CMS addresses redundancies in Medicare drug plan as it composes formulary and coverage policies for 2007

In response to ongoing industry and beneficiary concerns about the Medicare Prescription Drug Plan, the Centers for Medicare and Medicaid Services (CMS) is clarifying the rules and reviewing the formularies of insurers who are applying to provide Part D coverage for next year. CMS is simultaneously crafting guidance and procedural improvements that aim to make the program operate more smoothly.

Successful plans, according to CMS administrator Mark McClellan, MD, PhD, should have effective data systems, comprehensive formularies, responsive customer service programs, good relationships with pharmacists, and marketing practices that follow the rules.

MEANINGFUL OPTIONS

Another reason to approve a plan for 2007 would be its enrollment numbers for this year-administrators would not want to cancel an enhanced plan that has signed up 10,000 beneficiaries.

The effort to reduce the number of redundant coverage choices is a response to concerns that have been expressed since enrollment began last fall that seniors find it difficult to select Medicare drug coverage because of an overabundance of options. For many sponsors, "2 plan choices will be sufficient," Dr McClellan said.

EVALUATING FORMULARIES

A key factor in assessing plan bids is whether their formularies offer the drugs most needed by beneficiaries. Key measures for evaluating plan formularies are:

CMS also has clarified policies to ensure that Medicare drug plans cover approved medications in 6 "protected" therapeutic categories that require coverage of "all or substantially all" FDA-approved treatments, including antineoplastics, anticonvulsants, antiretrovirals, antipsychotics, antidepressants, and immunosuppressants.

CMS recently clarified that plans cannot institute prior authorization or step therapy for drugs in the 6 categories if beneficiaries already were taking them at the time of enrollment. Plans have expressed concerns that such a broad mandate compromises their ability to negotiate reduced prices from manufacturers and to fully implement pharmacy management tools, but CMS has not modified the requirement thus far.

ALLOWING EXCEPTIONS

As a slight compromise, CMS is allowing plans some freedom to place more high-cost drugs in a formulary's "specialty tier." While this policy may make it more difficult for patients to access these more costly medications, it aims to limit utilization to those beneficiaries who clearly would benefit from these treatments.

One issue in the coming months will be determining the frequency with which plans will update their formularies, and whether frequent changes will cause many Medicare patients to switch to new drugs or pay more out-of-pocket for their medications. CMS is noting how plans complied with providing off-formulary drug supplies to beneficiaries during a 90-day transition period from January 1 to March 31, 2006, that required plans to cover all necessary, existing prescriptions for beneficiaries even if the drug was not listed on the plan's formulary.

The agency also is asking for documentation that plans clearly informed members about which drugs would be covered after the transition period ended.

CMS emphasizes that plans should have understandable processes that permit patients and doctors to seek exceptions to the rules through a clear appeals process. To that end, America's Health Insurance Plans (AHIP), the American Medical Association (AMA), and AMA's workgroup on Medicare in April unveiled a 1-page common form, which may eventually receive an endorsement from CMS. The form is intended to make it easier for beneficiaries to seek access to drugs requiring prior authorization and to seek exceptions to formulary coverage policies.

Ms Wechsler is a Washington-based reporter specializing in federal and state healthcare issues.