At today’s meeting, the Medicare Payment Advisory Commission (MedPAC) began their consideration of challenges facing the Medicare Part D prescription drug benefit, building up to a slate of recommendations to be included in their report to Congress later this year. Last year, the Commission approved several changes aimed at shifting more risk away from the federal government towards Part D plan sponsors, and granting plan sponsors more flexibility in designing their benefits and formularies.
MedPAC staff opened the session by providing a status update on the benefit, which focused heavily on the growth in expenses related to the reinsurance portion of the benefit. In 2017, once a beneficiary has more than $8,071 in out-of-pocket costs in a plan year, the benefit’s “catastrophic” coverage begins. After that point, the Medicare program is responsible for 80% of the beneficiary’s drug costs, while the plan is responsible for 15% and the beneficiary is responsible for 5%. According to data provided by MedPAC staff, between 2007 and 2015, spending on reinsurance payments has increased from $8 billion to $34.3 billion (+329%) while overall benefit spending has increased 73% ($46.2 billion to $80.1 billion).
Once the discussion was opened up to the full Commission, several themes developed:
Modernizing the Part D Benefit. Amy Bricker, Vice President, Supply Chain Strategy for Express Scripts, opened up the discussion by noting that Part D plan sponsors cannot use many utilization management tools that have been implemented in the commercial sector, specifically the ability to make mid-year formulary changes (including “negative” formulary changes), the “six protected classes” coverage requirement that effectively blocks rebate negotiations in those classes, any willing provider requirements that complicate building cost-efficient pharmacy networks, and a liberal appeals process. The prescription drug landscape has changed considerably since Congress passed Part D legislation in 2003, and the Commission seems to think that the benefit itself needs to adapt as well.
Encouraging Value-Based Purchasing. Pat Wang, CEO of Healthfirst New York, noted that Part D is the one area of Medicare where there is no administrative push towards value-based purchasing. Other Commissioners, including Rita Redberg from UC San Francisco Medical Center and Kathy Buto, noted that it is important to make sure that higher-priced drugs that received FDA approval based off of surrogate endpoints, truly deliver the expected improved outcomes.
Reducing Unnecessary Polypharmacy. Both Susan Thompson Senior Vice President, Integration and Optimization with UnityPoint Health and Craig Samitt, EVP and Chief Clinical Officer at Anthem, noted that in many instances, beneficiaries are taking multiple unnecessary medications. A reduction in the utilization of low-value services, much like value-based purchasing, is an idea that has been discussed in other areas of Medicare, but not Part D.
Based on today’s discussion, the Commission seems determined to tackle some sensitive topics and make some aggressive recommendations to reform the Part D benefit for today’s health care environment. It will be interesting to see how the reinsurance issue comes up, especially since Republicans in Congress have long opposed the use of reinsurance and risk corridors within the context of the Affordable Care Act’s Marketplace plans. Regardless, it seems evident that the benefit itself could be headed for an overhaul, especially now that the market is developed and stable, and the program is popular.
Do you have questions about how changes to the Part D program could impact your business or organization? Contact us as mandel@appliedpolicy.org or 202-558-5272 to find out how we can help you improve the lives of the people you serve.