Summary

The Centers for Medicare & Medicaid Services recently announced that, in a reversal of prior policy, it will begin to allow Medicare Advantage organizations (MAOs) to implement step therapy for Part B drugs and services as of January 1, 2019. There are a number of restrictions on MAOs’ ability to take advantage of this new policy, however. Most notably, MAOs must pair step therapy for Part B drugs with drug management care coordination programs and offer rewards that incentivize beneficiary participation in such programs that are equal to at least half the amount saved on average per participant.

In Depth

The Centers for Medicare & Medicaid Services (CMS) recently announced its decision to allow Medicare Advantage organizations (MAOs) to implement step therapy for Part B drugs and services beginning January 1, 2019. The agency simultaneously rescinded guidance that was issued in September 2012 prohibiting the practice. Notably, MAOs that choose to take advantage of this option must offer, and encourage enrollees to participate in, a drug management care coordination program. Enrollees who choose to participate in such a program must receive rewards and incentives from the MAO equal in value to at least half of the planned per participant savings from the program.

CMS explained that its new guidance is based on Section 1852 of the Social Security Act, which allows MAOs to implement utilization management tools. In its 2012 guidance, the agency stated that it interpreted its regulations under 42 CFR 422.101 to prohibit step therapy for Part B drugs unless such step therapy was specifically permitted under a national coverage determination (NCD) or a local coverage determination (LCD). In the recently released guidance, based on the agency’s statutory interpretation, CMS now advises MAOs that step therapy is permitted for Part B drugs where the NCD or LCD is silent on the use of step therapy. 

CMS imposes a number of caveats on MAOs’ ability to take advantage of this new policy: 

• Incentives and Rewards for Drug Management Care Coordination Participation. Perhaps most notably, MAOs must pair step therapy for Part B drugs with drug management care coordination services and rewards that incentivize beneficiary participation in such programs. CMS defines such programs and activities to include, at a minimum:

• • Interactive medication review and associated consultations for enrollees to discuss all current medications and perform medication reconciliation and follow-up when necessary

  • Provision of educational materials and information to enrollees about drugs within the drug management care coordination program

  • Implementation of medication adherence strategies to help enrollees with their medication regimen 

MAOs must offer beneficiaries rewards in exchange for participation in these programs; such rewards can be gift cards or other items of value, but cannot be cash or monetary rebates. A US Department of Health and Human Services press release indicates such rewards could also be offered in the form of lower cost-sharing or, beginning in 2020, lower premiums. 

In order for the reward to be “reasonable and appropriate” and thus permissible, the reward must be “equivalent to more than half the amount saved on average per participant by a more efficient use of health care resources, promotion of improved health, or prevention of injuries and illness.” The guidance does not explicitly state that the total projected savings amount is based on the total amount projected to be saved by implementing Part B step therapy. Instead the guidance is more vague, and simply says the amount of the reward must be based on the savings expected from each participant in the broader drug management care coordination activities. The guidance also does not address how such a drug management care coordination program, or the related savings, would be calculated for beneficiaries enrolled in only Part C coverage without Part D coverage. CMS stated that it will consider rulemaking regarding step therapy for CY 2020, so future guidance may provide greater clarity regarding the rewards and incentive calculation and the drug management care coordination program requirements.

MAOs must report to CMS the value of the offered rewards or incentives on a per member basis in comparison to the average planned per participant savings from the drug management care coordination activities.

• Interaction of Part B and Part D Drugs. MAOs offering both Part C and Part D benefits (MAPD Plans) may also use step therapy to require Part D therapy before Part B therapy or vice versa. With respect to the latter, MAPD plans must ensure that such step therapy policies are clearly outlined in their Part D prior authorization criteria for relevant Part D drugs. In order to enable MAPD plans to impose step therapy requirements for Part B drugs in CY 2019, CMS will provide a special window for submission of Part B step therapy prior authorization edits from August 17 to 21, 2018. MAPD plans can also make the change during CY 2019 by requesting a negative change during the standard negative formulary change request timeframes.

• Pharmacy and Therapeutics Committee. MAPDs are “strongly encouraged” to use their pharmacy and therapeutics committees to determine when use of step therapy for Part B drugs is medically appropriate. If the committee is unable to develop and approve the prior authorization in time for the August 17–21 window, MAPDs may submit placeholder criteria.  

• Disclosures. MAOs must disclose that Part B drugs may be subject to step therapy requirements in Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) documents, in addition to more specific disclosure requirements set forth in the HPMS memo; however, MAOs need not update their bid submissions for 2019.  

• Other Limitations. CMS reminds MAOs that any step therapy measures for Part B drugs should not result in increased costs to beneficiaries, that MA plans must provide access to all Part A and Part B benefits, and that beneficiaries must be able to request an exception from a step therapy requirement for a Part B drug. Additionally, MAOs may only apply step therapy to new prescriptions and may not interrupt ongoing drug therapies with step therapy requirements.

This new policy may have important implications for both MA plans and providers, as it may encourage a shift away from physician-administered Part B drugs and towards Part D drugs, which beneficiaries most often obtain directly from a pharmacy. The policy may pose some challenges with respect to individuals who are enrolled only in Medicare Advantage, without corresponding drug coverage under Part D. Step therapy that requires use of a Part D drug before a Part B drug would not be possible in such a scenario, and it remains to be seen how such scenarios will play out.