On January 6, 2014, the Centers for Medicare & Medicaid Services (“CMS” or the “Agency”) released a proposed rule (the “Proposed Rule”) that would implement a number of changes to the Medicare Advantage (“MA”) and the prescription drug benefit (“Part D”) programs. The Proposed Rule would impose major changes in the existing Part D protected classes policy, implement program safeguards to curb allegedly abusive prescribing practices, and clarify other program requirements. Comments on the Proposed Rule will be accepted until March 7, 2014.
Major Changes Proposed to Protected Classes Policy
To implement the requirements of Section 3307 of the Affordable Care Act, CMS proposes to jettison the existing protected classes policy and subject the historic protected classes of clinical concern to proposed criteria designed to promote “normal formulary and price competition” unless the effect is discriminatory to Medicare beneficiaries. CMS cites the potential for overutilization and the negative impact on plan sponsors’ abilities to effectively negotiate rebates in exchange for drug formulary placement as the basis for its proposal. Based on the proposed criteria, only three of the six existing protected classes would remain: anticonvulsants, antineoplastics, and antiretrovirals. CMS explains that it has already determined that the remaining three existing categories – antidepressants, antipsychotics, and immunosuppressants – and all other drug categories and classes would fail one or both of the proposed criteria.
Significant Proposal Regarding Enrollment of Prescribers of Part D Covered Drugs
In order to help ensure that Part D drugs are prescribed only by qualified prescribers and to implement Section 6405(c) of the Affordable Care Act, CMS proposes that physicians and eligible professionals enroll in the Medicare program by January 1, 2015 in order to prescribe Part D drugs. CMS specifically solicits comments on whether an enrollment deadline of January 1, 2015 is feasible. CMS also solicits comments on whether it should consider requiring all pharmacies (network, non-preferred, home infusion, non-retail, or mail order) to enroll in the Medicare Fee for Service program in order to dispense Part D drugs.
Citing two separate statutory goals—(1) to promote private market competition and (2) to avoid creating policies that would interfere with negotiations leading to the selection of covered products—CMS proposes to interpret the statutory non-interference provisions (for the first time since the inception of the Medicare Part D program) to prohibit the Agency’s involvement in negotiations between manufacturers and pharmacies or plan sponsors. This prohibition would apply not only to initial discussions leading to executed agreements, but also to post-agreement discussions between the parties as to what the agreements require, including subsequent arbitration. CMS further proposes to clarify that it is generally prohibited from establishing drug product pricing standards or the dollar level of price concessions for Part D drugs, but that this does not prohibit the Agency from requiring full disclosure or uniform treatment of drug costs and prices.
Expansion of Negotiated Prices Definition
Citing variations in Part D sponsors’ cost reporting practices, CMS proposes to redefine “negotiated prices,” a measure reported by sponsors upon which CMS bases its payments. CMS proposes that “negotiated prices” must reflect all price concessions from network pharmacies or offered by drug manufacturers, including discounts, direct or indirect subsidies, and rebates. CMS explains that the current variations in Part D sponsors’ reporting practices impact beneficiary cost sharing, CMS payments to plans, federal reinsurance, as well as manufacturer coverage gap discount program payments.
Improper Prescribing Practices and Patterns
In response to concerns regarding improper physician prescribing practices, CMS proposes to implement program safeguards that would permit CMS to deny or revoke a physician or eligible professional’s Medicare enrollment (and thus, the ability to prescribe covered Part D drugs) based on the suspension or revocation of the prescriber’s Drug Enforcement Agency Certificate or applicable state license.
CMS further proposes that enrollment may be revoked or denied if the Agency determines that a prescriber has a pattern or practice of prescribing Part D drugs that is abusive and represents a threat to the health and safety of Medicare beneficiaries, or that fails to meet Medicare requirements. CMS lists several criteria to evaluate physician prescribing practices, including, but not limited to: whether there are diagnoses to support the indications for which the drugs were prescribed; whether the physician or eligible professional has prescribed controlled substances in excessive dosages that are linked to patient overdoses; and the various types of disciplinary or professional actions that have been taken against the physician or eligible professional.
Broadening the Release of Part D Data
CMS proposes to revise the regulations governing the release of Part D data to expand the release of certain unencrypted data contained in prescription drug event records. Specifically, the Agency would permit the release of unencrypted prescriber, pharmacy, and plan identifiers to current categories of requestors, including, but not limited to other HHS entities, Congressional oversight agencies, executive branch agencies, and certain external entities, such as researchers. CMS acknowledged that with respect to government entities, this proposed policy change is more a formality since this data is available in unencrypted format to these entities under other, current Part D data regulations. CMS is also soliciting comments on the current restriction on the release of prescription drug event data for commercial purposes.
Reopening and Payment Appeals
CMS proposes to extend the reopening period from one year to five years for purposes of rectifying over- or underpayments to plan sponsors. CMS proposes a parallel revision to extend the reopening period for manufacturer Coverage Gap Discount Reconciliation to a period of five years. CMS also proposes to establish an appeals process for payments made pursuant to Coverage Gap Discount Reconciliation. CMS proposes to exclude from reopening those contracts that have been terminated and settled.
P&T Committee Conflicts of Interest
CMS proposes to require Part D sponsors who use formularies to clearly articulate objective processes to evaluate potential conflicts of interest with respect to P&T committee members. This proposal builds on previous CMS guidance requiring P&T committees to include at least one practicing physician and one practicing pharmacist member that are “independent and free of conflict.” CMS interpreted this requirement to mean that such committee members could have no stake, financial or otherwise, in formulary determinations, including no direct or indirect financial interest in any entity—including Part D plans and pharmaceutical manufacturers—that would benefit from decisions regarding plan formularies. CMS now proposes to require sponsors to use an objective party, such as a compliance officer, to make the determination whether a disclosed financial interest is a conflict of interest and to manage recusals. CMS requests comments on whether to consider financial interest in a PBM to be a conflict of interest.
Clarification of Policies regarding Status of Combination Products, Barbiturates, Benzodiazepines, and Medical Foods as Part D Drugs
CMS proposes to clarify its policies regarding the status of combination products, barbiturates, benzodiazepines, and medical foods as Part D drugs. If finalized, a combination product would qualify as a Part D drug only if it is approved and regulated in its combination form by the FDA as a drug, vaccine, insulin, or biologic. Combinations of products that are bundled or packaged together for convenience but that have not been evaluated and approved by the FDA would be excluded. Barbiturates and benzodiazepines would be considered Part D drugs for all medically accepted indications. Medical foods would be excluded from the definition of Part D drug; however, combination products that include some or all ingredients meeting the definition of a Part D drug would be eligible for coverage if the combined product has been approved by the FDA as a drug, vaccine, or biologic. These proposals would not affect current policies regarding coverage of parenteral nutrition or extemporaneously compounded prescription drug products.
Expanded Authority to Use Information
Finally, CMS proposes to implement provisions of the Affordable Care Act that broaden the Agency’s authority to use information obtained pursuant to Part D payment provisions for oversight and enforcement purposes. The proposed regulations would allow such information to be used by officers, employees, and contractors of HHS for the purpose of, and to the extent necessary for, carrying out Part D payment-related activities, as well as to combat fraud and abuse.
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