On April 1, 2019, CMS released the final Medicare Advantage and Part D Call Letter for the 2020 plan year. While the Call Letter itself was relatively quiet, compared to other Administration activities around the two benefits, CMS pulled back on a proposal to limit plan sponsors from placing generic drugs on tiers labeled “brand” and vice versa. Beneficiaries can also expect a large increase in out-of-pocket spending next year: the out-of-pocket threshold will increase $1,250 to $6,350, meaning beneficiaries will have to wait longer before reaching the catastrophic coverage portion of the benefit. CMS has no flexibility in this, as the benefit parameter calculations are mandated by law.

The same beneficiaries could also be facing higher premiums, if the Administration moves forward with a separate proposal regarding rebate agreements made between pharmacy benefit managers (PBMs) and manufacturers. Many observers believe higher premiums will be one likely result if the policy is finalized. A final notice on that proposal is not expected until June at the earliest, but beneficiaries could be in for a rude awakening next year, after relatively stable premiums and cost-sharing in the past.

CMS Declines to Limit Generics to Generic-Labeled Tiers in Part D, but Warns Plans Against Blocking Generic Access

• In the draft Call Letter, CMS had solicited comments from stakeholders on whether the agency should prohibit Part D plan sponsors from placing generics on tiers labeled “brand” and vice versa.
• Noting opposition from plan sponsors, CMS declined to implement this policy, citing the risk of increased beneficiary premiums and higher cost-sharing.
• However, CMS notes that there are “limited” instances when Part D sponsors are not including generic alternatives when available, increasing cost-sharing and decreasing generic substitution.
• Therefore, the agency plans to continue to monitor beneficiary access to generic alternatives, utilization of multi-source brands when generics are available, and situations when the brand-drug is situated more favorably than the generic.

 Stakeholders Ask CMS to Work with Congress to Address $1,250 Increase in OOP Limits for 2020

• The benefit parameters for the standard benefit were finalized as proposed.
• Notably, the out-of-pocket (OOP) limit, at which point a beneficiary enters catastrophic coverage and only faces 5% cost sharing for the remainder of the calendar year, is increasing drastically from $5,100 in 2019 to $6,350 in 2020.
• Because the formula used to determine benefit parameters is set in statute, CMS has no flexibility in changing the parameters themselves.
• In response to commenters, CMS stated that the agency “remains committed to addressing the rising cost of prescription drugs for seniors.”

Standard Benefit	2019	2020
Deductible Beneficiary is responsible for 100% of drug costs.	$415	$435
Initial Coverage Limit Beneficiary is responsible for 25% of drug costs and the plan sponsor is responsible for 75% of drug costs, until total drug costs reach $4,020.	$3,820	$4,020
Out-of-Pocket Threshold Beneficiary is in coverage gap until out-of-pocket spending (including the value of any manufacturer rebates) reaches $6,350. During this time, beneficiary is responsible for 25% of drug costs. Brand manufacturers are responsible for 70% of drug costs for branded products, via rebate. Plan sponsors are responsible for 5% of drug costs for branded products and 75% of drug costs for generic products.	$5,100	$6,350
Catastrophic Coverage Once a beneficiary reaches $6,350 in out-of-pocket costs (including the value of manufacturer rebates paid on the beneficiary’s behalf), beneficiaries face the greater of 5% of drug costs or the following cost-sharing for the remainder of the plan year: ·         Generic/Preferred Multi-Source Drug ·         Brand Drug	$3.40 $8.50	$3.60 $8.95
Maximum Copayments for Non-Institutionalized Dual Eligibles
Up to 100% of federal poverty level (FPL) ·         Generic/Preferred Multi-Source Drug ·         Brand Drug	$1.25 $3.80	$1.30 $3.90
Over 100% of FPL ·         Generic/Preferred Multi-Source Drug ·         Brand Drug	$3.40 $8.50	$3.60 $8.95
Partial Subsidy ·         Deductible ·         Coinsurance up to out-of-pocket threshold ·         Maximum copayments above OOP threshold o   Generic/Preferred Multi-Source Drug/Biosimilar o   Other	$85.00 15%   $3.40 $8.50	$89.00 15%   $3.60 $8.95

CMS Finalizes Risk Adjustment Model for Medicare Advantage

• The 21^st Century Cures Act requires CMS to overhaul the current MA risk-adjustment process to better account for beneficiaries with multiple comorbid conditions.
• CMS is finalizing the Alternative Payment Condition Count (APCC) model for 2020, which incorporates a count of the number of conditions a beneficiary has into the model.
  • This model includes additional conditions for dementia and pressure variables.
  • Most of the public comments on the new risk adjustment process were supportive of using the APCC model.
• CMS will blend 50% of the risk score using the 2017 risk adjustment model and 50% of the risk score calculated with the alternative payment condition count model.

CMS Reiterates Comments in Draft Call Letter, Encourages Naloxone Availability

• CMS is continuing to encourage plan sponsors to include at least one naloxone product on a generic or Select Care Tier.
• The agency is also encouraging the co-prescribing of naloxone with an opioid prescription for beneficiaries at an increased risk of overdose.
• CMS reiterated their comments from the draft comment letter encouraging MA plans to offer non-opioid pain management treatments as a supplemental benefit.

MA Plans Can Begin Offering Non-Health Related Supplemental Benefits to Chronically Ill Beneficiaries

• Consistent with the Bipartisan Budget Act of 2018, MA plans will be able to offer non-health related supplemental benefits to chronically ill beneficiaries beginning with 2020
  • Plans must develop objective criteria and maintain detailed documentation for these supplemental benefits
• In response to public feedback, CMS clarified the following criteria for offering supplemental benefits:
  • Not covered by Original Medicare
  • Primarily health related
  • Plan incurs a non-zero direct medical cost in furnishing or covering the benefit
• The agency noted its expanded interpretation of “primarily health related” to consider items or services that may help diagnose or compensate for physical impairments, help limit the functional/psychological impact of injuries or conditions, or reduce avoidable emergency and healthcare utilization.

CMS Finalizes Auto-Ship Program for Prescription Refills Beginning with Contract Year 2020

• Part D plan sponsors will be allowed to offer voluntary auto-ship programs for enrollees beginning with contract year 2020.
• The following enrollee protections must be followed:
  • Enrollees opt-in to auto-ship refills on a drug-by-drug basis after an initial fill. Enrollees may also opt-out of auto-ship refills at any time;
  • A minimum of 2 shipping reminders are sent before each auto-shipped refill; and
  • The pharmacy provides a refund for any unwanted refills, which applies to both new prescriptions and auto-shipped refills.
• CMS chose not to finalize a separate annual consent and needing a four-month continuous therapy to qualify.
• Auto-ship programs will not be mandatory for Part D enrollees.