Updates on Medicare, Step Therapy and Specialty Tiers

Medicare Legislative Update

Many advocates for Medicare beneficiaries are backing a new bipartisan bill to further expand off-label Part D drug coverage by modifying the rules in the prescription drug program to mirror those used in Part B. The bill would modify the Part D rules to allow plan sponsors to pay for drugs used off label to treat diseases other than cancer — such as Alzheimer’s, multiple sclerosis (MS) and muscular dystrophy — if they are not in Medicare-approved compendia, but are supported by peer-reviewed literature.

The Medicare Modernization Act, which created the Part D program, originally prohibited plan sponsors from covering drugs prescribed off label unless they are listed on Medicare-approved compendia. Under Part B, which covers drugs that are administered in a doctor’s office, off-label drugs are covered if their use is supported in peer-reviewed literature. The Medicare Improvement for Patients and Providers Act (MIPPA), passed in 2008, expanded Part D coverage for off-label prescriptions of cancer drugs if they were supported by peer-reviewed literature.

The new bill would use the existing Part D coverage and appeals rules to allow plan sponsors to pay for off-label drug uses on a case-by-case basis, but wouldn’t mandate that coverage. Also, it would include a thorough review of the “safety and efficacy of the drugs,” which have been a concern for lawmakers.

One issue the bill does not address, however, are therapies that are covered under Medicare Part D and used on an off-label basis, yet under Medicare Part B are subject to Local Coverage Determinations, which affect coverage and dosing, even if the medical literature supports their use. Another issue not addressed is the development of Tier 4 plans that allow co-insurance charges for specialty therapies under Medicare Part D. Co-insurance charges that average 20 percent to 35 percent for therapies such as IVIG can cost hundreds to thousands of dollars per month.

The bill is sponsored by first-term Ohio Democrat Mary Jo Kilroy, who suffers from MS, and is co-sponsored by two Texas Republicans: Reps. William “Mac” Thornberry and Michael Burgess.

Neurologists Not Eligible for Medicare Payment Incentives and Increased Medicaid Rates

An error has led to the omission of neurologists from the list of specialists eligible to receive the Medicare payment incentives under the Patient Protection and Affordable Care Act, HR 3590, as well as increased Medicaid rates in the Health Care and Education Affordability Reconciliation Act, HR 4872.

HR 3590 provides a bonus to physicians who: 1) specialize in family medicine, internal medicine and geriatric medicine, and 2) have allowed charges for evaluation and management services that account for at least 60 percent of the physician’s or practitioner’s total allowed charges. HR 4872 requires that Medicaid payment rates to primary care physicians (family medicine, general internal medicine or pediatric medicine) for furnishing primary care services in 2013 and 2014 be at least 100 percent of Medicare payment rates under both fee-for-service plans and managed-care plans.

Neurology practices are heavily focused on patient evaluation, management and coordination of care, and, on average, neurologists bill 61 percent of their services as described in the second criteria of HR 3590. Efforts are under way to add neurology to the list of specialties eligible for these incentives before access to care for patients is compromised.

Louisiana Passes Bill to Bypass Step Therapy

On July 2, 2010, the governor of the state of Louisiana signed into law legislation that would put the right to prescribe the best therapy for patients in the hands of physicians.In an effort to save money, insurance companies have previously required patients to first undergo step therapy, which has caused, in many cases, irreparable harm.

As of Jan. 1, 2011, Louisiana state health plans must provide coverage for step therapy or fail-first protocols. When medications for a treatment of any medical condition are restricted for use by an insurer by a step therapy or fail-first protocol, the prescribing physician shall have access to a clear and convenient process to expeditiously request an override of that restriction. An override must be considered by the insurer under any of the following circumstances: The prescribing physician can demonstrate, based on sound clinical evidence, that the preferred treatment required under step therapy or fail-first protocol has been ineffective in the treatment of the insured’s disease or medical condition; is expected to be ineffective based on the known relevant physical or mental characteristics of the insured and known characteristics of the drug regimen; or will cause or will likely cause an adverse reaction or other physical harm to the insured.

New York Law Prohibits Drug Specialty Tiers

The state of New York has passed a new law that prohibits commercial health insurance plans from creating specialty tiers within their prescription drug formularies. According to the law, the justification for the ban on specialty tiers is as follows:

As the cost of prescription drugs continues to climb, health insurance plans in California, Minnesota, Maryland and Alabama have created new specialty tiers to increase the co-payments that consumers pay. Instead of a three-tiered drug formulary structure used by most plans (where Tier 1 is for generics, Tier 2 is for brand-name preferred drugs, and Tier 3 is for brand-name non-preferred drugs), some plans have begun to add fourth and fifth tiers for the most expensive medications. These additional tiers assign a percentage of the cost of the medication as co-insurance, as opposed to a set dollar amount used in the other three tiers. An example might be $10 for Tier 1 generics, $25 for Tier 2 brandname preferred drugs, and $50 for Tier 3 brand-name non-preferred drugs. In the states allowing specialty tiers, medications placed in Tiers 4 and 5 are typically assigned a co-insurance payment of between 20 percent and 35 percent. Therefore, a patient being treated for multiple sclerosis (MS), for example, could have a monthly copayment that could reach $775. People living with chronic illnesses, such as MS, rheumatoid arthritis and hemophilia, or people with a life-threatening condition, such as HIV, breast or colorectal cancers, leukemia and non-Hodgkin’s lymphoma, are the patients who are most affected.

According to the New York law, specialty tiering is contrary to the original purpose of insurance, which is to spread the cost. Instead, it creates a structure where those who are most sick pay more, which is an unlawful discriminatory practice