Challenges for providers taking on Medicare Part D risk

In January 2019, the Centers for Medicare and Medicaid Services (CMS) released Part II of the 2020 Advance Notice and Draft Call Letter, which contains the proposed methodological changes for the 2020 Medicare Advantage (MA) capitation rates along with Part C and Part D payment policies.

In the letter, CMS issued a request for comments on the potential use of risk-based arrangements for pharmacy benefits in contracts between MA plans and contracted providers. CMS noted that risk-based arrangements in contracting for pharmacy benefits may be another tool to drive down the cost of Part B drugs in MA and Part D drugs for MA and Part D plans. CMS requested information on the barriers, feasibility, benefits, and drawbacks for these types of arrangements between MA plans and contracted providers.

As part of its August 2018 proposed rule, CMS asked how accountable care organizations and Part D sponsors in the Medicare Shared Savings Program “could structure the financial terms of these arrangements to reward Part D sponsors’ contributions towards achieving program goals.” There was also a request for information in that rule regarding “barriers to developing these relationships.”

In this article, Milliman’s Matt Kramer, Simon Moody, and Michael Hunter provide a summary of the key issues providers need to consider before taking on Part D risk, an increasingly common ask from MA organizations, and highlight some of the complexities and common barriers observed when advising provider clients on their strategies for Part D risk.

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