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Major CMS Announcements on Medicare Advantage and Part D Drug Prices

Posted on Sunday, January 20, 2019 4:55 PM

Last week, CMS outlined two new initiatives aimed at lowering drug costs and a transforming update to an existing model.

“Expanding choices for patients, aligning incentives, and providing new flexibility for insurers in Medicare Advantage and Medicare Part D will deliver better value from these programs,” said HHS Secretary Alex Azar.  “The models being announced today create new incentives for plans, patients, and providers to choose drugs with lower list prices, and new ways to meet the unique healthcare needs of specific populations, prevent disease, and expand the use of telehealth.  Today’s announcement draws on successes we have already seen in Medicare and advances our priority of using HHS programs to build a value-driven healthcare system.”

The wide-ranging enhancements to the VBID model announced today will test a new series of service delivery approaches for Medicare Advantage plan beneficiaries for the 2020 plan year, including:

  • Allowing plans to provide reduced cost sharing and additional benefits to enrollees in a more targeted fashion than has previously been allowed, including customization based on chronic condition, socioeconomic status, or both, and even for benefits not primarily related to health care, such as transportation;
  • Bolstering the rewards and incentives programs that plans can offer beneficiaries to take steps to improve their health, permitting plans to offer higher value individual rewards than were previously allowed; and
  • Increasing access to telehealth services by allowing plans to use access to telehealth services instead of in-person visits, if an in-person option remains, to meet a range of network requirements, including certain requirements that could not previously be fulfilled through telehealth.

Starting in 2021, the VBID model will allow Medicare Advantage plans to offer hospice benefits.  The change is to allow greater access to hospice and better coordination of care between all members of a beneficiaries’ medical team.

The Part D payment modernization announced last week, Under the new model, participating plans will take on greater risk for spending in the catastrophic phase of Part D, creating new incentives for plans, patients, and providers to choose drugs with lower list prices.  Based on plan year performance, CMS will calculate a spending target for what government spending would have been without plans taking on this additional risk.  Participating Part D plans will share in savings if they stay below the target but will be accountable for losses if they exceed the target.

Click here for the full press release.

Click here for the VBID Fact Sheet for 2020.


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