Panel: New Medicare Part D Policies and Requirements Aim to Lower Plan Costs

Upward trends in enrollment and deductibles for Medicare Part D plans create an opportunity for new policies and requirements to create more stability in the Part D space and savings for beneficiaries, as explained by panel experts during a presentation at the Academy of Managed Care Pharmacy Nexus 2021 meeting.

The experts described the current trends facing the Medicare Part D benefit landscape, discussed the most recent changes, explained new policies that will go into effect in 2022, and listed potential future policy changes and how they may affect managed care pharmacy, plans, beneficiaries, and manufacturers.

Unsurprisingly, enrollment into Part D plans has increased substantially since 2006, growing from 22 million beneficiaries to 41 million in 2021, largely due to the baby boomer generation gradually aging into the system, explained Babette S. Edgar, PharmD, MBA, FAMCP, area senior vice president of BluePeak Advisors. Currently, 56% of the total Part D enrollment is managed by 3 companies (UnitedHealthcare, CVS Health, and Humana).

Additionally, Edgar said that although premium trends have been somewhat stable, deductibles have risen from about $100 in 2006 to $233 in 2021 and the out-of-pocket threshold is estimated to increase from $6700 in 2021 to $9800 by 2028.

Edgar went into some of the most recent policy changes, including that the Part D Payment Modernization Model will be repealed at the end of 2021 and the Senior Savings Model went into effect on January 1, 2021.

The Part D Payment Modernization Model, enacted by the Trump administration, was aimed at reducing expenditures by making available optional flexibilities to Part D sponsors, including Part D rewards and incentives programs, medication therapy management programs, flexibility to lower costs for beneficiaries, and cutting or removing cost sharing on generics and biosimilars for low-income subsidy (LIS) beneficiaries. In recent years, enrollment among LIS beneficiaries has significantly increased since 2006, leading the Biden administration to revoke the model, according to Edgar.

The Senior Savings Model, also enacted by the Trump administration in January 2021, was designed to lower prescription drug costs and provide Medicare patients with new choices of Part D plans by capping co-pays for 1-month supplies of participating insulins at $35. Edgar explained that within the coverage gap, the 70% discount on insulins would be calculated before the co-payment is applied, which reduces the plan’s liability. Under the model, beneficiaries are estimated to save $446 in annual out-of-pocket costs, which represents savings of 66%. Edgar said that she anticipates more drugs will be added to the Senior Savings Model.

Melissa Andel, MPP, principal of CommonHealth Solutions, highlighted some of the policy changes coming in 2022, including the allowance for Part D plans to maintain 2 specialty tiers, which is expected to provide plans more flexibility in coverage for higher-cost products and to prepare the benefit for increased availability of biosimilars. Early trends showed that the approximate average difference in cost sharing between preferred and nonpreferred specialty tiers will be 5%, and 92% of plans that have signed on will use a tier design with 5 tiers or 5 tiers plus a carve-out tier.

Another change coming is the availability of real-time benefit tools (RTBTs), which will be required for all Part D plans, according to Andel. RTBTs will have to enable enrollees to view information in the prescriber RTBT system. Plans will have to develop a new portal and they may offer reasonable rewards and incentives to enrollees who log onto the beneficiary RTBT or seek to access the information using the plan’s customer service call center.

Plans will also be required to implement mandatory drug management programs in 2022, where plans will have to provide information on the risks of opioids and alternative therapies to all Part D beneficiaries at the time of enrollment and on an annual basis, according to Andel.

Andel also discussed potential solutions to address rises in annual drug costs for beneficiaries and Part D spending on reinsurance, including eliminating legal protections for rebate negotiations between manufacturers and plans, restructuring the Part D benefit to cap out-of-pocket costs, requiring government price controls for some drugs, and regulatory and legal reforms aimed at fast-tracking availability for generic and biosimilar products.

However, opposition by Republicans and some Democratic representatives has presented challenges in getting new drug-pricing policies enacted, said Andel, leading to President Joe Biden’s recent announcement that the reconciliation bill’s spending target would be lowered from $3.5 trillion to between $1.75 and $1.9 trillion over a 10-year period.