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April 10, 2018

CMS Final Rule and Call Letter for 2019

Looks like it's been awhile since I've posting anything here. That's because we've had the privilege of having Elise Smith keep us updated on the latest policy and payment initiatives affecting the LTC industry. Elise is working away on another important update so I thought I might step in and cover CMS' latest pronouncements related to the calendar year 2019 (CY 19) Medicare Advantage and Medicare Part D program changes.

Each year about this time CMS issues payment rates and policy changes for the next Medicare calendar year. We generally refer to this as the "Call Letter". This year we got a bonus, with not just one, but two announcements. You may recall that late last year CMS issued a Notice of Proposed Rulemaking (NPRM) proposing new policies in the Medicare Drug Benefit, much of it related to implementation of the Comprehensive Addiction and Recovery Act (CARA). So, we got a bit of extra reading in early April when both final documents were released on the same day.

What's New

Both documents contain much of the same information. This is because CMS needed to change some policies through formal notice and comment rulemaking and then had to formally implement these changes through the annual ratemaking and Call Letter process. So, you ask, what's the news in the Call Letter?

  • Special Needs Plans Permanently Authorized: Medicare Special Needs Plans (SNPs)were temporary provisions in the Medicare Modernization Act and Congress has reauthorized them periodically as the authorization has expired. The last major spending bill (Bipartisan Budget Act of 2018)made these plans permanent. The Call Letter simply adds this to the official notice to plans that these special plans will continue.
  • Health Related Supplemental Benefits:CMS has loosened up the definition of what they will allow Medicare Advantage (MA) plans to cover under the definition of supplemental benefits. CMS has not previously allowed an item or service to be eligible as a supplemental benefit if the primary purpose is daily maintenance. However, medical and health care research has demonstrated the value of certain items and services that can diminish the impact of injuries or health conditions and reduce avoidable emergency and health care utilization. For example, fall prevention devices can be an effective means to assist enrollees at high risk of fall and protect against the likelihood of additional injury resulting from a fall; CMS believes provision of a fall prevention device – and similar items and services that diminish the impact of injuries/health conditions and reduce avoidable utilization - could be provided as a supplemental benefit for a defined period of time and in certain situations, even if a significant purpose of the item or service is daily maintenance.
  • Transparency & Timeliness with Prior Authorization Processes:CMS reminds MA oranizations that they should be transparent and provide adequate notice of any coverage restrictions, such as PA requirements, to providers and enrollees. Plans should specify the existence of any coverage restrictions, including what information is needed when submitting a PA request, in the plan’s Evidence of Coverage (EOC), their contracts with providers and additional provider communications/materials (e.g., provider manuals). Where an enrollee or provider is attempting to satisfy a PA requirement and the plan requires or has a PA request form, the plan should make PA request forms available and easily accessible.
  • Medication Therapy Management (MTM) Annual Cost Threshold:The 2018 MTM program annual cost threshold is $3,967. The 2019 MTM program annual cost threshold is updated for 2019 using the annual percentage increase of 1.94% as specified in the Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies. Therefore, the 2019 MTM program annual cost threshold is $4,044.
  • Part D Benefit – Change in the Coverage Gap Discount Program:The Bipartisan Budget Act of 2018 (BBA) (Public Law No. 115-123), enacted on February 9, 2018, made the following two modifications to the Medicare Part D Coverage Gap Discount Program (CGDP).
    Manufacturer Discounts.For applicable drugs, (see definition below), the BBA increases the manufacturer discount for beneficiaries in the gap from 50 to 70 percent34 and reduces beneficiary cost sharing to 25 percent in 2019. Manufacturer discount amounts will continue to count towards a beneficiary’s true out-of-pocket cost (TrOOP).
    Applicable Drug Definition:Currently, biosimilars are excluded from the definition of applicable drugs under the Coverage Gap Discount Program. Section 53113 of the Bipartisan Budget Act sunsets that exclusion as of January 1, 2019.35 As a result, for CY 2019 biosimilars will be subject to a 70 percent manufacturer discount and must be covered under a CMS CGDP agreement in order to be covered by Medicare Part D. These changes will become effective on January 1, 2019. CMS will update its regulations, the CGDP manufacturer agreement, and sub regulatory guidance as necessary to comply with these statutory requirements.
  • Specialty Tiers:Per 42 C.F.R. §423.578 (a)(7), a Part D sponsor may exempt a formulary tier in which it places very high cost and unique items from its tiering exception process. In order for a Part D drug to be placed on this specialty tier, the sponsor-negotiated price must exceed an established dollar-per-month threshold. Similar to past years, an analysis was performed utilizing CY 2017 prescription drug event (PDE) data to identify monthly fills that exceed the current specialty tier threshold of $670. This analysis showed that just around 1% of 30 day-equivalent fills exceeded $670 and as a result, CMS will maintain the $670 threshold for CY 2019. CMS will continue to monitor this trend in future years to determine if specialty tier threshold increases are necessary.

The Final Rule had many of the same provisions, but went into some detail that was absent in the Call Letter. Here are some highlights from that document:

  • Implementation of CARA:The Comprehensive Addiction and Recovery Act takes up much of this document and describes how at-risk beneficiaries are to be identified and the requirements for Part C and Part D plans to monitor these beneficiaries and control access to prescribers and pharmacies. As you are aware, LTC residents (SNF and ICF/MR) are exempt from these provisions.
  • Limitation to the Part D Special Enrollment Period for Dual and Other LIS-Eligible Beneficiaries:While LTC residents will continue to have the ability to change plans each month, dual-eligible and LIS beneficiaries will be limited to one plan change per calendar quarter for the first three quarters of the calendar year.
  • Changes to the Days’ Supply Required by the Part D Transition Process: Currently LTC residents have access to up to three months of transitional supplies of prescribed drugs when their drug is not on the plan formulary. Effective 2019 LTC residents will be limited to a months supply, which is the current standard for outpatient enrollees. Based on the past 11 years experience, CMS believes that this is sufficient and will have the effect of reducing waste.
  • Expedited Substitutions of Certain Generics and Other Midyear Formulary Changes:Effective 2019 CMS will allow plan sponsors to immediately remove branded drugs from the formulary and replace them with equivalent generics. Plans were previously required to provide 60 days notice and get approval from CMS before replacing branded drugs with generics. This change will allow plans to require substitution earlier and should result in cost savings. Sponsors are still required to provide notice to beneficiaries, but the process has been streamlined.

These changes were anticipated and it appears that they shouldn't be too disruptive. Don't overlook the importance of CMS' decision to allow plans to add supplemental benefits beyond what are currently offered. This represents opportunity for the enterprising LTC pharmacist. We will go into that in depth in the next post.

September 23, 2016

Change Ahead for LTC Pharmacy News

It's been three years since the launch of LTCPharmacy.net and the monthly newsletter. We now have over 1500 subscribers and the feedback has been generally positive.

Reporting on the regulatory and legislative developments that affect the members of the LTC Pharmacy industry has been the centerpiece of the effort and will remain an important part of what we do going forward. However, that leaves a lot of ground left uncovered.

It is becoming clearer with each passing day that what we do is changing. The facilities we serve are being swept along by the changing expectations of consumers and payers; fewer elders will seek care in institutional settings and new models will eventually overtake the old models that have become so common to us all. Consider the new demands that CMS is making on LTC providers; more accountability for re-hospitalizations, more emphasis on drug regimen review, more incentives to move people out of institutional settings. All this is likely to accelerate change in the way we look at what we do.

This is why the LTC Pharmacy News is undergoing a change. First of all, the regular news will be found at www.ltcpharmacynews.com. The old ltcpharmacy.net site is undergoing a major overhaul and will eventually become a paid site. The general newsletter will always be free to anyone who wishes to subscribe, but in order to cover the expanding breadth of the industry and provide meaningful content to professionals in our field, we will need to invest more resources in uncovering new trends, talking with new voices, moving away from summaries of what others have said and toward original content. In short, we look forward to providing original content on the trends in our industry that you won't find anywhere else.

Moving from free to paid will put pressure on us to dig deep to introduce you to important policy makers, create thoughtful analysis you will actually be able to use, and have significant discussions with the enterpreneurs shaping the new LTC Pharmacy industry. We will also be delivering news and content in new formats with a new focus on video and interactive media.


In the next newsletter I hope to be introducing a new collaborator to LTC Pharmacy News. This will be a name that will be familiar if you've been in the industry for any length of time. Stay tuned for that!

Work continues on the new site and I promise you a chance to take a long look for free before we limit access to paid subscribers.

Thanks for your support and be sure to drop a note with any suggestions you may have to paul@ltcpharmacy.net

Paul Baldwin

LTC Pharmacy News

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