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CMS Allows Medicare Advantage Plans to Adopt Step Therapy

Medicare Advantage plans may now use step therapy for Part B and some Part D drugs, a protocol CMS said will reduce out-of-pocket costs for patients.

step therapy

Source: Thinkstock

By Sara Heath

- CMS has given new authority to Medicare Advantage plans that allows those plans to negotiate lower drug prices. These new policies will specifically allow Medicare Advantage Plans to practice step therapy, which CMS says will create cost cuts that can reduce out-of-pocket costs for patients.

The new policy will also allow Medicare Advantage plans to cross-manage across Part B and Part D where applicable.

“President Trump promised better Medicare negotiation and lower drug prices for the American people. Today, we are taking an important step in delivering on that promise,” HHS Secretary Alex Azar said in a statement.

“As soon as next year, drug prices can start coming down for many of the 20 million seniors on Medicare Advantage, with more than half of the savings going to patients,” he continued. “Consumers will always retain the power to choose the plan that works for them: If they don’t like their plan, they don’t have to keep it. We look forward to seeing the results of tougher negotiation within Medicare, and expanding successful negotiation tools throughout our programs.”

Step therapy is a cost-cutting practice in which payers begin a patient on a low-cost medication regimen, usually using a biosimilar. The patient remains on that treatment until she and her doctor determine that a costlier drug may be necessary.

CMS said these changes only apply to newly-prescribed medications and may begin on January 1, 2019.

Medicare Advantage plans may employ step therapy on Part B drugs, which currently account for approximately $12 million in Medicare costs. With some Medicare Advantage plans cross-managing certain prescriptions between Part B and Part D, patients may need to complete step therapy for their Part D prescriptions, as well.

CMS said cross managing between Part B and Part D will increase competition. Often, a Part B drug will have an extraordinary cost because its competitor is listed as a Part D treatment. With cross management, these drugs will now be in competition with each other, ideally reducing costs, CMS suggested.

Patients may see lower drug costs due to these changes, CMS explained. When a Medicare Advantage plan saves money from step therapy, it will be required to pass on over half of its savings to patients through lower coinsurance or rewards programs. Starting in 2020, CMS said plans can pass on savings through lowered premiums.

Flexibility for step therapy comes with some patient protections, CMS reported. Plans must explicitly communicate its new approach to step therapy to patients through the Annual Notice of Change and Evidence of Coverage documents. This notification can prompt patients who no longer wish to participate in that plan to select a new one.

CMS also said Medicare Advantage plans must practice considerable care coordination during the step therapy process to ensure more value to the patient. Care coordination must include discussing medication options with beneficiaries, driving patient education about their medications, and implementing medication adherence protocol.

“Under the President’s leadership, for the first time ever, CMS is bringing negotiations to physician-administered drugs and delivering on our promise to lower drug prices for patients,” said CMS Administrator Seema Verma. “For too long, Medicare Advantage plans have not had the tools to negotiate a better deal for patients. Today we begin lifting those barriers so plans can use private-sector tools to drive down the cost of expensive drugs while also offering new care coordination and drug adherence programs, to ensure that patients are getting high quality care at lower cost.”

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