Tuesday, August 7, 2018

New Rules, Medicare Advantage, Drug Step Therapy: What Really Happened?

On August 7, 2018, there was a rapid flurry of news articles which followed a CMS press release that it was loosening burdensome regulations on Medicare Advantage plans and allowing them to use Step Therapy.   CMS framed this as an important advance for controlling drug costs in the Medicare program, and that this rollback of excess regulation was consistent with ongoing HHS themes.
  • See news at PatientEngagementHIT here, at Endpoints here, at CNBC here, at Healthcare Finance News here, at Forbes here.   ASCO press release here and article here; Oncology Practice here.  Commmunity Oncology Alliance (COA) called the policy "a nightmare," here.  Specialty Pharma Times here; MedPageToday here.  For a September 2018 update at MedCityNews, here.  

  • More broadly, see articles on the Trump agenda to reduce drug prices (Forbes here, Politico here, 44-page HHS blueprint, here.)   For a 2018 law journal article on step therapy, here.

  • For the CMS August 7, 2018, press release, here.  For the actual memo, here.
What Really Happened?

For years, CMS has had policy that Medicare Advantage plans must provide the same benefits as Part B (or Part A) Medicare. 

For example, let's say that a Part B MAC has a policy to pay for any of drugs A, B, C, D.   A Medicare Advantage plan can't say they only pay for Drug A, or only pay for Drug B and C if drug A fails, and never Drug D.   This wouldn't be "the same coverage for the patient as Part B." 

The 2012 Memo.  A 2012 CMS memo made clarified this.   Exclusion of Medicare Advantag step-therapy was laid out by HHS attorney Danielle Moon in a two-page memo to plans on the simple basis that it conflicted with the concept of matching Part B coverage under LCDs.  (She appears to be at Deloitte now.)   Find this 2012 document and the new 2018 document together in a cloud zip file here.

The 2018 Memo.  The new document is a 4 page memo signed by Administrator Verma (zip file here).  It "rescinds" the 2012 memo.   It states that Medicare Advantage plans can use prior authorization methods, and that step therapy is only a form of prior authorization.  (I guess it is prior authorization where the question is, "Did you try and fail Drug A first?")   Net net, the press release is pretty broad and bold, while the underlying 4 page administrative memo is pretty nerdy, and couched in cautionary language about beneficiary access protections.

Potential Link to Diagnostics

Within a few days, ASCO had already met with HHS Secretary Azar about the stepped therapy policy.   Regarding oncology, there is a potential tie-in to diagnostics.  We frequently hear that some large percentage of cancer patients don't get the correct precision medicine diagnostics, OR, that they get the drugs surprisingly often without the diagnostics.   If plans institute tight policy review for stepped therapy, it would almost certainly include requirements that on-label CDx are obtained before the drugs are covered.  (This could be done in M.A. even if not done in any corresponding MAC LCD.)

Bonus Trick Question

Why are the 2012 memo and 2018 revision concerned only with step therapy in Part B drugs under Medicare Advantage plans?  Because if the drugs were Part D oral drugs, there wouldn't be any fee for service LCD (neither Part A or B) that the Medicare Advantage plan would have to provide the-same-coverage-as. 

Implications of Step Therapy for Part B Drugs

The biggest bang-for-buck is usually substituting generic for branded drugs.   Another example might be putting Avastin for macular degeneration as Step 1 therapy and other drugs (Lucentis, Eyelea) as Step 2 drugs if Avastin fails.   Another would be the creation of step therapy in response to pharma discount offerings.  (Our drug is $2000 and their drug is $2000.  We'll give you our drug for $1500, if you make it Step 1 and the other guy Step 2.)

August 7, 2018 Memo Has Apparent Error

Based on the memo still online on August 16, dated August 7, here, there is apparently an error in page 3.  It says any value rewards to encouragement participation should be MORE THAN HALF the value saved by the process or service.   I believe this should be LESS THAN HALF.  Nerdy discussion here.

AMA Letter on HHS Drug Policy; Manatt Article on Innovation

Researching this, I ran across a new July 16, 2018, twenty-page letter from the AMA to HHS on drug policy.  Here.    I also ran across a nice paper by Annemarie Wouters of Manatt, on the topic of US health insurance and innovation, which I hadn't seen before - here.  Both are in my airplane reading folder for today.