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CMS Takes Action to Lower Out of Pocket Medicare Part D Prescription Drug Costs

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The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would make updates to the Medicare Advantage (MA) and Medicare Part D programs that would lower out-of-pocket prescription drug costs for beneficiaries with Medicare Part D and improve price transparency and market competition. The proposed rule would improve beneficiaries’ experiences with MA and Part D, with a strong emphasis on individuals who are dually eligible for Medicare and Medicaid. Ultimately, CMS is taking action to hold MA and Part D plans to a higher standard in offering benefits and improve health equity in the programs.

In recent years, more Part D plans and pharmacies have entered into arrangements—called price concessions—where plans pay less money to pharmacies for dispensed drugs if the pharmacies do not meet certain metrics. However, there is no public visibility on these pharmacy price concessions, and these lower prices are not passed along to the beneficiary at the point of sale. In late 2018, CMS sought comment on a policy that would require Part D plans to apply all price concessions they receive from network pharmacies at the point of sale, which would reduce beneficiary cost-sharing. Having considered the comments, CMS is now proposing this policy, which would take effect January 1, 2023, to reduce beneficiaries’ Medicare Part D out-of-pocket costs and improve price transparency and market competition in the Part D program.

The proposed rule also takes steps to improve experiences for dually eligible beneficiaries who are enrolled in Dual Eligible Special Needs Plans (D-SNPs). D-SNPs are plans offered by MA organizations that enroll individuals who are eligible for both Medicare and Medicaid. The proposed rule would require that MA organizations with a D-SNP establish, maintain, and consult with one or more enrollee advisory committees to ensure the experiences of people with both Medicare and Medicaid are considered in plan decision making. The proposed rule would also simplify materials that describe how to access Medicare and Medicaid services and streamline the grievance and appeals processes in certain D-SNPs. The rule also proposes a change to MA cost-sharing rules that would result in more equitable payments to providers who serve dually eligible individuals and may improve dually eligible individuals’ access to providers.

In addition, CMS is proposing actions that reduce health disparities by ensuring that all MA special needs plans solicit information about an individual’s barriers to accessing care, through standardized questions in required health risk assessments on housing instability, food insecurity, and transportation. Also, the proposed rule seeks to protect people with Medicare by ensuring they receive accurate and accessible information about Medicare coverage. For example, CMS is proposing to strengthen oversight of third-party marketing organizations that act, directly or indirectly, on behalf of MA organizations and Part D sponsors. These changes include requiring that MA and Part D plans provide information in all required beneficiary communications about the availability of free translation services.

This proposed rule also protects beneficiaries by holding plans to a higher standard when reviewing applications for new or expanded MA plans by requiring that plan applicants demonstrate a sufficient network of contracted providers to care for beneficiaries. CMS also proposes to limit MA plans’ ability to expand or enter into new contracts if their previous performance is poor. This rule further protects beneficiaries by clarifying requirements for plans during disasters and emergencies to ensure that beneficiaries have uninterrupted access to needed services.

CMS is also proposing to hold plans more accountable for how Medicare revenue is spent, including providing greater transparency regarding the amounts used to provide supplemental benefits (e.g., dental, vision, hearing, transportation, meals) by requiring MA and Part D plans to expand reporting of information on the percent of plan revenue spent on patient care and quality improvement activities, known as the medical loss ratio.

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