CMS Suggests Significant Changes to Medicare Part D and Medicare Advantage Prescription Drug Plans

by Holland & Knight LLP

  • The Centers for Medicare and Medicaid Services, CMS, recently issued a Proposed Rule that would initiate important changes to prescription drug plans under Medicare Part D and Medicare Advantage. Comments can be submitted through March 7, 2014.
  • Among the changes CMS proposes are those concerning the criteria for protected drug categories, the costs to Part D enrollees and the government delivered by preferred pharmacy networks, and methods of targeting fraud and abuse by prescribers.

On January 6, 2014, the Centers for Medicare and Medicaid Services ("CMS") issued a proposed rule, "Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs," (the "Proposed Rule") with public comments due by March 7, 2014.

The Proposed Rule would bring considerable changes to Medicare Part D and Medicare Advantage prescription drug plans. Most significantly, the Proposed Rule would modify the criteria for protected "drug categories or classes of clinical concern," require preferred pharmacy networks to deliver lower costs to Part D enrollees and the government, and target fraud and abuse by requiring prescribers to enroll in Medicare in order for their prescriptions to be covered under Part D.

Categories or Classes of Clinical Concern

The Medicare Modernization Act ("MMA") required Medicare Part D plan formularies to include "all or substantially all" drugs falling within six "protected" classes of drugs — immunosuppressants, anticonvulsants, antineoplastics, antidepressants, antipsychotics and antiretrovirals. The Affordable Care Act ("ACA") subsequently codified this policy, allowing CMS to specify criteria for identifying protected classes through notice and comment rulemaking.

In the Proposed Rule, CMS indicated that it will continue to require formulary inclusion of all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes, but would no longer require all drugs from the antidepressant and immunosuppressant drug classes to be on Part D formularies. Moreover, while CMS also anticipates removing the requirement on antipsychotics, "they will remain protected at least through 2015" to ensure that CMS has "not overlooked a need for any transitional consideration."

Preferred Pharmacy Networks

Over the past several years, CMS has expressed concern about preferred pharmacy networks. Specifically, CMS suggested that these networks may not consistently lower costs and noted that, in some cases, costs in preferred networks are higher than non-preferred networks.

The Proposed Rule would allow Part D sponsors to reduce copayments or coinsurance for preferred pharmacies only if they offer consistently lower negotiated prices than are available from other pharmacies in the broader pharmacy network. Further, CMS wants to modify the definition of "negotiated prices" to require all price concessions from pharmacies to be reflected in negotiated prices. Practically speaking, CMS asserts that "this would mean that whatever pricing standard is used to reimburse drugs purchased from network pharmacies in general, a lower pricing standard must be applied to drugs offered at the preferred level of cost sharing."

Physician Fraud and Abuse

To help control fraud and abuse, CMS proposes to require that all prescribers of Part D-covered drugs be enrolled in Medicare as a condition of coverage for those prescriptions. Moreover, the Proposed Rule suggests that CMS be authorized to revoke a prescriber's Medicare enrollment if CMS discovers a pattern of prescribing Part D drugs that threatens a beneficiary's health and safety. Additionally, CMS would be authorized to revoke a prescriber's Medicare enrollment if the prescriber's state license or DEA certificate of registration is suspended or revoked.

Additional Proposed Changes

In addition to the above changes, CMS offers the following through the Proposed Rule:

  • U.S. Citizenship Requirement: The Proposed Rule would require U.S. citizenship and lawful presence as an eligibility requirement for enrollment in Medicare Part D or Medicare Advantage plans.
  • Enhanced Risk-Adjustment Data Validation ("RADV") Process: CMS proposes to combine the medical record review-determination and the error rate calculation appeals into a combined process.
  • Expanded Data Sharing: The Proposed Rule would give "legitimate researchers" (i.e., non-commercial researchers) broader access to healthcare data by expanding access to various identifiers contained in the prescription drug event ("PDE") data.
  • Limited Plan Options Per Service Area: CMS proposes to limit prescription drug plans sponsors to offering no more than two Part D plans in the same service area.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Holland & Knight LLP | Attorney Advertising

Written by:

Holland & Knight LLP

Holland & Knight LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.