Medicare Update

CMS Releases Final Rule on Medicare Part D Claims Data

On May 22, 2008, the Centers for Medicare & Medicaid Services (CMS) released a display copy of a Final Rule to permit Medicare Part D claims data to be used for program monitoring, research, public health, care coordination, quality improvement, population of personal health records, and other purposes. 

The Final Rule allows CMS to disclose certain Medicare Part D claims data to other federal governmental agencies, states and external researchers.  However, such disclosures will be subject to certain protections for beneficiary privacy and commercially-sensitive plan information.  CMS has also released a Fact Sheet on the Final Rule.  The Final Rule is scheduled to appear in the Federal Register on May 28, 2008.

On May 22, 2008, the Department of Health and Human Services also issued a Press Release announcing collaborative efforts between the Food and Drug Administration (FDA) and CMS to improve patient safety and the quality of care. Specifically, HHS announced the Sentinel Initiative and reported that the Final Rule will allow CMS to share Medicare claims data with the FDA for purposes of the new initiative. 

The FDA is launching the Sentinel Initiative with the goal of creating and implementing a Sentinel System, which will be a national, integrated, electronic system for monitoring medical product safety.  According to the Press Release, the system will enable the FDA to analyze significantly more information than it can today by using vast databases of health information to detect early signs of emerging safety problems.

During a press conference on May 22, 2008, HHS also reported that the Sentinel Initiative will start with a database of more than the 25 million beneficiaries enrolled in the Medicare Part D prescription drug benefit and later include private databases through partnerships with private firms.

CMS Proposes New Medicare Advantage and Prescription Drug Plan Marketing Rules

The Centers for Medicare & Medicaid Services (CMS) recently released a display copy of a Proposed Rule that would enhance the marketing standards for Medicare Advantage (MA) health plans and Medicare Part D prescription drug plans. In the Proposed Rule, CMS incorporates some of the requirements that CMS previously imposed through operational guidance and introduces new MA and Medicare Part D prescription drug plan requirements.  According to the CMS Press Release, the marketing standards would:

• Prohibit cold-calling and expand the current prohibition on door-to-door solicitation to cover other unsolicited circumstances. Any appointment with a beneficiary to market health care-related products would have to be limited to the scope that the beneficiary agreed to in advance. Cross selling of non-health care-related products to a prospective MA or Part D enrollee would also be prohibited.
• Prohibit sales activities at educational events such as health information fairs and community meetings or in areas such as waiting rooms where patients primarily intend to receive health care-related services, as well as limit the value and type of promotional items offered to potential enrollees.
• Require that MA organizations that use independent agents to market MA and Part D plans use state-licensed agents for such marketing, and require that MA organizations report to states, in a manner consistent with state appointment laws, that they are using those agents.
• Require MA organizations to establish commission structures for sales agents and brokers that are level across all years and across all MA plan product types (e.g., HMOs, PPOs, and private fee-for-service plans). Commission structures for prescription drug plans would have to be level across the sponsors' plans as well.  According to CMS, these requirements are designed to discourage "churning" of beneficiaries from plan to plan each year in a manner that earns agents and brokers the highest commissions and would ensure that beneficiaries are receiving the information and counseling necessary to select the best plan based on their needs.

The Proposed Rule also contains provisions for enhancing the protections afforded to Medicare beneficiaries receiving the low income subsidy and those enrolled in special needs plans.  The Proposed Rule is expected to appear in the Federal Register on May 16, 2008.  CMS reports that it will be accepting comments on the Proposed Rule until July 15, 2008.

CMS Releases 2009 Medicare Advantage Capitation Rates

On April 7, 2008, the Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year 2009 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (Announcement).  According to the Announcement, the aged and disabled capitation rates for MA plans will increase on average about 3.6 percent.  Furthermore, the final estimate of the 2009 national per capita MA growth percentage for aged and disabled enrollees is 4.24 percent, which includes 3.74 percent for the underlying trend change and approximately 0.5 percent due to corrections to prior years' estimates.  In addition to the Announcement, CMS has posted a Fact Sheet on the CMS website.

CMS Releases New E-Prescribing Standards for Medicare Part D

On April 2, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing that it has released a display copy of the Final Rule establishing Medicare Part D e-prescribing standards for medication history, formulary and benefits, fill status notification, and the identification of individual health care providers.  According to the Press Release, the new e-prescribing standards supplement a set of "foundation" standards that were published in a November 7, 2005 final rule.  The Final Rule is scheduled to appear in the Federal Register on April 7, 2008 and CMS reports that the new e-prescribing standards will be effective on April 1, 2009. According to Acting CMS Administrator, Kerry Weems, "[t]he Part D e-prescribing standard final rule moves us closer to achieving interoperable health information technology, one of the cornerstones of the Administration's Value-Driven Health Care Initiative." 

CMS Releases Final Medicare Prescription Drug Plan Changes for Low Income Beneficiaries

On March 31, 2008, the Centers for Medicare & Medicaid Services (CMS) announced in a Press Release that has it has released a display copy of the Final Rule intended to allow certain low-income Medicare beneficiaries to remain in the Medicare Part D prescription drug plans that they enrolled in without having to pay a premium.

The Medicare prescription drug benefit provides for premium and cost-sharing subsidies for certain low-income Medicare beneficiaries. CMS calculates the low-income subsidy (LIS) available to beneficiaries each year based on the new premiums for Medicare Part D plans in each region.  As a result of premium and LIS changes, the premium for a Medicare Part D plan can be fully covered by the LIS in one year but not the following year.  Therefore, CMS has randomly reassigned certain LIS eligible beneficiaries (during each annual election) to another Medicare Part D plan if the beneficiaries would otherwise have to begin paying a premium.

On January 8, 2008, CMS published a Proposed Rule in the Federal Register aimed at reducing the number of Medicare beneficiaries that are subject to reassignment. Under the Proposed Rule, CMS proposed to allow Medicare Part D plan sponsors to offer a reduced premium amount for certain LIS eligible beneficiaries under certain conditions.  However, after considering public comments, CMS does not adopt that approach in the Final Rule.

Instead, the Final Rule will change the way that CMS calculates the regional LIS benchmarks. Under the Final Rule, such benchmarks will be weighted based on each plan's share of enrollees receiving the LIS, rather than their share of total Part D enrollment.  CMS believes that this change will result in fewer LIS beneficiaries having to change Medicare Part D plans in order to avoid paying a premium.  In fact, CMS estimates that, if the 2008 benchmarks had been calculated using the Final Rule's approach, there would have been approximately 850,000 fewer reassignments.

The Final Rule is effective on May 31, 2008 and is scheduled to appear in the Federal Register on April 3, 2008.   

Lower Medicare Part D Prescription Drug Costs Projected

On January 31, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing that the overall projected cost of the Medicare Part D prescription drug benefit is $117 billion lower over the next 10 years than estimated last summer.  In the Press Release, CMS attributes the lower cost projection to slowing drug cost trends, lower plan spending estimates, and higher rebates from drug manufacturers. 

CMS also reports that, following the third open enrollment season, there are 1.5 million more Medicare Part D enrollees, bringing the total number of Medicare Part D enrollees to 25.4 million. Further, according to CMS, about 3.1 million Medicare Part D enrollees (or 12 percent) changed plans in 2008.  Of those who changed plans, 2.1 million were beneficiaries receiving the low-income subsidy and were reassigned so they would not have to pay a premium.

In the Press Release, CMS also reports that recent independent surveys show that beneficiary satisfaction with the Medicare Part D benefit is at more than 85 percent.  Further, citing rising enrollment, high customer satisfaction, and lower cost projections, Department of Health and Human Services Secretary, Michael Leavitt, states in the Press Release that "...Medicare's prescription drug benefit is proving a resounding success."

GAO Reports on Medicare Improper Payments Estimate for 2007

On January 23, 2008, the Government Accountability Office (GAO) released a report indicating that the major executive branch agencies report a total improper payments estimate of $55 billion for fiscal year (FY) 2007.  In the report, the fee-for-service component of the Medicaid program has an improper payment estimate of $12.9 billion, which is the largest estimate for FY 2007.  The fee-for-service component of the Medicare program follows with the third largest total improper payments estimate of $10.8 billion.   However, the report does not include estimates for 14 Federal programs with outlays totaling about $170 billion for FY 2007.   Among the Federal programs without estimates are the Medicare Advantage program and Medicare prescription drug benefit with combined total outlays of about $124.4 billion for FY 2007.

OIG Reports on Medicare Part D Payments and Drug Acquisition Costs

On January 10, 2008, the Department of Health and Human Services' Office of Inspector General (OIG) released a report entitled Review of the Relationship Between Medicare Part D Payments to Local, Community Pharmacies and the Pharmacies' Drug Acquisition Costs (Report).

According to the Report, the OIG found that Medicare Part D payments, excluding dispensing fees, to local, community pharmacies exceeded the pharmacies' drug acquisition costs by approximately 18.1 percent when the OIG analysis included the rebates that drug wholesalers paid to pharmacies. Excluding the rebates, the OIG found that Part D payments exceeded drug acquisition costs by approximately 17.3 percent.

Further, the OIG reports that the estimated difference between Part D payments and drug acquisition costs was $9.13 per prescription including rebates and $8.78 excluding rebates.  The OIG also determined that the estimated average Medicare Part D dispensing fee paid to local, community pharmacies was $2.27 per prescription, and about $2.00 less than the average Medicaid dispensing fee.

The objective of the Report was to analyze the relationship between Medicare Part D payments, excluding dispensing fees, to local, community pharmacies and the pharmacies' drug acquisition costs, and estimate Part D dispensing fees and compare them with Medicaid dispensing fees. The Report is based on the review of Part D payments and drug acquisition costs at 100 statistically selected pharmacies in September 2006.

In the Report, the OIG recommends that Congress and the Centers for Medicare & Medicaid Services consider the results of the Report, including the data provided, in any deliberations regarding Medicare Part D reimbursement.

Telephone Conference Scheduled for Medicare Part B Competitive Acquisition Program

The Centers for Medicare & Medicaid Services (CMS) recently announced an additional election period for physicians who have not already elected to participate in the 2008 competitive acquisition program (CAP) for Medicare Part B drugs. To accommodate the additional election period, the designated carrier for the CAP, Noridian Administrative Services (NAS), will hold an Ask the Contractor Telephone Conference for the additional election period at 2:00 p.m. (CST) on January 23, 2008.

During the telephone conference, prospective CAP physicians will have an opportunity to learn more about the CAP and how to elect into the CAP during the additional election period. Physicians will also have an opportunity to participate in a question and answer session with NAS staff.  To participate in the telephone conference, one must dial 1-888-830-6260 and use passcode 463742.  CMS reports that a Powerpoint slide presentation for the telephone conference will be posted on the CAP Ask the Contractor Teleconferences page of the NAS website at least one day prior to the telephone conference.

The additional election period will begin on January 15, 2008 and end on February 15, 2008.  The effective dates of participation for physicians who elect to join the CAP during the additional election period will be April 1, 2008 to December 31, 2008.

Medicare Prescription Drug Plan Changes Proposed for Low Income Beneficiaries

On January 7, 2008, the Centers for Medicare & Medicaid Services (CMS) announced in a Press Release that it will be publishing a proposed rule that is intended to allow certain low-income Medicare beneficiaries to remain in the Medicare Part D prescription drug plans that they enrolled in without having to pay a premium.

The Medicare prescription drug benefit provides for premium and cost-sharing subsidies for certain low-income Medicare beneficiaries.  CMS calculates the low-income subsidy (LIS) available to beneficiaries each year based on the new premiums for Medicare Part D plans in each region.  As a result of premium and LIS changes, the premium for a Medicare Part D plan can be fully covered by the LIS in one year but not the following year.  Therefore, CMS has randomly reassigned certain LIS eligible beneficiaries (during each annual election) to another Medicare Part D plan if the beneficiaries would otherwise have to begin paying a premium.

The proposed rule is intended to reduce the number of Medicare beneficiaries that are subject to reassignment.  Specifically, the proposed rule would allow Medicare Part D plan sponsors to offer a reduced premium amount for certain LIS eligible beneficiaries under certain conditions.  However, this proposal would only apply in regions where there otherwise would be fewer than 5 Medicare Part D plan sponsors with a "zero premium" plan option for LIS eligible beneficiaries.

The proposed rule is scheduled to appear in the Federal Register on January 8, 2008.  CMS reports that the final rule is expected to be published on March 28, 2008 and be effective for the 2009 benefit year.  CMS has posted a display copy of the proposed rule on the CMS website.