Summary of Key Provisions in Centers for Medicare and Medicaid Services (CMS) Part D Final Rule

On May 19, CMS finalized its first major Part D Rulemaking in several years. Several of the proposals were highly controversial, and CMS received over 7,000 comments. CMS failed to address, much less finalize, many of the proposals that would have benefited community and long-term care pharmacy, including the “any willing provider” changes and the “preferred pharmacy network” changes. As a result and as reported below, stakeholders and Congress are seeking to address some of these omissions.

Provisions not finalized in the Final Rule:

Eliminating Two of the Six Protected Classes: In early March the Agency, under severe political pressure, abandoned this proposal. CMS, however, has suggested that it may revisit the proposal at some point in the future.

Any Willing Provider Requirements: CMS had proposed to expand the Any Willing Provider regulations to permit pharmacies meeting standard terms and conditions to be in-network at preferred status levels. The Agency was blanketed with 4,000 comments on this proposal. Although many of the comments (including those of H. D. Smith) were in favor of the proposal, CMS declined to adopt the proposed rule “pending further study.”

Preferred Network Access: CMS had proposed to open up current preferred provider networks, which historically have trended towards favoring large national chain pharmacies over independent community pharmacies.

Long-Term Care Pharmacy Cost Sharing/Short Cycle Dispensing: The Agency had proposed implementing regulations around 14-day short cycle fills for long-term care pharmacies.

Medication Therapy Management Standards: In perhaps the greatest disappointment of the rulemaking, CMS failed to finalize its proposed requirements to expand MTM programs. CMS had initially recommended redefining chronic conditions and utilization levels to increase participation – which would have created new service opportunities for pharmacies and distributors. The Agency, however, received comments that expanded MTM could increase program costs. Although CMS acknowledged that the rate of MTM participation today of 8% is too low, CMS still opted to defer rulemaking on the issue.

Mail Order Standards: CMS had proposed that mail order pharmacy meet specific service standards – 99% of prescriptions had to be delivered in three days if no follow up was needed, and five days if follow up was required.

CMS did finalize several important proposals:

Non-Interference Clause: CMS had memorialized in regulation what it had already implemented in the field over the past six years, and now has explicit regulatory authority to set general pricing standards and require rebate reporting. Although hardly a major change in the program, it is likely that memorializing its statutory interpretation in regulation is creating the backdrop for even greater CMS participation in the market over the coming years.

Transitional Supply Cost Sharing: The Agency has now clarified that beneficiaries will be responsible for cost sharing (deductibles and co-pays) for the 30-day supply of “transition” drugs that are not on formulary when the beneficiary first joins a Plan. The costs will be up to the LIS limits for dual-eligibles, or limits applicable to non-formulary drugs will now be required.

Drug Pricing and Maximum Allowable Costs Disclosure: CMS has historically not been clear on the obligation of a Plan Sponsor to disclose to beneficiaries (via the Planfinder) current drug prices, or to update pharmacies on reimbursement amounts. The new rule will require such disclosures – particularly of Maximum Allowable Cost (MAC) prices -- from all Plan Sponsors on a weekly basis.

Physician Enrollment/DEA Certification: To track inappropriate prescribing, and for other purposes, CMS will require that all prescribers (doctors, dentists, psychiatrists, and others, but not pharmacies) have a National Prescribing Identifier (NPI) number or have a valid opt-out affidavit on file, and for controlled substances have a valid DEA Certificate and otherwise not undertake improper prescribing practices.

Releasing Part D Data – Including Pharmacy Identifiers in PDE Records: The Agency proposed to release a greater set of unencrypted PDE files, including for the first time pharmacy identity, for research and evaluation purposes only.

CMS Postpones Medicaid Payment Change

Following bipartisan, bicameral congressional letters and stakeholder urging, CMS on June 3 announced it would give states a one year transition period to comply with the Medicaid Average Manufacturer Price-based Federal Upper Limits (FULs). Pharmacy groups, including the National Community Pharmacists Association and the National Association of Chain Drug Stores, as well as the National Association of Medicaid Directors, had all urged a one year transition period, instead of the one or two months for the transition. Members of Congress expressed concern that the rapid implementation might pose problems for under-reimbursement of Medicaid prescriptions at the state level, and therefore problems for Medicaid beneficiaries. CMS has not indicated when they would finalize the drug payment policy mandated by the Affordable Care Act, but the Agency does plan to issue a guidance memo on implementing the policy which will also include a new effective date.

Medication Therapy Management (MTM) Legislative Compromise Sought

Representatives from Prescriptions for a Healthy America, a medication-adherence coalition, plan to develop a compromise MTM legislative proposal, after CMS declined to move forward on its proposal to expand MTM to over half of Medicare beneficiaries. Pharmacist organizations aim to loosen the current rules limiting MTM services to beneficiaries with at least two chronic conditions who are on several medications costing more than $3000 per year. Representative Cathy McMorris-Rodgers (R-WA) and Senator Kay Hagan (D-NC) have introduced bills to make MTM available to individuals with just one chronic condition. The Medication Therapy Management Empowerment Act of 2013 (H.R. 1024, S. 557) has 166 cosponsors in the House and 33 bipartisan cosponsors in the Senate.

Another approach would expand MTM to Part B by recognizing pharmacists as providers. As reported here earlier, Representatives Brett Guthrie (R-KY), G.K. Butterfield (D-NC), and Todd Young (R-IN) introduced H.R. 4190, legislation to allow Medicare reimbursement for certain pharmacist services in medically underserved communities. H.R. 4190 has 63 bipartisan cosponsors.

Managed care pharmacies express concern that expanding MTM could increase costs for health plans without helping patients. Prescriptions for a Healthy America has urged CMS count the cost of finding and contacting eligible beneficiaries about MTM services as a quality of care program, not an administrative cost.

Legislation Advances to Address Prescription Drug Abuse Epidemic

On June 10, the House Energy and Commerce Committee approved H.R. 4709, the Ensuring Patient Access and Effective Drug Enforcement Act of 2014 sponsored by Representatives Tom Marino (R-PA), Marsha Blackburn (R-TN), Peter Welch (D-VT), and Judy Chu (D-CA).

H.R. 4709 aims to help prevent prescription drug abuse by establishing clear and consistent enforcement standards, and ensuring patients have access to needed medications by promoting collaboration between government agencies, patients, and industry stakeholders. This collaboration would allow stakeholders to consider abuse and access issues at the same time. Specifically, the bill will allow companies registered with the Drug Enforcement Administration (DEA) to submit corrective action plans to address DEA concerns, and clarify key terminology in the Controlled Substances Act to better delineate registrant responsibilities under the law.

The bill was also referred to the House Judiciary Committee, and bill sponsors hope to move quickly through that Committee and have the bill considered by the full House this year. There is not yet a Senate companion bill, but trade associations, such as the Healthcare Distribution Management Association (HMDA), are working with interested Senators on developing a path forward for the legislation.

Legislative Effort to Open Preferred Pharmacy Networks

In a June 10 letter to Congress, 130 pharmacists, patient advocacy, and business organizations expressed “unified support” for allowing “any willing pharmacy” to participate in Part D preferred pharmacy networks. Representatives Morgan Griffith (R-VA) and Peter Welch (D-VT) have sponsored the Ensuring Seniors Access to Local Pharmacies Act, or H.R. 4577, which has 37 bipartisan cosponsors. The bill would allow “any willing pharmacy” located in a medically underserved area to participate in all Medicare Part D drug plan networks, including preferred networks. While CMS declined to move forward on a proposal to open up preferred pharmacy networks, Representative Griffith commented that the decision over whether to open preferred pharmacy networks should be made by Congress, not CMS.

Prescription Monitoring Program Reauthorization

On June 25, Senators Dick Durbin (D-IL), Jeanne Shaheen (D-NH), Pat Toomey (R-PA), and Jeff Sessions (R-AL) introduced legislation, S. 2529, to reauthorize the National All-Schedules Prescription Electronic Reporting (NASPER) program, which provides grants to states to maintain, improve, and expand their prescription drug monitoring programs. Last year, Representative Ed Whitfield (R-KY) introduced similar legislation, H.R. 3528, the National All Schedules Prescription Electronic Reporting (NASPER) Reauthorization Act. First enacted in 2005, the NASPER program is due for reauthorization by Congress.

Implementation of Drug Quality and Safety Act (DQSA): Congress Directs FDA to Consult with Stakeholders, Food and Drug Administration (FDA) Issues Compounding Regulations

Congress is working through fiscal year 2015 government funding bills, including the Agriculture funding legislation that appropriates money for the FDA. To implement the DQSA, the Obama administration requested $25 million to pay for inspections of compounding pharmacies. At this point in the legislative process, the House Appropriations Committee allocated $12 million for this purpose, while the Senate Appropriations Committee has not provided a specific number but has indicated that it included all the funding changes requested by the Administration. The Senate Appropriations Committee also included language directing the FDA to meet with stakeholders as it develops guidance and implements the DQSA. Senator Lamar Alexander (R-TN) pushed for inclusion of this guidance after he heard from doctors, pharmacists, and patients that the FDA was not communicating with them or responding to their concerns. According to Senator Alexander, “The purpose of the compounding law is to end confusion and improve communication so we can help prevent another tragic meningitis outbreak. If FDA isn’t sitting down with doctors, patients, and pharmacists and communicating how it is implementing the law, then I will stay on FDA until it does.”

A bipartisan group of House Members has also been focused on ensuring that the FDA preserves the ability of community pharmacists to compound small amounts of medication for office use within States that currently allow such action, as well as allowing the repacking of finished FDA-approved pharmaceuticals.

On July 1 the FDA released draft guidance on manufacturing standards for large-scale compounders; published a proposed list of drugs considered too risky to compound; reopened nominations for a list of bulk pharmaceuticals which may be used in compounding; and published final guidance on enforcement actions the Agency will take against individuals or pharmacies who violate the compounding regulations.