1 CMS-4157-FC Medicare Part C and D Final Rule with Comment for Contract Year 2013 Christian Bauer Director, Division of Drug Plan Policy & Quality

2 Summary Published on April 12, 2012 [tentative] 60-day comment period for Independence of Long-Term Care (LTC) Consultant Pharmacists [tentatively June 11, 2012] We have responded to comments and finalized 26 provisions for the Medicare Advantage (MA) program (Part C) and prescription drug benefit program (Part D)

3 Subject Areas A.Implementing Statutory Provisions B.Strengthening Beneficiary Protections C.Excluding Poor Performers D.Improving Program Efficiencies E.Clarifying Program Requirements

4 Two Non-Finalized Provisions We did not finalize two provisions Independence of LTC Consultant Pharmacists Application of the Medicare Hospital-Acquired Conditions and Present on Admission Indicator Policy to MA Organizations

5 Preamble Section A. Implementing Statutory Provisions

6 Coverage Gap Discount Program Implements provisions of the Affordable Care Act Codifies the Coverage Gap Discount Program requirements in new subpart W Primarily codifies the existing requirements in new subpart W, but there are some changes and clarifications: For Example: Clarifies that all supplemental benefits offered by employer group waiver plans are considered other, non-Medicare health coverage always paid after the discount has been applied Requires manufacturers to maintain up-to-date NDC listings with electronic database vendors (in addition to the FDA) that they provide NDCs for pharmacy claims processing

7 Inclusion of Benzodiazepines and Barbiturates as Part D Covered Drugs Implements provision of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) Part D drugs will include, provided they meet all other requirements to be a Part D drug: Barbiturates used for the medical indications of epilepsy, cancer, or a chronic mental health disorder; and Benzodiazepines Effective for prescriptions dispensed on or after January 1, 2013

8 Pharmacy Benefit Manager’s Transparency Requirements Implements section 6005 of the Affordable Care Act Promotes transparency of financial transactions Part D sponsors and entities providing PBM services Requires reporting of various PBM financial data elements Establishes confidentiality of PBM data Imposes penalties for sponsor or PBM failure to provide PBM data to the Secretary

9 Preamble Section B. Strengthening Beneficiary Protections

10 Good Cause and Reinstatement into a Cost Plan Last year, CMS established rules that allowed beneficiaries involuntarily disenrolled from MA or Part D plans for failure to pay premiums the opportunity to establish good cause and request reinstatement In this rule we are extending this right to beneficiaries enrolled in cost plans As outlined in § (c): To be eligible for reinstatement, the enrollee would have to pay all outstanding arrearages, including premiums that accrued during the period of disenrollment; and The standard for good cause would be similar to the standard established under MA and Part D This regulation is applicable starting 1/1/13

11 Requiring MA Plans to Issue ID Cards Revises § to require plans to provide member ID cards with specific information Ensures consistency of information on enrollees’ plan membership ID cards across all MA organizations, and that providers have easy access to information necessary to verify coverage/process claims Many MA organizations issue ID cards to their enrollees but, absent regulatory requirements, we cannot ensure that all MA organizations issue cards to their members, or that the information is consistent across plans and useful to enrollees and providers Based on comments received on the proposed rule concerning what kind of information should be included on the card, we will identify specific information to be included in upcoming guidance

12 Determination of Actuarially Equivalent Creditable Prescription Drug Coverage The Affordable Care Act caused two actuarial values for standard prescription drug coverage exist – a value applied to applicable beneficiaries (non-LIS), and a value for establishing the low-income subsidy (LIS) This regulation aligns the actuarial value calculation we use for purposes of determining the Part D late enrollment penalty with the actuarial value calculation used to determine the value of the retiree drug subsidy Calculation excludes the value of gap discounts or coverage This change will be effective 6/1/2012

13 Who May File Part D Appeals with the Independent Review Entity We are amending our regulations to allow prescribers the ability to request a Part D reconsideration from the IRE on an enrollee’s behalf without obtaining an appointed representative form This change does not give physicians or other prescribers appeal rights, it merely allows them to file an appeal on behalf of an enrollee This provision is effective 1/1/13

14 Independence of LTC Consultant Pharmacists We considered a change that would require LTC consultant pharmacists to be independent of the LTC facility’s pharmacy, pharmaceutical manufacturers or distributors or affiliates of these entities in order to: Ensure that consultant pharmacists decisions are objective and unbiased and medication recommendations are based solely on what is in the residents’ best interests Address our concerns with resident health and safety Reduce overprescribing, unnecessary use of high price brand name drugs and inappropriate use of antipsychotics and other drugs generally to be avoided among older LTC residents

15 Independence of LTC Consultant Pharmacists Con’t. Many commenters – both supporters and opponents of the independence requirement – noted that other agents, including LTC facility medical directors, nurse practitioners and physician assistants and the residents' attending physicians, contribute to drug overutilization and inappropriate drug use in LTC facilities We agree that an independence requirement solely for consultant pharmacists would not solve overutilization, would be highly disruptive to much of the LTC industry, and would single out one party, but leave the others to continue unaffected As a result, we are not finalizing the requirement at this time

16 Independence of LTC Consultant Pharmacists Con’t. We are soliciting further comment to assist us to better define the problem and frame a more comprehensive solution to address our concerns regarding medication management and quality in LTC Specifically, we are soliciting comment related to the following three issues: Enhancing medication management and the effectiveness of medication review Data collection and use Increasing transparency

17 Independence of LTC Consultant Pharmacists Con’t. We strongly encourage the LTC industry in general to voluntarily adopt changes to increase transparency Separate contracting for LTC consulting services from dispensing and other pharmacy services Payment by LTC facilities of a fair market rate for consultant pharmacist services Disclosure of any affiliations that would pose a potential conflict of interest or the execution of an integrity agreement Should marked improvement in inappropriate utilization not occur, we will use future notice and comment rulemaking to propose requirements to address our concerns

18 Preamble Section C. Excluding Poor Performers

19 CMS Termination of Health Care Prepayment Plans Strengthens our bases for terminating Health Care Prepayment Plans (HCPPs) by clarifying and consolidating current regulations Plans may be terminated if they do not substantially comply with requirements including the following: Adequate access to providers (and appropriate documentation) Retention of financial records related to costs payable to CMS

20 Plan Performance Ratings as a Measure of Admin. and Mgmt. Arrangements and as a Basis for Termination or Non-Renewal CMS would have the option to terminate MA organization or Part D sponsor contracts that achieve plan ratings of less than three stars for three straight years Consistently low plan ratings are evidence of an organization’s substantial failure to comply with its Medicare contract

21 Denial of Applications Submitted by Part C and D Sponsors with a Part Contract Termination of CMS-Initiated Non-Renewal CMS may include any CMS-initiated contract termination or non-renewal executed within the previous 38 months as a negative factor in its past contract performance when evaluating the terminated organization’s application for a new Medicare contract This period is longer than the standard 14-month look-back for past performance assessment and reflects the dramatic negative impact contract terminations have on the Medicare program and beneficiaries

22 Preamble Section D. Improving Program Efficiencies

23 Cost Contract Plan Public Notification Requirements in Cases on Non-Renewal Removes the public notification requirement for non- renewing cost contract plans, making requirements consistent for cost, MA, and Part D plans Previously, non-renewing cost contract plans had to notify enrollees individually and publish in a newspaper in the plan’s service area notification of the non-renewal. Plans must still notify enrollees individually of non-renewals We inadvertently did not apply this provision to cost plans in our previous rulemaking removing the public notification requirements for MA plans

24 Additional Benefit Flexibility for Certain Dual Eligible Special Needs Plans Permits dual eligible special needs plans (SNPs) meeting certain requirements to offer additional supplemental benefits beyond those other MA plans may offer Facilitates integration of care, reduces need for nursing home care, and accomplishes other dual SNP health care goals Part of our effort to integrate Medicare and Medicaid coverage services, improve patient care, and lower costs Qualified D-SNPs may offer the following additional categories of supplemental benefits: Non-skilled in-home support services; in-home food delivery; supports for caregivers; home assessments, modifications, and assistive devices for home safety; and adult day care services

25 Clarifying Coverage of Durable Medical Equipment Clarifies that plans may limit coverage of durable medical equipment (DME) to specific brands/manufacturers as long as plans provide all categories of DME and meet specific beneficiary protection requirements ensuring access Strikes a balance between flexibility for plans and access for enrollees Based on public comments on the proposed rule, the provision ensures that DME items which must be tailored to individuals may only be limited based on brand/manufacturer if certain conditions are met (please see the 2013 Call Letter for additional information). We will update the list of such items annually. For 2013, the list of such items includes: speech-generating devices, oxygen, wheelchairs, powered mattress systems, and diabetic supplies

26 Broker and Agent Requirements Permits MA plans and Part D sponsors to select compensation amounts for agents/brokers that are at or below the fair market value rates CMS sets each year Each year plans must report to CMS if they are using independent broker/agents and the amounts they will pay their brokers/agents

27 Establishment and Application of Daily Cost-Sharing Rate Beginning January 1, 2014, Medicare Part D sponsors must apply a daily cost-sharing rate to prescriptions for less than a month’s supply (unless an exception applies due to the type of drug involved), and in the case of a monthly copayment, multiply it by the days supply actually dispensed Taking advantage of a daily cost-sharing requirement is voluntary for the beneficiary in consultation with the prescriber or pharmacist Designed to reduce a significant portion of the current costs of discontinued chronic medications by incentivizing beneficiaries to ask their prescribers for less than a month’s supply when prescribed an initial fill of a chronic medication with higher cost-sharing (e.g., a “trial fill”)

28 Establishment and Application of Daily Cost-Sharing Rate Con’t. An additional benefit is facilitating the synchronization of prescriptions for beneficiaries through reduced-cost-sharing, as well as the reduction of unused drugs Estimate of the potential savings to the Part D program are $150 million in 2013/$1.8 billion total by 2018 and takes into account additional dispensing fees, how many beneficiaries will request trial fills, and average days supply

29 Preamble Section E. Clarifying Program Requirements

30 Extending MA and Part D Program Disclosure Requirements to Section 1876 cost Contract Plans Ensures that cost contract plans disclose to beneficiaries at the time of enrollment and annually, thereafter, detailed information about plan benefits, service area, and other plan information via the ANOC/EOC This is consistent with previous rulemaking in which we extended the MA and Part D marketing requirements to cost contract plans

31 Clarification of, and Extension to Local Preferred Provider Plans, of RPPO Plan Single Deductible Requirements Extends the RPPO single deductible requirements to LPPOs, thus leveling the playing field between RPPOs and LPPOs and increasing transparency to beneficiaries Provides that, if an RPPO or LPPO elects to have a deductible, the deductible applies to both in and out-of- network covered services with the exception of in-network zero cost sharing Medicare preventive services. However, the PPO has the option to exclude any or all Part A and B in- network services from the deductible requirement Clarifies that there may be no deductible for preventive services

32 Application Requirements for Special Needs Plans Provides CMS authority to deny SNP applications based on failure to meet the following existing requirements: implementation of an evidence-based model of care; evidence of a contract with State Medicaid agencies in the State(s) in which the SNP operates; and operation of a quality improvement program Provides SNPs with appeal rights during the application cycle

33 Clarification of Contract Requirements for First Tier and Downstream Entities This provision clarifies the existing requirement that MAOs and Part D sponsors include language in all contracts with first tier and downstream entities that makes explicit their obligations to the MAOs and Part D sponsors with respect to the performance of Medicare-related functions

34 Valid Prescriptions Codifies long-standing policy that drugs cannot be eligible for Part D coverage unless they are dispensed upon prescriptions that are valid under applicable State law Does not in any way preempt existing State requirements or create new Federal requirements

35 Medication Therapy Management comprehensive Medication Reviews and Beneficiaries in LTC Settings We clarified the requirements for MTM programs to offer CMRs to all targeted beneficiaries, including in LTC settings The annual CMR must include an interactive, person-to- person, or telehealth consultation performed by a pharmacist or other qualified provider with a written summary in CMS’ standardized format In the event the beneficiary is unable to accept the offer to participate in the CMR (cognitively impaired), the MTM provider is encouraged to reach out to the beneficiary's prescriber, caregiver, or other authorized individual to take part in the beneficiary's CMR

36 Employer Group Waiver Plans Requirement to Follow All Part D Rules Not Explicitly Waived Underscores that, even though CMS waives benefit package review, all EGWPs must meet all other Part D requirements unless explicitly waived or modified by CMS

37 Access to Covered Part D Drugs Through Use of Standardized Technology and National Provider Identifiers Beginning January 1, 2013, all Medicare Part D PDEs must contain an active and valid individual prescriber NPIs Sponsors will be required to ensure that the lack of an active and valid individual prescriber NPI on a network pharmacy claim does not unreasonably delay a beneficiary's access to a covered Part D drug (e.g., generally not more than 24 hours) Sponsors will be required engage in point-of-sale NPI validation communication with pharmacies, and if this communication does not produce an active and valid NPI, sponsors will be required to pay the claim anyway

38 Access to Covered Part D Drugs Through Use of Standardized Technology and NPI Con’t. If an active and valid NPI cannot be obtained retrospectively, sponsors will not be able to submit the PDE to CMS, and will only be able to recoup payment from a network pharmacy if the sponsor has engaged in the POS communication Vast majority of prescribers have NPIs, they can also be obtain voluntarily, and options are being explored to require them for those few prescribers who do not voluntarily do so Medicare beneficiaries do not have to know their prescriber’s NPI to be reimbursed for a claim