It’s worth sitting up and taking notice when everyone seems to hate what you are doing. Last week, 20 of the 24 members of the sometimes fractious Senate Finance Committee wrote Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner about a Medicare Part D proposed rule CMS published on January 10. They told her that they were “perplexed as to why CMS would propose to fundamentally restructure Part D …” and urged her to scrap the plan.

The House Energy and Commerce Committee held a hearing, also last week, with the hardly neutral title of “Messing with Success: How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors.” At the hearing, Medicare Chief Jon Blum, one of the most well-liked federal health officials there is, was subjected to a bipartisan, first class, grilling.

These Congressional complaints followed on the heels of a Feb. 28 letter slamming the proposed rule from 277 organizations (with more organizations continuing to sign on) including patient advocates, insurance companies, health plans, pharmacists, employers, and both brand and generic drug companies.

In fairness to CMS, this is only a proposed rule and comment is what they are seeking.  Well, it is comment that they are getting.  What has led to this firestorm of criticism?

A Move Toward Increased Regulation Of Competition In Part D

Fundamentally, CMS has suggested some major changes to the now decade-old Medicare prescription drug program that get to the heart of a longstanding controversy with Part D: To what degree should CMS regulate competition to protect beneficiaries and taxpayers, versus allowing competition itself to police the marketplace and control spending? With these proposals, CMS has largely opted to further insert itself into directing — some would say micromanaging — the terms of competition in Part D.

In the process, its proposals have united a disparate group of interests who, while not agreeing on much else, nevertheless agree that they want this proposal to simply go away. While some may like parts of the proposed rule, as a whole the status quo is better than the future of Part D that CMS has presented.

New criteria for protected drug classes. One of the proposals involves protected classes. From the start of the Part D program, CMS believed that there were certain conditions for which patients and their physicians needed immediate access to a broad choice of medicines that might not be available if a Part D plan excluded some from their formularies. Among the six classes of drugs that CMS has “protected” by requiring plans to provide substantially all products on their formularies are cancer and AIDS drugs. CMS is now suggesting criteria for whether a class of drugs needs this protection and has applied these criteria to the current six. The result is that two classes, antidepressants and immunosuppressants, would immediately lose their protection and one, antipsychotics, might lose protection next year.

While the Part D plans support this result because of the additional, cost saving negotiating leverage it might provide them, drug companies and some beneficiary groups are deeply concerned. They claim that patients will be harmed because the criteria assume, they contend in error, that patients and their caregivers understand and can quickly navigate the process of appealing a drug coverage denial. Even groups that would not be immediately impacted, such as AIDS advocates, are wary of the CMS approach.

Expanding medication therapy management. Another issue is medication therapy management. This is a requirement in Part D that plans provide extra counseling and medication coordination to beneficiaries with multiple chronic conditions and high drug costs. CMS is proposing to greatly expand the use of medication therapy management. While pharmacy groups are cheering the move, the Part D plans question the value of the added costs. Weighing in on their side is the respected Medicare Payment Advisory Commission, MedPAC, who, in a Feb. 28 letter to CMS, questioned the expansion of the medication therapy management program because of their doubts that even the current effort is worthwhile.

Limiting plan offerings. CMS has also proposed a series of changes that would limit the number and kind of plans that may be offered under Part D. One change, vehemently opposed by the plan sponsors, would limit their ability to use networks of preferred pharmacies to, in their view, lower premiums and cost sharing for beneficiaries that choose plans that offer them. Some of the lowest premium cost and most popular choices in Part D use preferred networks. CMS is concerned that the preferred networks might actually increase costs. These limited pharmacy networks worry community retail pharmacists who are often left out.

CMS would also limit the number of plans each sponsor could offer in a region. They assert that beneficiaries often have too many choices that are confusing and not sufficiently different from each other. Opponents of the change don’t understand why CMS would want to take away choices from beneficiaries who, they assert, are able to do just fine in picking a plan that is right for them.

Breaching the principle of non-interference in drug pricing. And then there is the non-interference issue. While many Democrats and even some Republicans have questioned why CMS cannot negotiate with drug companies to reduce prices, the assurance of non-interference in drug pricing was critical to winning the narrow passage of the Part D program and is a concept that has its roots in President Clinton’s failed attempt to gain a Medicare drug benefit. In its proposed rule, CMS surprised everyone by stating that it needed to better define the limits of its powers related to drug pricing. It has proposed language that has alarmed the Part D plans and has provided little comfort to the drug companies.

In The Immortal Words Of Emily Litella …

Each of these issues and more have inflamed groups with strong interests in Part D. While all don’t agree on every issue, the strong push back to the proposed rule represents a conclusion by them that CMS has gone too far and in some wrong directions to increase its involvement in Part D.  It presents a political reality that now is not the right time to be rocking the Part D boat. CMS would be smart to adopt a line from the late Gilda Radner’s Saturday Night Live character Emily Litella who famously said, “Never mind!”

Note: Through his affiliation with Manatt, Phelps & Phillips, the author represents clients with interests in the Medicare Part D rulemaking discussed above, but the opinions in this post are his own.

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