Senate Approves Bill to Address Opioid Epidemic

On Monday, the Senate approved a bill to address the opioid epidemic by a vote of 99 to 1. Three months ago, the House passed their own opioid legislative package by a vote of 396 to 14. Both chambers overcame their usual partisan politics to turn 70 separate bills into a comprehensive legislative package that can be enacted before the mid-term elections. Conference discussions have already started, and the goal is to have a final package for President Trump’s signature by Friday, September 28.

While many of the provisions in the House and Senate bills are similar, there are some important differences. In particular, the Senate bill does not include as much funding as the House provisions. Experts in the substance abuse community feel both bills do not include enough money (estimated to require $20 billion a year) to make a dent in the opioid epidemic, which took 50,000 lives last year. One in three Medicare beneficiaries took at least one opioid last year—but at least it’s a start.

“Decreasing access to opioids without appropriate treatment facilities and resources will not decrease the alarming number of deaths in those patients addicted to opioids,” explained a Gorman Health Group senior consultant. “Health plans will still need to plan for alternative medications and treatment placements.”

The Senate bill costs $8.4 billion with the funds to be disbursed to multiple government agencies involved in the public health emergency. Common provisions in both bills include funds for the U.S. Postal Service to detect shipments of the deadly synthetic fentanyl drugs, most of which come from China. The bills also include funds for physicians and first responders to have access to more medications to reduce the use of opioids by addicts and provisions for fewer pills in each prescription. “The restrictions on opioid quantity and day’s supply for those new to opioids should decrease the number of addicts, but it is unclear what methods can be used to stop fentanyl, the dangerous and lethal powder coming from China." Both bills require CMS to test a bundled payment model to expand Medicare coverage for opioid treatment programs. The bills mandate electronic prescribing in Medicare Part D for controlled substance prescriptions, and both bills also include more funding for National Institutes of Health (NIH) research.

The Senate bill does not include $1 billion included in the House that will partially overturn the Medicaid Institutions for Mental Disease (IMD) exclusion, which prohibits Medicaid from paying for addiction services in certain inpatient rehabilitation settings with more than 16 beds. The Senate bill does not authorize additional Medicare funding for non-opioid alternatives for post-surgical pain as included in the House bill or the House provision to share more patient medical information. The Senate bill also does not include a provision to require Medicare Part D plans to provide drug management programs for beneficiaries at risk for substance abuse addiction and requiring Medicare and Medicaid managed care plans to implement safety limits for opioid prescriptions and refills. The Senate bill also does not include a provision allowing CMS to waive limits on telemedicine reimbursement for substance abuse and related mental health disorders.

The President is expected to sign the legislation as soon as it arrives on his desk.


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Barriers to the New Opioid Care Coordination Safety Edit for 2019

The Contract Year (CY) 2019 Call Letter and Centers for Medicare & Medicaid Services (CMS) expectations for all sponsors to implement a real-time opioid care coordination safety edit at the time of dispensing as a proactive step to engage both patients and prescribers about overdose risk and prevention will require:

  • Implementing a point of sale (POS) safety edit days’ supply limit of 7 days for initial fills of opioids (for opioid naïve patients).
  • Implementing an opioid care coordination soft POS safety edit at 90 Morphine Milligram Equivalent (MME) per day.
  • In implementing this edit, sponsors should instruct the pharmacist to consult with the prescriber, document the discussion, and if the prescriber confirms intent, use an override code that specifically states the prescriber has been consulted.
  • Sponsors will have the flexibility to include a prescriber and/or pharmacy count in the opioid care coordination edit.
  • Sponsors will also have the flexibility to implement hard safety edits and set the threshold at 200 MME or more and may include prescriber/pharmacy counts.

These new requirements have created an urgency for the National Council for Prescription Drug Programs (NCPDP) to evaluate guidance that could possibly require new reject codes and override codes for POS safety edits. The NCPDP Telecommunication Standard is the standard used for eligibility, claims processing, reporting, and other functions in the pharmacy services industry as named in the Health Insurance Portability and Accountability Act (HIPAA) and in electronic prescribing as named in the Medicare Modernization Act (MMA). With the expectation the opioid care coordination edit should be implemented in 2019, there is very little time for the industry to develop and implement a standardized communication process for these safety edits where there are variations in the exception criteria.

The opioid care coordination edit will allow pharmacists to play a greater role in patient care, but this will require the development of standardized electronic edits and documentation to facilitate POS rejects that currently require a coverage determination initiated by the prescriber. In addition, the intent of the POS soft safety edits to bypass the coverage determination process for clinical safety edits could create audit risks for the pharmacy without the additional POS codes to override soft edits in opioid care coordination. An added burden, given the implementation time frame, is the CMS expectation that sponsors’ network pharmacies and customer service representatives be adequately trained with regard to these new care coordination edits. NCPDP hopes to work with CMS in identifying effective, less burdensome approaches using industry adopted standards that will yield safer and appropriate opioid prescribing and ensure patient access to care and alleviate any confusion on the intent of the soft and hard POS edits proposed in the CY 2019 Call Letter.

On one hand, the national opioid crisis is urgent, and relying on technology to contain the crisis is essential, however, the NCPDP Telecommunication and SCRIPT standards do not currently support the edits and the necessary documentation that needs to be captured between the prescriber and the pharmacist. There will be a need to standardize this across the industry for opioid MME claim rejection and override codes. In the meantime, stakeholders would need to rely on manual attestation and documentation processes. Plan sponsors will have to review their current opioid policy to ensure a variety of tools are in place to address all the issues and to ensure their pharmacy benefit managers (PBMs) and call centers are ready in 2019.

Gorman Health Group can help in developing effective, proactive utilization management programs for Part D opioid utilization. Our experts are available to assist in the design of a comprehensive opioid overutilization prevention program that can address member, provider, and pharmacy care coordination policy per CMS guidance and expectations.



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CMS Takes Action to Lower Drug Prices, Permits Step Therapy

I have been known to utter “holy cow” in my day, and the recent Centers for Medicare & Medicaid Services (CMS) Health Plan Management System (HPMS) memo allowing step therapy for Part B drugs was the reason for my most recent exclamation. Who saw this coming?

The first sentence of the memo reads, “CMS is hereby rescinding our September 17, 2012, HPMS memo, “Prohibition on Imposing Mandatory Step Therapy for Access to Part B Drugs and Services.” Holy cow. For some time, the Part B versus Part D issue has been the bane of Medicare Advantage (MA) plans. CMS has tried over the years to ease that pain by issuing guidance on when a drug can be billed as Part B and when it should be billed as Part D. As late as the 2017 Call Letter, CMS reminded us of the new 2016 requirements at 42 CFR §422.112(b)(7), which require all plans to establish and maintain “a process to ensure timely and accurate POS transactions, and to issue a decision and authorize or provide the benefit as appropriate under Part B or Part D when a party requests a coverage determination.” So why the about-face on requiring expediency in dispensing Part B drugs? It all comes down to cost containment.

Step therapy has been a mainstay in Part D drug utilization management to help contain the cost of medications. The idea is for the beneficiary to use an effective and less expensive drug before moving onto more costly therapies. This makes good sense. Why pull out a flame-thrower when a match will work? Historically, Part B drugs have not been subject to step therapy – providers either pulled their preferred drug from the shelf or wrote a prescription the pharmacy filled under Part B. Now Part B drugs will be subject to the same coverage determinations and appeals processes for step therapies Part D drugs have enjoyed. How might this affect what providers stock in their offices? And how about Home I.V. and Long-Term Care pharmacies? These pharmacies have had the luxury of dictating what products would be used in the past, and Part B step therapy will be a game changer as plan sponsors take back control over what is dispensed. Holy cow.

While cost containment is desired, there are also unintended consequences. Beneficiaries may experience a delay in obtaining their drugs due to determinations and appeals processes. Part D drugs are subject to coverage determinations that have a 72-hour time frame for standard determinations and 24 hours for expedited determinations. Part B drugs are subject to organization determinations. These Part B pre-service determinations have a 14-day time frame for standard requests and a 72-hour time frame for expedited requests. In last night’s memo, CMS “strongly encourages that MA plans expedite requests for exceptions in Part B to align with the 72-hour adjudication timeframe for requests in Part D.” Holy cow. Plan sponsors will need to implement a procedure for their organization determinations, appeals, and grievances staff so drugs can be given priority over other requests.

Plan sponsors will also have new Part B issues to deal with. The memo calls out the need for “interactive medication review to discuss all current medications,” which may be code for Medication Therapy Management (MTM). How will these new requirements affect MTM programs and targeting of eligible beneficiaries? Chapter 7, Section 30.2 (2) and (3), of the Medicare Prescription Drug Benefit Manual speaks to targeting Part D drugs only for both numbers of drugs being taken and dollar amount thresholds. Is the expectation that Part B drugs be added to these targeting thresholds?

And last but not least is the job of actually developing Part B step therapy criteria. Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs) will still apply, and we know beneficiaries already using a Part B drug will be grandfathered in. CMS is allowing “cross-contamination” of steps. Plan sponsors may require a beneficiary to use a Part D drug before getting a Part B drug and vice versa, requiring a Part B drug before receiving a Part D drug. Can step therapies incorporate both Part B and Part D drugs within a specific step? And who will review exception requests – the organization determination team or the coverage determination team – when both Part B and Part D drugs are incorporated into step therapies? Thinking about the possibilities is absolutely mind-numbing.

And, of course, the window for uploading these new step therapies is fast upon us – August 17 through August 21. Holy cow. So get those Pharmacy & Therapeutics Committees cracking! And while you’re at it, you may want to check with your Marketing Department to see how far along you are in the development of your Annual Notice of Change and Evidence of Coverage. If you can’t hold the presses to add these new step therapies, you will need extra time to develop addendums to be sent to your beneficiaries.

I am looking forward to seeing how this new twist to an already complex benefit will play out in 2019. As always, if you need help navigating the rules, regulations, and best practices, Gorman Health Group has the experts to help you.




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Trump Administration Alarms PBMS with First Drug Pricing Initiative

The Department of Health and Human Services (HHS) issued its blueprint for dealing with the high price of prescription drugs in May, and the administration is finally undertaking a number of initiatives to operationalize the proposals. So far, as seen from the updates below, the proposals will have the biggest impact on pharmacy benefit managers (PBMs) and payers.

Voluntary Price Drops

Several weeks ago, President Trump tweeted that Pfizer was not following the intent of the blueprint and actually met with the Pfizer CEO at the White House to put pressure on the drug company to delay price increases. As a result, Pfizer will delay price increases on 40 drugs from July until early in 2019. Last month, Novartis postponed a price increase for its autoimmune drug Cosentyx in response to California’s new drug transparency pricing program. The Novartis CEO also announced this week the company would not have further price hikes this year after it raised prices for three costly cancer therapies a few weeks ago. Another major manufacturer, Merck, announced a 60 percent drop in the price of its hepatitis C treatment Zepatier and will make 10 percent pricing cuts to some other products. News sources report, however, HHS Secretary Azar is not counting on these voluntary actions, “We're driving swift, firm regulatory action and legislative action that's going to create every incentive to bring prices down in this country." A deeper investigation by reporters also found these price decreases were mostly illusory, however, they do show drug companies are working with the administration and likely have no reason to fear future HHS proposals. This brings us to HHS’ first significant proposed rule, currently under review at Office of Management and Budget (OMB).

The End of Rebates As We Know It?

The Office of Inspector General sent a proposed rule to OMB to change the current safe harbor protection for manufacturer rebates paid to insurers and PBMs and establish a new safe harbor rule. Naturally, the proposed rule indicates it would have a substantial impact on the industry of over $100 million. While we don’t have details on the proposed rule at this time, Azar previously testified to Congress he was considering prohibiting rebates to PBMs because, in his view, PBMs whose role is to negotiate discounts can actually benefit from higher list prices. The Pharmaceutical Care Management Association which represents PBMs noted two studies, one from the OIG that found reducing or eliminating the safe harbor for rebates and other discounts would not reduce drug prices. The Pharmaceutical Care Management Association (PCMA) also challenged HHS’ authority to change the safe harbor requirements without congressional action. Depending on the severity of the new rule, a change in drug rebates could have immense implications for PBMs and insurers. It is also unclear which programs the new rule would impact. As Thomas Johnson, Gorman Health Group’s Medicaid expert, noted, “For Medicaid, the drug rebate has been crucial in encouraging states to use Medicaid managed care.”


Drug Importation?

In a third effort to reduce drug costs, the Food and Drug Administration (FDA) announced it will create a working group to explore drug imports to curb drug prices. The FDA will initially focus on imports of drugs when there is a sharp price increase in the U.S. for an off-patent drug produced by a single manufacturer. The Washington Post noted responses from stakeholders that such a limited response would not address the overall trend of increasing drug prices for brand name drugs.

The blueprint talked about increasing competitive pressures for drug prices to come down and the actions this week between the administration and the pharmacy manufacturers and PBMs suggest jaw-boning at least before the election may have an impact even if only temporary and symbolic. However, it should be noted proposed regulations like changing the safe harbor for rebates take months to get to a final rule and the voluntary price reductions are also only temporary – until the end of the year and after the election. The FDA working group will also take time to agree on a strategy to curb imports of drugs that have not been previously approved by the FDA.




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House Passes Opioid Bill

Surprise, the House actually passed a bipartisan healthcare bill on June 22 that had support from almost all members of both parties. H.R. 6, Support for Patients and Communities Act, is a comprehensive opioid bill that combines more than 58 individual bills intended to address the national opioid epidemic. The bipartisan bill passed 396-14 with only one Democrat voting against it. The impetus was political pressure in an election year to address a problem that results in the death of 115 Americans each day. A recent CBS poll showed 71 percent of all Americans and 78 percent of Republicans support a government response to the crisis.

The bill also passed because it avoided controversy by not including large amounts of new funding. Members from both parties want to show progress on an issue that affects virtually every state before the November elections. Earlier this year, Congress approved $4 billion in new funding, which advocates argue is a drop in the bucket given the scope of the crisis. The House bill does not include any significant new funding, which is a disappointment to Democrats and advocates, however, they supported the bill to show some accomplishment in an election year on an issue important to voters. They are also hopeful there will be other opportunities for additional funding, e.g., in the Senate bill or through the appropriations process. Just before passage, the House bill included a provision to delay Medicare eligibility for end-stage renal disease (ESRD) patients for three months, saving the government $290 million over a decade. The Medicare savings will result in shifting costs to insurers and health plans. The impact on Medicare Advantage (MA) plans should be small since new ESRD beneficiaries are not eligible to enroll in an MA plan except for a small number of members who are already enrolled and age into Medicare.

So what does the bill do? It expands access to treatment, e.g., by allowing nurse practitioners and physician assistants to administer drugs that will avert death from an overdose, it encourages the development of non-opioid treatments following surgery and for pain relief, and it includes steps to stem the flow of illicit drugs through the mail from other countries. There are a number of Medicare and Medicaid provisions on substance use disorders (SUD) in HR 6.


  • Conduct a demonstration project to increase provider capacity for substance use treatment and recovery services
  • Mandate a beneficiary assignment program that identifies at-risk beneficiaries and assigns them to a pharmaceutical home program
  • Require state Medicaid programs to have safety edits in place for opioid refills, monitor concurrent drug prescribing, and monitor antipsychotic prescribing for children
  • Continue Medicaid coverage for incarcerated juveniles
  • Continue Medicaid coverage for youth in foster care until the age of 26 if they move out of state
  • Require the Centers for Medicare & Medicaid Services (CMS) to issue guidance on Neonatal Abstinence Syndrome (NAS) treatment options and require a Government Accountability Office (GAO) study on coverage gaps for pregnant women with SUD
  • Provide additional incentives for Medicaid health homes for patients with SUD


  • Require Part D plans to establish drug management programs for at-risk beneficiaries
  • Require e-prescribing for coverage of prescription drugs that are controlled substances under the Medicare Part D program
  • Create a pass-through payment extension to encourage the development of clinically superior non-opioid drugs
  • Add a review of current opioid prescriptions and, as appropriate, a screening for opioid use disorder (OUD) as part of the Welcome to Medicare initial examination
  • Incentivize post-surgical injections as a pain treatment alternative to opioids by reversing a reimbursement cut for these treatments in the Ambulatory Service Center setting
  • Provide access to Medication-Assisted Treatment (MAT)
  • Evaluate the utilization of telehealth services in treating SUD

On June 20, the House passed a controversial separate bill that would allow Medicaid payment for 30 days during a year for a five-year period for substance abuse treatment at inpatient hospitals with more than 16 beds. Medicaid payment for inpatient substance abuse treatment is currently not allowed under the Institution for Mental Disease (IMD) exclusion policy. The cost of this expansion is estimated at $1 billion.

Next, both of these House-passed opioid bills will go to the Senate where three committees have been developing their own legislative package to deal with the opioid crisis. Many of the Senate provisions are similar to the provisions in the House bill. Expect to see congressional passage of a major opioid legislative package by the fall.




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Changes for How Biosimilars are Reimbursed

Biosimilars have finally been accepted by the popular crowd. Coverage year 2019 (CY2019) is going to see some changes for how biosimilars are being reimbursed. In 2015, the first biosimilar product, Zarxio (filgrastim), was approved in the U.S. An approved biosimilar is a medication that has been shown to be highly similar to a Food and Drug Administration (FDA)-approved biologic, the reference product. Only minor differences in clinically inactive components between the biosimilar and reference product are allowed, and there must be no meaningful clinical differences. However, a biosimilar is not considered a generic drug, which is approved through a different pathway. Due to the inherent complexities of biologics, it is not possible to make an identical copy of a biologic. Traditional, small-molecule drugs are made through a predictable set of chemical reactions, but biologics are made using manufacturing processes (e.g., cell production, purification processes) and living organisms (e.g., cell lines) that are unique to each manufacturer. Although not a generic from a molecular or manufacturing perspective, biosimilars do function as a generic in intent. Meaning, biosimilars help increase access to biologic medications and potentially lower healthcare costs through competition. There have been several company announcements touting the cost savings potential of biosimilars. A recent example is Mylan’s approval of it’s biosimilar Fulphila, which has promised that it will come to market with “double-digits reduction” in price compared to the reference product Neulasta.

The topic of drug pricing transparency and reform has been addressed by the current administration. At the recent Pharmacy Quality Alliance Annual Meeting, the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma spoke about “The American Patients First Blueprint” and the four-pillared strategy. The four pillars are as follows:


1. Reducing Americans’ out-of-pocket spending
2. Increasing competition in the drug market
3. Improving negotiation to get a better deal for patients and taxpayers
4. Creating incentives for manufacturers to lower list prices


As part of this initiative, the access to biosimilar agents was addressed. Biologic products are among the most expensive medications on the market today and include treatments for cancer, diabetes, rheumatoid arthritis, and multiple sclerosis. The Biologics Price Competition and Innovation Act (BPCI Act) created an abbreviated licensure pathway for biological products that are demonstrated to be biosimilar to or interchangeable with an FDA-approved biological product. Within the Medicare Part D program, biosimilar uptake has been dependent on a number of factors, with formulary inclusion/placement being significant. In general, plans encourage use of lower-priced products, but current coverage gap discounts have provided financial advantages to the reference biologic products. This approach incentivized inclusion of the biologic reference products and resulted in beneficiaries potentially having higher cost sharing.


Essentially, when the beneficiary is in the “donut hole,” his/her resulting scenario is higher out-of-pocket costs for lower-cost medicines. Passage of  the Bipartisan Budget Act of 2018 (BBA)  has provided forward momentum for biosimilar uptake. The BBA, enacted on February 9, 2018, amended the definition of “applicable drug” for purposes of the coverage gap discount program to include biological products (finally). Effective CY2019, biosimilar and interchangeable products will be “applicable drugs” for purposes of the coverage gap discount program. This policy change ensures patients in the “donut hole” won’t get stuck with a bigger bill for the biosimilar than the reference product. It is important to note that while biosimilars are considered applicable drugs for manufacturer GAP discount purposes, they are still considered to be generic entities for Low Income Cost-Sharing Subsidy (LICS) purposes.


Part D Sponsors should make sure measures are in place to ensure biosimilar claims are adjudicating and being reimbursed as expected for the 2019 changes. GHG’s Pharmacy Solutions experts can assist you with operationalizing the new regulations. Contact us today!




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President Trump unveils a Blueprint to Lower Drug Prices

On May 11, 2018, President Trump unveiled his Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs entitled “American Patients First”. The President emphasized lowering drug prices as one of his greatest priorities during the campaign and promised to use the federal government’s purchasing power to negotiate lower drug prices to protect consumers, in particular Medicare beneficiaries, from being ripped off by greedy drug companies.

While the administration has continued to discuss the problem of unaffordable drugs since the election, the Blueprint is the first concrete plan to improve affordability of drugs for Medicare beneficiaries. But is it merely a laundry list of ideas on how to reduce the list price of drugs or a concrete, step-by-step process of addressing a complex drug pricing system that has grown out of control for patients and payers? The Blueprint clearly does not call for direct government to drug manufacturer negotiations as a way to lower drug prices as discussed during the campaign, but does it provide a better way of using Medicare’s purchasing power by empowering private plans combined with changes to government-administered drug pricing formulas to accomplish the same goal as claimed by the Department of Health and Human Services (HHS) Secretary Azar after the President’s speech?

An analysis of the Medicare proposals in the Blueprint reveals there are a number of very specific proposals that could strengthen the ability of Medicare to tighten its purchasing power over many prescription drugs Medicare covers, however, there is a lack of a legislative authority to negotiate the costs of many of the more expensive Part B drugs used by a population with high drug chronic care needs and a lack of authority to implement a number of more aggressive purchasing strategies that would lower Part D costs. As background, Medicare covers outpatient prescription drugs under the Part D benefit, which uses private health and drug plans to negotiate discounts on behalf of their respective enrollees. Medicare also covers drugs under Part B that are administered by a physician in an office or outpatient setting and are paid with prices set through an administrative formula based on average sales prices and are not negotiated. Medicare also covers a smaller number of drugs under Part A in an inpatient setting.

There are a number of proposals included in the Blueprint the Administration could implement through its regulatory and administrative authority to lower the costs of the Part D program, although it should be pointed out that even changing regulations often involves a multi-year process of proposing regulatory changes, seeking comments, and finalizing the new policies. Subject to legal review, these could include the following:

  • Updating Medicare’s drug pricing dashboard to make price increases and generic competition more transparent. It should be noted CMS has already updated the dashboard since the Blueprint was announced, and further updates would be expected.
  • Giving plan sponsors more power when negotiating with manufacturers similar to the provision in the 2019 regulation that would allow mid-year substitution of generic drugs on formularies in response to a price increase. This could include prices for high-cost drugs that lack competition or drugs that do not provide rebates.
  • Implement more measures to inform Medicare beneficiaries about lower-cost alternatives, e.g., improving the usefulness of the Part D Explanation of Benefits.
  • Prohibiting Part D contracts from pharmacist gag clauses, e.g., preventing pharmacists from telling patients when they can pay less out-of-pocket by not using insurance.
  • Permit Part D plans to pay a different price for a high-cost drugs based on the indication.
  • Develop demonstrations to test innovative ways of encouraging value-based purchasing that would hold manufacturers responsible for outcomes and offer value over volume.

Additional proposals were included in the Blueprint to improve Part D that are more controversial and will most likely need Congressional action include the following:

  • Reducing the minimum number of drugs per class or category in Part D formularies from two to one
  • Excluding manufacturer discounts from out-of-pocket costs in the coverage gap and establishing an out-of-pocket maximum in the catastrophic phase of the Part D benefit
  • Eliminating or further restricting drugs in the protective classes
  • Eliminating cost sharing for generic drugs for low-income beneficiaries
  • Requiring Part D plans to apply a substantial portion of rebates at the point of sale

A number of proposals in the Blueprint could improve the purchasing power of Part B. These include the following:

  • Leveraging the Competitive Acquisition Program in Part B, e.g., allow physicians to obtain drugs from vendors approved through a competitive bidding process or directly purchasing drugs through the current average sales price method
  • Finalizing a policy in which each biosimilar for a given biologic gets its own billing and payment code under Medicare Part B to incentivize development of additional lower-cost biosimilars
  • Modifying the Wholesale Acquisition-cost based payment for Part B

More controversial proposals to improve Part B drug pricing that were included in the Blueprint will need new authorities:

  • Leveraging Part D plans’ negotiating power for certain drugs covered under Part B by moving them to Part D
  • Modifying site-neutral payment policy for physician-administered drugs under Part B or between inpatient and outpatient settings

Other proposals not specific to Medicare included in the Blueprint that could also reduce Medicare drug prices include the following:

  • Using specific incentives that are yet to be defined to discourage manufacturer price increases
  • Including list prices in advertising
  • Speeding up Food and Drug Administration (FDA) approval of generic drugs
  • Reviewing and modifying the role of patent exclusivity
  • Considering the role and fiduciary status of Pharmacy Benefit Managers
  • Measures to restrict the use of rebates and discounts and create incentives for manufacturers to lower list prices



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Benefit Administration Testing – From a Compliance, Audit, and Best Practice Perspective

In 2016, 41 million individuals (72 percent of all Medicare beneficiaries) were enrolled in Medicare Part D. Of those enrolled, 60 percent were in stand-alone Prescription Drug Plans (PDPs), and 40 percent were in Medicare Advantage Prescription Drug plans (MA-PDs). Plan sponsors must adjudicate pharmacy claims for the Part D benefit in accordance with their Centers for Medicare & Medicaid Services (CMS)-approved formulary and Plan Benefit Package (PBP) bids.

Most Part D sponsors delegate prescription claim adjudication to their Pharmacy Benefit Manager (PBM). Formulary and benefit coding performed by a plan sponsor’s PBM is a compliance risk area. Sponsor oversight and auditing of their PBM’s claim processing systems include key formulary administration and transition processes for new and current enrollees that are consistent with 42 CFR §423.120(b)(3).

Benefit Administration Testing on a yearly basis allows for prompt identification and correction of formulary and benefit coding errors prior to go-live. Early detection and correction of areas of non-compliant Part D claim adjudication ensures accurate benefit set-up, minimizes member disruption and access to care issues, and is paramount for a compliant Part D formulary and compliant benefits administration.

A comprehensive Benefit Administration Testing review requires a strategic and systematic process to ensure accurate adjudication of the CMS-approved formulary and PBP. This includes testing for accuracy of all covered drug copayments, tiering, and Utilization Management (UM) and confirming pharmacy claim processing is in compliance with CMS guidance as stipulated in 42 CFR Parts 422 and 423, including guidance located in the Medicare Managed Care Manual, Prescription Drug Benefit Manual, and CMS Program Audit Findings and Best Practices Memos.

Gorman Health Group's (GHG’s) Benefit Administration Testing service provides MA and Part D sponsors with an assessment from not only a compliance, audit, and best practice perspective but also an indication of how the organization would likely perform in an actual CMS audit.

The GHG comprehensive Benefit Administration Testing review includes:

  • Test suite that validates a broad sample of claim types for copayment, pharmacy network, True Out-of-Pocket (TrOOP)/Maximum Out-of-Pocket (MOOP) accumulator, lesser of logic, formulary and non-formulary, excluded drugs, etc.
  • Strategic custom scenarios for each formulary and plan design variation and includes point of sale National Council for Prescription Drug Programs (NCPDP) and custom messaging review.
  • UM edits for Prior Authorization (PA), Quantity Limit (QL), Step Therapy (ST), and grandfathering.
  • A special focus on protected class drugs, transition of care, and look-back logic.
  • Concurrent drug utilization review (cDUR) logic per CMS recommendations for the following, but not limited to, criteria: therapeutic duplication, age/gender-related contraindications, over-utilization and under-utilization (e.g., early refill), drug-drug interactions, incorrect drug dosage, or duration of drug therapy and drug-allergy contraindications.

Common coding errors identified and corrected include:

  • Coding of QLs resulting in inappropriate rejections:
  • Maximum daily dose limits that were more restrictive than the CMS-approved QLs and/or Food and Drug Administration (FDA) maximum recommended daily doses.
  • Quantity over time coding that failed to consider unbreakable packaging.
  • Applying a CMS-approved QL specific to brand drugs only to generic versions of the drugs.
  • Coding errors for transition logic resulting in inappropriate claim rejections for new and continuing beneficiaries transition supplies:
  • Applying PA edits on claims for continuing beneficiaries with a utilization history of protected class drugs.
  • Failure to afford long-term care beneficiaries multiple transition fills as necessary during the entire length of the transition period.
  • Failure to correctly identify drugs with a negative cross-year formulary change.
  • Imposing UM edits that are not appropriate during transition (e.g., edits are not related to Part A or B vs. Part D determination, FDA maximum daily dose, early refill, etc.).
  • Benefit was coded to reject transition-eligible claims for drugs in their smallest available unbreakable package size when the calculated days’ supply exceeded the transition days’ supply limits.

GHG additional offerings include:

  • Marketing Materials Review
  • Post Go-Live Claims Review

Now is the time to lock in your Benefit Administration Testing project for go-live January 1, 2018. GHG’s Pharmacy experts can create and conduct a thorough and strategic Benefit Administration Testing plan for your organization to ensure your PBM is processing claims consistent with your CMS-approved prescription drug benefit before the new plan year begins as well as on an ongoing basis throughout the year through post go-live claim reviews.




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10 CMS Program Audit Risks

Program audits and oversight activities must be designed with many factors to balance: accuracy, consistency, efficiency, and in an effort to be least disruptive to a plan sponsor. Correspondingly, a plan should be tailoring its response to these audits with those same factors in mind. A colleague and I outline ten common risk areas we observe in plans large and small.

  1. Comprehensive Part D Benefit Administration Testing: Plans accept the standard Pharmacy Benefit Manager (PBM) testing scenarios and do not endeavor to do full benefit testing on the Part D formulary prior to the beginning of the plan year. This puts the plan at risk for transition issues and inappropriate rejected claims during the critical data universe window the Centers for Medicare & Medicaid Services (CMS) uses.
  2. Coverage Determinations and Redeterminations: Plans continue to experience issues with decision and notification timeliness as well as notice content that is unclear to the member and provider.
  3. Organization Determinations: Plans fail to do appropriate provider outreach and experience decision and notification timeliness issues.
  4. Claims Determinations: Claims are not fully developed, out-of-area emergency and plan-directed care denials continue to appear in universes, and appeals language is missing from notices.
  5. Delegated Function Audits: Plans do not complete annual delegation oversight audits (a CMS recommendation) for both the PBM and Part C delegates.
  6. Misclassification of Grievances/Appeals/Inquiries: Plans continue to struggle with multiple entry points of information into the plan, which increases the risk for misclassification and thus timeliness of outreach and decision notification.
  7. Special Needs Plan Model of Care (MOC): Oftentimes, it is found plans have misinterpreted the MOC requirements, leading to the realization a MOC was incorrectly written, regardless of high scoring from the National Committee for Quality Assurance.
  8. Failure to Connect the Compliance Dots: Plan staff struggle to articulate their roles and responsibilities when it comes to program oversight, whether it pertains to internal or delegated operations. With only six tracer samples to evaluate, each sample matters a great deal in the evaluation of the three Compliance Program audit areas.
  9. Data Integrity in Universe Preparation: Incomplete or inaccurate universes continue to plague Operations and Compliance teams, an indication of readiness and a possible indicator on the state of delegation oversight.
  10. Commitment: Plans operate in full-on reactive mode, which may be palpable to CMS. They agency has noted in the past they can tell within five minutes whether or not a plan has a culture of compliance. Demonstrated organizational commitment changes the “have to do it” mindset to a “we are glad to do it” attitude.

If any of the 10 items listed resonate with you, contact us. Do you already have a dedicated audit team, comprised of the specialists in your plan, who can speak to your operations and samples? Practice with and exposure to the CMS program audit process gives you and your colleagues a leg up on expectations. Secondly, are the program audit areas on your auditing and monitoring plan for this year? These are areas of particular concern for Medicare Parts C and D. We are more than halfway through 2017 – are you on track to meet your audit plan goals? Contact us for information on how Gorman Health Group can help with your 2017 internal audit activities and your CMS audit preparedness.


Want to stay up to date on policy and regulation changes? The Insider is GHG’s exclusive intelligence briefing, providing in-depth analysis and expert summaries of the most critical legislative and political activities impacting and shaping your organization. Read our full press release >>

Our clinical team has compiled a checklist to ensure your clinical operations are where they should be by identifying what’s working and what’s not. Download the checklist >>

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Rising Drug Costs Continue to be a Concern

During the presidential campaign, Donald Trump highlighted the need to address rising drug costs, stating the drug industry was “getting away with murder.” Several recent high-price drug increases for HIV/AIDS drugs, hepatitis C drugs, and the EpiPen®, among others, have also raised Congressional, state, and public concern about the issue. During the campaign, Trump discussed allowing re-importation of cheaper drugs or allowing the government to negotiate drug prices as ways to lower prices.

The Trump administration has now established a working group, led by the Office of Management and Budget (OMB), which includes top officials from the U.S. Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), the Food and Drug Administration (FDA), the Health Resources & Services Administration (HRSA), the National Economic Council, and the Office of the Trade Representative, and work has begun on development of an Executive Order on the subject. According to press reports, the Executive Order is expected to include more modest proposals than discussed during the campaign such as speeding up approval of generic drugs as well as proposals that are supported by the drug industry. There is no announced schedule for release of the Executive Order, however, working group members have discussed a July release as well as continued work throughout the summer.

Politico has obtained a copy of a draft Executive Order and is reporting the policy changes provide broad authority for federal agencies including FDA, CMS, the U.S. Trade Representative, and other health agencies to develop measures to deal with drug prices. For example, CMS could design Medicare and Medicaid benefits that would reduce out-of-pocket costs for beneficiaries or modify the Part D protected classes. The Executive Order could also include a focus on value-based drug pricing, which would allow agreements between insurers (including Medicare and Medicaid) and manufacturers that tie payment to drug efficacy. This proposal is supported by the pharmaceutical industry. The order is also expected to roll back a federal 340B drug discount program, which was expanded during the Obama administration, and provides discounts to hospitals and clinics that serve a large number of low-income patients. Not all of these proposals would actually reduce total health system drug prices. In some cases, they would merely shift who is paying. House and Senate Democrats have written a letter to the administration requesting a more comprehensive approach in the Executive Order such as measures to increase transparency in drug pricing and increase price competition.

The FDA has already moved to implement a proposal that is focused on speeding up drug approvals. On June 19, the FDA issued draft guidance for comments which is intended to assist companies in getting shorter reviews of generic drug applications. Initially, this policy will focus on older drugs that have limited competition On June 27, the FDA published a list of off-patent, off-exclusivity branded drugs without approved generics as part of a new policy to speed up generic reviews. Previously, the FDA Commissioner announced the FDA will develop a “drug competition action plan” to facilitate competition among expensive drugs after holding a public hearing on ways to accomplish this goal and will move to clear the backlog of FDA reviews of generic drugs.

Initially, curbing excessive drug prices had bipartisan support in Congress, and Congress started to move on drug prices. However, it appears partisan gridlock over the Affordable Care Act (ACA) repeal and replace legislation will thwart any real congressional action this year. The Senate Health, Education, Labor, and Pension (HELP) Committee held a hearing in early June which focused on patient costs for drugs. The HELP hearing demonstrated a lack of bipartisan consensus on the problem and potential solutions, with Republicans focusing on bringing more drugs to the market faster to promote competition and the Democrats focusing on more active policies like government negotiation of Part D prices. A second HELP hearing scheduled for July has been canceled, and it is unlikely a third hearing planned for the fall will be held. The House Energy and Commerce Committee said they are planning a hearing on the issue, but there is no scheduled date.

States have also moved to address drug prices. In June, Nevada enacted legislation to require increased transparency of drug prices for treatment of diabetes. Companies that have raised a drug’s list price over a certain amount must disclose information about the costs of making and marketing the drug and any rebates provided to Pharmacy Benefit Managers (PBMs). The legislation also includes provisions for more PBM transparency. Vermont already has a drug price transparency statute on the books and has produced a report on egregious drug price spikes. Maryland recently passed legislation that provides authority for the Attorney General to target generic drug makers who increase the acquisition cost of a generic drug more than 50 percent in one year and to impose civil penalties or lower the price, though this has recently been challenged in court.



Want to stay up to date on policy and regulation changes? The Insider is GHG’s exclusive intelligence briefing, providing in-depth analysis and expert summaries of the most critical legislative and political activities impacting and shaping your organization. Read our full press release >>

Our clinical team has compiled a checklist to ensure your clinical operations are where they should be by identifying what’s working and what’s not. Download the checklist >>

Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG’s weekly newsletter. Subscribe >>