CMS Announces Strategy to Lower Medicare Advantage Costs

In an effort to negotiate better deals for Medicare patients and create competition between drugs used to treat the same conditions, the Centers for Medicare and Medicaid Services (CMS) has announced they will shift more than half of the savings required directly to patients.

“President Trump promised better Medicare negotiation and lower drug prices for the American people... We are taking an important step in delivering on that promise,” department of health and human services secretary Alex Azar said in a press statement. “As soon as next year, drug prices can start coming down for many of the 20 million seniors on Medicare Advantage, with more than half of the savings going to patients.”

According to the press release, CMS will allow negotiation for Part B drugs in a way that lowers costs and improves the quality of care for Medicare Advantage plans. Further, for Medicare Advantage plans that offer a Part D benefit, CMS says they will be able to cross-manage across both Part B and Part D so patients are able to receive the best medicine whether it be physician-administered or self-administered. Finally, CMS intends to carry out the initiative, American Patients First, which makes sure that Medicare Advantage plans are negotiated in a way that ensures patient choice and provides patient protections that include things like step therapy, which can only be applied to new prescriptions for patients who are not actively receiving a given medication.

CMS will allow Medicare Advantage plans to begin using this option on January 1, 2019 in order to ensure patients receive the most preferred drug therapy first and step to other therapies, if needed. Further, CMS is allowing Medicare Advantage plans to take advantage of step therapy for Part B drugs, which constitute around $12 billion per year in spending by plans.

CMS noted that if a plan decides to offer this approach to enrollees in 2019, it must be explicitly communicated to beneficiaries through the Annual Notice of Change and Evidence of Coverage documents. CMS explained that the Medicare Advantage plan is to be coupled with care coordination services to support a shift towards paying for value.

For Medicare beneficiaries currently enrolled in a Medicare Advantage plan, the option to select a plan using these new tools will be available during the 2019 open enrollment period beginning in October 2018.

“Under the President’s leadership, for the first time ever, CMS is bringing negotiations to physician-administered drugs and delivering on our promise to lower drug prices for patients,” CMS Administrator Seema Verma, MPH, said in a statement. “For too long, Medicare Advantage plans have not had the tools to negotiate a better deal for patients.

“Today we begin lifting those barriers so plans can use private-sector tools to drive down the cost of expensive drugs while also offering new care coordination and drug adherence programs, to ensure that patients are getting high quality care at lower cost,” she concluded.—Julie Gould