Medicare Part D may be on the brink of one of the biggest
changes to the program since its start in 2006. A proposed rule from the
Department of Health and Human Services would revise the safe harbor protection
that currently allows pharmaceutical manufacturer rebates to be paid after the
point-of-sale and start requiring such rebates to be credited against the
drug’s point-of-sale price.
This change could dramatically reduce the member’s cost of
many brand-name drugs that receive rebates for Medicare beneficiaries. It also
affects employer group waiver plans (EGWPs) and merits immediate action on the
part of plan sponsors and insurers offering EGWPs.
Under the current rules, prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MAPDs) use anticipated rebate revenue to reduce their projected net plan liabilities. The proposed rule would move the revenue from a retrospective payment to an additional discount at the point-of-sale. Some PDPs and MAPDs will need to reduce copays to pass actuarial equivalency tests.
Most EGWPs are likely to see a financial impact in 2020. When plan designs have no deductible and no coinsurance, the shift from post-point-of-sale to point-of-sale rebates will affect spending phase progression and the net plan liability when coverage gap discount payments are reduced for brand-name scripts that receive rebates.
In this paper, Milliman consultant Steve Kaczmarek explains how the removal of the safe harbor protection will affect EGWPs and what EGWP sponsors and insurers can do to mitigate changes.
Milliman consultants Patrick Cambel, Dustin Pollastro, and Steve Kaczmarek will speak at the 2019 Pharmacy Benefit Management Institute National Conference in March. Their session entitled “Best Practices to Optimize a Pharmacy Benefits Program in a Dynamic Environment” will offer perspectives to help plan sponsors optimize their pharmacy benefit programs. They will provide an overview of potential changes to the regulatory environment, identify key strategies that can be implemented to procure and maintain superior contracting terms, and discuss best practices for maintaining a strong pharmacy benefit program within a dynamic industry as well as methods to improve clinical outcomes.
For more information about the conference, click here.
Even before the first member is enrolled, consumer operated and oriented plans (CO-OPs) will invest thousands of hours in developing the operational infrastructure that will provide healthcare coverage for their members. Conventional approaches to managing cost such as contract negotiations with network providers for competitive unit costs and implementing medical management models to curb excessive utilization are important starting points for controlling the cost of claims. However, recent changes to the nation’s healthcare system have created a few additional items for CO-OPs to consider as they prepare for October 2013 and enrolling their first members.
Read more in the latest issue of CO-OP Point of View.