On January 18, 2019, the Centers for Medicare and Medicaid Services (CMS)’ Center for Medicare and Medicaid Innovation (CMMI) announced a new payment model that will allow Medicare Part D plans to share in the savings that are generated by reducing the costs in the program’s catastrophic phase.
The program, the Part D Payment Modernization Model, is part of President Donald Trump’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs and iams to reduce government spending once patients have spent $5,100 in out-of-pocket drug costs. When patients reach that level of spend, taxpayers become responsible for 80% of the costs, while the plans pay 15%. CMS believes that this new model may save taxpayers $2 billion per year.
The model for Medicare Advantage plans is an update to the Medicare Advantage Value-Based Insurance Design or “VBID” model that CMS first launched in 2017. The model for Part D plans is called the Part D Payment Modernization model. These are both voluntary models to advance innovation – meaning certain Medicare Advantage and Part D plans can choose to participate, and patients can choose to enroll in participating plans. The models will be closely monitored, and if they clear certain thresholds for impact on quality, costs, and access to benefits, the models can be expanded in scope.
Those who participate in the five-year model will take on dual-sided risk. CMS will calculate a benchmark for what government spending would have been without plans taking on the additional risk, and Part D plans willshare an unspecified percentage of savingsif they stay below the target. Plans that exceed the target will be accountable for 10 percent of the federal government’s losses.
The CMMI model will also provide participants with additional tools to increase engagement between plans and beneficiaries and to promote better understanding of the Part D benefit, out-of-pocket costs, and clinically equivalent therapeutic options. Under the Part D Rewards and Incentives program, CMS says that plans will be granted additional “flexibility… to strengthen the clinical relationship between the enrollee, their provider, and his or her chosen Part D plan.” While details on this aspect are limited, CMS notes that “additional programmatic flexibilities available will be outlined to model participants” in the RFA.
Applications to participate in the model for the 2020 plan year are due by March 1, 2019 and are open to both stand-alone Part D plans and Medicare Advantage (MA), though the formal Request for Applications (RFA) is not yet available. Once available, if a Part D sponsor chooses to apply with a standalone plan in a Part D region, the Part D sponsor must include all standalone plans in that Part D region. If a Medicare Advantage Organization (MAO) chooses to apply with an MA-PD, the MAO must include all of the eligible MA-PD plan benefit packages (PBPs) offered in or across the Part D region(s) that the MA-PD serves.