CMS Promises to Scrutinize MA PFFS Plans

February 6, 2009

In response to recommendations from the Government Accountability Office (GAO), the Centers for Medicare & Medicaid Services (CMS) says it is cracking down on insurers that offer private fee-for-service (PFFS) plans under the Medicare Advantage (MA) program.

In response to recommendations from the Government Accountability Office (GAO), the Centers for Medicare & Medicaid Services (CMS) says it is cracking down on insurers that offer private fee-for-service (PFFS) plans under the Medicare Advantage (MA) program.

The GAO reported that about 45% of the recent growth in MA enrollment has been in PFFS plans: “Enrollment in these plans increased from about 35,000 beneficiaries in June 2004 to about 2.3 million beneficiaries in June 2008.” But the report found that although the CMS pays those plans about 17% more than it would if the beneficiaries were enrolled in Medicare, the plans seem to be failing their enrollees, according to some measures. Even though “beneficiaries in PFFS plans tend to be healthier and younger than beneficiaries in other MA plans,” the GAO noted, they face higher out-of-pocket costs and are disenrolling at a rapid rate: 21% compared with a 9% disenrollment rate for MA HMOs, PPOs, and provider-sponsored organizations.

The major problem spotlighted by the GAO was the penalty that many PFFS plans impose on enrollees who do not notify their plan before obtaining medical services. “For example, one sponsor of PFFS plans increased the share of the cost for which beneficiaries were responsible from 30% to 70% if the beneficiaries did not contact the plan before obtaining certain durable [medical] equipment.” In some cases, PFFS plans denied coverage completely because of an enrollee’s failure to prenotify, even though the CMS says that such denials are unlawful.

The GAO recommended that the CMS investigate just how extensive the prenotification problem is, and the agency said that it will collect new data from PFFS plans to help it better monitor coverage denials and complaints. The GAO also recommended that the CMS ensure that its guidance to PFFS plans accurately reflects its policy on prior authorization; the CMS promised to do so, as well as to provide PFFS plans with model terms and conditions. Finally, the GAO indicated that the CMS should mail disenrollment rates for every MA plan to all Medicare beneficiaries rather than just post the data on its Web site. The CMS responded that it had signed a new contract to obtain better data on disenrollments, but it did not address how it would distribute that data. The full GAO report is available at http://www.gao.gov/new.items/d0925.pdf.

Medicare Prescription Drug CoveragePart D Plans Increase Chemotherapy Copays
A study by the American Cancer Society (ACS) and Avalere Health shows that Medicare beneficiaries who have cancer and are enrolled in stand-alone Part D prescription drug plans (PDPs) will pay significantly more for their prescriptions this year-the result of PDPs shifting the drugs to higher formulary tiers at which copays range from 26% to 35%. For instance, 84% of the stand-alone plans that were examined put Gleevec in their most expensive tier for 2009 compared with 39% of plans in 2006.

One example cited in the study, which was limited to brand-name oral chemotherapy agents that do not have an intravenous alternative, showed the impact of the tier escalation on patients. The average Part D enrollee with colon cancer who receives prescriptions for newer chemotherapy agents will face out-of-pocket costs as high as $15,201 in 2009 compared with costs slightly under $9000 in 2006.

“We also found an increase in required preauthorizations,” noted lead author Christy Schmidt, senior policy director at the ACS’s Cancer Action Network. Gleevec was the drug that most frequently required prior authorization, with 70% of PDPs demanding it, compared with 35% doing so 3 years ago. In second place was Tarceva, with 62% of PDPs requiring preauthorization, up from 35% in 2006.

FDA Weighs New Concerns Over Patient Leaflets
The FDA is considering making another attempt to regulate the leaflets that pharmacists distribute to patients when they receive a new prescription. Congress blocked a previous bid by the FDA to impose standards on the consumer medical information (CMI) leaflets, but a new study commissioned by the agency revealed potential problems with the leaflets, which are not limited to the FDA-approved language included in drug labeling. “Consumers are not getting the information they need consistently enough to promote the safe and effective use of prescription medicines,” warned Janet Woodcock, MD, director of the Center for Drug Evaluation and Research. The FDA plans to hold an advisory committee meeting February 26-27.

The study, conducted by the National Association of Boards of Pharmacy (NABP) and the University of Florida College of Pharmacy, Gainesville, focused on CMI leaflets for lisinopril, a hypertension drug, and metformin, a diabetes medication; 365 leaflets were analyzed and found to vary widely in quality. The investigators reported that one-quarter of the leaflets did not meet the minimum criteria for information that patients need. The most common omission: clear dosing information.

The basic information on the drugs is provided by manufacturers, but pharmacies decide how that information is presented. “It appears that the editing the pharmacies are doing is causing the problems,” explained NABP Executive Director Carmen Catizone, MS, RPh, DPh.

The problems spotlighted in the study went beyond missing information. In some cases, diligence in providing required information led to wordy leaflets that had “information overload” and “possible redundancy.” Moreover, many CMI leaflets contained extraneous information, such as marketing pitches for vitamins that the analysts warned “could cause distraction for consumers and make it difficult to determine the most important information to read.”

Medicare Prescription Drug Coverage CMS Plans to Ban Reference-Based Pricing
In a policy reversal, the CMS is planning to ban reference-based pricing in Part D plans in 2010. Since the Medicare drug benefit was launched in 2006, the agency has supported use of the reimbursement formula that allows plans to impose hefty, additional out-of-pocket costs on enrollees who choose brand-name drugs over available generics. However, the CMS has decided that “reference-based pricing may be inherently misleading to beneficiaries and inconsistent with our goal of improving transparency.” The policy switch was revealed in January letters to plans outlining criteria for next year.

The option to employ reference-based pricing has never been very widely used. The CMS counts 63 plans from 30 insurers with the provision, and with the exception of Health Net, those insurers primarily operate in only limited geographic markets. In some situations, the system can mean that beneficiaries pay almost the full price of their medication, but this is not the reason why the CMS plans to alter its rules. The agency’s concern is that because the policy bases its penalty on the difference between the cost of a generic and that of a brand-name version of a drug, it is “very difficult to accurately convey the extent of expected out-of-pocket spending.” As a result, patients and physicians have little advance information about exactly what choosing a brand-name drug will cost.