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Medicare Compliance & Reimbursement

MEDICARE PART D:

Part D Formularies Could Look A Lot Different In 2008

Published on Mon May 07, 2007

Keep a close eye on these 3 Part D policy shifts.

The feds have issued their final directive on Medicare Part D updates for 2008, but a close reading of the final call letter released April 19 suggests that the only thing certain about Part D as it evolves is uncertainty.

Industry leaders are watching the following formulary and benefit changes:

1. Formularies will continue to evolve, more so in 2008 than in the program's first years.

The Centers for Medicare & Medicaid Services (CMS) opted to stand by its draft plan to eliminate a key requirement for Part D formularies. Starting next year, prescription drug plans (PDPs) will no longer be required to include at least two drugs from every U.S. Pharmacopeia (USP) treatment class. Rather, plans will have more freedom to determine formulary essentials; CMS will use the USP categories as an outlier test to ensure that the drug types are "strongly represented" on all Part D formularies.

CMS continues to downplay the change, focusing instead on what it calls its new "augmented" formulary review process. The agency will continue its review of the "six classes of clinical concern" (antidepressant, antipsychotic, anticonvulsant, anticancer, immunosuppressant and HIV/AIDS) as well as drugs commonly used in the Medicare population. In addition, it will expand its review of drugs commonly used by dual eligibles to 200 drugs, up from 100.

"It remains to be seen how this will all play out," allows Jennifer Bowman of Washington, DC-based Avalere, speaking at a call-letter-focused audioconference on May 8.

By eliminating the USP guideline, CMS hopes to encourage private-sector negotiations between drug manufacturers and the PDPs or the pharmacy benefit managers, says CMS' Abby Block.

But consumer advocates are worried.

In the final letter, as in the draft, the agency challenges PDPs to submit "robust" 2008 formularies--specifying that it will look for lists containing even more than the 4,390 drugs the average Part D plan covers this year.

2. More plans may offer coverage gap benefits. Patients may soon need help to sort out what coverage they may have during Part D's coverage gap, or doughnut hole. CMS is encouraging PDPs to cover a subset of drugs--including either an entire tier or particular covered Part D drugs--throughout the entire coverage gap.

A plan that covers less than an entire tier throughout the entire coverage gap or that offers coverage of a specific monetary amount within the coverage gap will be considered to offer "limited gap coverage."

If a plan offers limited gap coverage, it must list the drugs covered in a separate formulary available on its website and in marketing materials.


3. CMS will be watching PDPs' transition policies. Complaints from beneficiaries and consumer advocates have led CMS to take a new look at how plans are handling the transition period.

"Sponsors must ensure that their transition process information is prominently posted on their websites," says CMS in the call letter.

CMS stipulates that plans may provide either a link from their formulary page or a separate Web page devoted to transition policy.

Questions and complaints have also prompted CMS to restate PDPs' responsibilities for beneficiaries who enroll late in the year. "Sponsors must extend their transition policies across contract years should a beneficiary enroll into a Part D plan with an effective enrollment date of either Nov. 1 or Dec. 1 and need access to a transition supply," CMS states.

To see the final call letter, go to www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/CallLetter.pdf.

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