrollees with a reasonable amount of time during which
they and their prescribers can address the issue (by requesting a
formulary exception or transitioning to a formulary drug) and prevents
them from having to abruptly change or go without their medication (see
Transition notice requirements (to enrollees and providers) [Sec.
[thinsp]423.120(b)(3)(iv and v); Chapter 6 of the Medicare Prescription
Drug Benefit Manual, section 30.4.10]). Thus all enrollees and their
prescribers have advance notice of any issue with continued coverage of
a previously initiated therapy and sufficient time to resolve those
issues without any lapse in appropriate therapy. The preceding
formulary review and transition requirements are described in Chapter 6
of the Medicare Prescription Drug Benefit Manual (located at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Chapter6.pdf).
The fifth enrollee protection we took into account is the
requirement for a robust coverage determination and appeal process,
including the right of an enrollee or his or her prescriber to request
an exception to the plan's UM criteria, tiered cost-sharing structure,
or formulary. Part D sponsors are required to issue a coverage decision
and notify the enrollee (and the prescriber, as appropriate) in writing
in accordance with strict regulatory timeframes. In general, consistent
with Sec. 423.578, a plan must grant a tiering or formulary exception
(for example, provide coverage for a non-formulary drug or a formulary
exception to the UM criteria) when it determines that the requested
drug is medically necessary, consistent with the prescriber's
supporting statement indicating that preferred alternatives(s) would
not be as effective and/or would have adverse effects.
We have established by regulation both an expedited adjudication
timeframe if the plan or prescriber believes that applying the standard
timeframe may jeopardize the enrollee's health, and a requirement that
plans must issue all coverage decisions as expeditiously as the
enrollee's health condition requires. The requirements at Sec. 423.568
for coverage determinations and Sec. 423.572 for expedited coverage
determinations state that the plan must notify the enrollee ``as
expeditiously as the enrollee's health condition requires, but no later
than [72 or 24 hours, respectively] after receiving the request, or,
for an exceptions request, the physician's or other prescriber's
supporting statement.'' That is to say, if an enrollee's health
condition requires a response in less than 24 hours, the plan is
obligated to provide one.
If, based on the initial review of the request, the Part D sponsor
expects to issue a partially or fully adverse decision based on medical
necessity, the coverage determination must be reviewed by a physician
or other appropriate health care professional with sufficient medical
and other expertise, including knowledge of Medicare coverage criteria,
before the Part D sponsor issues the decision on the coverage
determination. If the Part D sponsor makes an adverse coverage
determination, the required written notice must explain the specific
reason(s) for the denial and include a description of the enrollee's
right to a standard or expedited redetermination by the plan, and the
rest of the five-level appeals process, including the right to request
independent review. At the redetermination level of appeal, when the
issue is the denial of coverage based on a lack of medical necessity,
the redetermination must be made by a physician with expertise in the
field of medicine that is appropriate for the services at issue. If a
plan fails to make a coverage decision and notify the enrollee within
the required timeframe, the request must be forwarded to the
independent review entity (IRE) to be adjudicated.
Moreover, while we do not treat a claim transaction as a coverage
determination, we require Part D sponsors to arrange with network
pharmacies to provide enrollees with a written copy of the Office of
Management and Budget (OMB)-approved standardized pharmacy notice
(``Notice of Denial of Medicare Prescription Drug Coverage,'' CMS-
10146) when the enrollee's prescription cannot be filled under the Part
D benefit and the issue cannot be resolved at the point-of-sale (POS).
The notice instructs the enrollee on how to contact his or her plan and
explains the enrollee's right to request a coverage determination.
Thus, all enrollees immediately receive clear, concise instructions on
how to pursue their right to request a coverage determination when a
prescription cannot be filled at POS. For additional information on the
coverage determination, appeals, and grievance process, including
information about the pharmacy notice, see 42 CFR part 423, subparts M
and U, and the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance, available at https://www.cms.gov/
Medicare/Appeals-and-
[[Page 23837]]
Grievances/MedPrescriptDrugApplGriev/.
CMS will be monitoring appeals activity to ensure Part D enrollees'
requests are appropriately evaluated. Additionally, we also plan to
implement a protected class-specific Complaints Tracking Module (CTM)
monitoring project in 2020 to monitor access to protected class Part D
drugs. Finally, as discussed elsewhere in this final rule, CMS is
taking steps in 2020 and future rulemaking to include e-prescribing
improvements such as real time benefit tools (RTBTs) and Part D
electronic prior authorization (ePA) as required by section 6062 of the
SUPPORT for Patients and Communities Act (Pub. L. 115-271), which could
reduce the need for coverage determinations and appeals. Taken
together, these initiatives and the five beneficiary access protections
described previously will help to protect enrollees from any
unnecessary or inappropriate delay in access to medically necessary
drugs.
Comment: Several commenters stated that Part D sponsors already
have enough tools to manage protected class Part D drugs, including PA
on new starts, formulary tiering, and generic utilization. Some
commenters added that by using these tools, Medicare currently only
covers two-thirds of protected class Part D drugs, and plans already
use PA on nearly one half of protected class Part D drugs. However,
many other comments that we received expressed support for additional
formulary management tools.
Response: It is unclear on what basis commenters are making the
assertions regarding Medicare only covering two-thirds of protected
class Part D drugs and plans already using PA on nearly one-half of
protected class Part D drugs, as plans are required to include all
protected class Part D drugs on their formularies, with limited
exceptions as specified at Sec. 423.120(b)(2)(vi), and the use of PA
has been limited to new starts under our existing policy. Although we
are not able to speak to the actual rebate values, our internal
analyses of rebate data reported by Part D sponsors generally support
the assertion that Part D sponsors obtain substantially smaller rebates
for protected class Part D drugs than they do for non-protected class
Part D drugs. Due to restrictions on disclosure of rebate data, CMS is
not able to release this analysis to the public.
Comment: Some commenters claimed that proposing exceptions without
previously or concurrently proposing clinical criteria is out of order,
and not allowed by the plain reading of the statute.
Response: Section 1860D-4(b)(3)(G)(ii) of the Act specifies that
subject to section 1860D-4(b)(3)(G)(iv) of the Act, the Secretary
``shall identify, as appropriate,'' categories or classes the Secretary
determines are of clinical concern, using criteria the Secretary
establishes. Section 1860D-4(b)(3)(G)(iv) of the Act states that until
such time as the Secretary establishes the criteria, the existing
protected class categories ``shall be identified'' under section 1860D-
4(b)(3)(G)(ii) of the Act. The statute clearly contemplates that the
existing protected classes--that is, those set forth in section 1860D-
4(b)(3)(G)(iv) of the Act--are the identified classes for purposes of
section 1860D-4(b)(3)(G)(ii)(II) of the Act, as well as section 1860D-
4(b)(3)(G)(i)(I) of the Act, and therefore the Secretary need not
establish criteria for identifying new or different protected classes
before establishing exceptions.
Comment: Some commenters claimed that CMS's protected class
proposals violate the statutory non-discrimination provision,
particularly with respect to enrollees who take high-cost drugs in the
protected classes. Other commenters asserted that HIV patients, LIS
enrollees, and dually-eligible enrollees (particularly children) would
be disproportionately affected by our proposals.
Response: The non-discrimination provision and the protected class
provision are not at odds. Non-discrimination applies to all Part D
enrollees, while the protected class provision establishes additional
requirements for drugs in protected classes. Section 1860D-4(b)(3)(G)
of the Act authorizes formulary exclusion and UM for protected class
Part D drugs, which indicates that non-discriminatory formulary
exclusion and UM are contemplated by the statute. Therefore, excluding
a protected class drug from the formulary or imposing UM criteria would
not be discriminatory in itself. Our approach to approving PA and ST
criteria for protected class Part D drugs will be consistent with our
discrimination analysis for all other categories or classes--that is,
to ensure that these criteria, as applied, would not substantially
discourage enrollment by certain Part D eligible individuals. As
described previously, we conduct a discrimination review to ensure that
plans' formulary designs are not likely to substantially discourage
enrollment by certain Part D eligible individuals. We will conduct the
same review with respect to the protected class drugs that plans wish
to exclude from the formulary or for which they wish to impose PA or
ST, in each case only as permitted under the exceptions we are
finalizing in this rule. Moreover, there are other, non-protected
categories and classes of drugs that consist of high-cost therapies
(for example, drugs used to treat hepatitis C) for which CMS has been
able to ensure a benefit design that is not likely to substantially
discourage enrollment by certain Part D eligible individuals.
Comment: Some commenters asserted that CMS's proposals are
inconsistent with Congressional intent and in conflict with our
regulation. Specifically, commenters pointed to the language we adopted
at Sec. 423.120(b)(2)(vi)(C) specifying that any exception to the
criteria is based upon scientific evidence and medical standards of
practice (and, in the case of antiretroviral medications, is consistent
with the Department of Health and Human Services Guidelines for the Use
of Antiretroviral Agents in HIV-1-infected Adults and Adolescents).
Response: Section 1860D-4(b)(3)(G)(i)(II) of the Act specifically
allows the Secretary to establish exceptions that permit a Part D
sponsor to exclude from its formulary a particular covered Part D drug
in a category or class that is otherwise required to be included in the
formulary, or to otherwise limit access to such a drug, including
through PA or UM. Our existing exception at Sec. 423.120(b)(2)(vi)(C)
was adopted after enactment of the Medicare Improvements for Patients
and Providers Act (MIPPA) (section 176 of Pub. L. 110-275). However,
the PPACA (section 3307 of Pub. L. 111-148) removed this statutory
requirement. While our existing regulations at Sec.
423.120(b)(2)(vi)(C) discuss an exception for protected class Part D
drugs that is ``based upon scientific evidence and medical standards of
practice (and in the case of antiretroviral medications is consistent
with the [HHS] Guidelines for the Use of antiretroviral Agents in HIV-1
Infected Adults and Adolescents),'' this is a separate and distinct
exception from the exceptions proposed in this rulemaking. In other
words, these exceptions can exist contemporaneously, and are not in
conflict with each other.
Comment: Stakeholders provided alternative policies to lower drug
prices, such as allowing copay assistance cards for Part D enrollees
and other federal healthcare program beneficiaries, encouraging Part D
plans to institute benefit designs that include ``select care'' tiers
that would cover drugs with low or no patient cost sharing (including
antineoplastic drugs), exploring new ways to encourage Part D
[[Page 23838]]
plans to offer supplemental benefits for enrollees, further developing
demonstration models that provide supplemental benefits or reduced cost
sharing for patients with specific conditions or needs, or proposing an
exception that would permit Part D sponsors to exclude protected class
Part D drugs when therapeutic alternatives exist.
Response: We thank commenters for their suggestions.
We are finalizing our proposal to redesignate the existing
paragraph that appears at Sec. 423.120(b)(vi)(C) that permits CMS to
exempt other drugs that CMS specifies. However, because we are not
finalizing our proposed exceptions regarding new formulations and price
increases, paragraph Sec. 423.120(b)(vi)(C) will be redesignated as
paragraph (D), instead of (F) as originally proposed.
1. Broader Use of Prior Authorization for Protected Class Part D Drugs
Under section 1860D-4(b)(3)(G)(i)(II) of the Act, the Secretary can
establish exceptions to permit a Part D sponsor to exclude from its
formulary, or otherwise limit access through PA or UM, a particular
Part D drug that is otherwise required to be on the formulary because
it is in a protected class. This authority is specific to Part D drugs,
and moreover, applies without regard to whether an enrollee is
initiating therapy (new starts) or is currently taking a drug (existing
therapy).
Part D coverage is limited to those drugs that meet the definition
of a Part D drug in Sec. 423.100. Therefore, regardless of a drug's
potential status as a protected class drug, Part D sponsors are
responsible for ensuring that coverage is limited to Part D drugs. In
order to accomplish this, Part D sponsors use PA \2\ on drugs that have
a high likelihood of: (1) Coverage that is available under Parts A or B
(versus D) for the drug as prescribed and dispensed or administered;
(2) exclusion from Part D coverage (for example, a drug or drug class
or its medical use that is excluded from coverage or otherwise
restricted under Part D as defined in section 1927(d)(2) of the Act);
or (3) use other than for a medically accepted indication as defined in
section 1860D-2(e)(4) of the Act, in the Part D sponsor's experience or
as directed by CMS, consistent with sections 10.6 and 30.2.2.3 of
Chapter 6 of the Medicare Prescription Drug Benefit Manual.
Additionally, relative to medically accepted indications, consistent
with section 10.6.1 of Chapter 6 of the Medicare Prescription Drug
Benefit Manual, Part D sponsors may retrospectively identify and
confirm--either as part of their retrospective review programs required
under Sec. 423.153, or incident to another UM review--that a dispensed
drug, including when dispensed as a transition supply, was not
prescribed for a medically accepted indication for a particular
individual. CMS does not consider the use of CMS-approved PA
requirements for these purposes to be subject to section 1860D-
4(b)(3)(G) of the Act because section 1860D-4(b)(3)(G) of the Act is
specific to Part D drugs. Consequently, consistent with current policy,
CMS will continue to permit Part D sponsors to apply PA for potential
protected class drugs to determine whether such drugs can be covered
under Part D, for both new starts and existing therapy, for those drugs
with a high likelihood of being excluded from Part D for the reasons
provided previously, subject to CMS review and approval.
---------------------------------------------------------------------------
\2\ Consistent with section 10.6 of Chapter 6 of the Medicare
Prescription Drug Benefit Manual, Part D sponsors should
consistently use prior authorization (PA) for those drugs with the
highest likelihood of non-Part D covered uses unless plans are able
to reliably use tools other than PA to determine appropriate
coverage for the drug.
---------------------------------------------------------------------------
Using the authority under section 1860D-4(b)(3)(G)(i)(II) of the
Act, which applies without regard to new starts or existing therapy, we
proposed to permit Part D sponsors to apply PA and ST requirements to
new starts and existing therapy of protected class Part D drugs that
are implemented to confirm use is intended for a protected class
indication, ensure clinically appropriate use, promote utilization of
preferred formulary alternatives, or a combination thereof, subject to
CMS review and approval. We also solicited comment on whether PA and ST
of protected class Part D drugs should be limited to new starts only.
We received the following comments and our response follows:
Comment: A number of commenters supported the proposal to expand
the use of PA and ST for protected class Part D drugs from new starts
only to new starts and existing therapy to confirm use is intended for
a protected class indication, ensure clinically appropriate use,
promote utilization of preferred formulary alternatives, or a
combination thereof, subject to CMS review and approval.
Response: We thank the commenters for their support.
Comment: Many commenters asserted that treatments in the protected
classes are neither interchangeable nor ``one-size-fits-all,'' adding
that patients need access to the full range of therapies in these
classes, and prescribers need the autonomy to make the best decision
for each patient as an individual. Several commenters asserted that
while clinical practice guidelines are publicly available, they are not
intended to drive policy decisions. These commenters further added that
while guidelines are important to give clinicians a starting point in
the care of patients, it is ultimately up to the clinician who knows
the full history of the individual patient to tailor treatments that
will result in the best outcomes for that patient. Some commenters
added that PA and ST policies intended to restrict access to physician-
directed care unnecessarily prolong ineffective treatment and prevent
individuals from immediately starting the treatment their prescribers
believe is best. Some commenters suggested that ST requirements should
not be ironclad, but instead should be suggested clinical care pathways
to provide clinical decision support. Other commenters added that the
lack of autonomy damages the doctor-patient relationship.
Response: Consistent with Sec. [thinsp]423.120(b)(2)(iii) and
Sec. [thinsp]423.153(b), CMS conducts treatment guideline, ST
criteria, and PA criteria reviews as part of the annual formulary
review and approval process. CMS uses the FDA-approved labeling and
widely accepted treatment guidelines to determine clinical
appropriateness before approving PA or ST criteria. As discussed
previously in this preamble, we will only approve PA and ST criteria
that are clinically supported. These beneficiary protections, and
specifically the limits we place on Part D sponsors' ability to apply
PA and ST, differentiate Part D from other prescription drug benefits
and help prevent the negative consequences (that is, prolongation of
ineffective therapy and delaying accesses to appropriate therapy)
suggested by the commenters and are designed to preserve the doctor-
patient relationship. Moreover, ST requirements are not ironclad
because, consistent with Sec. [thinsp]423.578, prescribers can request
a formulary exception, and provided it meets the requirements at Sec.
423.578, the supporting statement provided by a physician or other
prescriber is given great weight when reviewing an exception request.
Comment: Some commenters expressed concern that CMS has not
provided specificity about the clinical criteria that will be applied
to its formulary review or any additional oversight and monitoring that
would be appropriate to ensure the well-being of Part D enrollees with
chronic conditions. Commenters recommended a system whereby CMS signs
off on ST
[[Page 23839]]
programs for protected classes based on certain defined criteria,
including that the program is evidence-based, or for areas where
adequate evidence is lacking, is based on accepted standards or best
clinical practice. Additionally, commenters suggested CMS should create
a specialty council with expertise in the fields of the various
protected class indications to review formulary decisions.
Response: As noted in response to the previous comment, consistent
with Sec. [thinsp]423.120(b)(2)(iii) and Sec. [thinsp]423.153(b), CMS
conducts treatment guideline, ST criteria, and PA criteria reviews as
part of the annual formulary review and approval process. CMS uses the
FDA-approved labeling and widely accepted treatment guidelines to
determine clinical appropriateness before approving PA or ST criteria.
We will only approve PA or ST criteria that are clinically supported.
Please see section II.A. of the preamble to this final rule for an
extensive description of our formulary review process. Consistent with
Sec. [thinsp]423.578, prescribers can also request a formulary
exception if a desired outcome is not met with current formulary
alternatives. Additionally, the CMS formulary team reviewing Part D
formularies and related PA and ST criteria is composed of pharmacists
who are board-certified pharmacotherapy specialists with extensive
clinical experience reviewing PA and ST criteria. These pharmacists use
the FDA-approved labeling and widely accepted treatment guidelines when
considering PA and ST criteria for disease states.
Comment: A number of commenters expressed concern that PA and ST
policies can lead to patients' not filling their prescriptions or
underutilizing medications, which leads to non-adherence. Commenters
expressed concern that non-adherence, in turn, can lead to
interruptions in therapy across the six classes, and in the case of
HIV, would endanger public health because it is a communicable disease
which can rapidly mutate and become resistant to therapy.
Response: CMS acknowledges that PA and ST requirements can
potentially cause the issues cited when they are implemented without
the protections provided under the Part D program. However, we believe
such concerns have been mitigated in Part D based upon our more than 12
years of experience with the Part D program, including our existing
policy that allows for PA and ST for new starts of protected class Part
D drugs (except antiretrovirals), and the other unique Part D
protections that are more robust than in comparable programs. For
example, in all other Part D drug categories and classes, where wide
use of PA and ST has been allowed since the beginning of the Part D
program, subject to our other formulary requirements, we have no
evidence to suggest that Part D enrollees routinely experience
interruptions in therapy as a result of PA and ST requirements.
Moreover, CMS is advancing improvements in price transparency,
interoperability, and e-prescribing, such as RTBTs and Part D ePA as
required by section 6062 of the SUPPORT for Patients and Communities
Act (Pub. L. 115-271), that could help mitigate the kinds of
administrative burdens sometimes associated with PA and ST that
commenters claim could lead to underutilization.
Comment: Several commenters asserted that the PA process is
complicated and labor intensive, and also, given the high approval
rate--particularly for protected class Part D drugs--PA requirements do
not reduce medication utilization and thus simply impose unnecessary
burdens on patient care. Some commenters added that this proposal is
counter to CMS's Patients over Paperwork initiative.
Response: We are concerned that the current policy potentially
facilitates the overutilization of drugs within the protected classes,
particularly antipsychotics.\3\ \4\ \5\ By limiting the ability of Part
D sponsors to implement UM tools (for example, PA or ST requirements)
for an entire category or class, we also limit their ability to prevent
the misuse or abuse of drugs that are not medically necessary.
Inappropriate use of Part D drugs can lead to adverse effects that can
harm the enrollee and require medical treatment that will otherwise not
have been necessary, thus increasing overall Medicare costs.\6\ We
remain concerned there may be a link between the profitability of
products not subject to normal price negotiations as the result of
protected class status, such as antipsychotics, and overutilization,
particularly off-label overutilization, of some of these drugs.
Additionally, as discussed elsewhere in this final rule, CMS is
advancing improvements in price transparency, interoperability, and e-
prescribing, such as RTBTs, and Part D ePA as required by section 6062
of the SUPPORT for Patients and Communities Act (Pub. L. 115-271), that
could help mitigate the kinds of administrative burdens sometimes
associated with PA and ST and aligns this proposal with the Patients
over Paperwork initiative.
---------------------------------------------------------------------------
\3\ A May 2011 Department of Health and Human Services Office of
Inspector General report found that of 2.1 million elderly persons
who lived in nursing homes in the first 6 months of 2007, almost
305,000 had a prescription for at least one atypical antipsychotic
drug. Eighty-eight percent of these prescriptions were for off-
label, medically unacceptable uses and/or were associated with a
specific FDA Black Box warning against their use by elderly persons
with dementia. In all, unapproved uses and improperly documented
claims for these drugs cost Medicare $116 million in one 6-month
period. Medicare Atypical Antipsychotic Drug Claims for Elderly
Nursing Home Residents. OEI-07-08-00150. https://oig.hhs.gov/oei/reports/oei-07-08-00150.pdf Accessed April 17, 2019.
\4\ The percentage of long-term nursing home residents being
given antipsychotic drugs dropped from about 24 percent in late 2011
to under 15 in the third quarter of 2018. National Partnership to
Improve Dementia Care in Nursing Homes: Antipsychotic Medication Use
Data Report (January 2019). https://www.nhqualitycampaign.org/files/Antipsychotic_Medication_Use_Report.pdf. Accessed May 10, 2019.
\5\ Advocates say even the lower rate of antipsychotic usage is
excessive, given federal warnings that elderly people with dementia
face a higher risk of death when treated with such drugs. February
5, 2018. Crary D. Associated Press. ``New Report Details Misuse of
Antipsychotics in Nursing Homes'' https://www.statnews.com/2018/02/05/antipsychotics-nursing-homes-elderly/ Accessed May 10, 2019.
\6\ Prescription Drug Workgroup; American Academy of Actuaries.
Issue Brief: Prescription Drug Spending the in US Healthcare System,
an Actuarial Perspective. March 2018. https://www.actuary.org/content/prescription-drug-spending-us-health-care-system Accessed
April 12, 2019.
---------------------------------------------------------------------------
Comment: Commenters were divided over whether we should continue to
allow PA and ST for UM purposes for new starts only. Some commenters
strongly supported the idea. Many commenters expressed concern that
requiring enrollees to undergo ST requirements after they have already
been stabilized on a treatment regimen can cause disruptions to the
overall success of the enrollee's treatment and create negative
treatment health care outcomes. However, other commenters opposed to
limiting PA and ST for new starts only, as contrasted to permitting PA
and ST for new starts and existing therapy, expressed concern that data
limitations for PDP sponsors to discern new starts from existing
therapy at the POS would create operational issues that would
ultimately cause them not to use this exception, which would
sufficiently undermine the exception and render it ineffective.
Some commenters suggested that rebate differences between the
protected classes would yield greater cost savings for some protected
classes, such as antipsychotics, antidepressants, and anticonvulsants,
than the other protected classes (antiretrovirals, antineoplastics, and
immunosuppressants). These commenters asserted that certain protected
classes, like antiretrovirals to
[[Page 23840]]
treat HIV, do not have significant branded competition and therefore
would not be expected to see significant rebating, even absent the
protected classes policy.\7\ Other commenters suggested that CMS should
introduce automatic permission for a 7-day temporary supply while
approval is sought.
---------------------------------------------------------------------------
\7\ See PEW Comments on Proposals to Modernize Medicare Drug
Payments. https://www.pewtrusts.org/en/research-and-analysis/speeches-and-testimony/2019/01/25/pew-comments-on-proposals-to-modernize-medicare-drug-payments Accessed April 12, 2019.
---------------------------------------------------------------------------
Response: CMS' current policy permits PA and ST for new starts only
for protected class Part D drugs, except antiretroviral medications.
We proposed to broaden the permissible use of PA and ST for
protected class Part D drugs by permitting PA and ST for enrollees on
existing therapy. Our goal was to provide additional flexibility so
that Part D sponsors could better manage the benefit from a clinical as
well as a cost savings perspective. We believe that the existing
beneficiary protections, including our extensive clinical formulary
review and approval process, would adequately protect enrollees from
the inappropriate application of PA and ST requirements. Moreover, we
would effectively limit most ST criteria to new starts as best
practice, except when a change in therapy is clinically supported by
the recognized compendia or widely accepted treatment guidelines. When
step therapy is applied, we would expect to approve PA or ST
requirements with initial treatment that is comparably supported by
recognized compendia or widely accepted treatment guidelines.
Nevertheless, CMS is persuaded by comments that expressed
significant concern for the potential disruption of ongoing therapy of
protected class Part D drugs used for protected class indications and,
after considering all the comments, we conclude that the risks
associated with inappropriately interrupting therapy for stabilized
patients receiving protected class drugs for protected class
indications by potentially subjecting them to PA or ST requirements
outweighs the potential clinical benefits that some enrollees could
gain from switching therapies that might be more appropriate and the
potential cost savings that would accompany the additional formulary
management flexibility. Therefore, we are finalizing a codification of
existing policy that allows Part D sponsors to apply PA and ST
requirements for protected class Part D drugs, except for
antiretroviral medications, only for new starts, to determine if a
drug's intended use is for a protected class indication, ensure
clinically appropriate use, promote utilization of preferred formulary
alternatives, or a combination thereof, subject to CMS review and
approval. PA and ST will continue to be prohibited for antiretroviral
medications. Because the statutory protected class provision applies
only to Part D drugs, Part D sponsors may continue to use coverage
determinations, including PA or other reliable tools, to determine a
drug's status as a Part D drug irrespective of such drug's status as a
new start or existing therapy. However, we clarify that for enrollees
on existing therapy, Part D sponsors may not require PA to confirm that
a drug's intended use is for a protected class indication if the drug
otherwise does not have a high likelihood of use intended for a non-
medically accepted indication that would not be coverable under Part D.
In other words, sponsors generally will need to rely on alternative
approaches, such as retrospective DUR, to confirm the intended use is
for a protected class indication for enrollees on existing therapy.
CMS thanks the commenters for their suggestion about the 7-day
supply. However, because of our transition policy, which requires at
least a month's approved supply, a 7-day supply is not necessary.
Comment: Some commenters expressed concern that expanded use of PA
and ST will limit access to protected class Part D drugs for important
uses that may not be considered a protected class indication, for
example, enrollees who take various protected class Part D drugs for
conditions like chronic pain or lupus. Commenters asserted that access
limitations based on purported ``protected'' versus ``non-protected''
uses would be divorced from the clinical realities that exist for
patients with complex and chronic conditions.
Some commenters expressed concern that expanded use of PA and ST
will limit access to protected class Part D drugs that have more than
one protected class indication, for example, antidepressants with dual
use as anxiolytics (antianxiety medications) or antipsychotics and vice
versa, or as another example, anticonvulsants with use as adjunct
anxiolytics or antidepressants. Other commenters added that the
proposal does not protect off-label prescribing within a protected
class, for example, tacrolimus for lung transplants.
Response: A number of protected class Part D drugs have medically
accepted indications for non-protected class uses. As discussed in the
proposed rule, we are clarifying that we consider medically accepted
indications consistent with the identified drug categories or classes
of the protected classes to be ``protected class indications.'' In
other words, when a Part D drug is used for a protected class
indication, we consider it to be a protected class Part D drug. Using
the commenter's example, tacrolimus for lung transplants would still be
considered to be used for a protected class indication if use in lung
transplant is a medically accepted indication. In addition, Part D
drugs with multiple medically accepted protected class indications are
protected for each such protected class indication, even if the
indications are in more than one protected class. For example,
aripiprazole has an FDA-labeled indication for acute and maintenance
treatment of schizophrenia, and an FDA-labeled indication for
adjunctive treatment of major depressive disorder; both of these uses
are considered to be protected class indications.
As discussed in the proposed rule at 83 FR 62158, CMS is concerned
that unless a Part D sponsor can use PA to determine the indication for
which the drug has been prescribed, there is the potential to increase
Part D program costs when there may be a less expensive alternative
available to treat a particular non-protected indication that would be
clinically appropriate. Therefore, we will permit Part D sponsors to
use PA only for new starts in the protected classes, except for
antiretrovirals, to determine if such drugs' intended use is for non-
protected class indications. For those drugs that have both protected
class and non-protected class indications, we may permit different PA
requirements or formulary inclusion for non-protected class indications
than those used for protected class indications, depending upon the
clinical appropriateness and consistent with the July 25, 2018 and
August 29, 2018 HPMS memos about indication-specific UM and formulary
design. Additionally, to the extent that treatment guidelines for non-
protected class indications include drugs with both protected class and
non-protected class indications, plans will still be required to meet
all established Part D formulary criteria regarding access to such
drugs for non-protected class uses.
For example, for an enrollee who is a new start on topiramate, an
anticonvulsant, the PA criteria used for topiramate could determine
coverage and establish appropriate use in the following scenarios:
[[Page 23841]]
If use is for weight loss (an excluded, use under Part D),
the Part D sponsor would deny coverage. (We remind Part D sponsors that
they may deny coverage for excluded use under Part D irrespective of
the enrollee's status as a new start or continuing existing therapy);
If use is as an anticonvulsant (a protected class
indication), the plan would cover the drug; or
If use is for migraine prophylaxis (a non-protected class,
indication), the Part D sponsor could--
++ Deny coverage (if this use is not on formulary) and require the
enrollee to seek an exception to obtain coverage; or
++ Apply another set of PA or ST requirements for this indication.
We expect that all such issues or questions would be addressed
during the coverage determination to avoid the possibility of enrollees
needing to submit multiple coverage determination requests for the same
drug.
Application of PA criteria to determine use for weight loss, as an
anticonvulsant, or for migraine prophylaxis would be consistent with
our July 25, 2018 Health Plan Management System (HPMS) memorandum
entitled, ``Indication-Based Utilization Management'' and our August
29, 2018 HPMS memorandum entitled, ``Indication-Based Formulary Design
Beginning in Contract Year (CY) 2020.''
Finally, in their formulary materials, we would expect Part D
sponsors to note differential formulary inclusion for drugs with regard
to protected class versus non protected class indications.
Comment: A few commenters suggested that, while they did not
support our proposal to allow broader use of UM for protected class
Part D drugs, one area in which they did support the use of such tools
in the protected classes was to reduce the inappropriate prescribing of
antipsychotics in the long-term care setting.
Response: We share the commenters' concerns about inappropriate
prescribing of antipsychotics in the long-term care setting. Allowing
PA and ST for new starts of antipsychotics will help to limit
overutilization of these drugs for non-protected class indications (for
example, antipsychotic use for sedation in nursing homes).
Comment: Some commenters expressed concern that expanded use of PA
and ST will limit or delay access to more than one drug for an
indicated use, asserting that individuals sometimes require more than
one drug, or a specific combination of drugs, for a particular
condition, and that this is particularly salient within the protected
classes.
Response: To the extent that the FDA labeling, recognized
compendia, or treatment guidelines discuss the use of multiple drugs,
or a particular combination of drugs, within the protected classes for
a given protected class indication, consistent with our existing
formulary requirements, plans will still be required to provide
coverage of such drugs for those patients. Additionally, UM and
retrospective drug utilization review (DUR) can be used to ensure that
combinations are clinically appropriate and comport with treatment
guidelines, even if such combination is not first-line therapy, for
example, retrospective DUR to ensure the use of combination therapies
of HIV medications comport with the HHS HIV Guidelines.
Comment: Several commenters expressed concern that ST is not
appropriate for protected class Part D drugs, particularly
antineoplastics, antiretrovirals, and immunosuppressants.
Response: We agree that in most circumstances of clinically
appropriate care, ST would not be appropriate for protected class Part
D drugs. However, as a general statement, we disagree with the
commenters. Our more than 12 years of experience with the Part D
program has provided evidence of inappropriate prescribing within the
protected classes, across all of the classes, and particularly for
antipsychotics. Additionally, we have recently seen evidence of
fraudulent prescribing and diversion of antiretrovirals. Although we
are taking a more limited approach to our application of PA and ST than
we proposed and excluding antiretrovirals from the exception we are
finalizing at Sec. 423.120(b)(vi)(C), we continue to believe that PA
and ST are important tools to ensure clinically appropriate use of
drugs, including those in the protected classes.
Comment: Some commenters suggested that CMS should require plans to
list all drugs that require PA and ST.
Response: Plans are required to submit this information in their
bids. Additionally, this information is available when beneficiaries
search for plans by inputting their drugs into the Medicare Plan
Finder. This information is also required to be available in the
printed formulary, on the formulary on the plan's website, and
available by calling the plan.
Comment: Some commenters noted that the Emergency Medical Treatment
and Labor Act (EMTALA) requirements preclude emergency physicians from
asking patients about their insurance coverage before a medical
screening examination is completed, and therefore, emergency physicians
do not know which type of plan and formulary the patient may have at
the point of prescribing. These commenters asserted that the urgency of
treatment in the emergency setting requires emergency services
personnel to provide medications that may not be on a Part D plan's
formulary and suggested that CMS exempt prescriptions that originate in
emergency settings from this exception.
Response: Part D enrollees may be started on non-formulary
medications as inpatients or in emergency settings that are subject to
PA or ST requirements if continued upon discharge. If an enrollee who
presented to the pharmacy a new prescription was started on protected
class drugs in such a scenario, we would expect Part D sponsors to
consider such enrollee to be continuing existing therapy. Additionally,
as detailed previously, our transition requirements and exceptions and
appeals process provides the necessary protection for enrollees that
need to remain on such medications. Although Part D enrollees and
prescribers may need to avail themselves of our exceptions and appeals
processes, as discussed previously in this preamble and consistent with
section 30.4.7 of Chapter 6 of the Medicare Prescription Drug Benefit
Manual, we remind Part D sponsors that they are required to make
coverage determinations and redeterminations as expeditiously as the
enrollee's health condition requires.
Comment: A commenter requested that CMS allow MA plans, through a
step therapy edit, to require the use of a Part B drug prior to the use
of a protected class Part D drug starting in 2020.
Response: We noted in the proposed rule that the combination of our
proposal to specify additional exceptions to the formulary requirements
for protected class Part D drugs (section II.A. of the proposed rule,
``Broader Use of Prior Authorization for Protected Class Part D
Drugs'') and our proposal for step therapy for Part B drugs (section
II.F of the proposed rule, ``Medicare Advantage and Step Therapy for
Part B Drugs'') would allow MA-PD plans to require step therapy of a
Part B drug before a Part D drug. However, step therapy of a Part B
drug before a Part D protected class drug would be allowed only under
the circumstances outlined in this regulation (for example, only for
new starts of five of the six protected classes) and subject to our
Part D formulary review process.
[[Page 23842]]
We thank stakeholders for their comments on the proposed expansion
of PA and ST for protected class drugs. We are redesignating the
existing paragraph at Sec. 423.120(b)(2)(vi)(C) as paragraph (D) and
adding a new exception at paragraph (C), which we are modifying in
response to comments: For enrollees that are not on existing therapy on
the protected class covered Part D drug, and except for antiretroviral
medications, PA and ST requirements that are implemented to confirm
that the intended use is for a protected class indication, to ensure
clinically appropriate use, to promote utilization of preferred
formulary alternatives, or a combination thereof, subject to CMS review
and approval. As modified, the exception is a codification of existing
policy and does not place additional limits on beneficiary access to
medications.
2. New Formulations
We proposed two changes to our protected class exceptions to
address new formulations. First, we proposed a change to the existing
exception at Sec. 423.120(b)(2)(vi)(A) to reflect the forthcoming
introduction of interchangeable biological products to the market by
specifying drug or biological products that are rated as--(1)
therapeutically equivalent (under the FDA's most recent publication of
``Approved Drug Products with Therapeutic Equivalence Evaluations,''
also known as the Orange Book); or (2) interchangeable (under the FDA's
most recent publication of the Purple Book: Lists of Licensed
Biological Products with Reference Product Exclusivity and
Biosimilarity or Interchangeability Evaluations).'' Second, we proposed
to add a new exception at new paragraph Sec. 423.120(b)(2)(vi)(D) that
would have specified that, in the case of a single-source drug or
biological product for which the manufacturer introduces a new
formulation with the same active ingredient or moiety that does not
provide a unique route of administration, the new formulation may be
excluded from a Part D sponsor's formulary. Under our existing policy,
Part D sponsors are not required to include a new formulation of a drug
on their formularies when the older formulation is still available.
We received the following comments and our response follows:
Comment: Many commenters requested that CMS define the term ``new
formulation.''
Response: We declined to propose a definition for ``new
formulation'' because we believe Part D sponsors will be better able to
make these determinations more quickly, and we saw merit and benefit in
providing Part D sponsors with the flexibility to determine whether
they will exclude the drug or negotiate with the manufacturer for
formulary inclusion and placement.
Comment: A few commenters asked CMS to expand the application of
the proposed exception for new formulations beyond brand drugs to
include generic drugs.
Response: Multiple-source drugs that are therapeutic equivalents
already can be excluded from the formulary in accordance with the
existing exception at Sec. 423.120(b)(5)(vi)(A).
Comment: Several commenters wanted CMS and not, as we proposed,
Part D sponsors, to track which drugs would be eligible for exclusion
under this exception and to publish a list of applicable drugs.
Manufacturers largely wanted to limit the applicability of the
exception, and plans generally wanted CMS to make the determinations
for them.
Response: We did not propose that CMS publish a list of such drugs
because we believed Part D sponsors will be better able to make these
determinations more quickly, and we saw merit and benefit in providing
Part D sponsors with the flexibility to determine whether they will
exclude the drug or negotiate with the manufacturer for formulary
inclusion and placement.
Comment: Some commenters expressed concern that CMS was attempting
to fix a problem that has not happened yet, as there have been no
instances of new formulations that that meet the proposed criteria for
an exception within the protected classes. Other commenters further
suggested that, while they understood CMS's attempts to fix a potential
problem, our proposal, if finalized, would leave vulnerable enrollees
without access to needed drugs.
Response: The purpose of our proposed exception was to specify that
even if a new formulation of a single-source drug or biological product
in the protected class became the only formulation available, Part D
sponsors would have been able to exclude it from their formularies,
except as required by our other formulary requirements in Sec.
423.120(b)(2) and subject to our review and approval, as part of our
annual formulary review process. Under our existing policy, which will
still apply, Part D sponsors are not required to include a new
formulation of a drug on their formularies when the older formulation
is still available. CMS was persuaded by the commenters' argument
because under our proposed policy, in a scenario where our other
formulary requirements did not require Part D sponsors to have the new
formulation on their formulary, a Part D enrollee who is stable on the
old formulation could be left without access to the new formulation.
Consequently, we decline to finalize this exception.
Comment: Several commenters asserted that the exception for new
formulations is unnecessary if the exception for PA and ST is
finalized.
Response: We thank the commenters for their suggestion. We note
that we are not finalizing the new formulations exception.
Receiving no comments on the proposed change to the existing
exception at Sec. 423.120(b)(2)(vi)(A) to reflect the forthcoming
introduction of interchangeable biological products to the market, we
are finalizing a change to Sec. 423.120(b)(2)(vi)(A) to allow an
exception for interchangeable biological products, in addition to our
existing policy of an exception for therapeutically equivalent generic
drugs. We are not finalizing the proposed exception to specify that, in
the case of a single-source drug or biological product for which the
manufacturer introduces a new formulation with the same active
ingredient or moiety that does not provide a unique route of
administration, the new formulation may be excluded from a Part D
sponsors' formulary.
3. Pricing Threshold for Protected Class Part D Drug Formulary
Exclusions
To address Part D sponsors' assertion that they have limited
ability to negotiate manufacturer rebates and achieve appreciable
savings relative to drugs within the protected classes, as well as
price increases for such drugs, CMS proposed, effective for plan years
starting on or after January 1, 2020, to permit Part D sponsors to
exclude from their formularies any single-source drug or biological
product that is a protected class Part D drug whose price increases,
relative to the price in a baseline month and year, beyond the rate of
inflation. We proposed the rate of inflation would be calculated using
the Consumer Price Index for all Urban Consumers (CPI-U), and the price
would be defined as the Wholesale Acquisition Cost (WAC).
We received many comments regarding this proposal, including
commenters that supported this proposed exception, and agreed with CMS
that this flexibility would allow plans more negotiation power with
manufacturers on protected class Part D drugs. However, we also
received many
[[Page 23843]]
comments urging us not to finalize this proposed exception highlighting
concerns with beneficiary access, and inability to adequately address
rising launch prices, among other concerns. Based on the comments and
responses summarized below, we are not finalizing this proposed
exception.
We received the following comments and our response follows:
Comment: Several commenters supported this exception, and agreed
with CMS that this flexibility would allow plans more negotiation power
with manufacturers on protected class Part D drugs.
Response: While we are not finalizing the exception, we thank
commenters for their support.
Comment: Many commenters stated that all three of our proposals
greatly compromised access to needed therapy (that is, delays and/or
interruptions in therapy) for patients taking protected class Part D
drugs, which would lead to adverse health outcomes for these enrollees,
and, in the case of HIV, endanger public health.
Response: In considering whether to propose these exceptions, CMS
took our other enrollee access protections into account, which have
successfully protected beneficiary access to needed medications in the
more than 12 years the Part D program has been operational. There are
five such enrollee protections, which include formulary transparency,
formulary requirements, reassignment formulary coverage notices,
transition supplies and notices, and the expedited coverage
determination and appeals processes. While we believe our current
enrollee access protects are sufficient, we appreciate commenters
concerns regarding beneficiary access and protections and as a result
we are not finalizing the pricing threshold exception.
Comment: Several commenters asserted that this proposed exception,
since it is based on cost considerations rather than scientific
evidence, medical standards, or clinical practice, represents an
unexplained departure from established policy that would create
discrimination in Part D. Commenters further asserted that basing
exceptions to the protected classes on cost considerations is neither
supported by statute nor our existing regulations at Sec.
423.120(b)(2)(vi)(C).
Response: While a price increase could have triggered a formulary
exclusion, the exception we proposed would not have superseded our
other formulary requirements, including our annual clinically and
scientifically based formulary review and approval process, which
includes extensive checks to ultimately ensure adequate representation
of all necessary Part D drug categories or classes for the Medicare
population.
We would also like to clarify that we do not view an exception
based on a pricing threshold as a departure from current policy. While
our existing regulations at Sec. 423.120(b)(2)(vi)(C) discuss an
exception for protected class Part D drugs that is ``based upon
scientific evidence and medical standards of practice (and in the case
of antiretroviral medications is consistent with the [HHS] Guidelines
for the Use of Antiretroviral Agents in HIV-1-Infected Adults and
Adolescents),'' this is a separate and distinct exception from the
exceptions we proposed in this rulemaking. In other words, these
exceptions can exist contemporaneously, and are not in conflict with
each other.
Finally, we remind commenters that CMS conducts a discrimination
review to ensure that plans' formulary designs are not likely to
substantially discourage enrollment by certain Part D eligible
individuals.
Comment: Some commenters suggested that this exception policy was
based on the erroneous belief that prices of protected class Part D
drugs are increasing rapidly and that plans need additional leverage to
negotiate prices for protected class Part D drugs, citing evidence from
MedPAC's March 2017 report \8\ that shows plans' ability to adequately
manage utilization of protected class Part D drugs and drive enrollees
toward use of generic drugs.
---------------------------------------------------------------------------
\8\ MedPAC, Report to the Congress: Medicare Payment Policy
(March 2017). p. 412.
---------------------------------------------------------------------------
Response: MedPAC's finding that Part D plans ``have had success at
moving enrollees toward generic drugs, which helps to slow the growth
in prices, even when a drug has protected status,'' does not negate the
unsustainable growth in protected class Part D drug prices or a Part D
sponsor's limited ability to negotiate rebates for such drugs. For
example, in addition to Part D sponsors' limited ability to negotiate
rebates for protected class drugs, internal CMS analysis has also shown
price trends for brand drugs are consistently higher for drugs in
protected classes than such drugs in non-protected classes. On the
whole, protected class drug prices have increased more than other, non-
protected drug classes between 2012 and 2017. More recently, the
allowed cost per days' supply increased by 24 percent for protected
class brand drugs between 2015 and 2016 and by 14 percent between 2016
and 2017. In contrast, the allowed cost per days' supply increased by
16 percent for non-protected class brand drugs from 2015 to 2016, and
showed no growth for such drugs from 2016 to 2017. In addition, in the
March 2017 MedPAC report, MedPAC also stated ``[the drug's protected
class status] may limit the amount of rebates plan sponsors are able to
obtain from manufacturers in these classes,'' which supports the basis
for which we proposed this exception. Although we are not finalizing
the proposed exception, we remain concerned about the pricing dynamics
for protected class drugs.
Comment: Some commenters suggested that if CMS finalized the
exception to broaden use of PA and ST in the protected classes, then
finalizing the exception based on a pricing threshold would not be
necessary.
Response: As discussed earlier in this rule, we are only finalizing
the exception that exists under current policy, related to the use of
utilization management in the protected classes, which we believe will
continue to provide Part D sponsors with the flexibility to use PA and
ST in the protected classes and help them achieve negotiating leverage
to realize cost savings for their enrollees. We agree that, at that
this time, the pricing threshold exception is not a necessary addition
to the exceptions we are finalizing.
Comment: A commenter suggested this policy exception was
dangerously close to price fixing.
Response: Although we are not finalizing, this proposed policy
would not have placed restrictions on how manufacturers may price their
products. We also note that Part D sponsors would not have been
required to exclude a protected class Part D drug from formulary under
this exception, rather, we were simply proposing to provide the sponsor
the flexibility to do so. However, as discussed further below, concern
over whether Part D sponsors would be motivated to exercise this
flexibility is one reason why we are not adopting this exception in
this final rule.
Comment: Several commenters agreed with the proposal, but noted it
would not limit growth in the launch prices of new drugs, which have
been found to drive spending increases among specialty drugs, and might
even lead to higher launch prices moving forward. Commenters also noted
the potential for gaming by manufacturers to circumvent their drug
being eligible for formulary exclusion under this exception.
Response: We agree with commenters that there may be an incentive
for
[[Page 23844]]
manufacturers to come in at higher launch prices for protected class
Part D drugs as a result of this exception. In light of this concern
and others noted previously, we are not finalizing this exception.
Comment: A commenter noted that Part D sponsors' contracts with
manufacturers may include price protections, and as such, may be
protected from any change in WAC during the contract year. Thus, Part D
sponsors' motivation to apply this exception may be muted.
Response: We understand that all Part D sponsors may not be
motivated to use this exception, particularly considering the limited
savings associated with this exception. In light of this comment, we
are not finalizing this exception as proposed.
Comment: We received many comments in response to these requests
for comment on several specific technical and operational elements of
the exception, some in support of the proposed operational and
technical components of the exception, and others that suggested
alternative approaches to those proposed.
Response: We thank commenters for their responsiveness to the
comment solicitation, but we are not finalizing this proposed
exception.
Comment: A commenter suggested that, in order to discourage
potential gaming for drugs not yet on the market as of September 1,
2019, CMS establish a reference baseline price for drugs new to the
market consistent with the inflation-adjusted launch prices of leading
therapeutic alternatives in the class rather than allowing the
manufacturer to establish its own baseline price.
Response: CMS shares the commenter's concern over the risk of
potential gaming, and, thus, we are not finalizing this exception while
we continue to consider how best to align incentives to encourage
manufacturers to keep drug prices low of their own volition, as was
intended with the proposed exception.
Comment: A commenter recommended that CMS apply this exception more
broadly to include all National Drug Codes (NDCs) assigned to single-
source brand drugs, single-source generic drugs, and generic drugs, as
well as both protected class and non-protected class Part D drugs and
biological products. The commenter asserted that if only protected
class Part D drugs are excluded based upon price increases beyond a
certain threshold, that over time, manufacturers will have the ability
to apply egregious price increases to an NDC that applies to more than
one drug, as well as non-protected classes in order to make up for any
lost compensation.
Response: While we are not finalizing this exception, we remind the
commenter that Part D sponsors already have the flexibility to exclude
non-protected class Part D drugs from their formularies or apply PA and
ST requirements to such drugs, unless the drug is required to be on
formulary to be compliant with our formulary requirements. As discussed
earlier in the preamble, this exception--which would have applied only
to the requirement that all protected class Part D drugs be included on
the formulary--does not supersede our formulary requirements at Sec.
423.120(b)(2). Regarding multiple-source generic drugs, as discussed in
the proposed rule (83 FR 62160), we declined to apply this exception to
such drugs given the wide use of maximum allowable cost (MAC) pricing
for such drugs which yields changes in list prices such as WAC
meaningless.
Regarding potential price increases for an NDC related to multiple
drugs, it is unclear what the commenter means by referring to ``an NDC
that applies to more than one drug'' because an NDC is specific to a
drug, the manufacturer, strength, dosage form, and quantity. However,
if the commenter simply means that manufacturers will increase prices
for multiple other non-protected class Part D drugs to offset limiting
price increases on a specific protected class drug or drugs to the
cumulative change in CPI-U, we share those concerns. Based on the
comments received, we are not finalizing this proposed exception.
4. Solicitation of Comment for Special Considerations
In considering whether exceptions to the added protections afforded
by the protected class policy are appropriate, we took other enrollee
protections in the Part D program into account. As detailed earlier in
section II.A of this final rule, there are five such enrollee
protections which include formulary transparency, formulary
requirements, reassignment formulary coverage notices, transition
supplies and notices, and the expedited exception, coverage
determination, and appeals processes. Our formulary review and approval
process includes a formulary tier review, and for PA and ST, we also
conduct restricted access, ST criteria, PA outlier, and PA criteria
reviews. Additionally, our formulary review and approval process takes
into consideration the applicable indication, proposed applicability to
new or continuing therapy, and likelihood of comorbidities when
reviewing PA and ST criteria submitted to CMS by Part D sponsors. We
noted that best practice UM practices do not require an enrollee who
has been stabilized on an existing therapy of a protected class Part D
drug for a protected class indication to change to a different drug in
order to progress through ST requirements, and we would not have
expected Part D sponsors to require, nor would CMS have been likely to
approve such requirements, unless clinically warranted (for example, an
enrollee was started on clinically inappropriate therapy or received
second- or third-line therapy for initial treatment of a condition, as
described by the recognized compendia). Moreover, we believe our
current approach, which ensures at least one drug within the class is
offered on a preferred tier and free of PA and ST, is working well and
should be maintained. Currently, Part D formularies frequently have
more than one protected class Part D drug at a preferred cost sharing
level, especially in classes with significant generic penetration,
without any PA or ST requirement, and we do not expect that this policy
will prompt Part D sponsors to stop including protected class Part D
drugs on tiers with preferred cost sharing.
Finally, our transition policy will continue to require Part D
sponsors to provide all new enrollees with at least an approved month's
supply if the Part D sponsor cannot determine at the point of sale
whether the enrollee is currently taking such protected class Part D
drug. (For a detailed discussion of our transition requirements, see
section II.A. of this final rule and regulations at Sec.
423.120(b)(3).)
Nonetheless, it was our intent to make certain that the three
proposed exceptions to the protected class policy (that is, broader use
of PA, new formulations, and pricing thresholds) would not introduce
interruptions for enrollees on existing therapy of protected class Part
D drugs for protected class indications.
We solicited comment on whether there are additional considerations
that will be necessary to minimize: (1) Interruptions in existing
therapy of protected class Part D drugs for protected class indications
during PA processes; and (2) increases in overall Medicare spending
from increased utilization of services secondary to adverse events from
interruptions in therapy. These could include, but are not limited to,
for example, special transition considerations for on-formulary
protected class Part D drugs for which the Part D sponsor has
[[Page 23845]]
established PA requirements, or as another example, for transitioning
some enrollees taking protected class Part D drugs for protected class
indications to alternative Part D drugs. If so, we sought comment on
why our current requirements and protections are inadequate, or could
be improved. In addition, we solicited comment on what specific patient
population(s), individual patient characteristic(s), specific protected
class Part D drugs or individual protected drug classes will require
such additional special transition or other protections and how such
population(s) can be consistently identified. Finally, we solicited
comment on other tools that could be used to minimize interruptions in
existing therapy of protected class Part D drugs for protected class
indications during PA processes, for example, wider use of diagnosis
codes on prescriptions, ePA during e-prescribing, targeting protected
class Part D drugs in Medication Therapy Management (MTM) programs, or,
as another example, expanded use of a data-sharing tool to exchange
information for enrollees transitioning from one plan to another.
We received the following comments and our response follows:
Comment: Several commenters expressed concerns that our proposals
would increase costs for Medicare Part D enrollees, the Part D program,
and Medicare overall due to increased utilization of other healthcare
services, for example, emergency department visits and inpatient
admissions. Some commenters requested that we exempt various protected
class indications or enrollees in LTC settings or served by LTC
pharmacies from the application of the proposed exceptions, asserting
these enrollees will have higher hospital admission and readmission
rates due to complications from ineffective medications and consequent
needs for additional treatment.
Response: CMS solicited comment on whether there are additional
considerations that will be necessary to minimize increases in overall
Medicare spending from increased utilization of services secondary to
adverse events from interruptions in therapy but did not receive
suggestions, apart from exempting virtually all of the applicable
enrollees from the exceptions, to abate these concerns.
We understand the importance of access and continuity of care with
these as well as all classes and will take that into consideration when
approving PA and ST criteria. Our annual formulary review and approval
process includes extensive checks to ensure appropriate representation
of drugs for all necessary Part D drug categories or classes for the
Medicare population. Our process has been working well to ensure that
enrollees have access to the drugs they need for their medical
conditions. Formularies will still be subject to the entire CMS
formulary review criteria, and our formulary review criteria look at
widely accepted treatment guidelines.
As discussed previously, we are finalizing one exception to the
protected classes formulary inclusion requirements. We are finalizing
an exception, consistent with current policy, to allow Part D sponsors
to apply PA and ST requirements for protected class Part D drugs,
except antiretrovirals, for new starts only to confirm intended use is
for a protected class indication, ensure clinically appropriate use,
promote utilization of preferred formulary alternatives, or a
combination thereof. Under this exception, PA and ST will continue to
be prohibited for antiretroviral medications. Any PA or ST requirements
implemented under this exception will be subject to CMS review and
approval.
Comment: Several commenters expressed support for our existing
transition requirements.
Response: We thank the commenters for their support.
Comment: We received comments in support of our suggestions on
other tools that could be used to minimize interruptions in existing
therapy of protected class Part D drugs for protected class indications
during PA processes, for example, wider use of diagnosis codes on
prescriptions, ePA during e-prescribing, targeting protected class Part
D drugs in Medication Therapy Management (MTM) programs (including
mandatory MTM for Part D enrollees in nursing homes on protected class
Part D drugs), or, as another example, expanded use of a data-sharing
tool to exchange information for enrollees transitioning from one plan
to another. Additionally, a commenter urged improvements to electronic
health records and claims processing.
Response: We thank the commenters for their support. As discussed
previously, CMS is taking steps to provide e-prescribing improvements
such as RTBTs, and Part D electronic prior authorization as required by
section 6062 of the SUPPORT for Patients and Communities Act (Pub. L.
115-271). CMS could explore the generation of reports through data
sharing platforms. Regarding electronic health records and claims
processing, we thank the commenter and welcome more input on this
suggestion.
Comment: A number of commenters claimed that existing protections
do not reliably ensure access to medically appropriate protected class
Part D drugs. Some commenters in support of the proposals also
encouraged CMS to improve enrollee protections, namely the appeals and
exceptions processes. Commenters disputed our claim that our appeals
and exceptions processes are mature and have proven workable, asserting
that Medicare Part D enrollees afflicted with conditions addressed by
protected class drugs continue to have considerable difficulty in
navigating Part D, even after the improvements that CMS has recently
taken to assist Medicare beneficiaries with selecting a plan and
navigating the appeals and grievance processes. Commenters added that
this is particularly concerning given that the proposal does not make
mention of any additional CMS resources (such as additional staff or
appropriations) to ensure that enrollees who need access to drugs
within the protected classes are able to obtain their medications in a
timely manner. Some commenters suggested that CMS should establish an
expedited exceptions process that functions in less than 24 hours.
Other commenters added that broader PA and ST should not be implemented
without improvements to electronic health records (EHRs) and claims
processing.
Response: CMS disagrees with the assertion that existing appeals
processes are inadequate to ensure access to needed to medically-
appropriate protected class Part D drugs, and commenters provided no
evidence to support statements that Part D enrollees with protected
class indications have difficulty navigating Part D. To that end, under
the exceptions we are finalizing in this rule, the appeals process will
work as it does today. If the enrollee's plan will not cover a drug the
enrollee needs, or it will cover the drug at a higher cost than they
believe they are required to pay, the enrollee or their prescriber can
request a coverage determination (for example, a PA or tiering
exception) from their plan. If their plan denies their request, they
have the right to appeal that decision to obtain a redetermination.
Additionally, the requirements at Sec. 423.568 for coverage
determinations and Sec. 423.572 for expedited coverage determinations
state that the plan must notify the enrollee ``as expeditiously as the
enrollee's health condition requires, but no later than [72 or 24
hours, respectively] after receiving the request, or, for an exceptions
request, the physician's or other prescriber's
[[Page 23846]]
supporting statement.'' That is to say, if an enrollee's health
condition requires a response in less than 24 hours, the plan is
obligated to provide one. Therefore, our existing appeals requirements
already provide for timeframes of less than 24 hours when warranted.
CMS will continue to closely monitor appeals activity through
audits and our Complaints Tracking Module (CTM) to ensure enrollees'
requests are appropriately evaluated and that Part D sponsors are
adhering to regulations. While we have confidence in our appeals
process, CMS continues to take steps to improve the Part D Appeals
process. Additionally, e-prescribing improvements such as real-time
benefit tools (RTBTs) and Part D electronic prior authorization as
required by section 6062 of the SUPPORT for Patients and Communities
Act (Pub. L. 115-271) could reduce the need for appeals. CMS will take
steps to further improve and strengthen the appeals process in response
to any issues that arise.
Finally, CMS does not foresee a need to augment its clinical review
staff because we already review PA and ST in the protected classes for
new starts.
Comment: Some commenters claimed that the existing formulary review
and approval process is inadequate to ensure non-discriminatory PA and
ST requirements that would limit access to protected class Part D
drugs, and the only way to ensure access to drugs in these classes is
to maintain the policy as it exists today. Commenters asserted that our
outlier analysis is an insufficient tool to provide oversight against
potential discriminatory practices, particularly against enrollees who
take high-cost drugs in these classes, HIV patients, LIS enrollees, and
dually-eligible enrollees (particularly children). Commenters added
that an outlier analysis is simply a test to determine if a certain
plan is being more discriminatory than other plans but would not
identify common discriminatory practices across plans. However, other
commenters highlighted industry practices that are not currently
allowed in Part D and were concerned that such practices would be
allowed in Part D under our proposed modifications to the protected
class policies. For example, some commenters expressed concern that we
would allow PA for Truvada[supreg] which is indicated for prevention of
HIV transmission. Other commenters cited commercial plans' requirements
to use multi-tablet regimens for HIV, which are known to reduce
medication adherence.
Response: We conduct a discrimination review consistent with Sec.
[thinsp]423.272(b)(2) to ensure that plans' formulary designs are not
likely to substantially discourage enrollment by certain part D
eligible individuals. Our clinical checks are intended to ensure that
formularies are robust and do not substantially discourage enrollment
by certain beneficiaries. Our outlier analysis is an additional step
that allows us to further question why a specific formulary either has
additional or fewer UM requirements than most other plans (for example,
an outlier because a Part D sponsor has not imposed PA where most other
Part D sponsors require PA, or an outlier because a Part D sponsor
requires PA when most other Part D sponsors do not). Being an outlier
in and of itself does not mean a formulary substantially discourages
enrollment (it might be just the opposite), but rather ensures the plan
can justify the basis for its additional or fewer UM requirements
compared to other plans.
All of our formulary requirements, when taken together, have
resulted in CMS' ability, in its twelve-year experience implementing
the benefit, to prevent formularies that are likely to substantially
discourage enrollment by certain Part D-eligible individuals under
plans. This includes protected class Part D drugs, due to our existing
allowance of PA and ST for new starts. We do not anticipate that
adoption of this policy will change our ability to prevent formularies
that are likely to substantially discourage enrollment by certain Part
D-eligible individuals under plans now. We are not aware of any
industry-wide practices that would result in formularies that are
likely to substantially discourage enrollment by certain Part D-
eligible individuals under plans that would also meet the totality of
our formulary requirements.
Comment: Some commenters expressed frustration that coverage
determinations, exceptions, and appeal approvals are usually only
granted for the duration of 1 plan year. Other commenters added that
immunosuppressant approvals, specifically, should be extended to match
the life of the transplanted organ.
Response: Part D benefits operate on a plan year for 1 calendar
year. While extended-duration (that is, longer than 1 calendar year)
approvals may be possible for Part D enrollees who stay with a plan
across multiple plan years, we recognize such approvals present
challenges when Part D enrollees switch plans. CMS has instituted the
Additional Beneficiary Information Initiatives (ABII) web portal to
facilitate data sharing from Medicare Part A claims data relative to
Medicare-covered transplants to aid Part D sponsors in making these
determinations; plans may request access to ABII to receive this
information about their enrollees. If a Part D enrollee switches plans,
the transition policy would apply and plans would be required to
provide the medication for at least an approved month's supply. As
discussed previously, CMS could explore the generation of additional
pertinent reports through secure data-sharing platforms.
Comment: Related to the pricing threshold exception, a commenter
suggested that enrollees doing well on a therapy should not lose their
ability to take that therapy, and enrollees on an existing therapy
should be grandfathered such that they do not lose the ability to
continue on that therapy. In addition, for enrollees not eligible for
grandfathering, Part D sponsors should be required to notify enrollees
of their decision to exclude a therapy any time they do so pursuant to
this exception.
Response: We appreciate the concerns raised by these commenters
and, as noted previously, will not be finalizing this proposal.
We are finalizing the first exception with the modification to
allow Part D sponsors to apply PA and ST requirements for protected
class Part D drugs, except antiretrovirals, only for new starts to
confirm intended use is for a protected class indication, to ensure
clinically appropriate use, to promote utilization of preferred
formulary alternatives, or a combination thereof, subject to CMS review
and approval. PA and ST will continue to be prohibited for
antiretroviral medications under this exception. As such, we also allow
indication-based formulary design and utilization management for new
starts of protected class Part D drugs, which would allow Part D
sponsors to exclude the protected class Part D drug from the formulary
for non-protected class indications. As is required for all other Part
D drug categories or classes, these formulary design and utilization
management edits will be subject to CMS review and approval as part of
our annual formulary review and approval process, which includes
reviews of PA and ST edits that will restrict access, step therapy
criteria, PA outliers, and PA criteria. (For an extensive description
of our annual formulary checks see section II.A.1. of this final rule.)
We also are finalizing a change to permit exclusion of interchangeable
biological products. As modified, the exception is a codification of
existing policy and does not place additional limits on beneficiary
access to medications.
[[Page 23847]]
In response to comments, we are not finalizing the proposed
exceptions to (1) allow Part D sponsors to exclude a protected class
Part D drug from a formulary if it is a new formulation of a single-
source drug or biological product with the same active ingredient of
moiety that does not provide a unique route of administration,
regardless of whether the other formulation is removed from the market;
and (2) to permit Part D sponsors to exclude from their formularies any
single-source drug or biological product that is a protected class Part
D drug whose price increases, relative to the price in a baseline month
and year, beyond the rate of inflation.
B. Prohibition Against Gag Clauses in Pharmacy Contracts (Sec.
423.120(a)(8)(iii))
In October 2018, Congress enacted the ``Know the Lowest Price Act
of 2018'' (Pub. L. 115-262). The measure, which amends section 1860D-4
of the Act by adding a paragraph (m), prohibits Medicare Part D plan
sponsors from restricting their network pharmacies from informing their
Part D plan enrollees of the availability of prescription drugs at a
cash price that is below what that the enrollee will be charged (either
the cost sharing amount or the negotiated price when it is less than
the enrollee's cost sharing amount) for the same drug under the
enrollee's Part D plan. In effect, the legislation prohibits Part D
sponsors from including in their contracts with their network
pharmacies ``gag clauses'', a term used within the prescription drug
benefit industry that refers to provisions of drug plan pharmacy
contracts that restrict the ability of pharmacies to discuss with plan
enrollees the availability of prescriptions at a cash price that is
less than the amount the enrollee will be charged when obtaining the
prescription through their insurance. The measure becomes effective
with the plan year starting January 1, 2020.
To make the Part D regulations consistent with the statute
governing the Part D program, we proposed to incorporate the new
requirement into the Part D regulations. Specifically, we proposed to
amend the set of pharmacy contracting requirements at Sec.
423.120(a)(8) by adding a paragraph (iii) that provides that a Part D
sponsor may not prohibit a pharmacy from, nor penalize a pharmacy for,
informing a Part D plan enrollee of the availability at that pharmacy
of a prescribed medication at a cash price that is below the amount
that the enrollee will be charged to obtain the same medication through
the enrollee's Part D plan.
Comment: A number of commenters expressed strong support and
appreciation for our effort to incorporate into the Part D regulations
the provisions of the ``Know the Lowest Price Act'' promptly after
enactment of the legislation.
Response: We thank the commenters for their support.
Comment: Several commenters requested that CMS address additional
issues related to beneficiaries' opting to purchase their prescriptions
outside their Part D plan. Specifically, they suggested that CMS adopt
policies to make it easier for plan enrollees to have their cash
purchases reported electronically and automatically to their Part D
plan sponsors, allowing the payment amounts to be counted toward
beneficiaries' TrOOP and benefit deductible accumulations. Commenters
also expressed their concern that prescriptions obtained outside the
Part D benefit are not subject to plans sponsors' drug utilization
review and medication therapy management tools, creating potential
health and safety risks for beneficiaries who pay out of pocket for a
covered medication. Some of these commenters urged CMS to take steps to
ensure beneficiaries are made aware of this particular risk.
Response: We thank the commenters for their perspectives, though
their suggestions are outside the scope of this rule. We have
previously advised in sub-regulatory guidance (Chapter 5, Section 30.1
of the Medicare Prescription Drug Benefit Manual) that sponsors should
accept paper claims for prescriptions their enrollees obtain without
using their Part D benefit so that the sponsor can make the appropriate
determinations concerning reimbursement, total gross covered drug cost,
and TrOOP. Also, in our guidance, we have affirmed that it is in the
best interests of beneficiaries to have their claims processed through
their Part D sponsor so that concurrent drug utilization review can be
performed (Chapter 14, Section 50.4.3 of the Medicare Prescription Drug
Benefit Manual). We will continue to evaluate the impact on the Part D
program of Part D plan enrollees filling their prescriptions outside
their benefit plan and may consider proposing regulatory changes to
address identified concerns in the future.
Comment: A commenter noted that the language of the proposed rule
did not exactly mirror the language of the underlying statute.
Specifically, the statute states that a sponsor may not restrict a
pharmacy from informing a beneficiary of a ``lower price the individual
would pay for the drug'' if obtained without using insurance while the
rule refers to a ``cash price'' that is below the amount that would be
charged to obtain the drug through insurance. The commenter states that
the term ``cash price'' is not used in the statute and therefore, to
promote uniformity in practical application of the requirement
throughout the payer and provider industry, it should not be used in
the corresponding rule.
Response: We appreciate the comment, though we believe that while a
rule must reflect the meaning of its underlying statute, it need not
simply re-state the statutory language. The commenter has not indicated
how the use of the term ``cash price'' changes the meaning of the
statute or could create confusion in its application. We have used the
term ``cash price'' in previous Part D guidance addressing the issue of
beneficiaries obtaining drugs outside their Part D benefit plans,
including manual chapters and the May 2018 memorandum issued by the
Administrator advising Part D sponsors that they should not include gag
clauses in their pharmacy contracts. The term ``cash price'' is a term
understood within the industry to mean a price charged by a pharmacy to
customers not using insurance to obtain a prescription drug and its use
in the rule promotes clarity in the statement of the new prohibition.
For the reasons sets forth in the proposed rule and our response to
the related comments, we are finalizing the proposed regulation at
Sec. 423.120(a)(8)(iii) without modification.
C. E-Prescribing and the Part D Prescription Drug Program; Updating
Part D E-Prescribing Standards (Sec. 423.160)
1. Legislative Background
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) requires the adoption
of Part D E-Prescribing (eRx) standards. Prescription Drug Plan (PDP)
sponsors and Medicare Advantage (MA) organizations offering Medicare
Advantage Prescription Drug Plans (MA-PD) are required to establish
electronic prescription drug programs that comply with the e-
prescribing standards that are adopted under this authority. There is
no requirement that prescribers or dispensers implement eRx. However,
prescribers and dispensers who electronically transmit and receive
prescription and certain other information for covered drugs prescribed
for Medicare Part D eligible
[[Page 23848]]
beneficiaries, directly or through an intermediary, are required to
comply with any applicable standards that are in effect.
For a further discussion of the statutory basis for this final rule
and the statutory requirements at section 1860D-4(e) of the Act, please
refer to section I. of the eRx and the Prescription Drug Program
February 2005 proposed rule (70 FR 6256).
2. Regulatory History
Part D eRx standards are periodically updated to take new
knowledge, technology, and other considerations into account. CMS
currently requires providers and dispensers to utilize the National
Council for Prescription Drug Programs (NCPDP) SCRIPT standard,
Implementation Guide Version 10.6, which was approved November 12,
2008, to provide for the communication of a prescription or
prescription-related information for certain named transactions.
However, as of January 1, 2020, prescribers and dispensers will be
required to use the NCPDP SCRIPT standard, Implementation Guide Version
2017071, which was approved July 28, 2017 to provide for the
communication of prescription or prescription-related information
between prescribers and dispensers for the old named transactions and a
handful of new transactions named at Sec. 423.160(b)(2)(iv). We also
currently require (under Sec. [thinsp]423.160(b)(5)) Medicare Part D
plan sponsors and prescribers to convey electronic formulary and
benefits information amongst themselves using Version 3 Release 0
(Version 3.0), from April 2012 of the NCPDP Formulary and Benefits
Standard Implementation Guides. (For a detailed discussion of the
regulatory history of eRx standards see the November 2017 proposed rule
(82 FR 56437 and 56438)).
The NCPDP SCRIPT eRx standards (SCRIPT) and the NCPDP Formulary and
Benefits standards (F&B) have become critical components of the Part D
program. In the 2018 calendar year, over 66 percent of Part D
prescriptions were transmitted electronically using the applicable
SCRIPT standard, and all Part D plans implemented electronic F&B files
using the adopted standard. Prescribers can use electronic F&B
transactions during the eRx process. F&B is a batch mode transaction
standard by definition, and therefore does not provide real-time
information. A batch transaction allows plans to send the information
nightly, weekly or even monthly. As plans make routine changes in their
formularies, they may or may not be captured on the batch formulary
files. In addition, F&B provides information on a contract level,
rather than a patient level, and consequently could not provide out-of-
pocket costs for a given patient at a given point in time, since costs
and applicability of utilization management could vary significantly
for individual beneficiaries depending on a variety of factors. For
example, a contract may have a prior authorization (PA) requirement on
a drug and that requirement would be listed on F&B data. However, if a
particular beneficiary has already completed that PA requirement, RTBT
would erroneously indicate that PA would be required in order for the
plan to pay for the drug as prescribed. Likewise, F&B data could
display outdated information about beneficiary-specific out-of-pocket
costs based on the applicable phase of the benefit. For example, it
would not indicate the out of pocket costs for a particular beneficiary
when the deductible has been exhausted.
We proposed a real-time benefit tool (RTBT) to serve as a critical
adjunct to the existing SCRIPT and F&B electronic standards. Should
prescribers chose to implement electronic prescribing, the existing
SCRIPT standard allows them a means to conduct electronic prescribing,
while the F&B standard allows a prescriber to see what is on the plan's
formulary. However, neither of those standards can convey patient-
specific real-time cost or coverage information that includes formulary
alternatives or utilization management data to the prescriber at the
point of prescribing. We proposed RTBT to be layered on top of F&B data
to gain a more complete view of the beneficiary's prescription benefit
information. It can augment the information available in F&B because,
though F&B is useful, it is a batch mode transaction standard by
definition and therefore does not provide real-time information.
As described in more detail in the next section, we believe
requiring plans to make one or more RTBTs available to prescribers will
lead to higher prescriber use of F&B information during the eRx
process. To be eligible for selection by a Part D sponsor, we proposed
to require that the RTBT be capable of integrating with at least one
prescriber's eRx and EMR system(s) the latter of which will hereinafter
be referred to as an electronic health record or EHR for consistency
with current Departmental terminology) and providing patient-specific
coverage information at the point of prescribing to enable the
prescriber and patient to collaborate in selecting a medication based
on clinical appropriateness, coverage and cost.
We believe that furthering prescription price transparency is
critical to lowering overall drug costs and patients' out-of-pocket
costs, and anticipate improved medication adherence, as well as support
for the MMA objectives of patient safety, quality of care, and
efficiencies and cost savings in the delivery of care.
3. Adoption of a Real-Time Benefit Tool
As we explained in the proposed rule (83 FR 62152), the Medicare
Part D program allows contracted entities that offer coverage through
the program latitude to design plan benefits, provided these benefits
comply with all relevant requirements. This flexibility results in
variation in Part D plans' benefit design, cost-sharing amounts,
utilization management tools (that is, prior authorization, quantity
limits, and step therapy), and formularies (that is, covered drugs). We
are aware of several Part D prescription drug plans that have begun to
offer RTBT inquiry and response capabilities to some physicians to make
beneficiary-specific drug coverage and cost data visible to prescribers
who wish to use such data at the point-of-prescribing. We have reviewed
multiple RTBT software solutions and have found that they are generally
designed to provide patient-specific clinically appropriate information
on lower-cost alternative therapies through the prescribers' eRx or EHR
systems, if available, under the beneficiary's prescription drug
benefit plan. However, for those software solutions that are capable of
providing such decision support, based on our current experience, we
understand that the prescribers will only embrace the technology if the
prescriber finds the information to be readily useful. Thus, we stated
in the proposed rule that to ensure success, we believe that the Part D
sponsor must present prescribers with formulary options that are all
clinically appropriate and accurately reflect the costs of their
patient's specific formulary and benefit options under their drug
benefit plan. In addition, as stated in the proposed rule, those who
use plans' current RTBT technology report that prescribers are most
likely to use the information available through RTBT transactions if
the information is integrated into the eRx workflow and electronic
health record (EHR) system. This will allow the prescriber and patient,
when appropriate, to choose among clinically acceptable alternatives
while weighing coverage and costs. Since eRx is generally performed
within the provider's EHR system, integration of the RTBT function
within the EHR generally, and the eRx workflow
[[Page 23849]]
specifically, appears to be critical for the successful implementation
of the technology. However, we recognize that without an industry
standard for RTBT, prescribers may be offered multiple technologies,
which may overwhelm and create burden for EHR vendors. We also
recognized that without a standard, the RTBT tool provided may not be
integrated with a prescriber's EHR, thus limiting its utility.
As stated in the proposed rule (83 FR 62152), we are interested in
fostering the use of these real-time solutions in the Part D program,
given their potential to lower prescription drug spending and minimize
beneficiary out-of-pocket costs. Not only can program spending and
beneficiary out-of-pocket costs be reduced, but evidence suggests that
reducing medication cost also yields benefits in patients' medication
adherence. As mentioned in the proposed rule, a 2012 review of studies
found that 85 percent of studies demonstrated that increasing patient
cost-share for a medication was associated with a significant decrease
in medication adherence.\9\ This review also revealed that 86 percent
of these studies demonstrated that increased medication adherence was
associated with improved clinical outcomes. With respect to studies
that directly measured the impact of out-of-pocket costs on outcomes,
76 percent found that increased medication out-of-pocket costs was
associated with adverse non-medication related outcomes such as
additional medical costs, office visits, hospitalizations, and other
adverse events. Subsequently published studies continue to reflect
similar findings.\10\ \11\
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\9\ Eaddy, M. T., Cook, C. L., O'Day, K., Burch, S. P., &
Cantrell, C. R. (2012). How Patient Cost-Sharing Trends Affect
Adherence and Outcomes: A Literature Review. Pharmacy and
Therapeutics, 37(1), 45-55.
\10\ Hershman, D.L., Tsui, J., Meyer, J., et al. (2014). The
change from brand-name to generic aromatase inhibitors and hormone
therapy adherence for early-stage breast cancer. Journal of the
National Cancer Institute. 106(11), dju319.
\11\ Chen SY, Shah SN, Lee YC, et al. (2014). Moving branded
statins to lowest copay tier improves patient adherence. American
Journal of Managed Care. 20, 34-42.
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Therefore, we proposed that each Part D sponsor be required to
implement one or more RTBT capable of integrating with at least one
prescriber's eRx and EHR systems to provide complete, accurate, timely,
clinically appropriate and patient-specific real-time formulary and
benefit information to the prescriber. We also encouraged plans to use
RTBTs to promote full drug cost transparency by showing each drug's
full negotiated price (as defined in Sec. 423.100), in addition to the
beneficiary's out-of-pocket cost information.
We also stated that health care providers using the RTBT should
ensure that individuals are aware that information about services or
treatment, such as a future prescription, may be disclosed to the plan
by the tool, and effectuate the individual's disclosure restriction
request by refraining to use the tool in instances in which the patient
intends to self-pay in full. We encouraged covered health care
providers to discuss with the individual whether the individual desires
the prescriber to use the RTBT as doing so will generally eliminate the
beneficiary's ability to request disclosure restrictions as the plan
will already be in possession of the query data regarding the desire to
prescribe something for a specified condition.
We sought comments on our proposal, including the feasibility for
plans to meet the proposed January 1, 2020 deadline, and how our
proposal may or may not expedite our goal of giving each Part D
enrollee and the clinicians who serve them access to meaningful
decision support through RTBT. We also sought relevant feedback about
RTBT standardization efforts; this includes the planned fulfillment of
any milestones that standardization bodies have already met, or are
likely to meet in advance of the proposed January 1, 2020 deadline. We
noted that we would consider retraction of our rule if we received
feedback indicating that it would be contrary to advancing RTBT within
Part D, or if a standard has been voted upon by an accredited Standard
Setting Organization or there were other indications that a standard
would have been available before the proposed 2020 effective date. In
such case, we indicated that we would review such standard, and if we
find it suitable for the Part D program consider proposal of that
standard as a requirement for implementation in our 2021 rulemaking,
effective January 1, 2021. We also solicited comments regarding the
impact of the proposal on plans and providers, including overall
interoperability and the impact on medical record systems. Finally, we
solicited comments regarding the impact of the proposed effective date
on the industry and other interested stakeholders.
We received approximately 194 comments on this proposal. Following
are summaries of the comments we received and responses to these
comments.
Comment: Commenters expressed widespread conceptual support for our
proposal as a way to accelerate use of electronic Real-time Benefit
Tools (RTBT) in the Part D program. These commenters believed that the
provision of patient-specific price and coverage transparency at the
point of prescribing will enable patients and providers to make more
informed decisions about medication therapy.
Response: We thank commenters for their support.
Comment: We received numerous comments relating to the proposed
January 1, 2020 implementation date. Although several commenters stated
that the 2020 deadline was achievable, the majority of comments
expressed concern. Most commenters believed that it would be prudent to
delay the implementation date until an industry standard was available
with some commenters characterizing the proposed time frame as overly
aggressive or unrealistic given the level of effort required to
implement RTBT.
Response: These comments have persuaded us that implementing RTBT
will take substantial effort and that a 2020 deadline may be too
difficult to achieve for those plans that have not yet begun to
implement a real time solution. Given the considerable level of effort
involved in developing RTBT we are delaying the required implementation
date until January 1, 2021. However, given the potential benefits of
RTBT, we strongly encourage plans to facilitate earlier use of RTBT
when possible and start implementing prior January 1, 2021.
Comment: Many commenters stated that requiring RTBT in absence of
an industry standard will impede integration of real-time information
into EHRs and eRx systems. Many commenters urged CMS to continue to
work with the industry through the National Council for Prescription
Drug Programs (NCPDP) to develop a national standard that could meet
the Part D program's needs. A few commenters asked CMS to wait a year
or two after a standard becomes available in order to give the industry
time to implement it. They noted that the cost of integrating multiple
RTBT systems into EHRs will be prohibitive and may be passed on to
prescribers through fees to the providers. A commenter suggested that
CMS require that RTBT be provided to prescribers free of charge.
Response: CMS continues to support interoperability as a way to
reduce the burden on health care providers and, as noted in our
proposed rule, we would have preferred to consider and name a single
industry standard for use in Part D. However as an industry standard is
not yet available and we wish to bring the benefits of RTBT to the Part
D
[[Page 23850]]
market as soon as feasible, we are finalizing the provision that each
plan implement an RTBT of its choosing. Should a suitable RTBT standard
emerge sometime in the future, we can consider it for future
rulemaking. We also note that prescribers will be unlikely to use RTBT
tools that impose a significant financial burden on their practices. We
therefore encourage plans to work with those responsible for their
real-time solutions to make sure that they present value to
prescribers. The Department of Health and Human Services will continue
to engage with standards development organizations, such as NCPDP to
encourage the development of standards.
Comment: Several commenters cautioned that holding plan sponsors
solely accountable for implementation of RTBT places an unfair burden
on the plans and will not result in furthering CMS's goals of
widespread use of the technology. Other commenters asked if a Part D
sponsor would be considered compliant with this provision if their RTBT
only integrates with one EHR.
Response: Though we believe that EHR and eRx providers will adopt
well-developed RTBT solutions, we recognize that such acceptance is not
always in the Part D plan's control. The proposed and final regulatory
language make it clear that the Part D plan is responsible for
supporting an RTBT capable of integrating with at least one EHR or eRX
system, but stops short of placing the responsibility for widespread
prescriber adoption on the plan. We are only requiring compatibility
with at least one prescriber's eRx or EHR, since CMS realizes that
without an industry-adopted standard, it would be operationally
unattainable for a plan to support an RTBT capable of integrating with
all EHR or eRx systems that prescribers are potentially using. And,
although Part D plans can make sure that the RTBT system is capable of
integrating with an EHR or eRx system, the decision to integrate the
RTBT with specific prescriber-facing systems is out of the plan's
control. Since this rule addresses Part D requirements, we can only
address the plan's readiness for integration at this point.
Comment: Some commenters sought guidance about what features and
information would satisfy the requirement for a RTBT. Commenters
suggested that RTBT include information on the drug that the physician
intends on prescribing along with formulary alternatives; they asked if
RTBT should include drugs' applicable cash price, beneficiary
copayment, any drug utilization controls, or side effects of
alternative therapies presented. Some commenters believe that
presenting negotiated prices to the prescriber would provide value to
the RTBT process, while most commenters believe that that information
was either not relevant or was considered proprietary information that
should not be widely shared. Some commenters believed that RTBT should
include information with respect to all available pharmacy and delivery
options while others believe that only the prices of alternatives
available at member's selected pharmacy should be populated by the
RTBT.
Response: Our proposed regulation indicated that the goal of RTBT
is to provide decision support to prescribers by presenting them with
relevant details about formulary information and alternatives to the
drug which the provider intends on prescribing. Although we encourage
the inclusion of the negotiated price in RTBT, we are not mandating it
at this time as the majority of commenters opposed its inclusion
stating that the information was proprietary and overly confusing.
Provider groups opposed its inclusion, since it was outside the scope
of their responsibility. However, we believe that RTBT must include
some minimal data points that will enable a prescriber and patient to
make informed medication choices at the point of prescribing. These
include benefit information about the drug which the provider intends
on prescribing, enrollee cost-sharing information, and comparable
information on formulary alternatives (meaning those medications that
may have a different copayment or coinsurance amount than the
medication about to be prescribed but may have the same therapeutic
efficacy). The benefit information should include patient-specific
utilization requirements (such as prior authorization or step therapy
requirements) that have yet to be satisfied at the time when the
prescription is written, and copayment or coinsurance (or negotiated
price values if included) at the patient's selected pharmacy.
Comment: Some commenters expressed concerns that the data populated
in the RTBT would not be reliable, that the data would be inaccurate or
that it would be used for purposes other than to provide decision
support to the prescriber. Commenters stated that existing real-time
solutions vary in their functionality and reliability. One provider
group pointed out that prescribers are already seeing that some of the
RTBT systems are not providing useful information. They report that
these systems are causing more effort on the part of the prescriber
without providing useful decision support. Other providers noted that
the quality of the information provided by multiple vendors is
variable, and suggested that CMS assess the outcomes of the alternative
vendors.
Response: CMS expects that data presented through RTBT will be
patient-specific, timely, and accurate. Part D plans must make sure
that they comply with these requirements. We are unsure what commercial
purposes were of concern to commenters and how they would adversely
impact the intended functionality. Should CMS become aware that RTBTs
are being used in ways that are contrary to the Part D program goals,
we will address the issues as they arise. Further, we believe that Part
D plans are in the best position to assess the effectiveness of the
RTBT solutions, since they have a financial stake in ensuring that
their enrollees have access to the most cost-effective medications. We
expect that widespread adoption of RTBT will, over time, facilitate
improved functionality and administrative ease of using the tools in
clinical practice. However, if such concerns are not mollified, we
would expect that EHR vendors would offer feedback to the plans.
Comment: A few commenters suggested that we refer to RTBTs using
other terms, such as real-time pharmacy benefit check or real-time
pharmacy benefit transaction to more clearly describe our proposal. A
commenter requested that we refer to the technology as a benefit check
and not a tool.
Response: We understand that some terms may be clearer to certain
readers. However, the ubiquity of the term RTBT leads us to believe
that it is the correct term to use. In addition, the suggested terms
were sufficiently close to our proposed term that we are convinced that
RTBT is an accurate description of our regulatory requirement.
Comment: We received a number of comments objecting to our proposal
that providers receive explicit patient consent before reviewing RTBT
solutions. Commenters explained to us that requiring affirmative
consent would result in providers having to modify their workflow and
systems to capture such explicit consent. These systematic changes
would require at least 18 months to adopt, implement, test, and remedy
any issues. Educating providers across the country on this requirement
and implementing the system changes would take at least another three
months, which calls into question the ability to fulfill this
requirement prior to January 1, 2020. Though one commenter
[[Page 23851]]
appreciated the proposed level of protection, all other commenters who
addressed the issue stated that the proposed requirement would be a
serious obstacle to the real-time process. For example, making system
changes that normally require at least 18 months to make, within less
than 6 months would require the hiring of significant amounts of new
staff and put a burden on their systems to implement prior to the
January 1, 2020 deadline.
Response: We are committed to ensuring that RTBT implementation
happens as smoothly as possible. The RTBT regulation requires that each
Part D plan implement one or more real-time benefit tools, but does not
specify the circumstances under which a prescriber should use the
technology. We expect that prescribers will only use RTBT when the
information provided is useful. As the intent of the RTBT is to help
the clinician know if a medication will be covered under a patient's
prescription benefit coverage, we do not expect that prescribers will
use the tool in those rare instances when a patient has expressed a
desire to buy the medication outside of the insurance benefit. Yet,
given the importance of protecting an individual from unauthorized
disclosure of health information, we considered requiring patient
consent before the RTBT was being used just to make sure that patients
are fully cognizant that RTBT will be used.
However, on further reflection, under the current RTBT scheme, we
believe that requiring that patients provide explicit affirmative
consent before each use of an RTBT is unnecessary. In most instances,
we expect that the choice about what prescription to prescribe will
happen when a beneficiary is present, because the current ePrescribing
standard requires the beneficiary to choose where the prescription is
to be sent. This means they will be aware that their data will likely
be transmitted to parties other than the prescriber. Furthermore,
beneficiaries have the opportunity to ask their prescribers about what
data is being sent over to the pharmacy.
We conducted more detailed research into how RTBTs would function
in the Part D context, and we discovered that after the prescriber
finishes consulting with the RTBT, they typically transmit the
prescription to the pharmacy electronically. If the enrollee decides to
private pay at a pharmacy, the pharmacy is required to send a failed
claim notice if a beneficiary decides to pay for the prescription out
of pocket, rather than all the information about the prescribed
medication. This failed claim notice satisfies the Sec. 423.120(c)(3)
requirement for pharmacies to submit claims to the Part D sponsors or
its intermediary whenever the Part D member ID card is presented or is
on file at the pharmacy, which is a requirement without RTBT use. Thus,
we encourage providers to discuss with the individual whether the
individual desires to self-pay as after the prescriber uses the RTBT
the patient will no longer be able to withhold information about the
prescription from their plan under 45 CFR 164.522(a)(1)((vi) (allowing
the beneficiary to request disclosure restrictions if they pay for
their prescription).
After reviewing the comments, we weighed these potential privacy
concerns against the potential disruptions to effective adoption of
RTBT raised by commenters. Especially since pharmacy benefit
information is generally already available to prescribers and
pharmacies under typical patient interactions, we believe that RTBT use
will fall within the category of health care treatment disclosures
making the disclosure of health care data generally permissible without
patient authorization. Nonetheless, we encourage prescribers to use
RTBT judiciously and must always allow an individual enrolled in a Part
D plan to instruct a prescriber not to use the system for any or all
prescriptions, and prescribers should heed that instruction.
Comment: Several commenters suggested that CMS work with the Office
of the National Coordinator for Health Information Technology (ONC) to
develop incentives for integration of RTBT products into EHRs.
Response: CMS thanks the commenters for this suggestion. However,
we do not believe that these incentives are required. Based on our
research, we believe many EHRs are moving to integrate RTBTs into
prescribers' works flows. In addition, since RTBTs are variable in
their functionality it would be difficult for ONC to incentivize use of
RTBT until an industry standard is implemented and tested.
Comment: A few commenters suggested that the F&B standards are no
longer necessary and others asked us to clarify the role that the F&B
standard should play in the future.
Response: In our proposed rule we clarified that F&B remains an
important component of the Part D electronic prescription standard and
plans must continue to support it. However, the future interaction
between RTBT and the F&B standards are out of scope of this regulation.
Comment: A commenter requested that long-term care facilities be
exempt from having to use a RTBT.
Response: CMS intends this regulatory requirement to apply solely
to Part D plans. Although we encourage the use of RTBTs among
providers, guidance for providers is outside of the scope of this final
rule.
Comment: A few commenters suggested that CMS require Part D plans
to develop a patient tool to provide prescription cost information to
patients in addition to, or instead of, the prescriber facing tool we
proposed.
Response: We appreciate the comments. However, our proposal was for
a prescriber facing tool. A patient tool is outside the scope of this
rule.
We are finalizing the proposal for each Part D plan to implement an
RTBT of its choosing, effective January 1, 2021. We strongly encourage
plans to start implementing this provision prior to 2021. We are
removing the proposed requirement that covered health care providers
obtain explicit beneficiary consent prior to using the RTBT.
D. Part D Explanation of Benefits (Sec. 423.128)
Section 1860D-4(a)(4)(A) of the Act requires Part D sponsors to
furnish to each of their enrollees a written explanation of benefits
(EOB) and, when the prescription drug benefits are provided, a notice
of the benefits in relation to the initial coverage limit and the out-
of-pocket threshold for the current year. We codified this EOB and
notice requirement at Sec. 423.128(e) by requiring the Part D EOB to
include specific information written in a form easily understandable to
enrollees. Part D sponsors must provide enrollees with an EOB no later
than the end of the month following any month in which the enrollee
utilized their prescription drug benefit.
Information about negotiated price changes for each of the
prescription drugs covered for a beneficiary, including information
about lower cost therapeutic alternatives, is not required to be in the
EOB under the current regulation. Based on comments received, we are
finalizing our proposal that sponsors must include negotiated price
increases and lower cost therapeutic alternatives in their
beneficiaries' Part D EOBs.
The Part D EOB is one of the principal documents that beneficiaries
can rely on to understand where they are in the benefit phases and
their changing out-of-pocket costs throughout the year. This document
is provided to beneficiaries every month for the immediately preceding
month that the
[[Page 23852]]
Part D benefit is used. As a retroactive monthly report, the EOB is the
means by which beneficiaries can monitor their benefit utilization and
prescription costs on a regular and frequent basis.
We received approximately 79 comments on this proposal. We have
included a summary of the comments and our responses.
Comment: Commenters unanimously supported increasing drug pricing
transparency for beneficiaries.
Response: We thank the commenters for their support. Lowering
prescription drug costs is of critical and immediate concern to
beneficiaries and the Administration.
Comment: Many commenters voiced concern that including drug pricing
information on the EOB would be ineffective for the following reasons:
(1) Its retroactive nature makes the price information not meaningful
or actionable for the beneficiary; (2) its timing during a benefit year
makes it not actionable by the beneficiary because of limitations on
enrollment changes; (3) the nature of acute prescriptions means the
information is not useful for short-term medications; and (4) this
information is not discernable without being read with the prescriber.
While asserting different reasons, these commenters generally agreed
that the drug cost information would not be meaningful, actionable or
useful for the beneficiary due to the enumerated circumstances.
Response: Despite the EOB being a retroactive report, the
information provided will allow beneficiaries to engage with their
prescriber at their next point of care and discuss their choices in
medication. This may lead to beneficiaries switching to a lower cost
drug. Even if a beneficiary is not able to change plans mid-year based
on the EOB information, the information may still be useful to the
beneficiary in the situation we just described--to engage with their
prescriber about their medication choices within their existing plan.
To address the comments concerning acute prescriptions, we note that on
the EOB as it is written today an acute prescription filled one time is
not carried over on multiple EOBs. However, we believe there is no harm
in including a negotiated price increase and a lower cost alternative
for an acute prescription claim, when available. This additional
information empowers the beneficiary and provides them with a holistic
approach when reviewing their Part D benefit. We believe this, in turn,
will ultimately spark dialogue between the beneficiary and their
prescriber(s) about lower cost therapeutic alternatives in the future.
Thus, we conclude that the EOB will empower the beneficiary with
information about drug costs that the beneficiary does not currently
have. This initiative will support CMS' commitment to promoting drug
price transparency in the Medicare Part D program.
Comment: Many commenters suggested that drug pricing information
will be more useful if provided through a prospective tool, such as a
real-time benefit tool (RTBT) at the time of prescribing, rather than
the EOB. They highlighted that beneficiary knowledge would be more
accurate with real-time information on which decisions could be made
with their prescriber at the point of care.
Response: Implementing a real-time benefit tool for beneficiaries
is an effective way to provide beneficiary-specific information about
drug costs (for additional discussion about RTBTs, please see the
previous section of this final rule). However, the EOB provides a
different method of communicating drug pricing information directly to
beneficiaries. Both are valuable price transparency tools.
Comment: Multiple commenters were concerned that displaying the
percentage change in negotiated price would not be a helpful metric for
beneficiaries when evaluating their Part D benefits. The commenters
asserted that the negotiated price is not the correct price to display
as it may not change throughout the benefit year, or if it does change,
it may not impact the cost-sharing for the beneficiary. However,
commenters did not provide alternative pricing that would be of greater
impact to the beneficiary.
Response: We do not agree and believe providing this information to
the beneficiary is valuable. The negotiated price information required
to be included in the EOB is the percentage increase in the total cost
for each prescription, when there is an increase, since the first claim
of the current benefit year for each prescription drug claim in the
EOB, which would display under each medication. Currently and under
this new requirement, the EOB would still display the price paid by the
beneficiary, plan and any other payer. While increases in negotiated
prices may or may not be directly proportionate to a change in a
beneficiary's cost-sharing for a variety of reasons, we believe that
ensuring beneficiary access to information about changes in drug
pricing in the context of their specific use of the benefit will allow
them to better assess the value they receive from their Part D benefit.
Comment: Multiple commenters pointed out the Part D EOB is meant to
be a brief document but is lengthy and complex. As such, these
commenters pointed out that including additional details would only
make the document longer, thereby paradoxically making a beneficiary
less inclined to read the document thoroughly. Therefore, our EOB
proposal would defeat the intent of requiring additional information in
it. Some commenters also mentioned that the EOB is not the appropriate
document to disseminate the pricing information and will inevitably
lead to increased beneficiary confusion. Commenters suggested improving
the functionality of the Medicare Plan Finder and other beneficiary-
facing tools to convey this information.
Response: We find the current structure of the EOB to be well-
suited to include additional information on individual prescription
drug claims. Other beneficiary materials are delivered on an annual
basis, and are geared toward assisting Part D beneficiaries make
enrollment decisions whether to remain with their current prescription
drug plan or switch to another. By including these negotiated price
increases and lower cost alternatives on a monthly basis in EOBs,
beneficiaries will be in greater control of their prescription drug
benefits and, with their prescribers, will be able to make more
informed decisions about their care. Beneficiaries will have documented
drug pricing information and will be able to seek assistance from their
prescribers, pharmacists, SHIPs, and family members.
Comment: A few commenters believed that the proposed rule did not
provide sufficient definition of a lower cost therapeutic alternative.
Response: The lower cost therapeutic alternatives will be
determined by the sponsor based on its formulary, not by CMS. As such,
any drug may be identified as a lower-cost therapeutic alternative for
another drug if a Part D sponsor reasonably determines it to be so. As
stated in the preamble of the proposed rule, lower-cost therapeutic
alternatives (meaning drugs with lower cost-sharing or lower negotiated
prices) will not be limited to therapeutically-equivalent generic drugs
if the original prescription fill is for a brand drug.
Comment: A few commenters wrote that the estimated implementation
cost with respect to this proposal was understated in the proposed
rule. These commenters also provided an estimate of their increased
costs, citing that the programming would be more than CMS estimated,
and also that these changes would contribute to increasing the length
of the EOB document, thereby increasing printing and mailing costs for
[[Page 23853]]
plans. Commenters did not provide alternative solutions for including
the drug pricing information and/or lower-cost therapeutic
alternatives.
Response: We thank the commenters for providing us with their cost
estimates. We have revised the estimated cost to implement the EOB
updates; however, we still believe that these updates are necessary for
adhering to the Administration's goal of drug price transparency and
lowering beneficiary out-of-pocket costs. We will work with
stakeholders to improve the model EOB to include this information in
the most efficient and effective manner for beneficiaries and sponsors.
Comment: Many commenters wrote that amending the Part D EOB to
include this information for the upcoming contract year, beginning
January 1, 2020, was unreasonable and too burdensome.
Response: We thank the commenters for their concerns, and
acknowledge that there will be administrative and programmatic costs to
implement these changes. Given the level of effort involved in updating
the Part D EOB, we are delaying the implementation date until January
1, 2021. However, given the potential benefits of these changes, we
strongly encourage plans to begin implementing this requirement prior
to January 1, 2021.
After consideration of comments received, we are finalizing the
reassignment of paragraphs (e)(5) and (e)(6) of Sec. 423.128(e) as
paragraphs (e)(6) and (e)(7) to add a new paragraph (e)(5) that will
require sponsors to include information about negotiated price
increases, if any, and lower-cost therapeutic alternatives in the Part
D EOBs. Based on comments received, as to information about negotiated
drug price increases, we will require that Part D sponsors include the
cumulative percentage increase, if any, in the negotiated price since
the first claim of the current benefit year for each prescription drug
claim in the EOB.
Second, CMS will require that Part D sponsors provide information
about drugs that are therapeutic alternatives with lower cost-sharing,
from the applicable approved plan formulary for each prescription drug
claim, when such therapeutic alternative are available as determined by
the plan. Also, the plan may include therapeutic alternatives with the
same copayments if the negotiated price is lower.
Part D sponsors will be permitted and encouraged by CMS to take
into consideration relevant beneficiary-specific information, such as
diagnosis, the indication for the prescription and completed step
therapy or exception requests, when providing formulary therapeutic
alternatives in the EOB that have lower cost-sharing. For example, if a
plan is aware that a beneficiary has already fulfilled step therapy
requirements and the beneficiary's physician has attested that the
beneficiary is not able to tolerate a formulary alternative, that
formulary alternative does not need to be included on the EOB for that
beneficiary.
E. Medicare Advantage and Step Therapy for Part B Drugs (Sec. Sec.
422.136, 422.568, 422.570, 422.572, 422.584, 422.590, 422.618, 422.619,
422.629, 422.631, 422.633)
1. Medicare Advantage and Step Therapy for Part B Drugs: General
Requirements
In a HPMS memo released August 7, 2018,\12\ CMS announced that
under certain conditions beginning in contract year 2019, MA plans may
use utilization management tools such as step therapy for Part B drugs;
such utilization management tools, including prior authorization, can
be used by MA organizations to both prevent overutilization of
medically unnecessary health services and control costs. CMS proposed
requirements under which MA plans may apply step therapy as a
utilization management tool for Part B drugs and affirmed, based on our
reinterpretation of the applicable statute, MA plans' authority to
implement appropriate utilization management tools, including prior
authorization, for managing Part B drugs in a manner to reduce costs
for both enrollees and the Medicare program. Under Part B, traditional
Medicare generally pays based on a statutory formula--average sales
price plus a 6-percent add-on--for drugs and biological products that
are not usually self-administered, such as injections and infusions. We
stated in the proposed rule how we believe there is minimal negotiation
between MA plans and drug manufacturers to reduce the price of these
drugs. Prior to the August 7, 2018, HPMS memo and subsequent FAQs, \13\
CMS interpreted existing law to prohibit MA plans from using step
therapy for Part B drugs because there was a concern that such
utilization management tools could have created an unreasonable barrier
to coverage of and access to Part B benefits that MA plans must provide
under the law. However, as we explained in the proposed rule, CMS
recognizes that utilization management tools, such as step therapy, can
provide the means for MA plans to better manage and negotiate the costs
of providing Part B drugs. Based on this and for the reasons explained
in more detail in this final rule, CMS rescinded the prior guidance
prohibiting step therapy for Part B drugs and services in MA, and we
are finalizing our proposal to allow MA plans to use step therapy for
Part B drugs, subject to certain parameters. In the proposed rule, we
explained how we believe the flexibility to use step therapy programs
for Part B drugs would considerably assist MA plans in negotiating on
behalf of enrollees to get better value for Part B drug therapies.
Using internal bid data, excluding MA employer group plans, CMS
estimates $9 billion in spending by MA plans for Part B drugs furnished
during contract year 2018.
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\12\ Prior Authorization and Step Therapy for Part B Drugs in
Medicare Advantage (August 2018). https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/MA_Step_Therapy_HPMS_Memo_8_7_2018.pdf.
\13\ Available online at: https://dpapportal.lmi.org/DPAPMailbox/Documents/Part%20B%20Step%20Therapy%20Questions%20FAQs_8-29-18.pdf.
---------------------------------------------------------------------------
As discussed in the proposed rule, we believe that these tools will
better enable MA organizations to take steps to ensure that MA plans
and MA enrollees pay less overall or per unit for Part B drugs which
could result in lower MA capitation payments by the government to MA
organizations and lower average sales prices for Part B drugs, on which
Medicare FFS payments for such drugs are based, while also maintaining
access to medically necessary Medicare-covered drugs and services.
These goals--reducing costs across the Medicare program while ensuring
access to medically-necessary Medicare-covered benefits--underlie this
final rule. We proposed adding a new regulation, at Sec. 422.136,
entitled ``Medicare Advantage and Step Therapy for Part B Drugs.''
Sections 1852(c)(1)(G) and (c)(2)(B) of the Act, and the MA
regulations at Sec. 422.4(a)(1)(ii) expressly reference a MA plan's
application of utilization management tools, like prior authorization
and other ``procedures used by the organization to control utilization
of services and expenditures.'' This indicates that MA plans are not
prohibited by the statute from implementing utilization management
tools such as step therapy. In light of this, we proposed to define
step therapy in Sec. 422.2 and adopt requirements under which MA plans
may apply step therapy as a utilization management tool for Part B
drugs. We solicited comments concerning the impact that allowing step
therapy for Part B drugs will have on MA plans and enrollees.
We clarified that for contract year 2020 and subsequent years,
coupling
[[Page 23854]]
drug management coordination with rewards and incentives was not part
of our proposal. While MA plans may still offer rewards and incentives
programs, savings realized from Part B step therapy must be reflected
in the plan's bid, as such savings would reduce the revenue necessary
for MA plans to provide basic benefits that MA plans must furnish
enrollees and supplemental benefits that MA plans may opt to offer.
Additional Part C rebate dollars associated with the lower bid, as with
all Part C rebate dollars, must be used to provide supplemental
benefits and/or lower premiums for the plans' enrollees.
We noted that existing requirements in Sec. Sec. 422.112(b) and
422.152 for care coordination activities are sufficient to promote
positive health outcomes for both drugs and services; we relied on this
and did not propose text at Sec. 422.136 that an MA plan must offer a
drug management program. We also recognized that we issued the August
7, 2018 memo that announced our reinterpretation of the statute after
bids were submitted for the 2019 plan year and therefore expected plans
to utilize the drug management program as a means to pass 2019 savings
on to enrollees through rewards and incentives. Because we are
finalizing this rule prior to the 2020 bid deadline, MA plans must
include savings from implementing Part B step therapy in their bids for
2020 and future years, as the savings will affect the revenue necessary
to provide benefits (see Sec. 422.254).
We acknowledged in the proposed rule the potential for utilization
management tools like step therapy to create administrative burden and
process challenges for network providers. We also explained how, in
light of that, we expect MA plans to work closely with the provider
community and to adopt best practices that streamline requirements and
minimize burden. We also encouraged continued development and
advancement of electronic prior authorization processes to more
efficiently administer this process. We solicited comment whether our
proposed regulation text imposing education and information
responsibilities in combination with existing regulations on care
coordination are sufficient to ensure that MA organizations
specifically address step therapy programs for Part B drugs as part of
those care coordination responsibilities and if we should finalize a
provision in Sec. 422.136 that addresses the administrative burden
imposed on network providers by MA plans.
We proposed and this final rule adopts a number of safeguards that
ensure enrollees have timely access to all medically necessary Medicare
Part B medications. MA plans will be required to administer the
existing organization determination and appeals processes under new
time frames that are similar to the timeframes applicable in Part D for
coverage determinations; enrollees will be able to seek organization
determinations in advance--or when the MA (or MA-PD) plan first starts
the step therapy protocol for the enrollee--if the enrollee (typically
after consultation with their health care provider) believes they need
direct access to a Part B drug that will otherwise only be available
after trying an alternative drug. We explained that MA plans will
adjudicate these organization determinations based on medical necessity
criteria. If an enrollee is dissatisfied with the plan's organization
determination, the enrollee has the right to appeal. We noted that CMS
monitors organization determination and appeals activity through the
audit process and regular discussions with the Part C Independent
Review Entity (IRE) to ensure enrollee requests are appropriately
evaluated and processed within applicable timeframes.
As discussed in the proposed rule, our existing disclosure
requirements at Sec. 422.111 would require MA plans that apply step
therapy to Part B drugs to disclose that Part B drugs may be subject to
step therapy requirements in the plan's Annual Notice of Change (ANOC)
(when initially adopted or subsequently changed) and Evidence of
Coverage (EOC) documents. In the ANOC, this information must be
included under the Changes to Benefits and Costs for Medical Services.
In the EOC, this information must be included in the Medical Benefits
Chart under ``Medicare Part B prescription drugs.'' Under existing
requirements at Sec. 422.202(b), MA plans must establish policies and
procedures to educate and fully inform contracted health care providers
concerning plan policies on utilization management, which will include
the plan's step therapy policies. We proposed to also include a
requirement at Sec. 422.136(a)(2) for plans to establish policies and
procedures to educate and inform health care providers and enrollees
specifically concerning its step therapy policies. We noted in the
proposed rule that preferred provider organization plans (PPOs) are
required, as part of the definition of a PPO at section
1852(e)(3)(A)(iv)(II) of the Act and under the MA regulation at Sec.
422.4(a)(1)(v)(B), to reimburse or cover benefits provided out of
network; while higher cost sharing is permitted, PPOs are prohibited
from using prior authorization or preferred item restrictions in
connection with out of network coverage. As such, PPOs must provide
reimbursement for all plan-covered medically necessary services
received from non-contracted providers without prior authorization or
step therapy requirements. We solicited comment whether the final rule
should include a specific regulatory provision clarifying this issue.
We proposed at Sec. 422.136 (a)(3), that MA plans will be required
to use a Pharmacy and Therapeutics (P&T) committee to review and
approve step therapy programs (meaning policies and procedures); we
explained that this is necessary to ensure medically appropriate
implementation of step therapy for Part B drugs. We explained how we
believe the burden of this requirement will be limited because MA-PD
plans and MA plans would be authorized to use any existing Part D P&T
committees established by the MA-PD plan (or an MA-PD plan under the
same contract as an MA-only plan) to comply with part 423 requirements
for the Part D benefit. The Paperwork Reduction Act listing for P&T
committee record keeping is OMB Control Number 0938-0964. We noted that
P&T committee decisions are not public information. We proposed, in the
introductory text of proposed paragraph (b), that a MA organization
must establish or utilize an existing P&T committee prior to
implementation of a Part B step therapy program so that the P&T
committee reviews Part B step therapy programs. In addition, we noted
in the proposed rule how we continued to actively consider expanding
the role of MA P&T committees. Therefore, we solicited comments on our
proposal that MA plans with Part B step therapy programs will be
required to have P&T committees and, in addition, whether the
requirement for this MA P&T committee should be expanded to all MA
plans that have any utilization management policy (such as prior
authorization or dosage limits) applicable to Part B drugs, and whether
there are other options that will meet the policy goal of ensuring that
Part B step therapy programs are medically appropriate underlying the
P&T committee proposal. We proposed to codify P&T committee
requirements for MA plans in Sec. 422.136(b).
Our proposal for the P&T committee mirrors the Part D requirements
for such committees currently codified at
[[Page 23855]]
Sec. 423.120(b) with regard to membership, scope, and
responsibilities. We explained our position that existing Part D P&T
requirements at Sec. [thinsp]423.120(b) are adequate to ensure MA
plans implement step therapy for Part B drugs that is medically
appropriate. We note that if necessary we may release subregulatory
guidance concerning application of the P&T committee requirements in
the context of Part B drugs.
We proposed requirements in Sec. 422.136(b) that would be
consistent with Part D requirements for a P&T committee. Specifically,
we proposed that the majority of members comprising the P&T committee
will be required to be practicing physicians or practicing pharmacists.
The committee will be required to include at least one practicing
physician member and at least one practicing pharmacist; these specific
individuals will be required to be independent and free of conflict
with the MA organization, the MA plan, and pharmaceutical
manufacturers. In addition, the plan will be required to include at
least one practicing physician member and one practicing pharmacist who
are experts in the care of elderly and disabled persons. We also
encourage MA plans to select P&T committee members representing various
clinical specialties (for example, geriatrics, behavioral health) to
ensure that all conditions are adequately considered in the development
of step therapy programs. We proposed provisions for the
responsibilities and scope of the P&T Committee at Sec. 422.136(b)(4)
through (11) that would mirror the current regulation text applicable
to Part D P&T Committees under Sec. 423.120(b)(1)(iv) through (xi),
with minor revisions to tailor the proposed MA regulation to the Part B
drug step therapy programs offered by MA plans. We reiterated in the
proposed rule how our proposal was to substantially align the
requirements of a P&T committee reviewing Part B drugs with Part D
requirements because the Part D requirements have proved sufficient in
ensuring that plans implement medically appropriate step therapy and
utilization management protocols in Part D.
CMS proposed, as a beneficiary protection, to limit Part B step
therapy requirements to only new starts of Part B drug therapies. CMS
explained in the proposed rule that we believe new step therapy
requirements should not disrupt ongoing Part B drug therapies for
enrollees. In order to ensure that step therapy requirements do not
disrupt ongoing Part B drug therapies, we proposed under Sec.
422.136(a)(1), that step therapy may not disrupt enrollees' ongoing
Part B drug therapies. Specifically, we proposed that step therapy only
be applied to new prescriptions or administrations of Part B drugs for
enrollees who are not actively receiving the affected medication; we
proposed to require MA plans to use a lookback period of 108 days, in
order to be consistent with established Part D policy with respect to
transition requirements for new prescriptions, to determine if the
enrollee is actively taking a Part B medication. In the proposed rule,
we explained how the Part D lookback period was created with clinical
and pharmaceutical input and that CMS believed the same criteria were
appropriate to use in setting a lookback period for Part B drugs. We
proposed that an MA plan would have to use the lookback period when an
enrollee elects a new MA plan (regardless of whether previously
enrolled in a MA plan, traditional Medicare, or new to Medicare) to
determine whether the enrollee has taken the Part B drug (that will
otherwise be subject to step therapy) within the past 108 days.
We explained that under our proposal, if the enrollee is actively
taking the Part B drug, such enrollee will be exempted from the plan's
step therapy requirement concerning that drug. We proposed to allow MA
plans flexibility in implementing step therapy for Part B drugs within
specific parameters. Specifically, we proposed that MA plans would be
able to use a step therapy program to ensure that an enrollee who is
newly diagnosed with a particular condition will begin treatment with a
cost-effective biological product licensed under section 351(k) of the
Public Health Service Act or generic medication before progressing to a
more costly drug therapy if the initial treatment is ineffective or if
there are adverse effects. We did not propose that Sec. 422.136
specifically address the standard for exemptions or movement within a
step therapy program because, as we explained in the proposed rule, we
interpret the MA plan's responsibility to provide all medically
necessary covered services and items covered under the original
Medicare program to mean that ineffectiveness or adverse effects of a
treatment required in a step therapy program would be sufficient basis
to grant an exemption or move an enrollee to a higher step in the
protocol.
Consistent with existing Part D guidelines, we proposed at Sec.
422.136(c) to permit MA plans to require an enrollee to try and fail an
off-label medically accepted indication (that is, an indication
supported by one or more citations in the statutory compendia) before
providing access to a drug for an FDA-approved indication (on-label
indication). However, we proposed that using off-label drugs in step
therapy will only be permitted in cases where the off-label indication
is supported by widely used treatment guidelines or clinical literature
that CMS considers best practices. We solicited comments on our
proposal to permit MA plans to use off-label drugs in a Part B step
therapy program only when such drugs are supported by widely used
treatment guidelines or clinical literature that CMS considers to
represent best practices.
We also proposed, at Sec. 422.136(d), that a step therapy program
must not include as a component of a step therapy protocol or other
condition or requirement any drugs not covered by the applicable MA
plan as a Part B drug or, in the case of an MA-PD plan, a Part D drug.
Specifically, we proposed Sec. 422.136(d) to prohibit an MA
organization from using a non-covered drug as a step in the step
therapy program (that is, as a condition to coverage). Under our
proposal, each step in a step therapy program would have to be another
drug covered by the MA plan (another Part B drug) or MA-PD plan
(another Part B drug or a Part D drug) to ensure that step therapy
programs are not, intentionally or unintentionally, barriers to
services that must be covered by the MA plan pursuant to section 1852
of the Act. Therefore, at Sec. 422.136(d), we proposed regulation text
to clarify that only Medicare covered Part B drugs (plus for MA-PD
plans, Part D drugs) may be used in a step therapy program. We
explained in the proposed rule that we intended to permit an MA plan to
require one Part B drug be used before a different Part B drug and to
permit MA plans that also offer prescription drug coverage (also known
as ``MA-PD plans'') to use step therapy to require a Part D drug
therapy prior to allowing a Part B drug therapy because the Part D drug
will be covered by the plan.
Additionally, we noted in the proposed rule that the combination of
our proposal to specify additional exceptions to the formulary
requirements for protected class Part D drugs (section II.A.1 of the
proposed rule, ``Broader Use of Prior Authorization for Protected Class
Part D Drugs'') and our proposal for step therapy for Part B drugs
(section II.F. of the proposed rule, ``Medicare Advantage and Step
Therapy for Part B Drugs'') would allow MA-PD plans to require use of a
Part B drug before a Part D drug as part of a step therapy program. Our
[[Page 23856]]
proposal about Part D protected class drugs is being finalized with
modifications in this final rule. As noted previously, we are
permitting the use of step therapy for protected class Part D drugs
(other than antiretrovirals) for enrollees that are not already using
the drug for a protected class indication (that is, ``new starts''),
and therefore MA-PD plans may, starting in 2020, require step therapy
of Part B drugs before Part D drugs for the protected classes as well,
consistent with the requirements we are adopting at Sec.
423.120(b)(2)(vi)(C). MA-PD plans that use cross-benefit step therapy
programs must ensure that these requirements are clearly outlined in
the Part D prior authorization criteria for the affected Part D drugs
and are otherwise consistent with Part D requirements. We also stated
in the preamble, as is required for all other drug categories or
classes in Part D coverage, that Part D step therapy requirements will
be subject to CMS review and approval, as part of our annual Part D
formulary review and approval process, which includes formulary tier
review, and relative to prior authorization and step therapy,
restricted access, step therapy criteria, prior authorization outlier,
and prior authorization criteria reviews.
We also solicited comments on the following aspects of our
proposal:
The restriction of step therapy to new starts of Part B
drugs.
The new requirement for a P&T committee for MA plans that
implement step therapy and the use of that P&T committee.
The prohibition on using non-covered drugs, and in certain
circumstances, off-label drugs, in the step therapy programs.
We thank commenters for helping inform CMS's Medicare Advantage and
Step Therapy for Part B drugs policy. We received approximately 153
comments on this proposal; we summarize them and our responses follow:
Comment: Some commenters strongly encouraged CMS to issue
operational guidance for allowing step therapy for Part B drugs more
quickly following the finalization of the Medicare Advantage and Step
Therapy for Part B drugs final rule. These commenters argued that
quickly finalizing this rule will allow for better compliance with CMS
requirements.
Response: CMS appreciates commenters concerns regarding finalizing
this rule and issuing operational guidance in a timely manner. The step
therapy regulation we are finalizing here will be effective for plan
years and coverage beginning on and after January 1, 2020. We will
continue to work with MA stakeholders to ensure that any additional
Part B step therapy program guidance, which may follow the rule, is
timely, transparent, and geared to producing positive health care
outcomes for enrollees.
Comment: Many commenters expressed concern that the step therapy
for Part B drugs proposal would lead to negative health outcomes as a
result of restricted access to care or delayed care. Commenters also
expressed concern that CMS has not demonstrated how it will ensure that
plans' step therapy policies are clinically appropriate and do not
impede access to needed care. Some commenters urged CMS to study the
effectiveness of step therapy on cost savings and its impact on health
outcomes before finalizing this policy. A few commenters supported
allowing step therapy as a cost effective utilization management tool.
Response: CMS appreciates commenters' feedback regarding the impact
of this rule, including those who expressed concern that the Part B
step therapy program will lead to negative health outcomes as a result
of restricted access to care or delayed care. MA plans must comply with
the statutory requirement that they provide enrollees with access to
all medically necessary Part A and Part B benefits available in
Original Medicare, as provided at section 1852(a)(1) of the Act. This
final rule does not change or limit this requirement for MA plans.
Accordingly, step therapy or other utilization management policies may
not be used as an unreasonable barrier to deny coverage of medically
necessary services or as a means to eliminate access to medically
necessary Part B covered benefits. CMS has included a number of
safeguards to ensure that access to medically necessary Part B services
is maintained for MA enrollees who are subject to step therapy for Part
B drugs. We note that consistent with MA regulations at 42 CFR 422.206,
MA plans may not restrict the ability of a treating physician to advise
enrollees about their treatment options. Thus, if a treating physician
believes, based on their own medical judgment, that an MA enrollee
should not be subject to step therapy for a Part B drug for medical
reasons, the health care provider can furnish advice consistent with
that and advocate on behalf of the enrollee. The treating physician can
request an organizational determination under Sec. 422.566(c) and the
MA plan will make a formal determination of medical necessity that if
denied, will require that the enrollee be notified of their right to a
timely appeal. Pre-service reconsiderations of a plan denial may also
be requested by a treating physician under Sec. 422.578.
CMS appreciates commenters' recommendations that more study is
needed to ensure that enrollees' health is not compromised. Although we
are finalizing the step therapy policies, we will continue to monitor
MA plan's use of Part B step therapy policies and will conduct
oversight to ensure compliance with these rules. CMS will conduct
audits that target pre-service organization determination and appeal
cases related to requests for Part B drugs, monitor the Complaints
Tracking Module (CTM) for access concerns, and closely monitor the
implementation and operation of step therapy programs.
We believe that this final rule also contains adequate protections
to ensure that step therapy policies are clinically appropriate and do
not impede access to medically necessary care. This final rule will
require that P&T committees have a majority of members who are
practicing physicians or pharmacists in order to bring adequate
clinical experience to the committee. The P&T committee requirements
finalized at Sec. 422.136(b)(2) require that P&T committee members
must be free of conflict relative to the MA organization, the MA plan,
and pharmaceutical manufacturers. Further, pursuant to Sec.
422.136(b)(5), clinical decisions of the P&T committee must be based on
the strength of scientific evidence and standards of practice,
including assessing research literature and data as appropriate. We
believe P&T committee requirements finalized at paragraph (b)(6) will
help ensure MA plans' Part B step therapy policies are based on
objective decisions that meet the needs of enrollees, by considering
whether a Part B drug included in a step therapy program has
therapeutic advantages in terms of safety and efficacy, while allowing
practicing providers a role in developing and implementing Part B step
therapy program guidance. This final rule, at Sec. 422.136(b)(8),
requires an annual reevaluation and analysis of the step therapy
protocols and procedures. P&T committees must, pursuant to Sec.
422.136(b)(9), document their decisions, which we believe must show how
the committee complies with the regulation. These requirements will
ensure that P&T committees' decisions with respect to Part B step
therapy are conducted in a manner that is documented, evidenced-based,
free from conflict of interest, and subject to CMS oversight. Finally,
CMS will hold plans' P&T committees accountable by requesting written
documentation, as
[[Page 23857]]
needed, regarding the development and revision of step therapy
programs.
Comment: Some commenters expressed concern that MA plan step
therapy policies would focus more on cost (as opposed to clinical
appropriateness), interfere in personalized care, and interfere with
provider autonomy. A few commenters expressed concern that this
proposal would lead to increased administrative burden, which will
frustrate physicians and cause them to leave the practice of medicine.
Response: CMS acknowledges the potential for step therapy programs
to create administrative burden and process challenges for network
providers. We remind readers that MA PPO plans may not impose limits
like prior authorization or step therapy on benefits furnished by out-
of-network providers. In a previous rulemaking (70 FR 4616 through
4617), CMS interpreted section 1852(e)(3)(A)(iv) of the Act and 42 CFR
422.4(a)(1)(v)(B) as precluding PPO plans from requiring enrollees to
obtain as a condition of coverage pre-certification or pre-
authorization, or a coverage determination before receiving a covered
service out-of-network. The requirement that both local and regional
PPO plans cannot require prior authorization as a condition for out-of-
network coverage of services is also described in CMS guidance in
Chapter 4, Sec. 110.4 of the Medicare Managed Care Manual. We expect
MA plans to work closely with providers to adopt best practices that
streamline operations and minimize burden. We consider such efforts
consistent with the obligation, under Sec. 422.202, of MA plans to
establish a mechanism to consult with the physicians who have agreed to
provide services under the MA plan offered by the organization,
regarding the organization's medical policy, quality improvement
programs and medical management procedures. We also encourage continued
development and advancement of electronic prior authorization processes
to more efficiently administer Part B step therapy programs.
With respect to clinical concerns and interference with provider
care, we reiterate that step therapy or other utilization management
policies may not be used as unreasonable means to deny coverage of
medically necessary services or to eliminate access to medically
necessary Part B covered drugs. The requirements in this rule, in
combination with current MA program regulations, ensure access to Part
B drugs and limit the potential for step therapy policies to interfere
with medically necessary care. Specifically, MA plans must ensure
access, consistent with the requirements at Sec. 422.100(a) and Sec.
422.101(a) and (b), to all medically necessary Part A and Part B
benefits that are available in Original Medicare. Further, we are not
changing or eliminating the existing requirements that MA plans must
comply with national and local coverage determinations and guidelines.
Organizations have been and remain subject to the MA regulations and
must comply with national and applicable local coverage determinations.
Step therapy protocols cannot be stricter than an NCD or LCD with
specified step therapy requirements. Based on how Sec. Sec. 422.100
and 422.101 will interact with Sec. 422.136, if an NCD or LCD
prohibits or establishes step therapy programs in connection with
coverage of a Part B drug, the MA plan must comply with the applicable
NCD or LCD.
As finalized in Sec. 422.136(a)(1), Part B drug step therapy
requirements may not apply to ongoing courses of Part B drug therapies.
This limitation is designed to prevent interference with the provision
of care to patients who have already started a drug treatment. As noted
in the proposed rule, we recognize that negative health outcomes can
arise from disruptions in existing treatment regimens and wish to avoid
such occurrences.
Further, the MA regulation at Sec. 422.206 prohibits an MA plan
from interfering with health care professionals' medical advice to
enrollees. Therefore, a provider's statement in support of a pre-
service organization or appeal for access to a Part B drug cannot be
prohibited by an MA plan. We expect MA plans to give weight to a
provider's medical judgment and expertise when making organization
determinations and deciding appeals related to access to Part B drugs
that are subject to step therapy protocols; we remind MA plans that
under Sec. Sec. 422.566(d) and 422.590(g)(2), all denials of coverage
based on medical necessity--which we expect will be the crux of
requests by enrollees to avoid step therapy programs--must be reviewed
by a physician or other appropriate health care professional with
sufficient medical and other expertise, including knowledge of Medicare
coverage criteria, before the MA organization issues the organization
determination decision. We note as well that under this final rule, the
adjudication time periods for Medicare Advantage organization
determinations are being shortened for cases related to coverage of
Part B drugs. The ability for providers and enrollees to receive a pre-
service decision regarding coverage on a Part B drug on this shortened
timeframe will greatly reduce the potential for delay in access to
medically necessary Part B drugs.
Furthermore, MA plans using step therapy must ensure that step
therapy programs are clinically appropriate under this rule and
existing rules governing the MA program. Pursuant to Sec.
422.202(b)(1), MA organizations must formally consult with contracted
physicians when developing utilization management guidelines, so that
policies like step therapy are based on reasonable medical evidence or
consensus of medical professionals, consider the needs of enrollees,
and are reviewed and updated; taken together these standards mean that
step therapy programs, like other utilization management policies, are
clinically appropriate. As we stated previously, we are requiring that
P&T committees must have a majority of members who are participating
physicians or pharmacists and they must follow the requirements at
Sec. 422.136(b)(5) through (10) in review, evaluation and approval of
step therapy policies. We believe this will help ensure that a MA
plan's Part B step therapy policies will be clinically driven and that
practicing providers, including network providers, will have a voice as
practice guidelines are developed and implemented.
Comment: Some commenters stated Part B Step Therapy conflicted with
section 1852(a)(1) of the Act. Specifically, these commenters argued
that section 1852(a)(1) of the Act which requires MA plans to cover all
Part A and Part B benefits (except for specifically excluded benefits
like hospice), means that MA plan coverage policies not be more
restrictive than Original Medicare and that CMS cannot allow plans to
impose additional restrictions to Part B drug coverage. The commenters
argued step therapy amounts to a denial of access to Part B benefits.
Response: As referenced in the proposed rule, CMS's
reinterpretation of section 1852 of the Act means that MA plans' may
implement appropriate utilization management tools, including prior
authorization and step therapy, for managing Part B drugs in a manner
to reduce costs for both enrollees and the Medicare program while not
denying access to medically necessary services. Section 1852(a)(1) of
the Act requires MA plans to provide coverage of items and services for
which benefits are available under parts A and B of the Medicare
statute, except for hospice care and, beginning 2021, excludes organ
acquisitions costs for kidney
[[Page 23858]]
transplants. Although CMS previously interpreted this as requiring MA
coverage of Part A and Part B benefits to be no more restrictive than
coverage in Original (FFS) Medicare, the need to control drug costs
prompted our review of the authority and CMS changed this
interpretation with respect to utilization management programs applied
to Part B drugs upon more careful consideration of the statute as a
whole. As discussed in the proposed rule, we expect the use of step
therapy for Part B drugs to lead to lower costs for the government and
Medicare beneficiaries; lowered costs are undoubtedly a means to ensure
the continued health of the Medicare program and a reasonable basis for
revisiting the statute to evaluate whether there is authority to
provide more flexibility to MA plans in connection with utilization
management policies.
Section 1852, in imposing the requirement that MA plans furnish or
cover Part A and Part B benefits, does not expressly prohibit the use
of utilization management. To the contrary, sections 1852(c)(1)(G) and
(c)(2)(B) of the Act expressly reference an MA plan's application of
utilization management tools, like prior authorization and other
``procedures used by the organization to control utilization of
services and expenditures.'' This clearly indicates that MA plans are
not expressly prohibited by the statute from implementing utilization
management tools such as step therapy. Although some commenters
disagreed that step therapy is a utilization management tool,
characterizing it instead as a limitation or restriction on coverage,
we believe that it is such a tool and that the reasonable limits these
protocols place on when a drug is covered are the means of controlling
utilization and cost. All Part B drugs must be covered by the MA plan
when medically necessary, for example, when a stepped drug is not
effective or appropriate for the patient, the patient must be allowed
direct access to an alternative Part B drug. We disagree with
commenters that characterize these limits as meaning that certain Part
B drugs are no longer covered by the MA plan; these limits on coverage
do not eliminate coverage, rather they ensure the most cost effective,
clinically appropriate treatment is provided. This is consistent with
our current interpretation of the requirement in section 1852 of the
Act that MA plans must furnish or cover medically necessary Part A and
Part B services, excluding hospice and, beginning 2021, excluding
kidney acquisition costs.
Further, we do not believe that the statute must list every
possible procedure or policy that controls utilization of services or
expenditures for the statute to authorize their use. Section 1860D-4(c)
of the Act does not expressly refer to step therapy, but because it is
an appropriate method for managing drug costs, we have historically
permitted Part D plans to use step therapy as a utilization management
program authorized by the statute. Section 1852(c)(1)(G) and (c)(2)(B)
of the Act contemplates that MA plans will use utilization management
policies that are not used in Original Medicare. If the statute
permitted only prior authorization, requiring disclosure of
``procedures used by the organization to control utilization of
services and expenditures'' would be unnecessary because subsection
(c)(1)(G) already requires disclosure of prior authorization policies.
Our interpretation gives meaning to both provisions and reasonably
interprets the reference to controlling utilization of services and
costs as including step therapy policies.
Further, we have explained our reinterpretation consistently. In
the August 7, 2018 HPMS memo \14\ and subsequent FAQs,\15\ CMS
recognized that utilization management tools, such as step therapy, can
provide the means for MA plans to better manage and negotiate the costs
of providing Part B drugs. In the proposed rule, we explained how we do
not believe that MA plans subject to our prior guidance and
interpretation engaged in negotiation over the cost of Part B drugs. As
previously noted using internal bid data, excluding MA employer group
plans, CMS estimates $9 billion in spending by MA plans for Part B
drugs during contract year 2018. By providing a basis on which MA plans
may more effectively negotiate the price they pay for Part B drugs,
this reinterpretation of the statute allows for more cost-effective
coverage of these drugs. Further, by using policies that promote the
use of more cost effective drugs first when such drugs adequately and
appropriate treat an enrollee's condition, step therapy programs can
result in lower utilization while ensuring consistent beneficial
outcomes.
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\14\ Available online at: https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/MA_Step_Therapy_HPMS_Memo_8_7_2018.pdf.
\15\ Available online at: https://dpapportal.lmi.org/DPAPMailbox/Documents/Part%20B%20Step%20Therapy%20Questions%20FAQs_8-29-18.pdf.
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Because the statute contemplates MA plans use of utilization
management policies and procedures and because Part B drugs are
accessible and covered when medically necessary (such as if other
medications that are used first in a step therapy program are not
effective), we have concluded that an MA plan may fulfill its
obligations to furnish Part B benefits even if a step therapy program
is used. As discussed elsewhere in response to comments, new Sec.
422.136 contains beneficiary protections and limits on how step therapy
can be used in order to ensure access to medically necessary Part B
drugs. CMS reiterates that MA plans must comply with the statutory
requirement that they provide enrollees with access to all medically
necessary Part A and Part B benefits available in Original Medicare, as
provided section 1852(a)(1) of the Act. This final rule does not
contravene this statutory requirement for MA plans.
Comment: Several commenters expressed concerns that the proposal
did not include adequate oversight from CMS. Several commenters argued
that CMS cannot guarantee consistent enforcement and provide enrollees
clinically appropriate Part B medication. Some commenters recommended
CMS establish procedures, similar to Part D, in which plans are
required to submit step therapy policies for CMS review and approval
prior to implementation and use. Commenters also recommended that CMS
actively monitor plans to ensure that plan policies and procedures are
implemented in a manner that does not violate CMS rules. Commenters
also suggested CMS closely monitor the extent to which organization
determinations and appeals are being sought so that CMS can assess the
need for additional patient protections.
Response: Although Sec. 422.136 does not explicitly address
monitoring and enforcement, CMS will leverage its existing oversight
programs to include targeted monitoring of the Part B step therapy
programs implemented by MA plans.
CMS will monitor beneficiary complaints and organization
determinations and appeals related to Part B drug step therapy
programs. CMS has regularly scheduled meetings with the Part C IRE
contractor; during these meetings, CMS and the IRE contractor identify
and evaluate systemic problems with coverage decisions that rise to the
IRE based on denials at the plan level. When systemic coverage issues
are
[[Page 23859]]
identified, CMS takes steps with the MA plan, or the industry as a
whole, to ensure correction of the problem. CMS will also monitor
compliance with organization determination and appeal adjudication
timeframes, both existing and those adopted in this final rule, by MA
plans. When MA plans are selected for audit, CMS will target sample
pre-service organization determination and appeals related to requests
for Part B drugs to ensure compliance with Sec. 422.136, particularly
the beneficiary protection requirements like the lookback period and
the requirements to educate and inform health care providers and
enrollees concerning its step therapy policies. CMS will also monitor
step therapy related complaints it receives from stakeholders to learn
how MA plans are implementing step therapy programs, including whether
plan communications explaining the program and involvement of
contracted providers, as we have outlined elsewhere in this final rule,
are consistent with program requirements. Finally, when CMS identifies
concerns about a step therapy program, CMS may request written
documentation from the plan's P&T committee under authority in Sec.
422.136(b)(9) and any other related plan information CMS deems
necessary, in accordance with Sec. 422.504(f)(2), in order to assess
and evaluate the MA plan's step therapy program and ensure compliance
with CMS requirements.
We note that CMS interprets its authority to review Part C bids and
plan designs as the authority under which we could review MA plans use
of Part B drug step therapy programs. However, given all of these
oversight means and tools, we believe CMS can effectively monitor MA
plan step therapy programs without reviewing all of the coverage
policies and procedures an MA plan adopts for step therapy in advance.
As discussed elsewhere in the final rule, P&T committees are
responsible for reviewing and implementing Part B step therapy programs
that are clinically appropriate and are based in scientific evidence
and standards of practice. CMS does not review other utilization
management practices (that is, prior authorization) for Part B items or
services in advance of implementation by an MA plan. We will continue
to hold plans accountable for ensuring coverage of medically necessary
Medicare covered items and services through CMS's oversight activities.
CMS solicited comment on the rule's restriction to new medication
starts only.
Comment: Some commenters requested CMS remove the new start
restriction and allow step therapy for all Part B drug therapies.
Several commenters requested that CMS increase the lookback period to
determine if the enrollee is actively taking a Part B medication from
108 to 365 days to better ensure uninterrupted care. These commenters
pointed out that there are many clinical differences in the drugs
covered under Part B compared to those covered under Part D and noted
that the FDA-approved dosage period for many Part B drugs exceeds 108
days. One commenter highlighted the following drugs (and their dosage
periods) specifically:
Zoledronic acid for osteoporosis is 1 year
Denosumab for osteoporosis is 6 months
Hyaluronic acid injections for knee osteoarthritis are 6
months
Rituximab for rheumatoid arthritis is dosed at two infusions
repeated every 4 to 6 months
Given these examples, these commenters and others recommended a 365-day
lookback period to better ensure uninterrupted care, noting that a
disruption in therapy could result in poorer disease control including
relapse of symptoms and other bad outcomes, such as hospitalization and
death, depending on the drug and condition. Commenters also reasoned
that a 108 day lookback period may not be clinically appropriate for
some disease states, as many patients receive less frequent infusions
that may not be captured in this short time period.
Response: Although we proposed that MA plans would be required to
have a lookback period of 108 days to determine if the enrollee is
actively taking a Part B medication, we explained in the proposed rule
how the purpose of the look back period was to determine if an enrollee
were actively taking a Part B drug. We stated our belief that
consistency with the Part D lookback period, which was created with
clinical and pharmaceutical input, would be appropriate. As commenters
have pointed out that the FDA-approved dosage periods for some Part B
drugs exceeds 108 days, we now believe that in order to fully ensure
that an MA enrollee is not already taking a Part B drug, a longer
lookback period is appropriate and necessary. Therefore, in order to
ensure continuity of care, we are finalizing Sec. 422.136(a)(1) with a
lookback period of 365 days as recommended by commenters. Based on this
information about the dosage periods for Part B drugs, the
justification for the 108-day lookback period used for Part D drugs is
not applicable to Part B drugs. In Part D, 108 days is a considered
sufficient because PDPs are allowed to provide 90-day supplies. The 108
day period allows for some flexibility beyond 90 days (18 days or 20%
of 90 days) if the beneficiary does not refill a prescription exactly
90 days after the first fill. This scenario is not applicable to Part B
drugs because Part B drugs are not administered based on a 90-day
supply and, as the commenters indicated, may have dosage periods of up
to a year. As discussed in the proposed rule, CMS believes new step
therapy requirements must not disrupt ongoing Part B drug therapies for
enrollees. In order to ensure that step therapy requirements do not
disrupt ongoing Part B drug therapies, we proposed, and are finalizing
at Sec. 422.136(a)(1), that step therapy may not disrupt enrollees'
ongoing Part B drug therapies. The regulation, at Sec. 422.136(a)(1),
permits MA plans to apply a step therapy program only to new
administrations of Part B drugs, using a minimum lookback period. We
believe a 365 day look back period will mean that MA plans identify
enrollees who may be using a drug with a longer dosage period and thus
better ensure uninterrupted care. Therefore, the final regulation text
specifies a 365 day lookback period.
Comment: Commenters also stated that new start protections must be
allowed for new MA enrollees as well as enrollees who switch MA plans.
Response: We agree that step therapy programs should be limited to
new administrations for all enrollees. We proposed that step therapy
should not be permitted to disrupt enrollees' ongoing Part B drug
therapies and noted in the proposed rule how we intended the
restriction to new starts and the use of the look back period to apply
to current enrollees and when an enrollee elects a new MA plan. We
clarify here that an enrollee's ongoing Part B drug therapy may not be
disrupted even when an enrollee switches plans. MA plans must use the
lookback period when an enrollee elects a new MA plan (regardless of
whether previously enrolled in a MA plan, traditional FFS Medicare, or
new to Medicare) to determine whether the enrollee has taken the Part B
drug (that will otherwise be subject to step therapy) within the past
365 days. We are finalizing the requirement in Sec. 422.136(a)(1) that
step therapy only be applied to new prescriptions or administrations of
Part B drugs, using a 365 day lookback period. This limitation must be
applied to all enrollees and means step therapy for a Part B drug may
be used only for an enrollee who is not receiving the
[[Page 23860]]
medication currently or has not previously received the medication
within the lookback period. MA plans must therefore take steps to
request and review information as necessary to identify whether an
enrollee has used the applicable Part B drug during the lookback
period.
Comment: Several commenters urged CMS to include in the final rule
an exemption or waiver policy for individuals subject to Part B step
therapy. Commenters argued that some beneficiaries have conditions that
are too sensitive to be subject to the increased restrictions that step
therapy would impose. Commenters reasoned that in some cases a patient
being required to first ``fail'' on a plan preferred medication or to
wait through a delay due to an appeal can to lead to adverse health
outcomes, especially if the patient's condition is stable due to the
enrollees' use of prescription drugs already selected by the
prescribing health provider. Commenters stated that step therapy
requirements prevent patients from adhering to their treatment plans
and, therefore, are not in their best interests. Commenters also
suggested CMS develop a more expansive exemption or waiver policy for
individuals that should not be subject to Part B drug step therapy
requirements.
Response: We reiterate that plans cannot deny medically necessary
care and enrollees and/or providers may request a pre-service
organization determination in order to receive plan approval to bypass
the step therapy requirement, but we are not adopting specific
regulation text to create additional exemptions from step therapy other
than the limits we proposed (meaning, the limits regarding new
administrations of a Part B drug, use of only covered drugs, and use of
off-label indications). We believe that a request for a pre-service
determination, particularly in light of the amendments to the deadlines
for responding to requests for organization determinations about
coverage of Part B drugs, is an adequate safeguard to ensure enrollee
access to medically necessary care. In addition, an enrollee may
request an expedited organization determination and reconsideration if
necessary. We are also requiring that step therapy be limited to new
starts with a 365 day look back period so continuing treatments are not
affected. CMS limited step therapy to new starts because a disruption
in successful MA enrollee therapy could result in poorer disease
control, relapse of symptoms and other bad outcomes including
hospitalization and death, depending on the drug and condition.
This final rule includes a number of safeguards that ensure timely
access to all medically necessary Part B medications, including the
following: (1) Requiring that step therapy only be applied to new
prescriptions or administrations of Part B drugs for enrollees who are
not actively receiving the affected medication with a lookback period
of 365 days to determine if the enrollee is actively or during the
lookback period was taking a Part B medication; (2) requiring that MA
plans issue organization determinations and decisions on appeals under
timeframes similar to those used in the Part D program when the issue
is about coverage of a Part B drug; and (3) requiring that plans use a
P&T committee to review and approve step therapy programs to ensure
medically appropriate implementation of step therapy for Part B drugs.
Comment: Some commenters urged CMS to require that step therapy
protocols be aligned with clinical practice guidelines and adhere to
recognized standards of care. Other commenters urged CMS to require MA
plans to establish processes to evaluate the clinical appropriateness
of their step therapy protocols. Some commenters suggested that plan
step therapy policies should be supported by evidence-based clinical
guidelines and best practices that are based on robust research and
publicly available overutilization data.
Response: CMS appreciates commenters' feedback about requiring P&T
committees to establish processes to evaluate the step therapy policies
developed by MA plans and that these policies be supported by evidence-
based clinical guidelines and best practices. We believe that our
proposal for P&T committees and the standards they would be required to
use in reviewing and approving step therapy programs for Part B drugs
are consistent with the commenters' recommendations. CMS is finalizing
its proposal at Sec. 423.136(b)(5), that requires P&T committees base
clinical decisions on the strength of scientific evidence and standards
of practice, including assessing peer-reviewed medical literature,
pharmacoeconomic studies, outcomes research data, and other information
as is determines appropriate. This regulation will allow P&T committees
discretion to determine the scientific evidence and standards of
practice on which their clinical decisions are based, although CMS can
monitor this process through review of P&T committee records. CMS is
also finalizing regulation text at Sec. 423.135(b)(9) that each P&T
committees must document in writing its decisions regarding the
development and revision of and utilization management activities and
make this document available to CMS upon request. Accordingly, CMS may
monitor compliance with (and, as necessary take enforcement and/or
compliance action regarding) the P&T committee requirements in Sec.
422.136(b) through requesting written documentation regarding Part B
step therapy programs and evaluating whether clinical decisions and
criteria are evidence-based and appropriate in terms of safety and
efficacy. We may also release subregulatory guidance concerning the
application of the P&T committee requirements in the context of Part B
drugs.
Comment: A few commenters requested that CMS carefully consider the
development of further guidance on how step therapy should align with
existing care coordination programs.
Response: We evaluated existing requirements in Sec. Sec. 422.112
and 422.152 that require care coordination activities and determined
that changes to these rules are not needed to include care coordination
activities related to Part B step therapy. We may consider further
requirements in the future, as needed, and note that CMS is not
finalizing a requirement in Sec. 422.136 that an MA plan must offer a
drug management care coordination program in conjunction with Part B
step therapy. We believe full disclosure to enrollees regarding a
plan's Part B step therapy program and good communication between
providers and enrollees undergoing step therapy are important features
of care coordination. We expect this disclosure to include informing
enrollees of their appeal rights and confirming whether enrollees have
used the stepped medication within the last year. While all of the care
coordination requirements are important, we emphasize that plans should
ensure that treating providers consider beneficiary input into the
provider's proposed treatment plan, as described at 42 CFR
422.112(a)(6)(iii). We also expect MA plans to ensure that providers
closely monitor patients undergoing step therapy to ensure that the
prescribed medication is meeting clinical expectations.
Comment: Some commenters expressed concern that the additional
education and information responsibilities in this proposal are
insufficient and do not adequately inform enrollees and providers of
plan step therapy policies. These commenters encouraged CMS to provide
greater transparency to enrollees and
[[Page 23861]]
providers of step therapy policies by requiring that plans disclose the
name of each Part B drug subject to step therapy in the annual notice
of changes (ANOC) and explanation of benefits (EOC).
Response: With regard to the comments on the sufficiency of our
proposal regarding education and information provided to providers and
enrollees, CMS believes transparency and informed beneficiaries and
providers are critical to a well-coordinated and efficient utilization
management program. We are finalizing the requirement that MA plans
establish policies and procedures to educate and inform health care
providers and enrollees concerning step therapy policies at Sec.
422.136(a)(2). In addition, we note that existing disclosure
requirements in Sec. 422.111 will apply to step therapy programs. We
are still considering how to apply and interpret the requirements in
Sec. 422.111 regarding the ANOC and EOC to step therapy programs in
light of the new requirement we are finalizing here at Sec.
422.136(a)(2), that MA plans establish policies and procedures to
educate and inform providers and enrollees about step therapy programs.
Subregulatory guidance will be provided Sec. Sec. 422.111 and
422.136(a)(2) and CMS intends to seek comment in its development of
such guidance about whether step therapy requirements should be
displayed in a drug-specific manner in the ANOC/EOC documents provided
to beneficiaries.
Comment: Some commenters expressed concern that the requirements
under this proposal are burdensome and not necessary to administer a
drug benefit.
Response: CMS appreciates commenters concerns regarding the
administrative burden imposed on network providers by MA plans. CMS
encourages MA plans to work closely with providers to adopt best
practices that streamline operations and minimize burden. We also
encourage continued development and advancement of electronic prior
authorization processes to more efficiently administer Part B step
therapy programs and potentially minimize burden on health care
providers. CMS believes that Part B step therapy programs can reduce
medical costs by replacing more expensive drugs with less costly drugs
when it is medically appropriate to do so.
Comment: Several commenters expressed concern about the disclosure
requirements and argued that beneficiaries should receive more detailed
information about drugs subject to Part B step therapy. Commenters
suggested that beneficiaries should be able to review step therapy
protocols and medications subject to step therapy prior to enrolling in
the plan. Commenters recommended increased transparency of plan step
therapy requirements, including having plans explain why step therapy
is required for a specific medication, how the process works, and what
recourse the beneficiary has to appeal. Furthermore, several commenters
urged CMS to prohibit mid-year additions to step therapy programs or
mid-year implementation of step therapy, noting that such restrictions
should only be established in advance of a plan year so that
beneficiaries will have access to all plan information prior to making
enrollment decisions.
Response: As previously discussed, CMS believes transparency and
informed beneficiaries and providers are critical to a well-coordinated
and efficient utilization management program. The regulation at Sec.
422.111 requires that MA plans disclose information covered by the
plan, including applicable conditions and limitations, premiums, cost-
sharing, and any other conditions associated with receipt or use of
benefits in the plan's ANOC (when initially adopted or subsequently
changed) and EOC documents, which are provided annually to plan
enrollees. In the past, we interpreted the regulation to mean that
plans must identify that covered services may be subject to utilization
management tools, like prior authorization. In light of the comments
regarding transparency and the need for enrollees to have detailed
information about step therapy programs, we are considering whether
Sec. 422.111 should be interpreted to require more detailed
disclosure, particularly as we are finalizing a requirement at Sec.
422.136(a)(2) that MA plans establish policies and procedures to
educate and inform providers and enrollees about step therapy programs.
We intend to seek comment through sub-regulatory guidance as to whether
step therapy requirements should be displayed in a drug-specific manner
in the ANOC/EOC documents and how MA plans should be required to
display this information so that enrollee elections can be made based
on all necessary information.
With respect to mid-year changes to implementation of step therapy
programs, we note that under Sec. 422.111(d)(3), MA plans must inform
all enrollees at least 30 days before the intended effective date of
changes in plan rules. Utilization management tools like prior
authorization and step therapy are plan rules within the scope of this
provision so MA plans must inform enrollees of changes to rules
described in the ANOC/EOC consistent with Sec. 422.111(d).
Comment: Some commenters supported the use of P&T committees as an
effective mechanism to ensure that step therapy and other utilization
policies are clinically appropriate. Other commenters noted that MA
plans utilize a Medical Policy committee, which reviews and evaluates
drugs covered under the medical, rather than the pharmacy benefit. The
commenters suggested CMS should allow MA plans to utilize these
committees to develop and review plan step therapy policies instead of
a P&T committee, which reviews and approves the Part D drug benefit.
Response: CMS appreciates commenters who shared both opposition and
support of the P&T committee requirement. CMS will require MA plans
that elect to use Part B step therapy programs to have a P&T committee
review and approve such step therapy programs. This regulation affirms
our reinterpretation of section 1852 of the Act, and the MA regulations
governing benefit coverage and utilization management policies (for
example, Sec. 422.4(a)(1)(ii)) to allow MA plans to use utilization
management tools such as step therapy for Part B drugs to prevent
overutilization of medically unnecessary health services and control
costs, subject to limitations finalized in Sec. 422.136. We are
finalizing the paragraph (b) provisions requiring use of P&T
committees, but are limiting the P&T committee responsibilities to
review and approval of Part B step therapy programs only. Our proposed
regulation text in paragraphs (b)(6), (b)(7), and (b)(9) referred to
utilization management policies and programs and proposed paragraph
(b)(10) referred to ``clinical prior authorization criteria;'' we are
not finalizing these references, but are limiting the regulation text
to step therapy programs. The final rule does not require P&T committee
review and approval of Part B utilization management policy other than
step therapy programs; MA plans are permitted to use P&T committees
more broadly to review and approve other utilization management
programs and protocols, but are not required to by Sec. 422.136 as
finalized here. Limiting P&T committee responsibilities to step therapy
programs is in line with our proposal. As explained in the proposed
rule, Sec. 422.136 is specific to step therapy programs applicable to
Part B drugs, our reinterpretation permitting such programs, and the
appropriate limits on MA plans using such
[[Page 23862]]
programs. Our proposal was not explicitly to impose new limits on
existing utilization management programs. Although we solicited
comments, we did not receive any comments recommending that P&T
committee requirements be extended to other programs.
We believe the P&T committee requirements being finalized in this
rule are necessary to ensure medically appropriate implementation of
step therapy for Part B drugs. P&T committees will promote safe,
effective, and cost-effective Part B drug therapy by reviewing and
approving the policies and procedures for step therapy. CMS is not
adopting any requirements for use of Medical Policy committees because,
as discussed in the proposed rule, we believe it is appropriate to
substantially align the requirements of a P&T committee reviewing Part
B drugs with Part D requirements for administrative efficiency between
Part C and Part D programs. P&T committee membership and regulatory
requirements are specifically designed to ensure that adequate
standards and considerations be used in reviewing step therapy programs
for drugs. A medical policy committee's scope would not necessarily be
limited to Part B drug review and, therefore, impose unnecessary burden
to MA plans. Additionally, Part D requirements for P&T committees have
proven sufficient in ensuring that plans implement medically
appropriate step therapy and utilization management protocols in Part
D.
Comment: Some commenters expressed concern about CMS's requirements
regarding the sufficiency of the P&T committee's composition. These
commenters believe MA plans should require, rather than encourage, P&T
committees to include more specialists, nurse practitioners, and
beneficiary representation.
Response: CMS appreciates commenters concerns regarding P&T
committee composition. In response to commenters' suggestions that P&T
committee composition include more specialists, practitioners, and
beneficiary representation, CMS notes that this final rule requires P&T
committees include a majority of members who are practicing physicians
or pharmacists. Although P&T committees must include a majority of
members who are physicians and pharmacists, plans have the discretion
to include specialists, nurse practitioners, and beneficiaries as
members. We do not believe that adopting different or revised
composition requirements will necessarily further our goals for the use
of the P&T committee while they could impose additional burden on MA
plans, which would not be able to immediately implement use of an
existing P&T committee established for the Part D program, if
additional members must be added to the committee. As noted in the
proposed rule, we believe that using the same rules as apply in the
Part D program are appropriate because of the demonstrated success in
that context.
Comment: A few commenters expressed concern that this proposal
would lead to higher out-of-pocket (OOP) costs for beneficiaries. Some
expressed concern that allowing plans to step a Part D drug before a
Part B drug would lead to increased OOP costs for beneficiaries due to
the differences in cost sharing rules between Part B and Part D drugs.
A few commenters urged CMS to allow plans to cross-manage Part B and
Part D drugs to enable plans to better manage Part B and Part D drug
costs.
Response: CMS acknowledges that in some narrow instances
beneficiaries may be financially disadvantaged and experience higher
cost sharing if for example, a Part B step therapy program uses a Part
D drug as a step to the Part B drug for an enrollee who had reached
their MA plans maximum out-of-pocket limit (MOOP). MA enrollee out-of-
pocket costs for Part D drugs are not included in the MOOP limit
imposed on enrollee out of pocket costs under Sec. Sec. 422.100(f) and
422.101(d), but enrollee costs for Part B drugs are; therefore, an
enrollee who has reached the catastrophic limit would not have any cost
sharing charged for a Part B drug, but would have to pay cost sharing
for a Part D drug. However, we believe the majority of MA enrollees
will realize reduced cost sharing as a result of the step therapy
policy finalized in this rule because the enrollees will be directed to
a clinically appropriate and more cost effective drug treatment. We
expect that the implementation of step therapy will result in lower
plan bids, because the cost of furnishing Part A and Part B benefits
will be lower. If a plan reduces its bid relative to the benchmark, the
plan should be able to charge a lower premium or provide supplemental
benefits at a lower (or potentially no) premium.
Comment: Some commenters recommended that CMS permit plans to
provide a two-tiered Part B preferred drug list with differential cost-
sharing and requested that CMS use its authority through the Annual
Rate Notice and Call Letter to permit MA plans to establish non-
preferred Part B drug cost sharing greater than 20 percent.
Response: We thank commenters for their suggestions. We note that
CMS does not have the authority to make such changes through the annual
Call Letter. Section 3202 of the Affordable Care Act amended section
1852 of the Act to establish new standards for MA plans' cost sharing.
Specifically, section 1852(a)(1)(B) of the Act was amended by the
addition of new clause (iii) that limits cost sharing under MA plans so
that it cannot exceed the cost sharing imposed under Original Medicare
for specific services identified in new clause (iv). New section
1852(a) (1)(B)(iv) of the Act lists the three service categories for
which cost sharing in MA plans may not exceed that required in Original
Medicare (chemotherapy administration services, renal dialysis
services, skilled nursing care) and section 1852(a)(1)(B)(iv)(IV) of
the Act specifies that this limit on cost sharing also applies to such
other services that the Secretary determines appropriate. CMS must use
rulemaking to identify additional services to which this provision
would apply to limit how much cost sharing is charged to an MA
enrollee.
As stated in the CY 2012 Call Letter, MA plans and 1876 Cost Plans
may not charge enrollees higher cost sharing than is charged under
Original Medicare for chemotherapy administration including
chemotherapy drugs and radiation therapy integral to the treatment
regimen, skilled nursing care, and renal dialysis services (Sec. Sec.
417.454(e) and 422.100(j)). In addition, in order to ensure that cost
sharing is consistent with both Sec. Sec. 422.254(b)(4) and
422.100(f)(2) and (6), CMS evaluates actuarial equivalent cost sharing
limits separately for all Part B drugs. Therefore, the 20 percent limit
applies to both Part B drugs-Chemo and Part B Drugs-Other.
Comment: Some commenters also suggested CMS allow plans'
utilization management protocols to supersede national coverage
determinations (NCDs) and local coverage determinations (LCDs).
Specifically, it was suggested that CMS provide guidance that grants
plans flexibility in implementing step therapy on Part B drugs with
LCDs or NCDs. We also received a comment that encouraged CMS to review
NCDs and revise those policies that impose barriers on the utilization
of biosimilars.
Response: MA organizations have been and remain subject to Sec.
422.101(b), which requires compliance with national and in some cases,
local, coverage determinations. Part B step
[[Page 23863]]
therapy protocols for a given drug cannot be stricter than the step
therapy provisions specified in an NCD or LCD. For example, if the NCD
or LCD has specified Part B step therapy requirements for that
particular drug, then the Part B step therapy protocols of an MA plan
cannot be stricter than those protocols. We would further note that
when NCDs or LCDs do not preclude MA step therapy, we believe that Part
B step therapy can be an effective utilization management tool. Where
an LCD or NCD addressing coverage of a Part B drug does not address or
include a step therapy protocol, this regulation will permit the MA
plan to adopt a step therapy for that Part B drug. As we have discussed
elsewhere in this final rule, one significant policy goal in allowing
Part B step therapy is to enable MA plans to reduce unnecessary drug
spending and, in turn, reduce costs for beneficiaries and the Medicare
program. MA plans must provide coverage of all Part A and Part B
benefits, therefore, MA plans must provide coverage of all Part B
drugs. If an NCD specifies that a biosimilar is not covered under Part
B, it cannot be used under the Part B drug step therapy program.
Comment: Some commenters requested CMS clarify whether all of the
projected savings resulting from step therapy may be incorporated in
the bid amount, instead of offering incentives only to those enrollees
subject to step therapy who completed specified care management
activities, beginning in 2020.
Response: Effective January 1, 2020, MA plans must incorporate
anticipated savings in the plan's bid amount; therefore, coupling step
therapy with rewards and incentives will not be a requirement in 2020
or future years for MA plans (as it is in 2019) that use a step therapy
program for one or more Part B drugs. Pursuant to Sec. 422.254(b), MA
bids for the basic benefit are required to reflect the revenue
requirements for an MA plan to cover all Part A and Part B benefits;
when use of a step therapy program means that the MA plan projects
lower utilization or lower pricing (such as due to pricing negotiation
with drug manufacturers), that will necessarily result in lower revenue
needs to provide the Part B drugs that are subject to the step therapy
program. CMS reminds plans that additional Part C rebate dollars
associated with the lower bid, as with all Part C rebate dollars, must
be used to provide supplemental benefits and/or lower premiums for the
plans' enrollees.
We explained in the proposed rule how preferred provider
organization plans (PPOs), because of the requirement in Sec.
422.4(a)(1)(v)(B) to reimburse or cover benefits provided out of
network without use of restrictions on coverage, would not be able to
impose prior authorization or step therapy requirements on out-of-
network provision of Part B drugs. We solicited comment on whether the
final rule should include a specific regulatory provision clarifying
whether preferred provider organization plans (PPOs) can apply step
therapy out of network.
Comment: Some commenters requested that CMS allow PPOs to apply
step therapy out of network.
Response: We clarify that PPOs are required, as part of the
definition of a PPO at section 1852(e)(3)(A)(iv)(II) of the Act and
under the MA regulations at Sec. 422.4(a)(1)(v)(B), to reimburse or
cover benefits provided out of network; while higher cost sharing is
permitted, PPOs are prohibited from using prior authorization or
preferred items restrictions in connection with out of network
coverage. (70 FR 4616 through 4617). As such, PPOs must provide
reimbursement for all plan-covered medically necessary services
received from non-contracted providers without prior authorization or
step therapy requirements. Therefore, PPO plans may only use step
therapy or prior authorization when a Part B drug is provided by an in-
network provider.
Comment: Some commenters requested that all step therapy policy,
including CMS operational guidance, be subject to advance public notice
and an opportunity to provide comment.
Response: CMS thanks commenters for the suggestion and will
consider soliciting comment on draft operational guidance related to
Sec. 422.136 and its requirements for Part B step therapy in the
future. However, we do not believe that we are required to do so.
Because of timing factors, as well as other policy considerations, we
may release guidance without first soliciting comment.
Comment: Some commenters urged CMS to evaluate and revise existing
subregulatory guidance and update relevant Medicare manual chapters to
maximize the time plans have to design and implement step therapy
programs and incorporate them in their bid applications for CY 2020.
Response: CMS will continue to evaluate and update Part B and Part
D subregulatory guidance to ensure accuracy and consistency with new
regulations. CMS appreciates that plans need to prepare bid submission
and will work to provide additional Part B subregulatory guidance in a
timely manner. This final rule provides significant discussion of Sec.
422.136 and the requirements for Part B step therapy. Additional
guidance before the bid deadline for CY2020 may not be possible.
Comment: Some commenters supported the proposal to permit MA plans
to use off-label drugs in a step therapy program only when such drugs
are supported by widely used treatment guidelines or clinical
literature that CMS considers to represent best practices. Some
commenters requested that CMS clarify what it considers to be ``best
practices'' or ``widely used treatment and clinical literature'' in
this regard. Others expressed caution that the use of off-label drugs
as proposed could limit further investment in developing therapies and
could provide disincentives to seeking FDA approval of additional
indications. Some commenters expressed concern that the proposed
regulation text does not explicitly require that an off-label use meet
the definition of a medically accepted indication. Commenters also
expressed concern that reliance upon compendia standards as the
criteria for off-label coverage is insufficient to determine clinical
appropriateness and could undermine the FDA and its role to review and
approve investigational uses of approved drugs. Other commenters
recommended CMS prohibit step therapy through an off-label medicine,
particularly if there is an on-label medicine available.
Response: We thank commenters for their feedback. In order to
ensure the medically appropriate use of off-label drugs, CMS's
finalized rule prohibits an MA plan from including in step therapy
protocols a drug supported only by an off-label indication unless the
off-label indication is supported by widely used treatment guidelines
or clinical literature. For example, an example of widely used
treatment guidelines that would be relevant for Part B drugs would be
the National Cancer Center Network (NCCN), which has separate
guidelines for different types of cancer, as well as a compendium for
cancer drugs.
Comment: A commenter asked whether the policies in our proposed
rule allow a MA plan to require the use of a Part D protected class
drug prior to the use of a Part B drug (that is., as a step to a Part B
drug on a Part B step therapy program). The commenter also asked how
the Part B step therapy program would impact enrollees' access to Part
D protected class drugs.
Response: This final rule, at Sec. 422.136(d), provides that only
Medicare covered Part B drugs (and, for MA-PD plans, also Part D drugs)
may be
[[Page 23864]]
used in a step therapy program for a Part B drug. A Part B step therapy
program used by an MA plan must not include as a step or other
component of the program any drugs not covered by the MA plan as a Part
B drug, or, in the case of an MA-PD plan, a Part D drug. In addition to
requiring one Part B drug be used before a different Part B drug, MA
plans that also offer prescription drug coverage (MA-PD plans) may use
step therapy to require a Part B drug or a Part D drug therapy,
including a protected class Part D drug, prior to allowing a Part B
drug therapy because the Part D drug will also be covered by the plan.
MA-PD plans may also apply step therapy to require a Part B drug
therapy prior to allowing a Part D drug therapy, including, for new
starts only, a protected class Part D drug (other than an
antiretroviral), as part of a Part D step therapy program or
utilization management program; however, MA-PD plans must ensure that
these requirements are clearly outlined in the Part D prior
authorization criteria for the affected Part D drugs and are otherwise
consistent with Part D requirements, including the requirements for the
use of prior authorization and step therapy for protected class Part D
drugs that we are finalizing elsewhere in this rule.
As discussed previously, after careful consideration of all
comments received, and for the reasons set forth in the final rule and
in our responses to the related comments, we are adopting a new
regulation at Sec. 422.136, substantially as proposed but with some
modifications. Specifically, we are making the following changes from
the proposal:
In the proposed regulation text Sec. 422.136(a) (1), we
are finalizing a lookback period of 365 days instead of 108 days.''
Thus, Sec. 422.136(a) (1) reads as follows: ``Apply step therapy only
to new administrations of Part B drugs, using at least a 365 day
lookback period.''
In the introductory text in Sec. 422.136(b), we are
correcting a typographic error in the proposed regulation text to use
``an existing Part D P&T committee'' in place of ``an existing Part D
P&T committees.''
We are also amending the P&T committee requirements at Sec.
422.136(b) to clarify that P&T committee responsibilities apply to
review and approval of Part B drug step therapy programs, and do not
extend to all utilization management policies for Part B items or
services. Therefore, we are making the following modifications:
In the regulation text Sec. 422.136(b)(6), we are
replacing ``a utilization management programs, such as'' with
``program''. Thus, we are finalizing Sec. 422.136(b)(6) to read as
follows: ``Consider whether the inclusion of a particular Part B drug
in a step therapy program has any therapeutic advantages in terms of
safety and efficacy.''
In the regulation text Sec. 422.136(b)(7), we are not
finalizing the language ``utilization management processes, including
drug utilization review, quantity limits, generic substitution, and
therapeutic interchange'' and are finalizing language that refers to
step therapy. Thus, we are finalizing Sec. 422.136(b)(7) as follows:
``Review policies that guide exceptions and other step therapy
processes.''
In the regulation text Sec. 422.136(b)(9), we are not
finalizing ``and'' and ``utilization management.'' Thus, we are
finalizing Sec. 422.136(b)(9), to read as follows: ``Document in
writing its decisions regarding the development and revision of step
therapy activities and make this documentation available to CMS upon
request.''
In the regulation text Sec. 422.136(b)(10), we are
removing ``clinical prior authorization criteria'' and ``protocols and
quantity limit restrictions.'' Thus we are revising Sec.
422.136(b)(10), to read as follows: ``Review and approve all step
therapy criteria applied to each covered Part B drug.''
2. Medicare Advantage and Step Therapy for Part B Drugs: Adjudication
Timeframes
We proposed to amend a number of regulations related to the
timeframe for an MA plan to make expedited and standard organization
determinations and reconsiderations regarding coverage of Part B drugs.
We also received comments on our proposal that requests for Part B
drugs, including Part B drugs subject to step therapy, be processed
under the same adjudication timeframes as used in the Part D drug
program. As we stated in the proposed rule, we believe the clinical
circumstances that typically accompany requests for Part B drugs
warrant application to coverage decisions regarding Part B drugs of the
shorter adjudication timeframes that apply in Part D. In keeping with
this rationale, we did not propose to permit MA plans to extend
adjudication timeframes for organization determinations and appeals
related to Part B drug requests. We explained that our proposal to
change the adjudication timeframes applies through the Part C IRE level
of review. We did not propose to change how Part C appeals, whether for
Part A, Part B or supplemental benefits, are processed by the Office of
Medicare Hearings and Appeals (OMHA) and the Medicare Appeals Council
(Council) which is housed within the Departmental Appeals Board (DAB).
Specifically, we proposed the following amendments regarding the
organization determination and appeal procedures for Part B drugs:
Add adjudication timeframes at Sec. Sec. 422.568,
422.572(a), and 422.590(c) and (e)(2) for, respectively, standard
organization determinations, expedited organization determinations,
standard reconsiderations, and expedited reconsiderations related to
coverage of Part B drugs that are the same as the timeframes for these
appeal stages for Part D drugs under Sec. Sec. 423.568, 423.572, and
423.590.
Add references to determinations regarding Part B drugs to
Sec. Sec. 422.568(d) and (e)(4), 422.584(d), 422. 618(a) and (b), and
422.619(a), (b) and (c).
Specify in Sec. Sec. 422.568(b)(2), 422.572(a), and
422.590(c) and (e)(2) that the rules related to extending the
adjudication timeframe related to requests for medical services and
items (at Sec. Sec. 422.568(b)(1)(i), 422.572(b) and redesignated
Sec. 422.590(f)) do not apply to the timeframes for resolving standard
organization determinations, expedited organization determinations,
standard reconsiderations, and expedited reconsiderations for Part B
drugs.
Make conforming changes that reference the applicable
proposed timeframes and deadlines for determinations regarding Part B
drugs and update cross-references in Sec. Sec. 422.570(d)(1),
422.584(d)(1), and 422.618(a).
Add a reference to an ``item'' to regulation text to
clarify that the scope covers services and items at Sec. Sec.
422.568(b), (d), and (e); 422.572(a) and (b), 422.590(a), (e), and (f);
and 422.619(a) and (b).
Redesignate existing regulatory paragraphs at Sec.
422.568(b)(1) and (2) to Sec. 422.568(b)(1)(i) and (ii), at Sec.
422.590(c)-(f) to Sec. 422.590(d)-(f), and at Sec. 422.619(c)(2) to
Sec. 422.619(c)(3), without substantive change.
We explained in the proposed rule our intent to balance goals of
cost savings and efficiencies with enrollee access, enhanced quality of
care, and due process protections. We also solicited comments on our
proposals related to organization determination and appeals timelines
and processes that will be applicable to Part B drugs. Specifically, we
solicited comments on our proposal to not permit MA organizations to
extend the proposed timeframes for requests for Part B drugs and
whether we overlooked an appeal
[[Page 23865]]
procedure or timeframe that should also be addressed in order to meet
our goal of aligning organization determinations and appeals related to
Part B drugs with the procedures and timeframes currently applicable to
coverage determinations and appeals for Part D drugs under part 423.
For more detail about the proposal, we direct readers to the proposed
rule, 83 FR 62171 through 62174.
We explained in our proposal that, in a separate proposed rule,
CMS-4185-P, entitled ``Medicare and Medicaid Programs; Policy and
Technical Changes to the Medicare Advantage, Medicare Prescription Drug
Benefit, Program of All-inclusive Care for the Elderly (PACE), Medicaid
Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and
2021'' and appeared in the Federal Register on November 1, 2018 (83 FR
54982), we proposed integrated grievance and appeal provisions for
certain D-SNPs with aligned enrollment with Medicaid managed care
plans. We also solicited comment on whether the proposed timeframes for
organization determinations and appeals of coverage of Part B drugs
should be incorporated into the integrated appeals procedures for
certain D-SNPs.
We received 13 comments on our proposal related to organization
determination and appeals timeframes for Part B drug requests:
Comment: Several commenters expressed support for the proposal to
mirror Part D adjudication timeframes for Part B drug requests.
Commenters stated that they appreciate CMS' efforts to clarify the
appeals process and to establish greater consistency in how Part B and
Part D drug requests are adjudicated. In expressing support for the
adjudication timeframes for Part B drugs, one commenter stated that
delays in treatment can have devastating health implications and noted
that requiring plans to meet the Part D timeframe of 72 hours for
standard organization determinations and 24 hours for expedited
organization determinations will help ensure that these adverse
outcomes are avoided.
Response: We thank the commenters for their support for this
proposal. CMS believes that applying Part D adjudication timeframes to
requests for Part B drugs establishes greater clarity and consistency
in the coverage determination and appeals processes across the two
programs. We believe the approach of applying shorter adjudication
timeframes affords the most protection for beneficiaries. In addition,
utilizing the timeframes that already exist in the Part D program
minimizes changes to program operations for many plans since MA-PD
plans are already familiar with and use the Part D timeframes.
Comment: Several commenters supported the proposed changes to the
adjudication timeframes, but expressed concern that these beneficiary
safeguards may not be strong enough to counter the negative effects of
the proposed use of step therapy and utilization management tools.
These commenters believe use of utilization management tools undermine
patient access to clinically necessary and critical drugs, treatments,
and therapies.
Response: We thank the commenters for sharing these concerns. CMS
believes that mirroring the Part B adjudication timeframes with those
shorter timeframes in Part D provides the best protection for enrollees
who need a Part B drug. In all cases, the MA organization must notify
the enrollee, and the physician or other prescriber involved, of its
decision as expeditiously as the enrollee's health condition requires,
but no later than the applicable adjudication timeframe. As we stated
in the proposed rule, the rules on disclosure of utilization management
requirements and individualized medical necessity determinations,
coupled with the right to request an organization determination, ensure
that an enrollee is informed about applicable step therapy requirements
and has an opportunity for an individualized medical necessity
determination related to a Part B drug step therapy requirement.
Further, an MA organization has the discretion to establish an
evaluation process for the appropriateness of enforcing its step
therapy protocols on an enrollee when the enrollee's healthcare
provider's assessment of medical necessity for the Part B drug
indicates that the lower or earlier steps in the step therapy protocol
are not clinically appropriate for that enrollee; this final rule does
not prohibit MA organizations from working with their network providers
to develop processes that eliminate the necessity for an enrollee to
file a request for an organization determination in such cases.
However, to the extent an MA organization develops an evaluation
process for the appropriateness of enforcing its Part B step therapy
protocols as described previously, the MA organization must ensure that
the right of the enrollee to request an organization determination is
not circumvented by such a process and that organization determination
requests are processed in accordance with the requirements in Part 422,
Subpart M.
Comment: Some commenters stated that they do not believe the
appeals process is adequately responsive to patients with urgent
treatment needs as it can be burdensome and slow for patients and their
providers attempting to obtain drugs that are not on formulary. Other
commenters noted concern about the complexity of the MA appeals process
and how the process may be difficult for some beneficiaries to
navigate. One commenter stated that the Part D appeals process is too
deeply flawed to serve as a model for adopting changes to the MA
appeals process for the purpose of providing protections to enrollees
affected by plans' use of step therapy programs for Part B drugs.
Another commenter stressed that, unlike Part D drugs, Part B drugs are
almost exclusively administered to the sickest patients and require a
patient to go to their doctor to receive treatment. This commenter
indicated that it is critical that any request for direct access to a
Part B drug that would otherwise only be available after trying an
alternative drug be addressed as promptly as possible, and suggested
that MA plans be required to make all decisions about Part B drugs
within a 24-hour timeframe rather than a 72 hour timeframe as proposed.
Response: We thank commenters for their concerns and suggestions.
We believe that application of shorter adjudication timeframes to
requests for Part B drugs compared to the adjudication deadlines for
other MA-covered services affords the best protection to enrollees who
have an urgent need for the requested drug. As finalized in this rule,
the MA organization must notify the enrollee, and the physician or
other prescriber involved, of its decision regarding coverage of a Part
B drug as expeditiously as the enrollee's health condition requires,
but no later than 24 hours for expedited organization determination
requests and 72 hours for standard organization determination requests
for a Part B drug. We believe this medical exigency standard, coupled
with the shorter timeframes, constitute meaningful beneficiary
protections for those with urgent treatment needs. We believe that
applying the same adjudication timeframes to all drug requests will
increase consistency in the Part C and Part D coverage decision
processes.
We disagree with the comment that every Part B drug request be
adjudicated in a 24-hour period. We believe it is important to provide
some flexibility in how MA plans allocate resources so that truly
urgent requests are given the requisite level of consideration. As
[[Page 23866]]
noted in the proposed rule, we believe applying the 72-hour timeframe
to standard Part B drug requests affords appropriate protection for
enrollees and we reiterate that, in all cases, the plan must notify the
enrollee of its decision as expeditiously as the enrollee's health
condition requires. In other words, the plan must notify an enrollee of
a decision even more quickly in a case where there is a medical need to
do so and we expect plans to triage requests in a manner that ensures
that this medical exigency standard is satisfied. In addition, under
existing rules, an enrollee or a physician may request that an MA
organization expedite an organization determination if an enrollee is
waiting to receive a drug. For a request made by an enrollee, the MA
organization must provide an expedited decision if it determines that
applying the standard timeframe could seriously jeopardize the life or
health of the enrollee or the enrollee's ability to regain maximum
function. For a request made or supported by a physician, the MA
organization must provide an expedited decision if the physician
indicates that applying the standard timeframe could seriously
jeopardize the life or health of the enrollee or the enrollee's ability
to regain maximum function.
Comment: One commenter stated that they believed that the current
review time for Part B drugs is appropriate and allows for adequate
physician coordination of services and drugs concurrently, and that
expediting the Part B determinations would pose no advantage. In a
similar vein, another commenter was opposed to the proposed changes to
the adjudication timeframes and noted a preference to keep timeframes
for Part B and Part D distinct and separate to maintain consistency
with current processes; this commenter also indicated that restricting
the ability to extend the timeframes would severely constrain their
capacity to obtain the necessary and appropriate information to make
informed determinations, exacerbating denial rates and adding costs to
plans through increased administrative burdens.
Response: We thank the commenters for sharing their perspectives,
but believe that the clinical circumstances that typically accompany
requests for Part B drugs warrant application of the shorter
adjudication timeframes that apply in Part D. As stated in the proposed
rule, applying the shorter Part D adjudication timeframes to requests
for Part B drugs establishes greater clarity and consistency in the
coverage determination and appeals processes across the two programs
and affords appropriate protections for enrollees requesting Part B
drugs, including those subject to step therapy or other utilization
management requirements. In keeping with the rationale that the
clinical circumstances that typically accompany requests for Part B
drugs warrant application of shorter adjudication timeframes, this
final rule does not permit extension of the adjudication timeframes for
Part B drug requests, as is allowed for other Part B organization
determinations and appeals. With respect to the comment on increased
administrative burdens, we believe utilizing the timeframes that
already exist in the Part D program will minimize administrative
burdens and changes to program operations for many plans since MA-PD
plans are already familiar with and use the Part D timeframes.
We did not receive comments specific to our solicitation regarding
whether to finalize different timeframes for Part B drug coverage
decisions made as part of the integrated grievance and appeal
provisions for certain D-SNPs with aligned enrollment with Medicaid
managed care plans. As explained below, we are finalizing provisions to
require applicable integrated plans to use the same Part B organization
determination and appeals timeframes set forth in this rule. CMS
finalized integrated appeals procedures for certain D-SNPs with aligned
enrollment with Medicaid managed care plans in the final rule CMS-4185-
F, Policy and Technical Changes to the Medicare Advantage, Medicare
Prescription Drug Benefit, Programs of All-Inclusive Care for the
Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care
Programs for Years 2020 and 2021. This final rule appeared in the April
16, 2019 Federal Register (84 FR 15680). A significant part of the
rationale for finalizing certain timeframes for the unified appeals
processes for certain applicable integrated plans in that final rule
was to provide consistency with existing timeframes in MA appeals
procedures. In order to ensure that D-SNPs using the integrated appeals
procedures operate consistently with other MA plans and provide
protection of shorter timeframes for decisions regarding coverage of
Part B drugs, we are finalizing here regulation text to require
applicable integrated plans to use the same Part B organization
determination and appeals timeframes finalized in this rule.
Specifically, we are finalizing here the following amendments to the
noted regulations:
In Sec. 422.629(a), text to require applicable integrated
plans to use the Part B drug rules;
In Sec. 422.631(a), text to specify the applicability of
Part B drug rules to integrated organization determinations; and
In Sec. 422.633(f), text to specify the applicability of
Part B drug reconsideration timelines to the integrated reconsideration
process.
We note that Sec. 422.634(d) requires that when an applicable
integrated plan completely reverses its integrated organization
determination involving a Part B drug, the applicable integrated plan
authorize or furnish the Part B drug within 72 hours. Because the 72-
hour timeframe established in Sec. 422.634(d) applies to all
integrated reconsiderations involving benefit, including Part B drugs,
that were not furnished while an appeal was pending, we do not believe
that any amendment or revision is appropriate to make it consistent
with the amendment finalized here at Sec. 422.618(a)(3). Therefore, we
are not amending Sec. 422.634(d).
Based on the comments we received on the proposal that requests for
Part B drugs be processed under the same adjudication timeframes as
used in the Part D drug program and for the reasons provided in the
proposed rule and our responses to comments, we are finalizing without
substantive modification the following proposed changes to the
regulatory provisions at Part 422, Subpart M:
Add adjudication timeframes at Sec. Sec. 422.568,
422.572(a), and 422.590(c) and (e)(2) for, respectively, standard
organization determinations, expedited organization determinations,
standard reconsiderations, and expedited reconsiderations related to
coverage of Part B drugs.
Specify in Sec. Sec. 422.568(b)(2), 422.572(a), and
422.590(c) and (e)(2) that the rules related to extending the
adjudication timeframe for requests for medical services and items (at
Sec. Sec. 422.568(b)(1)(i) and 422.572(b), and at redesignated Sec.
422.590(f), respectively) do not apply to the timeframes for resolving
standard and expedited organization determinations and reconsiderations
for Part B drugs.
Make conforming changes that reference the applicable
proposed timeframes and deadlines for determinations regarding Part B
drugs and update cross-references in Sec. Sec. 422.570(d)(1),
422.584(d)(1), and 422.618(a).
Add a reference to an ``item'' to regulation text to
clarify that the scope covers services and items at
[[Page 23867]]
Sec. Sec. 422.568(b), (d), and (e); 422.572(a) and (b), 422.590(a),
(e), and (f); and 422.619(a) and (b).
Add references to determinations regarding Part B drugs to
Sec. Sec. 422.568(d) and (e)(4), 422.584(d), 422. 618(a) and (b), and
422.619(a), (b) and (c).
Redesignate existing regulatory paragraphs at Sec.
422.568(b)(1) and (2) to Sec. 422.568(b)(1)(i) and (ii), at Sec.
422.590(c)-(f) to Sec. 422.590(d)-(f), and at Sec. 422.619(c)(2) to
Sec. 422.619(c)(3), without substantive change.
We are finalizing Sec. 422.572(b)(1) with a slight modification to
clarify that the rule for extending the timeframe for an MA plan to
make its decision only applies if an extension to the timeframe is
otherwise permitted; this clarification is necessary because we are
finalizing, at Sec. 422.572(a)(2), regulation text to prohibit the
extension of the 24 hour timeframe for an MA plan to decide an
expedited organization determination regarding coverage of a Part B
drug. In addition, we are amending Sec. Sec. 422.629, 422.631(a) and
422.633(f) to adopt the same timeframes for decisions related to
coverage of Part B drugs made by integrated applicable plans.
Finally, as we previously noted, CMS will incorporate the shorter
adjudication timeframes for Part B drug requests into the deadlines
specified in the Part C IRE's contract per Sec. 422.592(b).
F. Pharmacy Price Concessions in the Negotiated Price (Sec. 423.100)
In the proposed rule, we sought comment on a potential policy
approach for requiring that all pharmacy price concessions be applied
to drug prices at the point of sale under Part D. We received over
4,000 comments on this potential policy approach. We thank the
commenters for their detailed responses. We will carefully review all
input received from stakeholders on this issue as we continue our
efforts to meaningfully address rising prescription drug costs for
seniors.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 30-day notice in the Federal Register
and solicit public comment before a ``collection of information''
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. For the purposes of the PRA and this section
of the preamble, collection of information is defined under 5 CFR
1320.3 of the PRA's implementing regulations. In order to fairly
evaluate whether an information collection should be approved by OMB,
section 3506(c)(2)(A) of the PRA requires that we solicit comment on
the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In our November 30, 2018 (83 FR 62152) rule, we solicited public
comment on our proposed information collection requirements, burden,
and assumptions. As discussed in section III.B.4. of this final rule,
we received comments related to our EOB burden estimates and revised
our estimates as a result of those comments. We have also revised our
business operations specialist-related cost estimates based on internal
review (see sections III.A and III.B.5.).
A. Wage Data
To derive average costs we used data from the U.S. Bureau of Labor
Statistics' (BLS's) May 2017 National Occupational Employment and Wage
Estimates for all salary estimates (https://www.bls.gov/oes/2017/may/oes_nat.htm). In this regard, Table 2 presents the mean hourly wage,
the upward adjustment to wages to account for the cost of benefits and
overhead (calculated at 100 percent of salary), and the resulting
adjusted hourly wage.
Table 2--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Benefits and Adjusted
Occupation title Occupation Mean hourly overhead ($/ hourly wage ($/
code wage ($/hr.) hr.) hr.)
----------------------------------------------------------------------------------------------------------------
Business Operation Specialist................... 13-1199 $36.42 $36.42 $72.84
Pharmacist...................................... 29-1051 58.52 58.52 117.04
Software Developers and Programmers............. 15-1130 49.27 49.27 98.54
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because benefits and overhead costs vary significantly from
employer to employer, and because methods of estimating these costs
vary widely from study to study. We believe that doubling the hourly
wage to estimate the total cost is a reasonably accurate estimation
method.
As previously mentioned, we have corrected the occupation code for
business operations specialists from 13-0000 to 13-1199. The correction
adds $1.88/hr. (mean) to our proposed business operations specialist-
specific cost estimates and $3.76/hr. (adjusted). The cost under
section III.B.5. of this final rule is affected by this change.
We are not making any changes to our Pharmacist (BLS occupation
code 29-1051 at $117.04/hr.) or Software Developers and Programmers
(BLS occupation code 15-1130 at $98.54/hr.) respondent types.
B. Information Collection Requirements (ICRs)
1. ICRs Regarding the Provision of Plan Flexibility To Manage Protected
Classes (Sec. 423.120(b)(2)(vi)(C))
As described in section II.A. of this rule, the new paragraph at
Sec. 423.120(b)(2)(vi)(C) implements the authority granted to CMS by
section 1860D-4(b)(3)(G) of the Act to establish exceptions that permit
a Part D sponsor to exclude from its formulary (or to otherwise limit
access to such a drug, including through prior authorization or
utilization management) a particular Part D drug that is otherwise
required to be included in the formulary. For the exception that
addresses the use of prior authorization and step therapy for protected
class drugs, the burden consists of the time and effort for Part D
sponsors to submit their formularies to CMS under the active (or
currently approved) annual submission process. The aforementioned
provisions are active under OMB control number 0938-0763 (CMS-R-262)
and will not impose any new or revised information collection
requirements or burden.
[[Page 23868]]
Consequently, the provisions are not subject to the PRA.
We received no comments on our proposed information collection
requirements, burden estimates, and assumptions associated with these
exceptions and are finalizing them for the PA and ST exception without
modification. We are not finalizing the proposed pricing threshold
exception, or the proposed collection of information requirements
associated with that exception.
2. ICRs Regarding the Prohibition Against Gag Clauses in Pharmacy
Contracts (Sec. 423.120(a)(8)(iii))
This final rule codifies a ban on contract provisions that prohibit
network pharmacies from informing Part D enrollees about instances
where the pharmacy has a cash price for a prescribed drug that is lower
than the out-of-pocket cost that would be charged to the enrollee.
Since the codification will not change any existing practice and the
provisions do not have any information collection implications, the
provisions are not subject to the PRA. We received no comments on this
assumption. As a result, we are finalizing this provision as proposed.
3. ICRs Regarding E-Prescribing and the Part D Prescription Drug
Program; Updating Part D E-Prescribing Standards (Sec. 423.160)
We proposed that each Part D plan sponsor adopt one or more Real
Time Benefit Tools (RTBTs) that are capable of integrating with at
least one e-prescribing (eRx) and electronic medical record (EMR)
system(s) (the latter of which will hereinafter be referred to as an
electronic health record or EHR for consistency with current
Departmental terminology) for use in Part D eRx transactions beginning
on or before January 1, 2020. As discussed earlier in this preamble, we
understand that some PBMs and a few prescription drug plans have
already begun to use RTBT tools capable of meeting the specifications
listed in our preamble discussion, which includes providing
beneficiary-specific drug coverage and out-of-pocket cost information
at the point-of-prescribing.
After giving a high-level description of the impact of this
provision (83 FR 62185 through 621877), we solicited comment on the
burden for implementing this provision since we had advanced the
provision with unclear costs and impacts (83 FR 62185 through 62187).
While we received a few comments relative to the collection of
information requirements as initially proposed, the input was not
sufficient to help us reliably quantify the burden associated with the
RTBT provisions. Consequently, we continue to maintain our inability to
reliably score the RTBT burden as it pertains to the PRA. In this
regard we are in the process of publishing stand-alone 60- and 30-day
Federal Register notices that will be subject to the regular non-rule
PRA process. Because of the uncertainty, the purpose would be to
revisit the burden issues, solicit public comment, quantify the burden,
and obtain OMB approval. The RTBT requirements and burden will be
submitted to OMB for approval under control number 0938-0763 (CMS-R-
262). Subject to renewal, it was last approved on November 28, 2018,
and remains active.
A summary of the public comments and our responses are as follows:
Comment: Some commenters stated that a growing number of plans are
already using RTBT due to the savings gained from enrollees switching
to cheaper drugs as a result of information provided by the RTBT.
Response: We are pleased to see that the industry is moving in this
direction and appreciate the feedback confirming that our understanding
was correct.
Comment: Commenters provided various estimates of the prevalence of
RTBT. The range was 70 percent to 90 percent of current plans are using
RTBT or could easily transition to the technology with relative ease.
Response: We thank commenters for their responses, but point out
that the range in estimate makes it difficult to estimate the total
plan burden for RTBT use. Additionally, prior to publication of the
proposed rule, one stakeholder suggested that only 30 percent were
using RTBT. This range, 30 percent to 90 percent, which includes
conversations prior to publication of the NPRM as well as comments on
the NPRM received during the public comment period is one part of our
justification for why no impact is provided.
Comment: Several commenters and without dissenting commenters
commented that existing third party software was sufficient to meet the
needs of RTBT.
Response: We thank these commenters for pointing this out. Based on
this comment, we are dropping our estimate of software burden since we
do not expect plans to develop their own software.
We are not quantitatively scoring this provision for the following
reasons: (i) As just indicated the estimates of how many plans are
using RTBT is 30 percent to 90 percent, implying that between 10
percent to 70 percent will need to implement RTBT. (ii) Based on the
previously presented comments, we are not assuming any plans will
develop their own software. (iii-iv) Based on internal CMS data there
are 1.4 billion PDEs per year. Based on conversations with industry,
for large volume, the cost of transactions for RTBT would be $0.01 per
transaction. (iii) However, we have no basis to ascertain how many of
the 1.4 billion PDE will have RTBT applied to them. (iv) Similarly, we
have no way of estimating the volume of transactions for each type of
drug. Consequently, we have no reliable way of quantifying impact.
4. ICRs Regarding Part D Explanation of Benefits (Sec. 423.128)
The requirements and burden related to the explanation of benefits
(EOB) will be submitted to OMB for approval under control number 0938-
0964 (CMS-10141). Subject to renewal, the control number is currently
set to expire on November 30, 2021. It was last approved on November
28, 2018, and remains active.
In accordance with Sec. 423.128(e)(5) of this rule, sponsors will
be required to include the cumulative percentage change in the
negotiated price since the first day of the current benefit year for
each prescription drug claim in the EOB. Sponsors will also be required
to include information about drugs that are therapeutic alternatives
with lower cost-sharing. The intent is to provide enrollees with
greater transparency with respect to drug prices, leading to lower
costs. Since plans use formularies, they already have the negotiated
drug price and the lower cost alternatives in an existing information
system. The cost of this provision consists of: Programming systems to
calculate and connect information to the Part D EOB production, and the
cost of paper, toner, and postage.
In the proposed rule, we assumed it would take 4 hours per contract
at $98.54/hr. for a software programmer to link alternative prices to
the EOB Model. However, commenters pointed out that there might be
numerous systems to update. As a result, we are revising our 4 hour
estimate to 160 hours. The change now estimates it will take two
software programmers 8 hours (16 hours total) to revise 10 systems at
the same hourly wage.
In the proposed rule we considered separate work for each contract.
Upon internal review we now believe it is more appropriate to estimate
burden by each parent organization since it is typically more efficient
for major system
[[Page 23869]]
changes to be performed once at the parent organizational level with
the contracts of that parent organization sharing the updated system.
Based on bid information and trends we expect 295 Part D Sponsors
and PDP parent organizations for 2020. In aggregate, our revised one-
time burden estimate for updating systems is 47,200 hours (160 hr per
response x 295 responses) at a cost of $4,651,088 (47,200 hr x $98.54/
hr) or $15,766 per respondent ($4,651,088/295 sponsors and
organizations). Over the course of OMB's anticipated 3-year approval
period, we estimate an annual burden of 15,733 hours (47,200 hr/3
years) at a cost of $1,550,363 ($4,651,088/3 years). We are annualizing
the one-time labor estimate since we do not anticipate any additional
burden after the 3-year approval period expires.
As discussed, commenters pointed out that there would be an added
ongoing burden since EOBs would contain additional information about
alternatives possibly requiring more printed pages per EOB. Based on
internal bid information and projection we expect 47.6 million Part D
enrollees in 2020. For our estimates of paper, toner, and postage we
are adopting the same estimates that we used on April 16, 2018 (83 FR
16440) for our CY 2019 MA (Part C)/Prescription Drug Benefit (Part D)
final rule (CMS-4182-F, RIN 0938-AT08) found on page 16695. However, we
are revising the postage rate to the updated 2019 bulk mailing rates.
Although our regulations allow electronic submission of Part D EOBs
upon request, informal communication from stakeholders indicates small
usage. We are therefore assuming mailings to all enrollees. Since we do
not require first class postage for Part D EOBs, we are assuming that
Part D sponsors will use the least expensive option, namely, the use of
bulk mailing rates. We also assume that the added information about
alternatives is not started on a separate page as that could be costly;
accordingly we assume the current Part D EOB on average ends mid-page
and that adding 1-2 pages would on average add 1.5 pages of print
requiring at most 1 page of paper (since the other half page of print
would go on an already printed page). Furthermore, we assume that the
Part D EOB is double-sided. In some cases the extra 1.5 pages may fit
on the last printed page and on its other side not necessitating more
paper. Bulk mailing rates vary by vendor; an informal survey on the web
suggests $0.19 for 2019 rates for 50 pounds (envelope weight is
normally considered negligible when citing these rates). Other
assumptions are possible but the main drivers of our added cost are
paper and toner as opposed to postage. The following breaks down those
costs:
Paper costs $0.005 per sheet ($2.50 for a ream of paper
with 500 sheets).
Toner costs $0.005 per sheet ($50 for a toner cartridge
lasting 10,000 sheets).
Postage costs are $0.000038 per page since--
++ A sheet of paper weights 0.16 ounces (5 pounds/500 sheets x 16
ounces/pound).
++ Commercial bulk postage rates for 2019 are $0.19 for 200 pieces
(50 pounds).
++ There are 16 ounces in one pound.
++ Postage cost per page is therefore $0.000038 ([$0.19 x 0.16
ounces per page]/[50 pounds x 16 ounces/pound]).
Thus, the total cost per page is $0.010038 ($0.005 for paper +
$0.005 for toner + $0.000038 for postage). Finally, we note that Part D
EOBs are sent out once per month to each enrollee summarizing drug
transactions for the previous month. Thus we estimate an annual cost of
$5,733,706 (47.6 million enrollees x 12 months x 1 page x $0.010038 per
page). We believe that after appropriate programming (as discussed
previously) the 47.6 million mailings will be performed automatically
and will not require extra staff time.
Combining the estimates for system updates and mailing we obtain an
annual estimated cost of $7,284,069 ($1,550,363 for updating systems +
$5,733,706 for paper, printing, and mailing)
A summary of the public comments and our response follow:
Comment: Commenters disagreed with our burden analysis. They
pointed out that multiple systems would have to be updated and
disagreed with our estimates regarding template creation. Finally, one
sponsor provided a $4.5 million estimate for set-up costs and a $6
million dollar estimate for mailing.
Response: We thank the commenters for this insight. Based on these
comments, we revised our estimated time for sponsors to update their
systems. Also, we note that our revised estimate assumes Part D
sponsors will update their systems to obtain information for the
template. Finally, our estimates for initial costs are $4.7 million for
system updates $5.7 million for mailing costs. Our estimates, which
were independently developed, are very close to the proposed impacts
provided by the commenter.
5. ICRs Regarding Medicare Advantage and Step Therapy for Part B Drugs
(Sec. Sec. 422.136, 422.568, 422.570, 422.572, 422.584, 422.590,
422.618, and 422.619)
The requirements and burden related to the establishment and use of
a P&T Committee will be submitted to OMB for approval under control
number 0938-0964 (CMS-10141). Subject to renewal, the control number is
currently set to expire on November 30, 2021. It was last approved on
November 28, 2018, and remains active.
This rule provides protections to help ensure that beneficiaries
maintain access to medically necessary Part B drugs while permitting MA
plans to implement step therapy protocols that support stronger price
negotiation and cost and utilization controls. In order to implement a
step therapy program for one or more Part B drugs, this rule requires
that an MA plan establish and use a P&T Committee to review and approve
step therapy programs used in connection with Part B drugs. The P&T
Committee requirements are similar to the requirements applicable to
Part D plans under Sec. 423.120(b). This rule allows MA-PD plans to
use the Part D P&T Committee to satisfy the new requirements related to
MA plans and Part B drugs. For MA plans that do not cover Part D
benefits already, they may use the Part D P&T Committee of an MA-P&D
plan under the same contract. Under Sec. 422.4(c), every MA contract
must have at least one plan offering Part D. Because of the small
amount of work needed annually, we believe it is reasonable to assume
that no new committees will be formed and that the added work will be
performed by the existing P&T Committees.
The finalized Sec. 422.136(b)(4) and (9) requires that the P&T
Committee ``clearly articulate and document processes,'' We estimate it
would take 1 hour at $72.84/hr. for a P&T Committee business specialist
to perform certain tasks and review and retain documentation and
information. This 1 hour estimate reflects half of the Part D P&T
Committee burden (or 2 hours) that is currently approved by OMB under
control number 0938-0964 (CMS-10141). We are estimating 1 hour since
the MA P&T committee work for Part B step therapy programs is
significantly less than the Part D P&T committee work; more
specifically; per Section 30.1 of Chapter 6 of the Prescription Drug
Benefit Manual,\16\ the Part D P&T committee work has seven tasks, two
of which, namely, formulary management
[[Page 23870]]
and formulary exceptions, do not apply to the mandatory MA P&T
committee work. The MA P&T committee work, under finalized Sec.
422.136, is limited to review and approval of step therapy programs for
Part B drugs (and not other types of utilization management programs).
We lack quantitative data on the amount of work attributed to each of
the seven tasks of the Part D P&T committee work. Therefore, we assumed
a 50 percent reduction in the amount of work since two of the seven
Part D P&T committee tasks are not required under Part B. In aggregate,
we estimate an annual burden of 634 hours (1 hr. x [697 plans - 63
Prescription Drug plans which do not offer Part B]) at a cost of
$46,181 (634 hr. x $72.84/hr.).
---------------------------------------------------------------------------
\16\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.
---------------------------------------------------------------------------
We received no comments on our proposed requirements and burden
analysis and are finalizing this provision without modification.
We are also finalizing, without modification, our proposed
beneficiary protection measure related to shorter adjudication
timeframes for organization determinations and reconsiderations for
requests for Part B drugs. Under this final rule, the adjudication
timeframes applicable to requests for Part B drugs will, as proposed,
be shorter than the timeframes that apply to requests for other covered
medical items and services. At the time of the proposed rule's
publication date (November 30, 2018) we did not finalize the necessary
revisions to our Notice of Denial of Medical Coverage form and
instructions (approved by OMB under control number 0938-0892; CMS-
10003). Therefore, we did not set out such burden or solicit comment.
Since that time, however, we have published a stand-alone 60-day
Federal Register notice (April 10, 2019; 84 FR 14383) that sets out the
revised form and form instructions. In compliance with the standard PRA
process, we will also be publishing a stand-alone 30-day Federal
Register notice (when ready). Please note that the revised form and
instructions have no impact on this rule's burden estimates. Instead,
the revision would include the Part B drug adjudication timeframes
within the form and update the CFR citations within the instructions.
C. Summary of Information Collection Requirements and Burden
Table 3--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
Regulatory reference Provision brief title Control No. (CMS Respondents Total Hours per Total Labor cost annual cost
ID No.) responses respondent hours ($/hr) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 423.128............. Part D Explanation of 0938-0964 (CMS- 295 295 160 15,733 $98.54 $1,550,363
Benefits (Updating 10141).
Systems).
Sec. 423.128............. Part D Explanation of 0938-0964 (CMS- 295 571,200,000 n/a n/a n/a * 5,733,706
Benefits (Extra mailings) 10141).
*.
Sec. Sec. 422.136, Part B Step Therapy (use of 0938-0964 (CMS- 634 634 1 634 72.84 46,181
422.568, 422.570, 422.572, PT Committee). 10141).
422.584, 422.590, 422.618,
and 422.619.
---------------------------------------------------------------------------
Total.................. ........................... .................. 634 571,200,929 Varies 16,367 Varies 7,330,250
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Non-labor requirements and costs.
IV. Regulatory Impact Analysis
A. Statement of Need
This final rule supports Medicare health and drug plans'
negotiation for lower drug prices and reduce out-of-pocket costs for
Part C and D enrollees. Although satisfaction with the MA and Part D
programs remains high, these proposals are responsive to input we
received from stakeholders while administering the programs, as well as
through our requests for comment.
HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs
(May 16, 2018, 83 FR 22692) sought to find out more information about
lowering drug pricing using these four strategies: Improved
competition, better negotiation, incentives for lower list prices, and
lowering out-of-pocket costs. We proposed a number of provisions that
implement these four strategies in an attempt to lower out-of-pocket
costs with a particular focus on strengthening negotiation for Part D
plans and increasing competition in the market for prescription drugs.
We proposed to offer more tools to MA and Part D plans that negotiate
with drug companies on behalf of beneficiaries, so these plans are
equipped with similar negotiation capabilities as group health plans
and issuers have in the commercial market. We sought to drive robust
competition among health plans and pharmacies, so consumers can shop
based on quality and value. These provisions align with the
Administration's focus on the interests and needs of beneficiaries,
providers, MA plans, and Part D sponsors.
B. Overall Impact
We examined the impact of this final rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act (the
Act), section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism
(August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and
Executive Order 13771 on Reducing Regulation and Controlling Regulatory
Costs (January 30, 2017).
The RFA, as amended, requires agencies to analyze options for
regulatory relief of small businesses, if a rule has a significant
impact on a substantial number of small entities. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and small governmental jurisdictions.
This final rule affects MA plans and Part D sponsors (NAICS
category 524114) with a minimum threshold for small business size of
$38.5 million (https://www.sba.gov/content/small-business-size-standards). This final rule additionally affects hospitals (NAICS
subsector 622) and a variety of provider categories, including
physicians, specialists, and laboratories (subsector 621).
To clarify the flow of payments between these entities and the
federal government, note that MA organizations submit bids (that is,
proposed plan designs and projections of the revenue
[[Page 23871]]
needed to provide those benefits, divided into three categories--basic
benefits, supplemental benefits, and Part D drug benefits) in June 2019
for operation in contract year 2020. These bids project payments to
hospitals, providers, and staff as well as the cost of administration
and profits. These bids in turn determine the payments from the
Medicare Trust Fund to the MA organizations that pay providers and
other stakeholders for their provision of covered benefits to
enrollees. Consequently, our analysis will focus on MA organizations.
There are various types of Medicare health plans, including MA
plans, Part D sponsors, demonstrations, section 1876 cost plans,
prescription drug plans (PDPs), and Program of All-Inclusive Care for
the Elderly (PACE) plans. Forty-three percent of all Medicare health
plan organizations are not-for-profit, and 31 percent of all MA plans
and Part D sponsors are not-for-profit. (These figures were determined
by examining records from the most recent year for which we have
complete data, 2016.)
There are varieties of ways to assess whether MA organizations meet
the $38.5 million threshold for small businesses. The assessment can be
done by examining net worth, net income, cash flow from operations, and
projected claims as indicated in their bids. Using projected monetary
requirements and projected enrollment for 2018 from submitted bids, 32
percent of the MA organizations fell below the $38.5 million threshold
for small businesses. Additionally, an analysis of 2016 data--the most
recent year for which we have actual data on MA organization net
worth--shows that 32 percent of all MA organizations fall below the
minimum threshold for small businesses.
If a final rule may have a significant impact on a substantial
number of small entities, the final rule must discuss steps taken,
including alternatives, to minimize burden on small entities. While a
significant number (more than 5 percent) of not-for-profit
organizations and small businesses are affected by this final rule, the
impact is not significant. To assess impact, we use the data in Table
11C, which show that the raw (not discounted) net effect of this final
rule over 10 years is $73.19 million. Comparing this number to the
total monetary amounts projected to be needed just for 2020, based on
plan submitted bids, we find that the impact of this final rule is
significantly below the 3 to 5 percent threshold for significant
impact. Had we compared the 2020 impact of the final rule to projected
2020 monetary need, the impact will be still less.
Consequently, the Secretary has determined that this final rule
will not have a significant economic impact on a substantial number of
small entities, and we have met the requirements of the RFA. In
addition, section 1102(b) of the Act requires us to prepare a
regulatory analysis for any final rule under title XVIII, title XIX, or
Part B of Title XI of the Act that may have significant impact on the
operations of a substantial number of small rural hospitals. We are not
preparing an analysis for section 1102(b) of the Act because the
Secretary certifies that this final rule will not have a significant
impact on the operations of a substantial number of small rural
hospitals.
Section 202 of UMRA also requires that agencies assess anticipated
costs and benefits before issuing any rule whose mandates require
spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2019, that threshold is approximately $154
million. This final rule is not anticipated to have an effect on state,
local, or tribal governments, in the aggregate, or on the private
sector of $150 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has federalism implications. Since
this final rule does not impose any substantial costs on state or local
governments, the requirements of Executive Order 13132 are not
applicable.
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret this final rule, then we should
estimate the cost associated with regulatory review. There are
currently 750 MA contracts (which also includes PDPs), 50 State
Medicaid Agencies, and 200 Medicaid Managed Care Organizations (1,000
reviewers total). We assume each entity will have one designated staff
member who will review the entire rule. Other assumptions are possible
and will be reviewed after the calculations.
Using the wage information from the Bureau of Labor Statistics
(BLS) for medical and health service managers (code 11-9111), we
estimate that the cost of reviewing this rule is $107.38 per hour,
including an upward adjustment to wages to account for overhead and
benefits. (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an
average reading speed, we estimate that it will take approximately 7.6
hours for each person to review this final rule. For each entity that
reviews the rule, the estimated cost is therefore, $816 (7.6 hours *
$107.38). Therefore, we estimate that the total cost of reviewing this
regulation is $816,000 ($816 * 1000 reviewers).
Note that this analysis assumed one reader per contract. Some
alternatives include assuming one reader per parent entity or assuming
(major) pharmacy benefit managers (PBMs) will read this rule. Using
parent organizations instead of contracts will reduce the number of
reviewers to approximately 500 (assuming approximately 250 parent
organizations), and this will cut the total cost of reviewing in half.
However, we believe it is likely that reviewing will be performed by
contract. The argument for this is that a parent organization might
have local reviewers; even if that parent organization has several
contracts that might have a reader for each distinct geographic region,
to be on the lookout for effects of provisions specific to that region.
As for PBMs, it is reasonable that only the major PBMs will review
this rule. There are 30-50 major PBMs, and this will increase the
estimate by 0.3 to 0.5 percent. Reviewing the source of comments on the
proposed rule, we find about 300 distinct organizations commenting
including health plans, universities and colleges, congressional-
related entities, patient-centered associations, medical associations,
pharmaceutical companies and manufacturers. Considering the wide source
of comments and the wide use of drugs it is very reasonable that the
total number of associations reading this is comparable to the number
of health plans. This would double our estimate. Using these alternate
considerations, we can safely say that the cost of reviewing is between
half a million (50 percent * $816,000) and two million (2 * $816,000).
Thus, we consider the $1 million a reasonable midpoint figure to
estimate review cost.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by the Office of Management and Budget (OMB).
We received no comments on our estimates of impact on small
businesses and other items mentioned in the overall impact section.
C. Anticipated Effects
1. Providing Plan Flexibility To Manage Protected Classes (Sec.
423.120(b)(2)(vi))
In this rule, we are finalizing an exception to the protected class
policy to allow Part D sponsors to apply PA and ST requirements for
protected class
[[Page 23872]]
Part D drugs, except antiretrovirals, only for new starts to confirm
intended use is for a protected class indication, and to ensure
clinically appropriate use, promote utilization of preferred formulary
alternatives, or a combination thereof, subject to CMS review and
approval. We also are finalizing a technical change to permit exclusion
of interchangeable biological products.
Since under this exception, these utilization management tools
(that is, PA and ST for new starts only, except for antiretrovirals)
are already permitted today under similar circumstances for the
protected classes for new treatment regimens, we do not anticipate any
material impacts from the use of these tools for the five classes where
it will be allowed. For antiretroviral drugs, we do not believe that
utilization management would generate returns for plan sponsors'
increased administrative burden, as these drug have narrower
indications, clinical criteria, and range of products that curtail
inappropriate use. As a result, we estimate no material impact from
this provision as well.
Formally recognizing Part D sponsors' utilization management
flexibility provides them with negotiating power. Additionally,
utilization management will promote substitution when appropriate and
reduce wasteful or inappropriate prescriptions. For example, if an
antipsychotic drug is prescribed to a beneficiary and the beneficiary
does not have a protected class indication that requires such a drug,
these additional tools will allow Part D sponsors to better manage
utilization of that drug. We did not assume any interactions with Part
D sponsors' ability to use indication-based coverage, as no experience
on that coverage is currently available.
At this time, we do not anticipate any adverse effects upon
enrollee access to drugs in the protected classes. The reasons for this
are two-fold. First, we did not propose to change or remove any of the
protected classes identified in section 1860D-4(3)(G)(iv) of the Act.
Second, in considering whether exceptions to the added protections
afforded by the protected class policy are appropriate, we took into
account the many other enrollee protections in the Part D program,
which are mature and have proven workable. These protections include:
Formulary transparency, formulary requirements, reassignment formulary
coverage notices, transition supplies and notices, and the expedited
exception, coverage determination, and appeals processes.
Comment: Commenters generally agreed with our assessment of the
impact of this provision. One commenter questioned why the impact
analysis in this final rule sees more generic opportunity in the
protected classes than MedPAC.
Response: While MedPAC has cited that the overall level of generic
use in the antidepressant, antipsychotic, and anticonvulsant categories
was similar to the overall generic use within Part D, our analysis of
the drug level data using internal CMS files, on which MedPAC has not
specifically commented, indicated that there was significant brand
usage with the potential to shift to generic drugs under new
utilization management practices. Comparing class-level generic use
against overall generic use can also be misleading, as the availability
of generics differs widely from class to class and over time.
Comment: Several commenters suggested that the estimated savings
from these proposals were too limited to justify modifications to the
protected classes policy.
Response: We disagree. While we are not finalizing modifications to
the existing policy (but codifying existing policy), we continue to
believe that it is possible that certain Part D sponsors may be able to
use additional flexibility to improve their negotiating position and/or
the effectiveness of their utilization management actions, thereby
producing savings that we will not be able to quantify until after the
policy takes effect. Additionally, we believe it is incumbent upon us
to be a good steward of taxpayer dollars, no matter how modest the
savings.
Comment: Some commenters encouraged us to consider manufacturer
rebates across other Federal programs, including Medicaid, the VA and
the 340B Drug Pricing Program (340B) before implementing our
exceptions.
Response: While we appreciate the commenters' concerns, we are
unable to quantify savings to the Part D program taking other Federal
programs into account. Additionally, specific to 340B, with the
exception of claims split-billed through AIDS Drug Assistance Programs
(ADAPs), CMS does not collect information on which claims were
processed under 340B.
Comment: A number of commenters expressed concern that PA and ST
policies can lead to patients' not filling their prescriptions or
underutilizing medications, which leads to non-adherence. Commenters
expressed concern that non-adherence, in turn, can lead to
interruptions in therapy across the six classes, and in the case of
HIV, would endanger public health because it is a communicable disease
which can rapidly mutate and become resistant to therapy.
Response: CMS acknowledges that PA and ST could potentially cause
the issues cited when they are not implemented properly. However, we
believe that based upon our more than 12 years of experience with the
Part D program, including our existing policy, which allows for PA and
ST for new starts of protected class Part D drugs (except
antiretrovirals), and the unique protections we have in place, which
are more robust than in other comparable programs, demonstrate that
such concerns have been mitigated in Part D. For example, in the
categories and classes of drugs not covered by the protected class
policy, that is, all other Part D drug categories and classes, where
wide use of PA and ST have been allowed since the beginning of the Part
D program, subject to our other formulary requirements, we have no
evidence to suggest that Part D enrollees routinely experience
interruptions in therapy as a result of PA and ST requirements.
Moreover, CMS is advancing improvements in price transparency,
interoperability, and e-prescribing improvements, such as a real-time
benefit tool (RTBTs) and Part D electronic prior authorization as
required by section 6062 of the SUPPORT for Patients and Communities
Act (Pub. L. 115-271), that could help mitigate the kinds of
administrative burdens sometimes associated with PA and ST that
commenters claim could lead to underutilization. As such, we did not
account for any decreases in utilization in our estimate.
2. Prohibition Against Gag Clauses in Pharmacy Contracts (Sec.
423.120(a)(8)(iii))
This provision proposed to codify existing practice and therefore
is expected to produce neither savings nor cost.
3. E-Prescribing and the Part D Prescription Drug Program; Updating
Part D E-Prescribing Standards (Sec. 423.160)
This provision proposed that each Part D plan sponsor adopt one or
more Real Time Benefit Tool (RTBT) tools that are capable of
integrating with at least one e-prescribing (eRx) and electronic health
record (EHR) systems (the latter of which will hereinafter be referred
to as an electronic health record or EHR for consistency with current
Departmental terminology) for use in Part D E-Prescribing (eRx)
transactions beginning on or before January 1, 2020. As discussed
earlier in this preamble, we understand that some PBMs and a few
prescription drug plans have already begun to use RTBT tools capable of
meeting the specifications listed in
[[Page 23873]]
our preamble discussion, which includes providing beneficiary-specific
drug coverage and out-of-pocket cost information at the point-of-
prescribing. CMS sought to accelerate the use of such real time
solutions in the Part D program so as to realize their potential to
improve adherence, lower prescription drug costs, and minimize
beneficiary out-of-pocket cost sharing. These tools have the capability
to inform prescribers when lower-cost alternative therapies are
available under the beneficiary's prescription drug benefit. We are
interested in fostering the use of these real-time solutions in the
Part D program, given their potential to lower prescription drug
spending and minimize beneficiary out-of-pocket costs. Not only can
program spending and beneficiary out-of-pocket costs be reduced, but
(as discussed above) evidence suggests that reducing medication cost
also yields benefits in patients' medication adherence.
We first give a high-level description of impact. The major savings
of this provision will be use of RTBT to encourage prescribing of lower
tier cost sharing drugs. This will result in a dollar savings to the
Medicare Trust Fund. However, because of both lack of data and
complexity of data, we are qualitatively scoring this provision and are
therefore scoring this provision as a qualitative savings. In the NPRM
we solicited comments from stakeholders on certain data. In response to
our solicitation, the following assumptions and complications were
pointed out:
Current usage: Commenters confirmed our belief that some
plans are already using RTBT. Commenter estimates ranged from 70
percent to 90 percent. Informal conversations with plans prior to
publication of the NPRM provided an estimate of 30 percent. This
combined wide range, 30 percent to 90 percent, shows both that RTBT is
being adopted, that there is uncertainty on the extent of adoption.
Cost if this Provision is Finalized:
Software costs: Commenters seem to reject the idea that any plans
would create their own RTBT software. They believe that the existing
opportunities from intermediaries was sufficient to satisfy new
regulatory requirements. As a result of these comments, we are
withdrawing in the Final Rule the estimates made in the NPRM on
software costs.
Developing substitution logic. Many commenters cautioned that
development of the logic to determine which formulary alternatives
should be presented to a prescriber in a given situation will impose
new burdens on plans. While IT programming can be leveraged across
plans variable formularies require that each plan develop its own
individual logic about which alternative drugs are available for use in
RTBT scenarios. Plans must decide how many potential formulary
substitutions should be presented to prescribers and must ensure that
the prescriber is not overly burdened with choices.
Lower tier cost sharing substitution: CMS believes the primary
source of RTBT savings to arise from the ability of providers to
prescribe lower tier cost sharing drugs. While there are also savings
from substitutions of generics for brands, many of these substitutions
already are currently already being done by pharmacy benefit
administrators. The commenters generally agreed with this assessment.
Implementation date and Standardization:
We received numerous comments relating to the proposed January 1,
2020 implementation date. Although several commenters stated that the
2020 deadline was achievable, the majority of comments expressed
concern. Most commenters, believe that it would be prudent to delay the
implementation date until an industry standard was available with some
commenters characterizing the proposed time frame as overly aggressive
or unrealistic given the level of effort required to implement RTBT.
We understand that implementing RTBT requires time and resources
for those plans that have not yet begun to implement a real time
solution As a result, we are delaying the implementation date until
January 1, 2021. However, given the potential benefits of RTBT, we
strongly encourage plans to start implementing this requirement prior
to January 1, 2021.
Cost to providers: Some commenters were concerned about
the cost of implementing multiple RTBT systems within EHRs. However,
other commenters made it clear that plans who have implemented RTBT
make the technology available to prescribers at no cost. Some
commenters cautioned that RTBT may add time to a medical office visit
but did not specify the potential cost impact of the additional time
involved. Others commenters stated that while RTBT may add time to a
medical office visit, it may provide enhanced benefits in terms of
patient adherence to medication therapies which may save time in the
long run. These divergent views left us unable to gain a definitive
picture whether providers are negatively affected by the finalized
provision. As a result, we lack data with which to reliably estimate
and include provider costs in our analysis of the impact of this
proposal.
CMS further notes that most plans are already making sure that
prescribers are not bearing the cost of implementing RTBT tools. Indeed
RTBT systems are being implemented by some plans because of the
resulting cost savings.
Savings vs Cost: Nearly all commenters were very
enthusiastic about the concept of the proposed provision. They largely
believed that any implementation costs incurred would be offset by
costs savings. One commenter who has been using RTBT for about a year
and noted that when presented with a lower cost, clinically appropriate
alternatives, enrollees are receiving a lower cost medication 45
percent of the time, and saving an average of $130 per fill in out of
pocket costs compared to the drug originally requested. CMS is unable
to confirm these savings but these reported results suggest that RTBT
can be instrumental in reducing drug costs. We recognize that it may
take plans time to develop an RTBT infrastructure such as developing
formulary alternatives and relationships with RTBT vendors.
We are finalizing the proposal for each Part D plan to support an
RTBT of its choosing, effective January 1, 2021. We are removing the
proposed requirement that covered health care providers get explicit
beneficiary consent prior to using the RTBT.
We point out that any savings arising from this provision if
finalized would be classified as a transfer since there is (at least as
a primary impact) no reduction in consumption of goods (prescription
drugs) but rather a transfer of expense from one drug to another.
However, this transfer (between manufacturers of drugs) would result in
reduced dollar spending by Part D Sponsors and enrollees and would
result in reduced spending by the Medicare Trust Fund.
4. Part D Explanation of Benefits (Sec. 423.128)
In section III. of this final rule, we have detailed the cost to
Part D sponsors to update their EOB templates. Additionally, CMS
Central Office staff will have to develop the model language to be used
by the Part D sponsors.
Significant effort goes into developing a model, including
developing instructions and obtaining clearance. Therefore, we estimate
that it would take two GS-13-Step 5 employees a month, each working a
half a day, or 160 hours (2 employees * 4 hours a day * 5 days a week *
4 weeks) to develop the templates. It would additionally take a
supervisory GS-15 staff, 5 hours to give approval.
[[Page 23874]]
Wages for 2018 for CMS staff may be obtained from the OPM website
at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2018/DCB_h.pdf. We estimate a total burden of $17,583
(160 hours * $52.66/hr for GS-13, Step 5 staff * 2 ((for an upward
adjustment to wages to account for overhead and benefits)).) + 5 hours
* $73.20/hr for GS-15, Step 5 staff * 2 (for an upward adjustment to
wages to account for overhead and benefits)).
As estimated in the Collection of Information Section of this Final
Rule, the Part D EOB incurs a first year cost of $4.65 million for
updating systems and ongoing costs in all years, including the first,
of $5.73 million for additional mailings. Thus the total first year
cost is $10.40 million (4.65+5.73+0.18 (the $17,583 cost for CMS staff
to create a template)) and cost in subsequent years is $5.73 million.
5. Medicare Advantage and Step Therapy for Part B Drugs (Sec. Sec.
422.136, 422.568, 422.570, 422.572, 422.584, 422.590, 422.618, 422.619,
422.629, 422.633 and 422.634)
Step therapy is a type of utilization management (for example,
prior authorization) for drugs that begin medication for a medical
condition with the most preferred drug therapy and progress to other
therapies only if necessary, promoting more cost effective therapies,
potentially better clinical decisions, and lower costs for treatment.
The lower costs of treatment primarily benefit MA enrollees and plans
and are transferred to the government as savings.
A further source of savings is negotiations. If an MA plan offers
all Part B drugs, then it typically will purchase drugs at market
price. If the MA plan is allowed to use step therapy, then when there
is more than one drug that has the same effect on a medical condition
but the drugs differ significantly in price, drug manufacturers in
their negotiations with MA plans, have an incentive to lower the cost
of their drug so that their drug is selected by the MA plan as the
first drug in the plan's step therapy protocol.
However, it is difficult to numerically estimate the savings from
increased negotiations because, unlike other impact events,
negotiations vary. Furthermore, we do not have access to negotiation
data as this is proprietary information between MA plans and
manufacturers and is not submitted in the MA bid. For these two reasons
(lack of data and volatility) we are leaving the negotiation of
increased savings as a qualitative, rather than a quantitative event.
We believe that the potential savings from negotiations is significant,
but have no way of quantifying the effect.
We note that although we are not estimating the savings from front-
end negotiations, we do estimate the savings from back-end
negotiations, more specifically, from the rebates manufacturers give
plans with favorable drug management practices. Such rebates also occur
on the Part D side and we have the data to estimate their effect. This
is done in this section of this final rule when discussing the impact
on the Medicare Trust Fund and beneficiary cost sharing due to step
therapy.
Although CMS believes that step therapy can promote more cost
effective therapies, potentially better clinical decisions, and lower
costs for treatment for the reasons earlier discussed, we acknowledge
that there are various studies suggesting that step therapy may be
costly either economically or health-wise. There are two primary
reasons for this.\17\
---------------------------------------------------------------------------
\17\ Article 1: Patrick P Gleason, PharmD, FCCP, BCPS,
``Assessing Step Therapy Programs: A step in the right direction,''
Journal of Managed Care Pharmacy, 13(3), 2007. Article 2: Adams AS,
Zhang F, LeCates RF, et al. Prior authorization for antidepressants
in Medicaid: Effects among disabled dual enrollees. Arch Intern Med.
2009; 169(8):750-756. Article 3: Zhang Y, Adams AS, Ross-Degnan D,
Zhang F, Soumerai SB. Effects of prior authorization on medication
discontinuation among Medicaid beneficiaries with bipolar disorder.
Psychiatr Serv. 2009; 60(4):520-527.
---------------------------------------------------------------------------
Discontinuation: Several studies show that there is the
potential for enrollees to become discouraged when step therapy is
used. This is called discontinuation. Discontinuation means a portion
of members with a claim rejection at the point of service go on to not
have claims in that class of medications. In other words, an unwanted
effect of step therapy is ``giving up'' and not seeking medical
treatment. There are several studies of discontinuation.\18\
Consequently, when discussing step therapy, it is important to address
possible unwanted side effects such as discontinuation.
---------------------------------------------------------------------------
\18\ S. Shoemaker, R. Subramanian, D. Mauch, (Abt Associates).
``Effect of 6 Managed Care Pharmacy Tools: A Review of the
Literature,'' Journal of Managed Care Pharmacy, Supplement, July
2010, Vol 16(6a), page s7.
---------------------------------------------------------------------------
Effects of delay: The idea of step therapy is that if the
initial drug ``fails first'' then a provider will prescribe the drug
they had originally wanted to prescribe. However, when the initially
given drug does not work, this creates a delay in the patient receiving
the necessary drug and consequently the delay may cause both a
worsening of conditions and increased medical costs. Several studies on
Part B drugs show this. For example, a study comparing spending in
Georgia's Medicaid program found that while there were savings in the
cost of medications when step therapy was used, the program spent more
money on outpatient services because less-effective medications often
led to higher health costs later.\19\ Similar studies have been done
on-- legislation to protect people from certain harms of step
therapy.\20\ However, the MA program has many beneficiary protections
and a robust appeals process to ensure that beneficiaries have access
to the medications and health services they need. For example, we
expect providers and enrollees who are concerned about the adverse
effects of delay or that a drug on the initial step may not be the best
or proper course of treatment, to seek pre-service organization
determinations that permit use of the ultimate Part B drug and to
appeal any denials by the MA plan. Since plan appeal rates are
monitored by CMS, this creates a strong incentive for plans to use step
therapy wisely and not exacerbating illness.
---------------------------------------------------------------------------
\19\ Retrospective assessment of Medicaid step therapy prior
authorization antipsychotic medications. Clin Ther. 2008;
30(8):1524-39; discussion 1506-7. doi: 10.1016/
j.clinthera.2008.08.009.
\20\ Iowa passed a rule restricting the use of Step Therapy in
Medicaid after patients encountered medical complications such as
stomach ulcers and increased pain in cases where past efforts to
find more cost-effective drugs or to try lower priced drugs were not
considered by the plans. See https://www.thegazette.com/subject/news/health/iowa-bill-would-allow-exemptions-from-fail-first-insurance-drug-practices-20170318. In the absence of safeguards,
such as requiring consideration of what works for patients, a
grandfathering policy on existing therapies is advisable.
---------------------------------------------------------------------------
Summary: Step therapy can result in both savings and costs. While
at the time of initiation of the step therapy there is initial savings
arising from reduced drug costs, this savings may end up costing in the
long run because of worsening conditions arising from the delay in
receiving the proper drug resulting in increased medical costs.
However, we believe the MA beneficiary protections and appeals process
coupled with periodic CMS review and monitoring of MA plans is robust
enough to ameliorate or eliminate the possible adverse effects of step
therapy.
In addition to the complications in estimating the health savings
from step therapy, some step therapy savings arise from negotiations,
which are difficult to quantify. We can however, estimate the effect on
the Medicare Trust Fund and on enrollee cost sharing.
The estimate of the impact on the Medicare Trust Fund includes
the--(1) backend negotiations, rebates from manufacturers to plans; (2)
use of less
[[Page 23875]]
expensive biological products approved under section 351(k) of the
Public Health Service Act (for example, biosimilars); and, (3) the
choice of less expensive drugs with therapeutically equivalent effect.
However, we do not discuss other quantitative effects of step therapy.
The articles cited previously lay out many pros and cons of step
therapy as well as the need for more studies to ascertain the true
impact of step therapy.
CMS acknowledges that step therapy is a widely accepted tool for
utilization management. Sixty percent of commercial insurers were using
step therapy in 2010; in 2014, 75 percent of large employers offered
enrollees plans with step therapy. Furthermore, the concerns expressed
in this RIA section are not unique to Federal insurance programs such
as Medicare Parts C and D. Eighteen states have enacted laws on the use
of step therapy.\21\ These laws vary widely and typically provide
protections to beneficiaries against the misuse of step therapy.
---------------------------------------------------------------------------
\21\ https://www.aad.org/advocacy/state-policy/step-therapy-legislation.
Table 4--Estimated Savings to Medicare Trust Fund and Beneficaries From Step Therapy
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Part B Rx
allowed pmpm Number of Adjustment for Assumed Backing out Savings to Cost Adjustment for
Year Enrollment with growth by months plans for rebate of Part B medicare trust sharing enrollees for Savings to
(thousands) medical per year proposed step percentage premium (%) funds percentage proposed step beneficiaries
inflation therapy (%) therapy (%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G) ($ millions) (H) (I) (J) ($ millions)
----------------------------------------------------------------------------------------------------------------------------------------------------
(G) = (A) * (B) (J) = (A) * (B)
* (C) * (C)
* (D) * (E) * * (H) * (I)
(F)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................... 23,181 $58.72 12 1.6 66 86 $145 13 0.2 $5
2021....................................... 24,062 60.21 12 1.6 66 86 154 13 0.2 5
2022....................................... 24,972 61.73 12 1.6 66 86 164 13 0.2 5
2023....................................... 25,858 63.30 12 1.6 66 86 174 13 0.2 6
2024....................................... 26,708 64.90 12 1.6 66 86 185 13 0.2 6
2025....................................... 27,549 66.55 12 1.6 66 86 195 13 0.2 6
2026....................................... 28,375 68.23 12 1.6 67 85 207 13 0.2 7
2027....................................... 29,161 69.96 12 1.6 67 85 218 13 0.2 7
2028....................................... 29,913 71.74 12 1.6 67 85 229 13 0.2 7
2029....................................... 30,590 73.55 12 1.6 67 85 240 13 0.2 8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The provision at Sec. 422.136 will allow MA plans to use this
utilization management tool for Part B drugs subject to some limits in
the regulation. MA plans may explore the most effective ways to use
step therapy to achieve savings while also ensuring access to medically
necessary treatment options.
In the remainder of this section we estimate the impact on the
Medicare Trust Fund and enrollee cost sharing, and explain the
calculations which are summarized in Table 4.
We obtained projected MA enrollment from the 2018 Medicare Trust
Fund report. This is presented in Column (A) of Table 4.
2016 is the most recent year for which we have Part B drug
spending and utilization from the CMS data systems. Column (B) presents
the average amount that MA enrollees pay per month on Part B drugs.
This amount is trended (from 2016) to reflect medical inflation (5.2
percent a year) with ordinary inflation (2.6 percent) carved out. The
inflation factors are obtained from the Medicare Trust Fund report. The
product of MA enrollment and average Part B spending per month provides
the aggregate MA Part B spending per month.
The Part B spending per month is multiplied by 12 (Column
(C)) to obtain the aggregate spending on Part B drugs annually.
We estimate that, because of this step therapy provision,
plans will save 1.6 percent (Column (D)) on the aggregate annual cost
of Part B drugs. There are several points about this 1.6 percent.
First, it represents the effect of the proposed provision (proposed
Sec. 422.136) in this final rule. As discussed earlier in this rule's
preamble, an HPMS memo was issued by CMS in August 2018 rescinding an
earlier memo prohibiting step therapy.\22\ However, because this memo
was published in late 2018, we do not have enough data to analyze the
impact to 2019 claims at this point, so our estimate of 1.6 percent is
based on prior experience. The 1.6 percent savings is independent, and
not impacted, by the provisions in the August 2018 HPMS memo; rather,
the 1.6 percent savings represents the estimated effects of the
finalized provision versus a baseline (zero percent savings) which does
not include the proposed provision nor the effects of the HPMS memo.
---------------------------------------------------------------------------
\22\ Available online at: https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/MA_Step_Therapy_HPMS_Memo_8_7_2018.pdf.
---------------------------------------------------------------------------
This finalized proposal surpasses the HPMS memo for periods
beginning January 1, 2020 and it is the effects of this provision that
the 1.6 percent captures. The 1.6 percent represents three factors
contributing to savings from Step Therapy:
Drugs for which there will be a less expensive biological
product approved under section 351(k) of the Public Health Service Act
in 2020, such as Remicade or Herceptin.
Pairs of drugs which are clinically comparable but differ
significantly in price. For example, Avastin[supreg], Eylea[supreg],
and Lucentis[supreg] for the treatment of macular degeneration.
Drugs for which the manufacturer gives a rebate to MA
plans with favorable management patterns. This happens in drugs with
sufficient competition, particularly in the treatment of rheumatoid
arthritis. Using our experience on manufacturers providing rebates on
Part D drugs, we are able to estimate the savings effects of similar
rebates on Part B drugs. As mentioned previously, this corresponds to a
savings in step-therapy from back-end negotiations.
The multiplication of enrollment, average Part B cost per
member per month, number of months per year and 1.6 percent represents
the total dollar savings from this provision.
We use this total dollar savings to estimate separately
savings to the Medicare Trust Fund and savings to enrollees in cost
sharing.
To obtain savings to the Medicare Trust Fund we multiply
the aggregate savings from step therapy by the average rebate
percentage and the average backing out of part B premium representing
the expected percentage reduction to Part B premium arising from
savings. These percentages are found in Columns (E) and (F). The
numbers in these columns are obtained by trending our experience with
plan
[[Page 23876]]
submitted bids over the next 10 years. Column (G), the product of all
previous columns, represents the dollar savings to the Medicare Trust
Fund.
To obtain savings to beneficiaries, we used the 2019
projected bid data submitted by MA plans to CMS in June 2018. These
data show that on average 13 cents of every dollar paying for Part B
drugs goes to cost sharing. We obtained this number by dividing the
cost sharing for Part B drugs by the total cost of Part B drugs. This
percentage is found in Column (H).
We next have to adjust the savings due to step therapy.
Recall that Column (D) indicates that step therapy will save 1.6
percent, the 1.6 percent arising from three factors listed previously.
Of those three factors, enrollees do not benefit from manufacturer
rebates. To illustrate this, consider a $20 drug for which the
beneficiary pays a 20 percent copay ($4). At the end of the year,
manufacturers and pharmacists give a rebate to plans that have used
their products. Let us suppose (for purposes of illustration) that the
rebate is $3. Theoretically the enrollee should get 60 cents of this $3
(20 percent copay * $3). However, the enrollee does not get a portion
of the rebate. We estimate that 1.6 percent savings has a 1.4 percent
component from manufacturer rebates and a 0.2 percent rebate from the
other factors listed previously. It follows that for the enrollee, the
savings from step therapy are 0.2 percent, not 1.6 percent. This is
listed in Column (I).
To obtain aggregate annual beneficiary savings we multiply
MA enrollment (Column (A)), average cost of prescription drugs per
month (Column (B)), number of months per year (Column (C)) and the 0.2
percent, the savings to enrollees from this step therapy provision
(Column (I)). This gives the total dollar savings, of which enrollees
pay 13 percent (Column (H)). The result is presented in Column (J).
The results of our calculations are summarized for 2020-2029 in
Columns (G) and (J) of Table 4. The savings to enrollees are between $5
and $8 million; the savings to the Medicare Trust Fund are between $145
and $240 million.
These projected dollar savings to the Medicare Trust Fund are
classified as transfers because the money on brand drugs would instead
be spent on generic drugs. While brand drugs are more expensive, the
primary driver of this expense is the research and development (R&D)
that went into them, and for drugs that are already on the market R&D
has already been done and would not change. In other words, although
this regulatory provision would reduce the return on drug development
because enrollees who are expected to purchase the brand and thus pay
for the initial R&D would instead purchase generics, this reduced
return would be experienced after the initial R&D has been completed;
consequently, any immediate reduction in R&D services would not impact
the availability of new drugs until later. There would also be no
reduction in production of drugs, since generic manufacturers rather
than brand manufacturers would produce the drugs consumed by enrollees.
However, the cost to the enrollee and the Medicare Trust Fund would be
significantly less because the enrollee and Medicare Trust Fund would
no longer pay for the initial R&D. In conclusion, this provision would
not reduce activities of production but rather transfers the
performance of those services from brand manufacturers to generic
manufacturers; however, as a consequence, the enrollees and Medicare
Trust Fund would experience reduced dollars spent.
The allowance of step therapy for Part B drugs in MA could result
in a higher appeal rate. We estimate the aggregate increase in cost in
2016 due to expected increased appeals as $0.8 million. Details are
presented in Table 5. The following narrative explains this table.
Table 5--Estimated Increase in Appeals All Levels Due to Step Therapy
----------------------------------------------------------------------------------------------------------------
Estimated
Total number number of
of appeals in appeals Hours per Hourly wages Total cost
2016 involving step appeal of physicians
therapy
(1) (2) (3) (1) x (2) x (3)
----------------------------------------------------------------------------------------------------------------
Reconsiderations............. 328,857 3913 0.8 $203.26 $636,350
IRE.......................... 58,023 690 0.8 203.26 112,277
Administrative Law Judge 3,481 41 0.8 203.26 6,737
(ALJ).......................
----------------------------------------------------------------------------------
Estimated Cost for 2016.. .............. .............. .............. .............. 755,363
----------------------------------------------------------------------------------------------------------------
Data for appeals are reported by MA plans. It typically takes 2
years for CMS to validate these data. Hence the latest year for which
we have complete data is 2016. Appeals can happen at various levels.
The first level is reconsiderations where an appeal is made for a plan
to reconsider a decision. If this is denied, the case goes on to the
IRE (a CMS contractor) to be reviewed. If this is also denied, the case
can be appealed to an administrative law judge (ALJ) if the amount in
controversy is met.
For 2016, there were 328,857 and 58,023 reconsiderations and IRE
cases respectively in the MA program. We estimate that in general 6
percent of cases reaching the IRE go on to an ALJ.
Based on data pulled from the Medicare Appeals System for part D
appeals, 1.19 percent of plan level appeals involving step therapy were
denied. We use this as a proxy for the percent of cases involving part
B drugs subject to step therapy that we expect to be appealed since we
have no other basis. We believe it is reasonable to consider Part D
appeals data related to cases that involve drugs subject to step
therapy in developing these estimates. We also use the 1.19 percent as
a proxy for the percent of reconsiderations and ALJ cases that involve
step therapy. We acknowledge that percentages might be different at
different appeal levels but the 1.19 percent is the only proportion we
have.
Having derived the expected number of appeals involving step
therapy we note that section 1852(g)(2) of the Act requires a
reconsideration by a MA plan to deny coverage on the basis of medical
necessity to be reviewed by a physician with the appropriate expertise;
CMS has adopted two MA regulations (Sec. Sec. 422.566(d) and
422.590(g)(2)) that implement this requirement for denials based on
medical necessity determinations. We believe it is reasonable to assume
that a decision to
[[Page 23877]]
deny coverage for a drug subject to step therapy will typically involve
a medical determination whether the drug would be ineffective or cause
adverse effects for the enrollee. A decision on a drug subject to step
therapy is also likely to involve evaluation of a healthcare provider's
assessment of medical necessity for the Part B drug; for example, the
health care provider may indicate that the lower or earlier steps in
the step therapy protocol are not clinically appropriate for that
enrollee (such as in cases of allergy or a prior unsuccessful use of
the preferred drug). Therefore, this estimate accounts for physician
review of reconsiderations. Based on the BLS website at https://www.bls.gov/oes/current/oes_nat.htm, the mean hourly wage of physicians
is $203.26. Our contractor experience with appeals suggests that the
average time to process an appeal is 48 minutes, or, 0.8 hour.
Multiplying the number of appeals * 0.8 hour per appeal * $203.26
cost per hour we arrive at total cost for each appeal level. Adding
these together we obtain the $0.8 million estimate, based on 2016 data.
Factors that enter into appeal rates include enrollment rates and
changes in plan benefit packages. Appeal rates change from year to
year. One major factor in appeal rates is enrollment. If enrollment
increases by 10 or 20 percent then it is very reasonable that the
number of appeals will approximately increase by that amount.
Thus to obtain estimates of cost for 2018 we will multiply the $0.8
million by the ratio of enrollment in 2018 to 2016. Similarly to obtain
estimates for 2020 to 2024 we multiply by ratios of enrollment.
The ratio of 2018 to 2016 is 1.1585 based on enrollment figures
from the CMS website. Projected enrollment for 2020 through 2029 may be
obtained from Table IV.C1 in the 2018 Trustee report. Using these
numbers we obtain the estimated cost of increased appeals for 2020
through 2029, presented in Table 6, as $1.0-$1.3 million.
Table 6--Expected Increase in Appeal Costs Due to Step Therapy
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost of appeals (in millions)................................. 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2 1.2 1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
We received no comments on impact estimates of the proposed rule.
D. Expected Benefits
Any relevant expected benefits for enrollees, stakeholders, and the
government have been fully discussed in section II. of this final rule.
E. Alternatives Considered
1. Providing Plan Flexibility To Manage Protected Classes (Sec.
423.120(b)(2)(vi))
Previous proposals to address the protected classes were aimed at
changing both the protected classes and exceptions to the requirement
that formularies include all drugs in the protected class. However, we
remain concerned that previous criteria, as established either by
statute under the MIPPA authority, or by CMS under the Patient
Protection and Affordable Care Act authority, did not strike the
appropriate balance among enrollee access, quality assurance, cost-
containment, and patient welfare that we were striving to achieve.
Consequently, we elected not to propose any changes to the drug
categories or classes that are the protected classes. As a result, the
critical policy decision was how broadly or narrowly to establish
exceptions to the requirement that all protected class drugs be
included on the formulary. Overly broad exceptions might
inappropriately limit the products within the protected classes,
thereby creating access issues for Part D enrollees. Only narrow
exceptions afford enrollee protections such as adequate access and
improved quality assurance while also providing an incentive for
manufacturers to aggressively rebate their products for formulary
placement in an operationally feasible manner for Part D sponsors.
2. E-Prescribing and the Part D Prescription Drug Program; Updating
Part D E-Prescribing Standards (Sec. 423.160)
We proposed to require that each Part D plan select a real time
benefit tool (RTBT) of its choosing by January 1, 2020. We had
considered delaying regulatory action around real time requirements
until the industry has developed a real time standard that could be
used by all Part D plans. However, we believe that the benefits that
would come with a real time standard in the form of cost transparency
are substantial and should not be further delayed. We also considered
requiring that plans use the optional fields in the NCPDP Formulary and
Benefit standards (F&B) to provide much of the cost data that we
believe would be important for prescribers to know. However, by
definition, the F&B standards are batch standards so that the
information provided is, by definition, not contemporaneous and are not
specific to each beneficiary. For these reasons we opted in favor of
proposing RTBT rather than proposing to require that plans use enhanced
F&B standards.
3. Medicare Advantage and Step Therapy for Part B Drugs (Sec. Sec.
422.136, 422.568, 422.570, 422.572, 422.584, 422.590, 422.618, 422.619,
422.629, 422.633 and 422.634)
We finalized proposed requirements under which MA plans may apply
step therapy as a utilization management tool for Part B drugs. We
finalized our proposal to confirm authority for MA plans to implement
appropriate utilization management and prior authorization tools for
managing Part B drugs and proposed parameters on using step therapy to
ensure it is implemented in a manner to reduce costs for both enrollees
and the Medicare program. Our finalized policy includes specific
parameters for how step therapy may be implemented for Part B drugs,
including requiring review and approval from a P&T Committee that meets
specific standards and permitting step therapy only for new
administrations of the drug (subject to at least a 365 day lookback
period). We also finalized our proposal to require new appeal
timeframes and deadlines for MA plans to adjudicate and respond to
requests concerning Part B drug coverage. An additional alternative
considered during development of the proposed regulation was allowing
step therapy for ongoing prescriptions or administrations of Part B
drugs for enrollees who are actively receiving the affected medication
at the time the step therapy program is adopted as well as for new
administrations of a Part B drug. However, allowing MA plans to
implement step therapy on ongoing prescriptions and administrations of
Part B drugs would require the development of a transition process for
affected enrollees and might result in negative health outcomes as on-
going treatment would be disrupted. We lack a basis to quantify the
impact of these expected negative health outcomes.
[[Page 23878]]
Furthermore, the estimated costs of developing a transition process,
including providing enrollees with appropriate notice regarding their
transition process and providing a temporary supply of affected drugs
likely outweighs any savings. Moreover, we recognized the health
significance of many Part B drug regimens (for example, cancer
treatments) and are working to ensure enrollees will not encounter
unnecessary barriers to medically necessary drugs or have disruptions
in care. Therefore, under the finalized regulations at Sec.
422.136(a)(1), step therapy programs are not permitted to disrupt
enrollees' ongoing Part B drug therapies as our finalized regulations
require that step therapy only be applied to new prescriptions or
administrations of Part B drugs for enrollees who are not actively
receiving the affected medication. More specifically, MA plans must
have a look back period of 365 days instead of the proposed 108 days,
to determine if the enrollee is actively taking a Part B drug and,
thus, not subject to step therapy for that Part B drug. Further, when
an enrollee elects a new plan, the plan would still be required to
determine whether the enrollee has taken the Part B drug (that would
otherwise be subject to step therapy) within the past 365 days. If the
enrollee is actively taking the Part B drug, such enrollee would be
exempted from the plan's step therapy requirement concerning that drug.
F. Accounting Statement and Table
The following table summarizes costs, savings, and transfers by
provision.
As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Table 7, we
have prepared an accounting statement showing the savings and transfers
associated with the provisions of this final rule for contract years
2020 through 2029. Table 7 is based on Table 8 which lists savings,
costs, and transfers by provision.
Table 7--Accounting Statement--Classifications of Estimated Savings, Costs, and Transfers Negative Numbers
Indicate Savings
----------------------------------------------------------------------------------------------------------------
Savings
----------------------------------------------------------
From calendar years 2020 to 2029 Discount Rate Whom is spending or
[$ in millions] -------------------------------- Period Covered transferring
7% 3%
----------------------------------------------------------------------------------------------------------------
Net Annualized Monetized Cost.... 7.46 7.38 CYs 2020-2029 MA Organizations,
Part D Sponsors,
Contractors for
the Federal
Government.
Annualized Monetized Savings..... .............. .............. CYs 2020-2029 ...................
Annualized Monetized Cost........ 7.46 7.38 CYs 2020-2029 MA Organizations,
Part D Sponsors,
Beneficiaries.
Annualized Transfers............. (191.23) (194.63) CYs 2020-2029 Federal government,
MA organizations
and Part D
Sponsors,
Beneficiaries.
----------------------------------------------------------------------------------------------------------------
The following Table 8 summarizes savings, costs, and transfers by
provision and formed a basis for the accounting table. For reasons of
space, Table 8 is broken into Table 8A (2020 through 2023), Table 8B
(2024 through 2027) and Table 8C (2028 through 2029). In these tables
savings are indicated as negative numbers in columns marked savings
while costs are indicated as positive numbers in columns marked costs.
Transfers result in reduced dollar spending by enrollees and the
government and are indicated by negative numbers. All numbers are in
millions. The row ``aggregate total by year'' gives the total of costs
and savings for that year but does not include transfers. Table 8 forms
the basis for Table 7 and for the calculation to the infinite horizon
discounted to 2016, mentioned in the conclusion.
Table 8A--Aggregate Savings, Costs, and Transfers in Millions by Provision and Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020 2020 2020 2021 2021 2021 2022 2022 2022 2023 2023 2023
Savings Cost Transfers Savings Cost Transfers Savings Cost Transfers Savings Cost Transfers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Savings................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Total Costs..................................................... ........ 11.40 .......... ........ 6.73 .......... ........ 6.73 .......... ........ 6.83 ..........
Aggregate Total................................................. ........ 11.40 .......... ........ 6.73 .......... ........ 6.73 .......... ........ 6.83 ..........
Total Transfers................................................. ........ ........ (150.00) ........ ........ (159.00) ........ ........ (169.00) ........ ........ (180.00)
Protected Classes, Government................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Protected Classes, Enrollees.................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Gag Clauses..................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
E-Prescribing................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Part D EOB...................................................... ........ 10.40 .......... ........ 5.73 .......... ........ 5.73 .......... ........ 5.73 ..........
Step Therapy, Government........................................ ........ ........ (145.00) ........ ........ (154.00) ........ ........ (164.00) ........ ........ (174.00)
Step Therapy, Enrollees......................................... ........ ........ (5.00) ........ ........ (5.00) ........ ........ (5.00) ........ ........ (6.00)
Step Therapy Appeals............................................ ........ 1.00 .......... ........ 1.00 .......... ........ 1.00 .......... ........ 1.10 ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Table 8B--Aggregate Savings, Costs, and Transfers in Millions by Provision and Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2024 2024 2025 2025 2025 2026 2026 2026 2027 2027 2027
Savings Cost Transfers Savings Cost Transfers Savings Cost Transfers Savings Cost Transfers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Savings................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Total Costs..................................................... ........ 6.83 .......... ........ 6.83 .......... ........ 6.93 .......... ........ 6.93 ..........
[[Page 23879]]
Aggregate Total................................................. ........ 6.83 .......... ........ 6.83 .......... ........ 6.93 .......... ........ 6.93 ..........
Total Transfers................................................. ........ ........ (191.00) ........ ........ (201.00) ........ ........ (214.00) ........ ........ (225.00)
Protected Classes, Government................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Protected Classes, Enrollees.................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Gag Clauses..................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
E-Prescribing................................................... ........ ........ .......... ........ ........ .......... ........ ........ .......... ........ ........ ..........
Part D EOB...................................................... ........ 5.73 .......... ........ 5.73 .......... ........ 5.73 .......... ........ 5.73 ..........
Step Therapy, Government........................................ ........ ........ (185.00) ........ ........ (195.00) ........ ........ (207.00) ........ ........ (218.00)
Step Therapy, Enrollees......................................... ........ ........ (6.00) ........ ........ (6.00) ........ ........ (7.00) ........ ........ (7.00)
Step Therapy Appeals............................................ ........ 1.10 .......... ........ 1.10 .......... ........ 1.20 .......... ........ 1.20 ..........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Table 8C--Aggregate Savings, Costs, and Transfers in Million by Provision and Year
----------------------------------------------------------------------------------------------------------------
2028 2028 2028 2029 2029 2029 Raw 10 year
Savings Cost Transfers Savings Cost Transfers totals
----------------------------------------------------------------------------------------------------------------
Total Savings................... ........ ........ .......... ........ ........ .......... ..............
Total Costs..................... ........ 6.93 .......... ........ 7.03 .......... 73.19
Aggregate Total................. ........ 6.93 .......... ........ 7.03 .......... 73.19
Total Transfers................. ........ ........ (236.00) ........ ........ (248.00) (1,973.00)
Protected Classes, Government... ........ ........ .......... ........ ........ .......... ..............
Protected Classes, Enrollees.... ........ ........ .......... ........ ........ .......... ..............
Gag Clauses..................... ........ ........ .......... ........ ........ .......... ..............
E-Prescribing................... ........ ........ .......... ........ ........ .......... ..............
Part D EOB...................... ........ 5.73 .......... ........ 5.73 .......... 61.99
Step Therapy, Government........ ........ ........ (229.00) ........ ........ (240.00) (1,911.00)
Step Therapy, Enrollees......... ........ ........ (7.00) ........ ........ (8.00) (62.00)
Step Therapy Appeals............ ........ 1.20 .......... ........ 1.30 .......... 11.20
----------------------------------------------------------------------------------------------------------------
G. Conclusion
As indicated in the ``Aggregate Total'' row of Table 8, we estimate
that this final rule generates for each year in 2021 through 2029, net
costs of approximately $7 million, with a first year cost of
approximately $11.4 million. These annual costs primarily reflect
mailing and programming costs arising from descriptions of alternatives
in the Part D EOB as well as increased appeals arising from the Step
Therapy provision. This final rule has no provisions which save.
Although other impacts in this rule are classified as transfers as
discussed in each provision, the aggregate effect of these transfers
reduce dollar spending by MA enrollees and the Medicare Trust Fund:
Enrollees: Enrollees are estimated to reduce their
spending on cost sharing by $62 million over 10 years from reduced cost
sharing from Step Therapy.
Government: The Medicare Trust Fund in aggregate reduces
their dollar spending by $1.91 billion over 10 years from the Step
Therapy provisions.
H. Reducing Regulation and Controlling Regulatory Costs
In line with Executive Order 13771, in Table 9, we estimate present
and annualized values of costs and cost savings over an infinite time
horizon. Costs are indicated by positive numbers. Based on these costs,
this Final Rule would be considered a regulatory action under Executive
Order 13771. As shown, this final rule generates level annual costs of
$5.9 million over an infinite horizon in 2016 dollars discounted at 7
percent.
Table 9--E.O. 13771 Summary Table
[In 2016 dollars over a perpetual time horizon]
------------------------------------------------------------------------
Primary Primary
Item (7%) (3%)
------------------------------------------------------------------------
Present Value of Costs.............................. 84.4 217.2
Present Value of Cost Savings....................... 0.0 0.0
Present Value of Net Costs.......................... 84.4 217.2
Annualized Cost..................................... 5.9 6.5
Annualized Cost Savings............................. 0.0 0.0
Annualized Net Costs................................ 5.9 6.5
------------------------------------------------------------------------
List of Subjects
42 CFR Part 422
Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy, and
Reporting and recordkeeping requirements.
42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Medicare, Penalties, Privacy, and Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 422--MEDICARE ADVANTAGE PROGRAM
0
1. The authority citation for part 422 is revised to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 422.2 is amended by adding a definition for ``Step therapy''
in alphabetical order to read as follows:
Sec. 422.2 Definitions.
* * * * *
Step therapy means a utilization management policy for coverage of
drugs that begins medication for a medical condition with the most
preferred or cost effective drug therapy and progresses to other drug
therapies if medically necessary.
[[Page 23880]]
0
3. Section 422.136 is added to subpart C to read as follows:
Sec. 422.136 Medicare Advantage (MA) and step therapy for Part B
drugs.
(a) General. If an MA plan implements a step therapy program to
control the utilization of Part B-covered drugs, the MA organization
must--
(1) Apply step therapy only to new administrations of Part B drugs,
using at least a 365 day lookback period;
(2) Establish policies and procedures to educate and inform health
care providers and enrollees concerning its step therapy policies.
(3) Prior to implementation of a step therapy program, ensure that
the step therapy program has been reviewed and approved by the MA
organization's pharmacy and therapeutic (P&T) committee.
(b) Step therapy and pharmacy and therapeutic committee
requirements. An MA plan must establish a P&T committee prior to
implementing any step therapy program. An MA plan must use a P&T
committee to review and approve step therapy programs used in
connection with Part B drugs. To meet this requirement, a MA-PD plan
may utilize an existing Part D P&T committee established for purposes
of administration of the Part D benefit under part 423 of this chapter
and an MA plan may utilize an existing Part D P&T committee established
by an MA-PD plan operated under the same contract as the MA plan. The
P&T committee must--
(1) Include a majority of members who are practicing physicians or
practicing pharmacists.
(2) Include at least one practicing physician and at least one
practicing pharmacist who are independent and free of conflict relative
to--
(i) The MA organization and MA plan; and
(ii) Pharmaceutical manufacturers.
(3) Include at least one practicing physician and one practicing
pharmacist who are experts regarding care of elderly or disabled
individuals.
(4) Clearly articulate and document processes to determine that the
requirements under paragraphs (b)(1) through (3) of this section have
been met, including the determination by an objective party of whether
disclosed financial interests are conflicts of interest and the
management of any recusals due to such conflicts.
(5) Base clinical decisions on the strength of scientific evidence
and standards of practice, including assessing peer-reviewed medical
literature, pharmacoeconomic studies, outcomes research data, and other
such information as it determines appropriate.
(6) Consider whether the inclusion of a particular Part B drug in a
step therapy program has any therapeutic advantages in terms of safety
and efficacy.
(7) Review policies that guide exceptions and other step therapy
processes.
(8) Evaluate and analyze treatment protocols and procedures related
to the plan's step therapy policies at least annually consistent with
written policy guidelines and other CMS instructions.
(9) Document in writing its decisions regarding the development and
revision of step therapy activities and make this documentation
available to CMS upon request.
(10) Review and approve all step therapy criteria applied to each
covered Part B drug.
(11) Meet other requirements consistent with written policy
guidelines and other CMS instructions.
(c) Off-label drug requirement. An MA plan may include a drug
supported only by an off-label indication in step therapy protocols
only if the off-label indication is supported by widely used treatment
guidelines or clinical literature that CMS considers to represent best
practices.
(d) Non-covered drugs. A step therapy program must not include as a
component of a step therapy protocol or other condition or requirement
any drugs not covered by the applicable MA plan as a Part B drug or, in
the case of an MA-PD plan, a Part D drug.
0
4. Section 422.568 is amended by revising paragraphs (b), (d), (e)
introductory text, and (e)(4)(i) to read as follows:
Sec. 422.568 Standard timeframes and notice requirements for
organization determinations.
* * * * *
(b) Timeframes--(1) Requests for service or item. Except as
provided in paragraph (b)(1)(i) of this section, when a party has made
a request for a service or an item, the MA organization must notify the
enrollee of its determination as expeditiously as the enrollee's health
condition requires, but no later than 14 calendar days after the date
the organization receives the request for a standard organization
determination.
(i) Extensions; requests for service or item. The MA organization
may extend the timeframe by up to 14 calendar days if--
(A) The enrollee requests the extension;
(B) The extension is justified and in the enrollee's interest due
to the need for additional medical evidence from a noncontract provider
that may change an MA organization's decision to deny an item or
service; or
(C) The extension is justified due to extraordinary, exigent, or
other non-routine circumstances and is in the enrollee's interest.
(ii) Notice of extension. When the MA organization extends the
timeframe, it must notify the enrollee in writing of the reasons for
the delay, and inform the enrollee of the right to file an expedited
grievance if he or she disagrees with the MA organization's decision to
grant an extension. The MA organization must notify the enrollee of its
determination as expeditiously as the enrollee's health condition
requires, but no later than upon expiration of the extension.
(2) Requests for a Part B drug. An MA organization must notify the
enrollee (and the prescribing physician or other prescriber involved,
as appropriate) of its determination as expeditiously as the enrollee's
health condition requires, but no later than 72 hours after receipt of
the request. This 72-hour period may not be extended under the
provisions in paragraph (b)(1)(i) of this section.
* * * * *
(d) Written notice for MA organization denials. The MA organization
must give the enrollee a written notice if--
(1) An MA organization decides to deny a service or an item, Part B
drug, or payment in whole or in part, or reduce or prematurely
discontinue the level of care for a previously authorized ongoing
course of treatment.
(2) An enrollee requests an MA organization to provide an
explanation of a practitioner's denial of an item, service or Part B
drug, in whole or in part.
(e) Form and content of the MA organization notice. The notice of
any denial under paragraph (d) of this section must--
* * * * *
(4)(i) For service, item, and Part B drug denials, describe both
the standard and expedited reconsideration processes, including the
enrollee's right to, and conditions for, obtaining an expedited
reconsideration and the rest of the appeal process; and
* * * * *
0
5. Section 422.570 is amended by revising paragraph (d)(1) to read as
follows:
Sec. 422.570 Expediting certain organization determinations.
* * * * *
(d) * * *
(1) Automatically transfer a request to the standard timeframe and
make the determination within the 72-hour or 14-
[[Page 23881]]
day timeframe, as applicable, established in Sec. 422.568 for a
standard determination. The timeframe begins when the MA organization
receives the request for expedited determination.
* * * * *
0
6. Section 422.572 is amended by revising paragraphs (a), the heading
to paragraph (b), and (b)(1) to read as follows:
Sec. 422.572 Timeframes and notice requirements for expedited
organization determinations.
(a) Timeframes--(1) Requests for service or item. Except as
provided in paragraph (b) of this section, an MA organization that
approves a request for expedited determination must make its
determination and notify the enrollee (and the physician involved, as
appropriate) of its decision, whether adverse or favorable, as
expeditiously as the enrollee's health condition requires, but no later
than 72 hours after receiving the request.
(2) Requests for a Part B drug. An MA organization that approves a
request for expedited determination must make its determination and
notify the enrollee (and the physician or prescriber involved, as
appropriate) of its decision as expeditiously as the enrollee's health
condition requires, but no later than 24 hours after receiving the
request. This 24-hour period may not be extended under the provisions
in paragraph (b) of this section.
(b) Extensions; requests for service or item. (1) When timeframe
may be extended. The MA organization may extend the 72-hour deadline
for expedited organization determinations for requests for services or
items by up to 14 calendar days if--
(i) The enrollee requests the extension;
(ii) The extension is justified and in the enrollee's interest due
to the need for additional medical evidence from a noncontract provider
that may change an MA organization's decision to deny an item or
service; or
(iii) The extension is justified due to extraordinary, exigent, or
other nonroutine circumstances and is in the enrollee's interest.
* * * * *
0
7. Section 422.584 is amended by revising paragraph (d)(1) to read as
follows:
Sec. 422.584 Expediting certain reconsiderations.
* * * * *
(d) * * *
(1) Automatically transfer a request to the standard timeframe and
make the determination within the 30 calendar day or 7 calendar day, as
applicable, timeframe established in Sec. 422.590(a) and (c). The
timeframe begins the day the MA organization receives the request for
expedited reconsideration.
* * * * *
0
8. Section 422.590 is revised to read as follows:
Sec. 422.590 Timeframes and responsibility for reconsiderations.
(a) Standard reconsideration: Requests for service or item. (1)
Except as provided in paragraph (f) of this section, if the MA
organization makes a reconsidered determination that is completely
favorable to the enrollee, the MA organization must issue the
determination (and effectuate it in accordance with Sec. 422.618(a))
as expeditiously as the enrollee's health condition requires, but no
later than 30 calendar days from the date it receives the request for a
standard reconsideration.
(2) If the MA organization makes a reconsidered determination that
affirms, in whole or in part, its adverse organization determination,
it must prepare a written explanation and send the case file to the
independent entity contracted by CMS as expeditiously as the enrollee's
health condition requires, but no later than 30 calendar days from the
date it receives the request for a standard reconsideration (or no
later than the expiration of an extension described in paragraph (a)(1)
of this section). The organization must make reasonable and diligent
efforts to assist in gathering and forwarding information to the
independent entity.
(b) Standard reconsideration: Requests for payment. (1) If the MA
organization makes a reconsidered determination that is completely
favorable to the enrollee, the MA organization must issue its
reconsidered determination to the enrollee (and effectuate it in
accordance with Sec. 422.618(a)(1)) no later than 60 calendar days
from the date it receives the request for a standard reconsideration.
(2) If the MA organization affirms, in whole or in part, its
adverse organization determination, it must prepare a written
explanation and send the case file to the independent entity contracted
by CMS no later than 60 calendar days from the date it receives the
request for a standard reconsideration. The organization must make
reasonable and diligent efforts to assist in gathering and forwarding
information to the independent entity.
(c) Standard reconsideration: Requests for a Part B drug. (1) If
the MA organization makes a reconsidered determination that is
completely favorable to the enrollee, the MA organization must issue
the determination (and effectuate it in accordance with Sec.
422.618(a)(3)) as expeditiously as the enrollee's health condition
requires, but no later than 7 calendar days from the date it receives
the request for a standard reconsideration. This 7 calendar-day period
may not be extended under the provisions in paragraph (f) of this
section.
(2) If the MA organization makes a reconsidered determination that
affirms, in whole or in part, its adverse organization determination,
it must prepare a written explanation and send the case file to the
independent entity contracted with CMS no later than 7 calendar days
from the date it receives the request for a standard reconsideration.
The organization must make reasonable and diligent efforts to assist in
gathering and forwarding the information to the independent entity.
(d) Effect of failure to meet timeframe for standard
reconsideration. If the MA organization fails to provide the enrollee
with a reconsidered determination within the timeframes specified in
paragraph (a), (b), or (c) of this section, this failure constitutes an
affirmation of its adverse organization determination, and the MA
organization must submit the file to the independent entity in the same
manner as described under paragraphs (a)(2), (b)(2), and (c)(2) of this
section.
(e) Expedited reconsideration--(1) Timeframe for services or items.
Except as provided in paragraph (f) of this section, an MA organization
that approves a request for expedited reconsideration must complete its
reconsideration and give the enrollee (and the physician involved, as
appropriate) notice of its decision as expeditiously as the enrollee's
health condition requires but no later than 72 hours after receiving
the request.
(2) Timeframe for Part B drugs. An MA organization that approves a
request for expedited reconsideration must complete its reconsideration
and give the enrollee (and the physician or other prescriber involved,
as appropriate) notice of its decision as expeditiously as the
enrollee's health condition requires but no later than 72 hours after
receiving the request. This 72-hour period may not be extended under
the provisions in paragraph (f) of this section.
(3) Confirmation of oral notice. If the MA organization first
notifies an enrollee of a completely favorable expedited
reconsideration orally, it
[[Page 23882]]
must mail written confirmation to the enrollee within 3 calendar days.
(4) How the MA organization must request information from
noncontract providers. If the MA organization must receive medical
information from noncontract providers, the MA organization must
request the necessary information from the noncontract provider within
24 hours of the initial request for an expedited reconsideration.
Noncontract providers must make reasonable and diligent efforts to
expeditiously gather and forward all necessary information to assist
the MA organization in meeting the required timeframe. Regardless of
whether the MA organization must request information from noncontract
providers, the MA organization is responsible for meeting the timeframe
and notice requirements.
(5) Affirmation of an adverse expedited organization determination.
If, as a result of its reconsideration, the MA organization affirms, in
whole or in part, its adverse expedited organization determination, the
MA organization must submit a written explanation and the case file to
the independent entity contracted by CMS as expeditiously as the
enrollee's health condition requires, but not later than within 24
hours of its affirmation. The organization must make reasonable and
diligent efforts to assist in gathering and forwarding information to
the independent entity.
(f) Extensions; requests for service or item. (1) As described in
paragraphs (f)(1)(i) through (iii) of this section, the MA organization
may extend the standard or expedited reconsideration deadline for
services by up to 14 calendar days if--
(i) The enrollee requests the extension; or
(ii) The extension is justified and in the enrollee's interest due
to the need for additional medical evidence from a noncontract provider
that may change an MA organization's decision to deny an item or
service; or
(iii) The extension is justified due to extraordinary, exigent or
other non-routine circumstances and is in the enrollee's interest.
(2) When the MA organization extends the deadline, it must notify
the enrollee in writing of the reasons for the delay and inform the
enrollee of the right to file an expedited grievance if he or she
disagrees with the MA organization's decision to grant an extension.
The MA organization must notify the enrollee of its determination as
expeditiously as the enrollee's health condition requires, but no later
than upon expiration of the extension.
(g) Failure to meet timeframe for expedited reconsideration. If the
MA organization fails to provide the enrollee with the results of its
reconsideration within the timeframe described in paragraph (e)(1) or
(2) of this section, as applicable, this failure constitutes an adverse
reconsidered determination, and the MA organization must submit the
file to the independent entity within 24 hours of expiration of the
timeframe set forth in paragraph (e)(1) or (2) of this section.
(h) Who must reconsider an adverse organization determination. (1)
A person or persons who were not involved in making the organization
determination must conduct the reconsideration.
(2) When the issue is the MA organization's denial of coverage
based on a lack of medical necessity (or any substantively equivalent
term used to describe the concept of medical necessity), the
reconsidered determination must be made by a physician with expertise
in the field of medicine that is appropriate for the services at issue.
The physician making the reconsidered determination need not, in all
cases, be of the same specialty or subspecialty as the treating
physician.
0
9. Section 422.618 is amended by revising paragraph (a) and adding
paragraph (b)(3) to read as follows:
Sec. 422.618 How an MA organization must effectuate standard
reconsidered determinations or decisions.
(a) Reversals by the MA organization--(1) Requests for service. If,
on reconsideration of a request for service, the MA organization
completely reverses its organization determination, the organization
must authorize or provide the service under dispute as expeditiously as
the enrollee's health condition requires, but no later than 30 calendar
days after the date the MA organization receives the request for
reconsideration (or no later than upon expiration of an extension
described in Sec. 422.590(f)).
(2) Requests for payment. If, on reconsideration of a request for
payment, the MA organization completely reverses its organization
determination, the organization must pay for the service no later than
60 calendar days after the date the MA organization receives the
request for reconsideration.
(3) Requests for a Part B drug. If, on reconsideration of a request
for a Part B drug, the MA organization completely reverses its
organization determination, the MA organization must authorize or
provide the Part B drug under dispute as expeditiously as the
enrollee's health condition requires, but no later than 7 calendar days
after the date the MA organization receives the request for
reconsideration.
(b) * * *
(3) Requests for a Part B drug. If, on reconsideration of a request
for a Part B drug, the MA organization's determination is reversed in
whole or in part by the independent outside entity, the MA organization
must authorize or provide the Part B drug under dispute within 72 hours
from the date it receives notice reversing the determination. The MA
organization must inform the independent outside entity that the
organization has effectuated the decision.
* * * * *
0
10. Section 422.619 is amended by--
0
a. Revising paragraphs (a) and (b);
0
b. Redesignating paragraph (c)(2) as paragraph (c)(3); and
0
c. Adding a new paragraph (c)(2).
The revisions and addition read as follows:
Sec. 422.619 How an MA organization must effectuate expedited
reconsidered determinations.
(a) Reversals by the MA organization--(1) Requests for service or
item. If, on reconsideration of an expedited request for service, the
MA organization completely reverses its organization determination, the
MA organization must authorize or provide the service or item under
dispute as expeditiously as the enrollee's health condition requires,
but no later than 72 hours after the date the MA organization receives
the request for reconsideration (or no later than upon expiration of an
extension described in Sec. 422.590(f)).
(2) Requests for a Part B drug. If, on reconsideration of a request
for a Part B drug, the MA organization completely reverses its
organization determination, the MA organization must authorize or
provide the Part B drug under dispute as expeditiously as the
enrollee's health condition requires, but no later than 72 hours after
the date the MA organization receives the request for reconsideration.
(b) Reversals by the independent outside entity--(1) Requests for
service or item. If the MA organization's determination is reversed in
whole or in part by the independent outside entity, the MA organization
must authorize or provide the service under dispute as expeditiously as
the enrollee's health condition requires but no later than 72 hours
from the date it receives notice reversing the determination. The MA
organization must inform the independent outside entity that the
[[Page 23883]]
organization has effectuated the decision.
(2) Requests for a Part B drug. If, on reconsideration of a request
for a Part B drug, the MA organization's determination is reversed in
whole or in part by the independent outside entity, the MA organization
must authorize or provide the Part B drug under dispute as
expeditiously as the enrollee's health condition requires but no later
than 24 hours from the date it receives notice reversing the
determination. The MA organization must inform the outside entity that
the organization has effectuated the decision.
(c) * * *
(2) Reversals of decisions related to Part B drugs. If the
independent outside entity's determination is reversed in whole or in
part by an ALJ/attorney adjudicator or at a higher level of appeal, the
MA organization must authorize or provide the Part B drug under dispute
as expeditiously as the enrollee's health condition requires but no
later than 24 hours from the date it receives notice reversing the
determination. The MA organization must inform the outside entity that
the organization has effectuated the decision.
* * * * *
0
11. Effective January 1, 2021, Sec. 422.629 is amended by revising
paragraph (a) to read as follows:
Sec. 422.629 General requirements for applicable integrated plans.
(a) Scope. The provisions in this section and in Sec. Sec. 422.630
through 422.634 set forth requirements for unified appeals and
grievance processes with which applicable integrated plans must comply.
Beginning January 1, 2021, these provisions apply to an applicable
integrated plan in lieu of Sec. Sec. 422.564, 422.566(c) and (d), and
422.568 through 422.590, and 422.618(a) and Sec. Sec. 438.404 through
438.424 of this chapter; provisions governing Part B drugs in
Sec. Sec. 422.568(b)(2), 422.570(d)(2), 422.572(a)(2), 422.584(d)(1),
422.590(c), and 422.590(e)(2) apply to an applicable integrated plan.
* * * * *
0
12. Effective January 1, 2021, Sec. 422.631 is amended by revising
paragraph (a) to read as follows:
Sec. 422.631 Integrated organization determinations.
(a) General rule. An applicable integrated plan must adopt and
implement a process for enrollees to request that the plan make an
integrated organization determination. The process for requesting that
the applicable integrated plan make an integrated organization
determination must be the same for all covered benefits. Timeframes and
notice requirements for integrated organization determinations for Part
B drugs are governed by the provisions for Part B drugs in Sec. Sec.
422.568(b)(2), 422.570(d)(2), and 422.572(a)(2).
* * * * *
0
13. Effective January 1, 2021, Sec. 422.633 is amended by revising
paragraph (f) introductory text to read as follows:
Sec. 422.633 Integrated reconsideration.
* * * * *
(f) Resolution and notification. The applicable integrated plan
must make integrated reconsidered determinations as expeditiously as
the enrollee's health condition requires but no later than the
timeframes established in this section. Integrated reconsidered
determinations regarding Part B drugs must comply with the timelines
governing Part B drugs established in Sec. Sec. 422.584(d)(1) and
422.590(c) and (e)(2).
* * * * *
PART 423--MEDICARE PROGRAM; MEDICARE PRESCRIPTION DRUG PROGRAM
0
14. The authority citation for part 423 is revised to read as follows:
Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, and
1395hh.
0
15. Section 423.120 is amended--
0
a. In paragraph (a)(8)(i) by removing ``and'' from the end;
0
b. In paragraph (a)(8)(ii) by removing the ``.'' and adding in its
place ``; and'';
0
c. Adding new paragraph (a)(8)(iii);
0
d. Revising paragraph (b)(2)(vi)(A);
0
e. Redesignating paragraph (b)(2)(vi)(C) as (b)(2)(vi)(D); and
0
f. Adding new paragraphs (b)(2)(vi)(C).
The additions and revisions read as follows:
Sec. 423.120 Access to covered Part D drugs.
(a) * * *
(8) * * *
(iii) May not prohibit a pharmacy from, nor penalize a pharmacy
for, informing a Part D plan enrollee of the availability at that
pharmacy of a prescribed medication at a cash price that is below the
amount that the enrollee would be charged to obtain the same medication
through the enrollee's Part D plan.
* * * * *
(b) * * *
(2) * * *
(vi) * * *
(A) Drug or biological products that are rated as either of the
following:
(1) Therapeutically equivalent (under the Food and Drug
Administration's most recent publication of ``Approved Drug Products
with Therapeutic Equivalence Evaluations,'' also known as the Orange
Book).
(2) Interchangeable (under the Food and Drug Administration's most
recent publication of the Purple Book: Lists of Licensed Biological
Products with Reference Product Exclusivity and Biosimilarity or
Interchangeability Evaluations).
* * * * *
(C) Subject to CMS review and approval, for enrollees that are not
on existing therapy on the protected class Part D drug, and except for
antiretroviral medications, prior authorization and step therapy
requirements to confirm intended use is for a protected class
indication, to ensure clinically appropriate use, to promote
utilization of preferred formulary alternatives, or a combination
thereof.
* * * * *
0
16. Effective January 1, 2021, Sec. 423.128 is amended by--
0
a. Redesignating paragraphs (e)(5) and (6) as paragraphs (e)(6) and
(7); and
0
b. Adding a new paragraph (e)(5).
The addition reads as follows:
Sec. 423.128 Dissemination of Part D plan information.
* * * * *
(e) * * *
(5) For each prescription drug claim, must include the cumulative
percentage increase (if any) in the negotiated price since the first
claim of the current benefit year and therapeutic alternatives with
lower cost-sharing, when available as determined by the plan, from the
applicable approved plan formulary.
* * * * *
0
17. Effective January 1, 2021, Sec. 423.160 is amended by adding
paragraph (b)(7) to read as follows:
Sec. 423.160 Standards for electronic prescribing.
* * * * *
(b) * * *
(7) Real time benefit tools. No later than January 1, 2021,
implement one or more electronic real-time benefit tools (RTBT) that
are capable of integrating with at least one prescriber's e-Prescribing
(eRx) system or electronic health record (EHR) to provide complete,
accurate, timely, clinically appropriate, patient-specific formulary
and benefit information to the prescriber in real time for assessing
coverage under
[[Page 23884]]
the Part D plan. Such information must include enrollee cost-sharing
information, clinically appropriate formulary alternatives, when
available, and the formulary status of each drug presented including
any utilization management requirements applicable to each alternative
drug.
* * * * *
Dated: April 25, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: May 8, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2019-10521 Filed 5-16-19; 4:15 pm]
BILLING CODE 4120-01-P
