CMS has informed Medicare Advantage health plans that, as of January 1, 2019, the plans will be allowed to use step therapy with prescription drugs covered under Part B. The agency believes that this change will help to lower drug costs for the almost 40% of Medicare beneficiaries covered by Medicare Advantage (MA).

The catch? The plans will be expected to operate a “shared savings” program of sorts, by providing “rewards” such as gift cards or other items of monetary value (sorry, no cash or rebates!) that are equivalent to at least half of the average savings expected to accrue to those beneficiaries impacted by the step therapy program. Sounds a bit like the Medicare Shared Savings program, where providers and Medicare share risk for keeping costs down and split the savings, yes?

In 2012, the Obama Administration prohibited MA plans from using step therapy. However, the agency acknowledges that the law allows MA plans to use utilization management tools, and that step therapy is recognized in commercial plans (and Medicare Part D) as a utilization management tool. It is expected that CMS will promulgate rules on the issue in the near future, ahead of the 2020 plan year.

In the meantime, plans are still expected to follow all national and local coverage determinations; inform beneficiaries in enrollment and plan materials that the plan uses step therapy; and not create “undue access barriers.” Plans are still obligated to furnish and provide access to all benefits that are available under Parts A and B. Plans will also be expected to offer drug management care coordination services to beneficiaries impacted by the step therapy requirements. Finally, step therapy requirements may only be applied to new patient starts, not patients established on therapy.