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Two Rules With Potential Part D Rebate Access Impact

By February 9, 2022March 7th, 2022CMS, Medicare, Part D

Two rules have the potential to impact how Part D price concessions and pharmaceutical rebates are managed and how these changes, when implemented, will subsequently impact a Part D sponsor’s operational areas. First, a recently proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) includes a requirement for plans to include any price concessions within the negotiated drug cost. Second, CMS has already finalized some changes to the federal Anti-Kickback Statute (AKS) safe harbor protections, which would require any pharmaceutical rebates to be applied at the point-of-sale, but those changes have not yet taken effect.

The background and possible operational impacts of both rules are outlined below.

  • Price Concessions:  Proposed Rule
    On January 12, 2022, CMS published the proposed rule titled “Contract Year 2023 Policy and Technical Changes to the Medicare Advantage Program and Medicare Prescription Drug Benefit Programs” (CMS-4192-P). If finalized, this rule would redefine the term ‘‘negotiated price’’ as the lowest possible reimbursement a pharmacy could receive for a covered Part D drug under its contract with the Part D sponsor or the sponsor’s intermediary. Additionally, the definition would specify that the negotiated price for a covered Part D drug must include all pharmacy price concessions and any dispensing fees and exclude additional contingent amounts (such as incentive fees) if these amounts increase prices, even when such price concessions are contingent upon performance by a pharmacy. Currently, if the price concession cannot be reasonably determined at the point-of-sale, Part D sponsors may calculate and collect these amounts after the claims have processed and the Part D sponsor has subsequently reported these amounts on the plan’s annual Direct and Indirect Remuneration (DIR) report. If this proposed rule is implemented, this will no longer be permitted, and all price concessions will be applied at the point-of-sale and reported to CMS on the prescription drug event (PDE) record. These changes are proposed to be effective January 1, 2023. Comments on the proposed rule are due on/before March 7, 2022. Also note, this rule is only proposed to impact price concessions and not pharmaceutical rebates.

If the above rules go into effect, any rebates and/or price concessions would need to be applied at the point-of-sale and buy down the claim’s drug cost. A reduction in the claim’s drug cost would benefit the member when they are in the deductible phase, paying a coinsurance benefit, and would also slow down their advancement to the coverage gap benefit phase. Without being able to apply rebates and/or price concessions after the claim processes, Part D sponsor’s liability will increase which may cause an increase in premiums. Part D sponsors will need to work closely with their bid actuaries to account for these changes in the bid calculation process.  Part D sponsors will also need to work with their PBM and other operational areas, because claim adjudication, PDE, Part D Explanation of Benefits (EOB), and DIR reporting will likely need to be updated to support the implementation of these rules.

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