CMS Proposes Changes for MA and Part D Plans: Coverage Changes for Protected Class Drugs, Step Therapy Requirements and Greater Price Transparency for Medicare Beneficiaries

On November 26, 2018, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would allow for changes in 2020 to coverage of protected class drugs, establish new requirements for when MA plans may apply step therapy as a utilization management tool for Part B drugs and implement electronic tools to increase drug price transparency for Medicare beneficiaries. This proposed rule is consistent with the President’s stated goal of lowering drug costs and reducing out-of-pocket costs for patients. Comments are due on January 25, 2018.

Changes to Drugs in Protected Classes

CMS is proposing changes to Part D coverage of protected class drugs. CMS believes these changes would increase the negotiating power of these plans and as a result, reduce out-of-pocket spending for beneficiaries.

Current Part D policy requires sponsors to include on their formularies all drugs in six categories or classes: (1) antidepressants; (2) antipsychotics; (3) anticonvulsants; (4) immunosuppressants for treatment of transplant rejection; (5) antiretrovirals; and (6) antineoplastics; except in limited circumstances. CMS proposes three exceptions to this requirement:

  • Broader use of prior authorization and step therapy for protected class drugs, including to determine use for protected class indications;
  • Exclusion of a protected class drug from a formulary if the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market; and
  • Exclusion of a protected class drug from a formulary if the price of the drug increased beyond a certain threshold over a specified look-back period.

Step Therapy Requirements for MA Plans

The agency reaffirms MA plans’ existing authority to implement utilization management tools, such as step therapy, and prior authorization programs for managing Part B drugs to reduce costs for both beneficiaries and the Medicare program. CMS proposes requirements under which MA plans may apply step therapy as a utilization management tool for Part B drugs. CMS believes this will encourage access to high-value products, including biosimilars.

Price Transparency for Medicare Beneficiaries

CMS is proposing to require Part D plans to increase price transparency on a patient’s out-of-pocket cost obligations for prescription drugs when a prescription is written. This would be accomplished through the integration of an electronic real time benefit tool with the prescriber’s e-Prescribing and electronic medical record systems.

CMS indicated in the proposed rule that they are also considering for a future plan year, which may be as early as 2020, a policy that would ensure that enrollees pay the lowest cost for the prescription drugs they pick up at a pharmacy, after taking into account back-end payments from pharmacies to plans.

A blog post on the proposed rule is available here.

A fact sheet on the proposed rule is available here.



For more information visit the McDermottPlus Payment Innovation Resource Center or contact Sheila Madhani at 202-204-1459 or or Mara McDermott at 202-204-1462 or