Increasing Competition and Choice

New America Foundation Releases White Paper Finding Proposed Medicare Part D Regulations Will Enhance Quality of Care and Increase Consumer Choice and Access in the Part D Market

David Balto,
New America Foundation

and James Kovacs

March 6, 2014 |

View the paper here. For much of the past decade, Congress, regulators, and industry lobbyists have played a game of cat and mouse when it comes to how the Medicare prescription drug program (“Part D”) is administered. With the Centers for Medicare & Medicaid Services (“CMS”) once again considering new rules around Medicare prescription drug coverage plans; a new white paper from New America addresses the following:

• By passing the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), Congress fully intended to provide beneficiaries broad pharmacy access through an any willing pharmacy (“AWP”) provision that permits willing pharmacies to participate in networks. The goal was to ensure that beneficiaries had access to a broad range of pharmacies and enhanced choice, competition, and service.
• Restricted pharmacy networks limit access, increase costs to beneficiaries, and diminish the level of service. These services are even more critical as pharmacies perform an increasingly critical role in delivering healthcare and reducing costs as envisioned by the Affordable Care Act (“ACA”).
• The proposed Medicare regulations restore Congress’ original intent and will enhance the delivery of services to beneficiaries without increasing costs.
• The critics of the reforms have manufactured several studies that are misguided and cannot rebut the data that CMS relies on. Rather, the facts indicate that expansion of services through AWP is likely to reap greater benefits for Part D beneficiaries.

The CMS Proposed Rule for fiscal year 2015 expands competition, access, and quality of care for beneficiaries. The paper focuses on one provision that permits any willing provider to participate in a prescription drug plan’s network. In enacting Part D, Congress provided an AWP provision to assure beneficiaries broad access to pharmacy services. CMS permitted more restricted networks in a 2006 clarification. After several years of scrutiny of these restricted networks, CMS concluded reform was necessary to preserve access and assure cost-savings. CMS provides in its proposed regulations that all pharmacies that can meet a plan’s contractual terms and conditions are allowed to participate in the plan’s network.

The proposed changes will have a profoundly positive effect on millions of beneficiaries. These reforms could not be timelier. Pharmacists will play an increasingly crucial role in the delivery of healthcare services under the ACA and through the expansion of pharmaceutical treatments including medication therapy management. Community and specialty pharmacists will be increasingly utilized for their knowledge and skills to improve drug adherence, provide
counseling, prevent re-hospitalization, and manage chronic conditions. The Proposed Rule will enhance the delivery of these valuable services by pharmacies.

Medicare Part D relies heavily on the use of for profit Pharmacy Benefit Managers (“PBMs”). CMS has recognized problems with the lack of transparency and conflicts of interest in the PBM marketplace and how these problems may lead to increased costs. Restricted networks, especially those that limit Medicare beneficiaries to PBM-owned mail order, can increase costs and diminish service.

The arguments of the opponents of the proposed regulations lack merit. They suggest that regulatory reform will increase cost. However, after careful analysis, CMS concluded otherwise. Studies by CMS and others indicate that there are little to no cost-savings associated with preferred pharmacy networks. Moreover, the PBM sponsored studies are flawed. Furthermore, properly using AWP will increase access and choice and lead to better services for Medicare beneficiaries.

Please use this link to view the New America Foundation White Paper. naf.Balto Policy Paper