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February 19, 2013

CMS releases Parts C and D proposals, reduces Part D deductible for 2014

By Sheila Lynch-Afryl, JD, MA

Beneficiaries will enjoy greater protection and improved payment accuracy as a result of two proposals released by CMS. In the 2014 advance notice and call letter, CMS announced that the Medicare Part D deductible for 2014 will decrease from $325 to $310. In addition, the advance release of a proposed rule establishes requirements for medical loss ratios (MLRs) for Medicare Advantage (Part C) and prescription drug plans (Part D), which, according to CMS, promote greater accountability and transparency. The proposed MLR rule will be published in the Federal Register on February 22, 2013.

Medical loss ratio. Under the Patient Protection and Affordable Care Act (P.L. 111-148) (PPACA), Medicare Advantage and prescription drug plans must meet a minimum MLR beginning in 2014. Plans must have a medical loss ratio of 85 percent, which means they must spend at least 85 percent of premium dollars on health care or quality improvement activities, as opposed to administrative costs and profit margins, or they will be subject to a sanction. If a plan fails to meet the minimum MLR requirement for three consecutive years, it will be subject to enrollment sanctions; if it fails to meet the requirements for five consecutive years, the sanction is contract termination.

Under the advance release of the proposed rule, an MLR would be determined based on the percentage of contract revenue spent on clinical services, prescription drugs, quality improvement activities, and direct benefits to beneficiaries in the form of reduced premiums. The proposed rule, which uses the MLR rules for the private health insurance market as a reference point, proposes to add new Subpart X to 42 C.F.R. Parts 422 (Part C) and 423 (Part D). It describes reporting requirements and how to calculate the MLR.

Auto-ship refill services. The 2014 advance notice and call letter notes that some pharmacies do not always verify that a beneficiary still wants a drug before delivering each refill, and others automatically deliver new prescriptions that were phoned in or e-prescribed without confirming that the beneficiary wants the prescription filled and delivered. When the prescription has been delivered, pharmacies cannot return the medication to stock and generally do not reverse the claim if the patient does not want it. To abate this practice, CMS proposed the new requirement for 2014 that pharmacies obtain consent to deliver a prescription, either new or refill, before each delivery.

Out-of-pocket spending. The standard Part D deductible for 2014 will decrease from $325 to $310, and the initial coverage limit will decrease from $2,970 to $2,850, according to the 2014 advance notice and call letter. The out-of-pocket threshold will be $4,550, down from $4,750 for 2013.

Fee-for-service Medicare. CMS made other proposals in the advance notice and call letter to better align payments for Part C with Medicare fee-for-service (FFS) (Parts A and B). For example, CMS proposed to phase in alignment of Medicare Advantage benchmarks with Medicare FFS costs and to continue to adjust for diagnostic coding differences between Medicare Advantage plans and Medicare FFS providers.

Medication therapy management. To support its Million Hearts initiative, which aims to prevent one million heart attacks and stroke by 2017, CMS encourages sponsors to offer medication therapy management to beneficiaries who fill one or more prescriptions of anti-hypertensive medications a year. It also encourages plans that offer a $0 or very low price tier to place blood pressure medications on this tier.

To be considered, comments on the advance notice and draft letter must be submitted by March 1, 2013. The final 2014 rate announcement and call letter will be published April 1, 2013.

MainStory: TopStory AgencyNews PartCNews PartDNews

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