Revised CMS Policy on Medicare Part D Drugs for Hospice Enrollees

CMS has revised its earlier policy on Medicare Part D payments for drugs used by beneficiaries enrolled in Medicare hospice. In a July 18, 2014 memo, CMS is modifying its March 10, 2014 guidance to Part D sponsors that imposed a prior authorization (PA) requirement for all drugs for hospice beneficiaries in light of operational issues and access concerns.  The revised guidance narrows the Part D hospice PA provision to four categories of drugs that the OIG, in consultation with hospice providers, has identified as nearly always covered under the hospice benefit. Specifically, CMS will now “strongly encourage” Part D sponsors to place beneficiary-level PA requirements only on: analgesics, antinauseants (antiemetics), laxatives, and antianxiety drugs (anxiolytics). Part D sponsors are not expected to place hospice PA requirements on other categories of drugs or take special measures beyond normal compliance and utilization review activities to retrospectively review paid claims to determine whether drugs in the other categories were unrelated to the hospice beneficiary’s terminal illness and related conditions or payment recovery.

OIG Report Concludes Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles

The OIG has released an ACA-mandated report assessing the extent to which formularies used by Medicare Part D drug plans include drugs commonly used by full-benefit dual-eligible individuals(i.e., individuals eligible for both Medicare and Medicaid and who receive full Medicaid benefits and assistance with Medicare premiums and cost-sharing). The report, which covered the 3,309 Part D plans operating in 2014, determined that on average, Part D plan formularies include 96% of the 195 commonly-used drugs identified by the OIG. In addition, 64% of the commonly-used drugs are included by all Part D plan formularies. The OIG observes that these results are largely unchanged from the 2013 report. Formularies applied utilization management tools to 28% of the unique drugs reviewed in 2014, also the same as in 2013.

CMS Finalizes Updates to Medicare Advantage/Part D Policies for 2015

On May 23, 2014, CMS published a final rule revising the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements, generally effective for contract year 2015. CMS estimates that the proposed rule would reduce Medicare spending by $1.615 billion between 2015 and 2024. Among many other things, the final rule:

  • Requires that Part D “negotiated prices” be inclusive of all price concessions from network pharmacies except contingent price concessions that cannot reasonably be determined at the point-of-sale, effective beginning with contract year 2016. CMS also specifies that additional contingent amounts, such as incentive fees, that increase prices and that cannot reasonably be determined at the point-of-sale are always excluded from the negotiated price.
  • Implements an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
  • Addresses prescription drug abuse by, among other things, authorizing CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern of prescribing Part D drugs that is abusive and represents a threat to beneficiary health and safety or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also requires prescribers of Part D drugs to enroll in Medicare or have a valid record of opting out of Medicare as a condition of coverage for their prescriptions, effective June 1, 2015.

Note that CMS is not finalizing its proposed changes to the ACA “drug categories or classes of clinical concern” requirement; instead, CMS will maintain the existing six protected classes. CMS also is not finalizing its proposal to require consistently lower negotiated prices at pharmacies offering preferred cost sharing in light of its adoption of a different definition of negotiated price than originally proposed. Moreover, CMS is not finalizing its proposed “any willing pharmacy” contracting provisions, nor the proposed changes to limit the authorized levels of cost sharing, pending further study.

CMS Proposes Medicare Hospice Payment Policies for FY 2015

On May 8, 2014, CMS published its proposed rule to update the Medicare hospice wage index for FY 2015 and make other payment and policy changes. CMS estimates that hospice payments would increase by 1.3% ($230 million) in FY 2015 compared to FY 2014. Specifically, CMS would update the hospice per diem rates by 2.0% (reflecting a 2.7% market basket increase that is reduced by 0.7 percentage points under ACA adjustments), but this update is partially offset by a 0.7 percentage point cut resulting from the use of updated wage data and CMS’s continued phase-out of its wage index budget neutrality adjustment factor. Hospices that fail to report quality data will have their market basket update reduced by 2 percentage points.

The proposed rule includes a number of policy provisions. For instance, CMS is proposing to require hospices to file a beneficiary Notice of Election (NOE) within three calendar days after the effective date of hospice election; if an NOE is not filed timely, the days from the effective date of election to the date of filing the NOE would be the financial responsibility of the hospice. Likewise, CMS is proposing to require hospices to file a notice of termination/revocation within three calendar days of a beneficiary’s discharge or revocation, unless the hospice has already filed a final claim. The rule also would, among other things: require the hospice to identify the attending physician on the election form; revise the applicability of quality reporting penalties to new hospices; provide that claims will be returned to providers if the claim lists a nonspecific symptom diagnosis as the principal hospice diagnosis; and require hospices to complete their hospice cap determinations within 150 days after the cap period and remit any overpayments at that time.

CMS also is soliciting comments on several policy issues, including definitions of “terminal illness” and “related conditions” that are intended to “strengthen and clarify the current concepts of holistic and comprehensive hospice care under the Medicare hospice benefit.” CMS also seeks comments on processes that Part D drug plan sponsors could use to coordinate with Medicare hospices in determining coverage of drugs for hospice beneficiaries and resolving disagreements between the parties. Comments on the proposed rule will be accepted until July 1, 2014.

CMS Announces Final 2015 Medicare Advantage/Part D Drug Plan Rates and Policies

The Centers for Medicare & Medicaid Services (CMS) has released its 2015 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, the final rate announcement increases 2015 MA rates by 0.4% compared to 2014 levels and compared to an estimated 1.9% reduction anticipated in the advance notice released in February 2014. Factors contributing to the rate boost include a modified phase-in schedule for a new risk-adjustment model, a refined risk adjustment methodology to account for the impact of baby boomers, and CMS’s decision not to finalize a proposal to exclude diagnoses from enrollee risk assessments. CMS also is not adopting at this time earlier proposals to implement a new Part D risk adjustment model; make changes to star ratings; or require additional coverage in the gap for generic and brand drugs in Enhanced Alternative plans. On the other hand, CMS is adopting a number of policies intended to strengthen beneficiary protections when MA plans make significant changes to their provider networks. Beginning in 2015, CMS will require MA organizations to provide CMS with 90 days notice of any significant changes to their provider networks. CMS also will allow enrollees to switch plans when they are affected by significant mid-year provider network terminations initiated by their MA plan without cause. In addition, the call letter establishes “best practices” for MA organizations to follow when they make significant changes to provider networks.

HHS OIG Identifies "Top 25" Priorities

The OIG has released its “Compendium of Priority Recommendations,” which lists 25 priority issues for which the OIG has open recommendation and that, if implemented, would best protect the integrity of HHS programs. The 25 top priorities are as follows:

  • Medicare Policies and Payments: address wasteful Medicare policies and payment rates for clinical laboratories, hospitals, and hospices; improve controls to address improper Medicare billings by community mental health centers, home health agencies, and skilled nursing facilities; detect and recover improper Medicare payments for services to incarcerated, unlawfully present, or deceased individuals; maximize recovery of Medicare overpayments; improve monitoring and reconciliation of Medicare hospital outlier payments; ensure that Medicare Advantage Organizations are implementing programs to prevent and detect waste, fraud, and abuse; and improve controls to address questionable billing and prescribing practices for Part D prescription drugs.
  • Medicare Quality of Care and Safety Issues: address adverse events in hospital settings; improve care planning and discharge planning for beneficiaries in nursing home settings; address harm to patients, questionable resident hospitalizations, and inappropriate drug use in nursing homes; improve nursing home emergency preparedness and response; and ensure hospice compliance with Medicare conditions of participation.
  • Medicaid Program Policies and Payments: ensure that state claims and practices do not inappropriately inflate federal reimbursements; ensure that states prevent, detect, and recover improper payments and return the federal share of recoveries to the federal government; assist states to better align Medicaid drug reimbursements with pharmacy acquisition costs; ensure that Medicaid Information Systems are fully functional; and address Medicaid managed care fraud and abuse concerns.
  • Medicaid Quality of Care and Safety Issues: ensure that Medicaid home- and community-based care service providers comply with quality and safety requirements; and ensure that States improve utilization of preventive screening services for eligible children.
  • Oversight of Food Safety: improve oversight of dietary supplements; and improve oversight of food inspections and traceability.
  • HHS Grants and Contracts: improve oversight of grantee compliance, quality assurance, and conflicts of interest; and improve oversight of Medicare contractor performance and conflicts of interest.
  • HHS Financial Stewardship: reduce improper payments and fraud; and correct deficiencies found in financial statement audits.

Note that some of these recommendations would require additional authority or other legislative change.  

RACs Correct $2.4 Billion in Medicare Claims in FY 2012

CMS has released data on Recovery Audit Contractor (RAC) operations fiscal year 2012. Key findings included the following:

  • In FY 2012, Medicare fee-for-service (FFS) RACs collectively identified and corrected 1,272,297 claims for improper payments, which resulted in $2.4 billion in improper payments being corrected ($2.3 billion in overpayments/$109.4 million in underpayments). Subtracting fees, costs, and first level appeals, the Medicare FFS Recovery Audit Program returned over $1.9 billion to the Medicare trust funds.
  • The Part D RAC’s initial review focused on identifying improper payments for prescriptions written by excluded prescribers or filled by excluded pharmacies beginning with contract year 2007. Recoupment of approximately $2 million in overpayments began in the first quarter of FY 2013 for those plans identified in the Part D RAC's initial audit review. The Part D RAC is continuing its review of excluded providers and pharmacies for contract years 2008 and 2009. In addition, CMS posted a notice on April 4, 2013, seeking potential contractors to perform Part C RAC activities.
  • As of September 30, 2012, 36 states had implemented Medicaid RAC programs, and other states are in various stages of preparation. For FY 2012, the states have recovered a total federal and state share combined amount of $95.64 million. CMS expects recoveries to increase as more states have fully operational State Medicaid RAC programs.

As previously reported, CMS has “paused” its RAC audits in preparation for the procurement of new RAC contracts and to “allow CMS to continue to refine and improve the Medicare Recovery Audit Program.”

CMS Finalizes 2014 Policy on Medicare Payment for Hospice Enrollees' Drug Expenses

On March 10, 2014, CMS issued a final memorandum outlining the criteria it will use to determine payment responsibility for drugs for Medicare hospice beneficiaries, effective May 1, 2014. CMS cites the statutory requirement that the hospice cover all drugs or biologicals for the palliation and management of the terminal and related conditions; these drugs are excluded from coverage under Medicare Part D. For prescription drugs to be covered separately under Part D when the enrollee has elected hospice, the drug must be for treatment of a condition that is completely unrelated to the terminal condition or related conditions. Since CMS expects drugs will rarely be covered under Part D for hospice beneficiaries, CMS is requiring Part D sponsors to place beneficiary-level prior authorization requirements on all drugs for hospice beneficiaries to determine whether the drugs are coverable under Part D. This will require the hospice and/or the prescriber to make a case for why each drug is not related to the terminal illness or related conditions before sponsors will pay for the drug. The agency also recommends that hospice providers initiate the prior authorization process prior to submission of a Part D claim, as described in the memo.

CMS requires the Part D sponsor and hospice to negotiate the retrospective recovery of amounts paid if the sponsor has paid for drugs after the effective date of the hospice election, but prior to receipt of notification from CMS. If the drug is determined to be a hospice liability, the parties should negotiate repayment. In situations where the beneficiary is liable (e.g., drugs the patient was taking prior to the hospice election for the treatment -- as opposed to the palliation and management -- of the terminal illness, that are not covered by the hospice but that the beneficiary chooses to continue taking), the sponsor should send a recovery notice to the beneficiary. CMS notes that there are still outstanding issues, primarily for 2015 and beyond, that will be subject to future rulemaking.

Congressional Health Policy Hearings

 A number of Congressional committees have held hearings recently to address various health policy issues, including the following:

CMS Proposes 2015 Payment, Policy Updates for Medicare Advantage and Drug Plans

CMS has posted its advance rate announcement and draft call letter for Medicare Advantage (MA) and Part D prescription drug plans for 2015. These documents detail updates to payment methodologies, other policies, and program operations for MA organizations and Part D drug plan sponsors. While the factors that impact 2015 rates are complex, CMS generally intends to more closely align MA payments with fee-for-service (FFS) Medicare and improve payment accuracy through a series of rate adjustments. Among other things, CMS notes that its preliminary estimate of the combined effect of the MA growth percentage and the FFS growth percentage is -1.9%. CMS also proposes to apply a -5.16% adjustment to MA plan payments to account for diagnostic coding differences between MA and FFS providers. The call letter addresses numerous policy issues, including encouraging MA organizations to adopt best practices that improve enrollee notification of significant changes in the MA’s provider network (CMS indicates it will consider rulemaking that could limit the timing of such network changes). Comments on the documents will be accepted until March 7, 2014, and the final rate announcement and call letter will be published on April 7, 2014. Also looking ahead, CMS announced in the call letter that it intends to issue a request for information in the coming months about an initiative to partner with private payers to test innovations in health plan design for CMS beneficiaries, including to value-based arrangements, beneficiary engagement and incentives, and/or care coordination.

CMS Proposes Updates to Medicare Advantage/Part D Policies for 2015

On January 6, 2014, CMS released a proposed rule that would revise the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements. CMS estimates that the proposed rule would reduce Medicare spending by $1.3 billion between 2015 and 2019. The sweeping proposed rule is summarized after the jump. 

Among many other things, the proposed rule would:

  • Revise the definition of “negotiated prices” to require that all price concessions from pharmacies are reflected in these prices. Under the proposed rule, negotiated prices would mean prices for covered Part D drugs that: (1) the Part D sponsor (or other intermediary contracting organization) and the network dispensing pharmacy or other network dispensing provider have negotiated as the amount such network entity will receive, in total, for a particular drug; and (2) are inclusive of all price concessions and any other fees charged to network pharmacies; and (3) include any dispensing fees; but (4) exclude additional contingent amounts, such as incentive fees, only if these amounts increase prices and cannot be predicted in advance; and (5) may not be rebated back to the Part D sponsor (or other intermediary contracting organization) in whole or in part.
  • Modify CMS’s interpretation of the Affordable Care Act’s (ACA) “drug categories or classes of clinical concern” requirement. Instead of mandating coverage of all drug products in a particular class on all Part D formularies, CMS generally would limit protected classes to those meeting criteria established under the regulation. The proposed criteria generally would result in formulary inclusion of all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes (subject to proposed exceptions), but the rule would not require all drugs from the antidepressant and immunosuppressant drug classes to be included on all Part D formularies. While antipsychotics would not meet the criteria, CMS proposes that they remain protected at least through 2015 to ensure that CMS has “not overlooked a need for any transitional consideration.”
  • Modify rules for “preferred pharmacies” within Part D plans’ pharmacy networks, so as to allow Part D sponsors to reduce copayments or coinsurance at such pharmacies only if they offer consistently lower negotiated prices than are available from other pharmacies in the pharmacy network.
  • Modify the “any willing pharmacy” requirement to require plan sponsors to contract with any willing pharmacy able to meet one set of the terms and conditions offered by that plan for that type of pharmacy. CMS also would require that, in establishing its contracted pharmacy network, a Part D sponsor must offer and publicly post standard terms and conditions for network participation for each type of pharmacy in the network, and (1) may not require a pharmacy to accept insurance risk as a condition of participation in the PDP sponsor's contracted pharmacy network, and (2) must offer payment terms for every level of cost sharing offered under its plans (consistent with CMS limitations on the number and type of cost sharing levels) and for every type of similarly-situated pharmacy.
  • Limit prescription drug plans sponsors to offering no more than two Part D plans in the same service area.
  • Implement an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
  • Address prescription drug abuse by, among other things, authorizing CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern of prescribing Part D drugs that is abusive and represents a threat to beneficiary health and safety or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also would require that prescribers of Part D drugs enroll in Medicare as a condition of coverage for their prescriptions.
  • Establish U.S. citizenship and lawful presence as an eligibility requirement for enrollment in MA and Part D plans.

The official version of the rule will be published on January 10, 2014. CMS will accept comments on the proposed rule until March 7, 2014.

CMS Invites Comments on Medicare Payment for Hospice Enrollees' Drug Expenses

CMS is inviting comments on a recent memo clarifying the criteria for determining Medicare payment responsibility for drugs for hospice beneficiaries. CMS notes that hospice providers are expected to cover virtually all drugs for hospice beneficiaries during the hospice election. For prescription drugs to be covered separately under Part D when the enrollee has elected hospice, the drug must be for treatment of a condition that is completely unrelated to the terminal condition or related conditions. CMS expects drugs will rarely be covered under Part D for hospice beneficiaries; the Part D sponsor therefore should place beneficiary-level prior authorization requirements on all drugs for hospice beneficiaries to determine whether the drugs are coverable under Part D. The hospice provider will be responsible for coordinating with Part D plan sponsors to determine payment responsibility for those drugs it believes should be covered separately under Part D. The memo addresses additional mechanics of the policy, including how hospices and plans should address disputes regarding payment responsibility for particular drugs while CMS develops an independent review process. CMS will accept comments on its guidance until January 10, 2014.

OIG Examines Inappropriate Medicare Payments on Behalf of Deceased or Unlawfully-Present Beneficiaries

According to the HHS Office of Inspector General (OIG), the Medicare program continues to make inappropriate payments on behalf deceased beneficiaries and beneficiaries who are unlawfully-present in the country. First, despite safeguards intended to prevent and recover Medicare payments made on behalf of deceased beneficiaries, Medicare inappropriately paid $23 million in 2011 for claims with service dates after beneficiaries' deaths. The majority of the improper payments were made under Medicare Part C. The OIG recommended a series of steps to improve payment safeguards in this area and to address providers and suppliers identified by the OIG with high numbers of claims with service dates after beneficiaries' deaths.

In a separate report, the OIG found that CMS did not adequately prevent Medicare Part D payment for unlawfully-present beneficiaries for calendar years 2009 through 2011. As a result, CMS inappropriately accepted 279,056 prescription drug event records submitted by Part D sponsors with unallowable gross drug costs totaling $29.0 million on behalf of 4,139 unlawfully-present beneficiaries. CMS used those records to make final payment determinations to sponsors. The OIG recommended that CMS resolve improper Part D payments made for drugs provided to unlawfully-present beneficiaries and take steps to develop and implement controls to prevent inappropriate payments in the future.

OIG Call for Medicare Part B Drug Rebates Rejected by CMS

A new OIG report estimates that Medicare could realize significant savings if drug manufacturers were required to pay rebates on Medicare Part B drugs, similar to rebates under the Medicaid program. Specifically, Medicare could have collected $3.1 billion in 2011 if manufacturers had been required to pay rebates based on average manufacturer price (AMP) for 60 high-expenditure Part B drugs, while rebates based on average sales price (ASP) for the same drugs could have generated $2.7 billion in payments. In the report, the OIG recommends that CMS examine establishing such a Part B drug rebate program and, if appropriate, seek legislative change. CMS rejected this suggestion, noting that developing such a plan – which would require new legislative authority -- would necessitate analysis of the effects of making fundamental changes to the Part B claims payment system, the impact on providers, and the impact on access to care. CMS maintains that it is “unable to devote significant administrative resources at this time to a proposal that is neither a provision of current law or actively under consideration.” (The Administration has, on the other hand, advocated rebates for Medicare Part D drugs furnished to low-income subsidy beneficiaries as part of its FY 2014 budget proposal.) 

OIG Focuses on Inappropriate Prescribing of Medicare Part D Drugs

The HHS Office of Inspector General (OIG) has issued two recent reports focusing on inappropriate prescribers practices involving drugs paid under the Medicare Part D program. In one report, the OIG concluded that the Medicare Part D program inappropriately paid for drugs (including controlled substances) ordered by individuals who did not have the authority to prescribe, such as massage therapists, athletic trainers, home contractors, interpreters, transportation companies, counselors, social workers, and chiropractors in 2009. In a related report, " Prescribers with Questionable Patterns in Medicare Part D," the OIG identified more than 736 general-care physicians who demonstrated what the OIG considers to be questionable prescribing patterns, such as prescribing extremely high numbers of prescriptions per beneficiary, using numerous pharmacies, prescribing a high percentage of Schedule II and Schedule III drugs, and prescribing a high percentage of brand-name prescriptions. Medicare paid $352 million for the Part D drugs ordered by these "extreme outlier" physicians. The OIG notes that while "some of this prescribing may be appropriate, such questionable patterns warrant further scrutiny." To address issues identified in the reports, the OIG recommends that CMS increase oversight of the Part D program by: requiring Part D plan sponsors to verify that prescribers have the authority to prescribe drugs; providing sponsors with additional guidance on monitoring prescribing patterns; increasing the Medicare Drug Integrity Contractor’s monitoring of prescribers; providing education and training for prescribers; ensuring that Medicare does not pay for prescriptions from individuals without prescribing authority; and following up on the prescribers identified in the reports. CMS concurred with the recommendations. The first report, "Medicare Inappropriately Paid for Drugs Ordered by Individuals without Prescribing Authority," is available here. To highlight its concerns in this area, the OIG has created a new "Spotlight" web page focusing on OIG enforcement efforts and investigations related to prescription drug diversion.

CMS Finalizes Medicare Advantage/Part D Plan Medical Loss Ratio Rules

CMS published a final rule on May 23, 2013 that implements new medical loss ratio (MLR) requirements for the Medicare Advantage (MA) program and the Part D prescription drug program. Under the new requirements, which were mandated by the ACA, MA organizations and Part D plan sponsors are required to report their MLR (percentage of revenue used for patient care), and are subject to financial and other penalties for a failure to meet a new statutory requirement that they have an MLR of at least 85%. The rule is generally effective for contract years beginning on or after January 1, 2014.

OIG Finds Medicare Plans Generally Cover Drugs Commonly Used by Dual Eligibles

The OIG has issued an ACA-mandated report on Medicare Part D prescription drug plan and MA drug plan coverage of drugs commonly used by full-benefit dual-eligible individuals (that is, individuals eligible for Medicare and Medicaid and who receive full Medicaid benefits and Medicare premium and cost-sharing assistance). The OIG determined that for 2013, Part D/MA plan formularies include 96% of 195 commonly-used drugs, with 64% of the commonly-used drugs included in all such formularies. Plans applied utilization management tools to 28% of the unique drugs reviewed in 2013, compared to 24% in 2012 (mainly attributable to an increase in the use of quantity limits). 

Health Policy Hearings

Recent Congressional hearings focusing on health policy include the following:

  • The House Energy and Commerce Committee held hearings on health insurance premiums under the ACA and drug compounding. The House Energy and Commerce Health Subcommittee also held a hearing on "Reforming SGR (Sustainable Growth Rate): Prioritizing Quality in a Modernized Physician Payment System," which reviewed draft SGR reform legislative language. A June 12 hearing will focus on the state perspective on the need for Medicaid reform, and a June 14 hearing will examine the federal government's response to the prescription drug abuse crisis.
  • A House Ways and Means Committee Health Subcommittee hearing addressed the “President's and Other Bipartisan Proposals to Reform Medicare," and the panel has scheduled a June 14 hearing to concentrate on proposals to reform Medicare post-acute care payments. 
  • The Homeland Security Committee held a second hearing on “Oversight and Business Practices of Durable Medical Equipment Companies.”
  • The Senate Special Committee on Aging held a hearing entitled “10 Years Later: A Look at the Medicare Prescription Drug Program." 

CMS Sequestration Guidance for State Surveyors, Medicare Part C & D Plans

CMS has issued guidance to state survey agencies explaining adjustments CMS is making to survey and certification operations to "accommodate sequestration with as little impact on the public as possible." The guidance discusses revisions in the frequency and timelines for various surveys and other survey changes in light of a 5% reduction to the FY 2013 survey and certification Medicare budget. CMS also issued a May 1, 2013 memo to Part C and D plans on sequestration, covering rules regarding reducing payments to contracted and non-contract providers, beneficiary liability under sequestration, coverage gap discount program payments, Part D risk corridor reconciliation, and Electronic Health Records (EHR) Incentive Program payments, among other topics. In a related development, President Obama has signed the sequestration order for FY 2014, as required by law, although the Obama Administration's proposed FY 2014 budget, if adopted, would replace sequestration.

CMS Finalizes Medicare Advantage, Part D Drug Plan Rates for 2014

On April 1, 2013, CMS released the 2014 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, under final rate announcement, CMS is forecasting that the final estimate of the combined effect of the Medicare Advantage (MA) growth percentage and the fee-for-service (FFS) growth percentage is 3.3%, compared to -2.2% in the advance call letter, which has the effect of increasing MA plan payment rates. This reversal is a result of CMS building into its spending forecast the assumption that Congress will once again override scheduled cuts in Medicare payments to physicians under the sustainable growth rate formula (thereby allowing MA plan payments to be compared to higher expected FFS spending levels). CMS also is phasing in the alignment of MA benchmarks with Medicare FFS costs and adjusting for diagnostic coding differences between MA plans and FFS providers, along with revising the risk adjustment model.

With regard to Part D, CMS notes that for the first time in the Part D program’s history, the costs of beneficiary coverage are falling, with the 2014 defined standard Part D prescription drug benefit having lower co-payments and deductible than in 2013. CMS also is adopting a number of policy changes for 2014, including requiring Part D plan retail and mail pharmacies to obtain patient consent to deliver a prescription, new or refill, prior to each delivery (CMS also encourages Part D plans to implement this consent requirement for the remainder of this year). While CMS had proposed requiring Part D sponsors to place beneficiary-level prior authorization requirements on certain categories of drugs which may be covered under the hospice or end stage renal disease (ESRD) benefits, so as to ensure that these drugs are appropriately payable under Part D before the prescriptions are filled, the final policy permits sponsors to use other approaches, such as pay-and-chase, to resolve payment responsibility in these situations.

Older Entries

April 10, 2013 — Obama Administration's Proposed FY 2014 Budget Includes $401 Billion in Health Program Savings

March 28, 2013 — MedPAC's March 2013 Report to Congress

March 12, 2013 — OIG Calls for Stronger Conflict-of-Interest Oversight for Medicare Part D P&T Committees

March 4, 2013 — Medicare and Sequestration - What Happens Now?

February 18, 2013 — CMS Proposes Medicare Advantage, Part D Drug Plan Medical Loss Ratio Rule and Advance 2014 Rate Information

January 30, 2013 — OIG Calls for Improvements to Medicare Parts C & D Benefit Integrity Activities

December 17, 2012 — OIG Releases 2012 Compendium of Unimplemented Recommendations

October 30, 2012 — GAO Finds Part D Coverage Gap Discount Program Did Not Spur Increased Drug Prices

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 16, 2012 — CMS Releases Medicare Advantage/Part D Drug Plan Quality Data as Open Enrollment Period Begins

October 15, 2012 — OIG Assesses Inappropriate Medicare Part D Payments for Schedule II Drugs Billed as Refills

July 27, 2012 — MedPAC Issues 2012 Data Book

July 18, 2012 — OIG Examines Medicare Part D Drug Payments for Hospice Beneficiaries

June 18, 2012 — CMS Correction Notices (IPPS, LTCH-PPS, MA, PDP)

June 13, 2012 — OIG Concludes Part D Plans Include Drugs Used by Dual Eligibles

May 11, 2012 — OIG Examines Retail Pharmacy Billing for Part D Drugs

April 23, 2012 — CMS Finalizes Medicare Part D/Medicare Advantage (MA) Rules for 2013

April 23, 2012 — CMS Guidance on CY 2013 Part D Medication Therapy Management Programs

April 2, 2012 — MedPAC Issues March 2012 Medicare Recommendations

February 28, 2012 — OIG Examines MA Organizations' Identification of Potential Fraud & Abuse

February 25, 2012 — CMS Releases 2013 Medicare Advantage/Part D Combined Advance Notice and Draft Call Letter

February 14, 2012 — President Obama Proposes FY 2013 Budget

January 25, 2012 — CMS Seeks Comments on Part D Reporting Requirements, & Issues Other Part D Updates

January 4, 2012 — CMS Guidance to Part D Plans on Prescription Drug Abuse

January 4, 2012 — OIG Identifies Part D Oversight Gaps

December 13, 2011 — Congressional Budget Office Revised Part D Spending Patterns

December 13, 2011 — OIG Examines Part D Financial Record Audits

December 13, 2011 — MedPAC to Discuss Medicare Payment Policies (Dec. 15 & 16)

November 29, 2011 — OIG Examines How Part D Limits Drugs to Medically-Accepted Indications

November 14, 2011 — OIG Highlights Medicaid Rebate Program, Indian Health Services (IHS) Issues

November 11, 2011 — CMS Guidance on Medicare Part D Coverage Gap Discount Program, Cost-Sharing for Dual Eligibles

October 28, 2011 — Upcoming MedPAC Meeting (Nov. 3-4)

October 14, 2011 — CMS Proposes Changes To Medicare Part D/Medicare Advantage Rules

October 14, 2011 — CMS Seeks Ideas on Reducing Overutilization of Part D Drugs

October 14, 2011 — GAO Examines Part D "Doctor Shopping"

September 27, 2011 — Medicare Coverage Gap Discount Program: Low Dollar Invoice Amounts

September 19, 2011 — President Obama Outlines Proposal to Deficit Reduction Super-Committee; Medicare Provisions Loom Large

September 1, 2011 — CMS Finalizes MIPPA Medicare Advantage/Part D Drug Plan Rule

August 16, 2011 — OIG Compares Medicare Part D and Medicaid Drug Rebates

August 16, 2011 — Part D Plan Mid-Year Formulary Changes Reviewed by GAO

August 1, 2011 — OIG Report on Medicare Part D Plan Sponsors' Fraud Training

August 1, 2011 — GAO Report on Part D Drug Utilization for Low-Income Subsidy Beneficiaries

July 18, 2011 — CMS Solicits Comments on Medicare Coverage Gap Discount Program Issues

June 14, 2011 — CMS Updates Guidance on Medicare Coverage Gap Discount Program Appeals

May 31, 2011 — Part D Payments on Behalf of Deceased Enrollees.

April 29, 2011 — OIG Report on Part D Drugs for Dual-Eligible Beneficiaries

April 13, 2011 — CMS Finalizes Changes to Medicare Part D, Medicare Advantage Rules

April 13, 2011 — CMS Seeks Comments on Part D Coverage Gap Appeals; 2012 MA/Part D Call Letter Released

March 29, 2011 — Medicare Part D Guidance: Medication Therapy Management, Formulary Submissions

March 29, 2011 — Compendium of Unimplemented OIG Recommendations

March 29, 2011 — GAO and OIG Examine Medicare Part D Issues

March 29, 2011 — CBO Presents Budget Options, Including Potential Health Policy Savings

March 7, 2011 — OIG Identifies Top HHS Management Challenges, Including ACA Implementation

March 7, 2011 — OIG Faults Part D Rebate Reporting

February 18, 2011 — OIG Report on Invalid Prescriber IDs on Part D Schedule II Drug Claims

January 28, 2011 — New Medicare Part D Guidance Documents

January 13, 2011 — Medicare Advantage/Part D Plan Marketing Guidelines, Applications

December 29, 2010 — CMS Seeks Comments on Recovery Audit Contractors (RACs) for Medicare Parts C & D

November 29, 2010 — Medicare Part D Pharmacy Discounts

November 16, 2010 — CMS Proposes Changes to Medicare Part D, Medicare Advantage Rules

November 15, 2010 — Medicare Coverage Gap Discount Program - 2012 Benefit Year

November 15, 2010 — OIG Report on Part D Terminated Drugs

October 15, 2010 — Medicare Coverage Gap Discount Program - 2011 Labeler Code File

September 17, 2010 — Part D Drug Benefit Coverage Gap

August 31, 2010 — "Consistently Low Performer" Ratings for Part C/Part D Plans

August 31, 2010 — OIG Report on Less-Than-Effective Drugs in the Medicare Part D Program

August 13, 2010 — Final Medicare Part D Coverage Gap Discount Program Manufacturer Agreement

July 28, 2010 — Comment Opportunity on 2011 MA/Part D Bid Submissions

July 12, 2010 — CMS Rule on E-Prescribing and the Medicare Prescription Drug Program

July 10, 2010 — Invalid Part D Prescriber Identifiers

June 18, 2010 — CMS Updates on Part D Coverage Gap Rebates/Discount Program

June 17, 2010 — OIG Report on Medicare Part D Prescription Drug Event Reconciliation Process

June 8, 2010 — CMS Information on Generic Drugs in the Part D Coverage Gap

June 8, 2010 — CMS Corrects Part D/MA Rule

May 28, 2010 — Affordable Care Act Updates on Part D Coverage Gap Payments SNF Policy, Fraud Provisions, Beneficiary Improvements

May 24, 2010 — CMS Issues Revised Program Instructions and Draft Manufacturer Agreement for Medicare Part D Coverage Gap Discount Program; Releases Medicaid AMP Reporting Guidance

May 11, 2010 — Draft Program Instructions for Medicare Part D Coverage Gap Discount Program (Comments Due May 14)

April 16, 2010 — Medicare Part C/Part D Final Rule

April 16, 2010 — CMS Releases Final 2011 MA/Part D Call Letter, 2011 MA Capitation Rates

March 31, 2010 — Congressional Hearings

March 30, 2010 — MedPAC Part D Data

March 15, 2010 — Congressional Hearings

March 15, 2010 — Medicare Part D/High-Cost Drugs

March 15, 2010 — Unimplemented OIG Recommendations

February 26, 2010 — Congressional Health Policy Hearings

February 26, 2010 — Advance Notice of 2011 MA/Part D Payments

February 26, 2010 — HHS Announces Relief for State Part D Drug Cost Expenses

February 9, 2010 — CMS to Host Part D Data Symposium (March 18, 2010)

December 21, 2009 — Medicare Appeals/Prescription Drug Appeals Rules

December 21, 2009 — OIG Report on Part D Plan Formulary Changes

November 11, 2009 — Part D Fraud & Abuse

October 30, 2009 — OIG Report on Medicare Part D E-Prescribing

October 15, 2009 — CMS Proposes New Rules for Medicare Advantage and Part D Drug Plans

September 28, 2009 — Medicare Part D Reconciliation Payments

August 17, 2009 — Medicare Part D, Medicare Advantage Developments

July 28, 2009 — Part D Drug Information

June 13, 2009 — White House proposes $313 billion in additional Medicare/Medicaid cuts

June 8, 2009 — Draft Part D Reporting Requirements

June 8, 2009 — Part D Payments for SNF Beneficiaries

May 18, 2009 — Senate Finance Releases Health Reform Financing Options -- Comments Due May 26, 2009