Fact File: New Part D rule changes

In January, the Centers for Medicare and Medicaid Services (CMS) detailed potential new rules for Part D. Here’s the least you need to know about the proposed changes.

Plan Negotiations

Currently: The Medicare Modernization Act (MMA) has a statue that prohibits the Department of Health and Human Services (HHS) from intervening with the market negotiations that occur between plans and pharmacies and drug manufacturers. Additionally, MMA does not permit a specific price structure for Part D reimbursement.

Proposed: The proposal changes the interpretation of MMA to permit Washington involvement in the pharmacy and plan sponsor price negotiations, rather than allowing plans to leverage volume for optimal pricing.

Preferred Networks

Currently: Plans are using preferred networks to funnel beneficiaries toward high-value pharmacies.

Proposed: CMS proposes an “any willing pharmacy” requirement so plan sponsors would be obligated to contract with any pharmacy that wants to participate. CMS says the rule is meant to allow for wider networks and more choice for seniors. According to Drug Channels Institute, the average premium for a basic prescription drug plan with a preferred network in 2014 is 21% lower than the average premium for a plan that does not use a preferred network.

Mail Order

Currently: Networks often use or own a mail-order pharmacy, which is required to ensure patient approval before shipping medication. Orders cannot be shipped automatically. According to CMS, the typical standard for delivery time is seven to 10 days.

Proposed: CMS would create new requirements for shipment of medication within three days (for straightforward fills) or five days (if provider interaction or prior authorization is needed). Obtaining patient acknowledgement could delay the shipping date and cause the pharmacy to fail to meet the three or five day requirement.

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Number of Plans

Currently: There are 1,169 Part D plans in 2014, according to the Kaiser Family Foundation.

Proposed: CMS would limit each issuer to offering one enhanced plan and one standard plan in each of the 34 Part D regions in 2016. The rule would result in plan consolidation and fewer choices.

Sources: American Action Forum, Kaiser Family Foundation, Drug Channels Institute