Medicare Part D Pharmacy Updates

1. 1 Medicare Part D Pharmacy Updates John Cocchiara Lead Regional Pharmacist Adele Pietrantoni Boston Regional Pharmacist Centers for Medicare & Medicaid Services June 1 and June 2, 2010

2. Agenda Plan Benefit Changes Supplemental File Changes Benefit Review Compliance Transition Requirements Scenarios Medicare Coverage Gap Discount Program 2

3. PBP changes 3

4. Tier Number Maximum of 6 tiers for 2011 PBPs Includes Part D Excluded Drug only tiers All benefit types except Defined Standard (DS) No tier designations for DS plans 4

5. Tier Labels New Standardized Labels New drop down menu of label options Based on information entered regarding the type of drugs included on the tier and designation as the specialty tier Specialty tier can only be labeled as �Specialty Tier Drugs� Excluded drug only tiers must include the term �Supplemental� in the tier label Populated in Summary of Benefits (SB) 5

6. �Additional� Gap Coverage Level Descriptions Standardized Gap Coverage Level Descriptions Percentage of formulary drugs covered through the gap Part D Excluded Drugs not used in coverage level determinations Reflects coverage above the new 7% standard coverage of generic drug costs 6

7. �Additional� Gap Coverage Level Descriptions (cont.) Same thresholds and descriptions as 2010 Separate calculations and descriptions for formulary generics and brands All: 100% of formulary drugs covered through the gap Many: >65% - 100% of formulary drugs covered through the gap Some: >10% - <65% of formulary drugs covered through the gap Few: >0% - <10% of formulary drugs covered through the gap (and >15 products covered) None: 0% (or <15 products covered) 7

8. �Additional� Gap Coverage Level Descriptions (cont.) No entry of coverage level description by sponsors in the 2011 PBP New HPMS report to review coverage level descriptions Available mid-summer 2010 for plans with approved formularies 8

9. Required Prescription Drug Coverage New PBP questions to ensure MA-PD Part D benefits offer required prescription drug coverage throughout a service area Must indicate that a basic Part D plan exists in the same service area as the EA plan OR Must indicate that the submitted EA plan�s supplemental Part D premium has been bought down to zero with MA dollars 9

10. Over-the-Counter (OTC) Drugs Utilization Management (UM) Part D sponsors may elect to offer OTCs as part of their administrative cost structure New PBP question regarding the type of UM strategy applied to OTC drugs Answer must agree with HPMS Formulary submission 10

11. Over-the-Counter (OTC) Drugs OTC Medication Attestation Statement Must attest in PBP that OTC drugs covered under Part C are NOT the same as the OTC drugs covered under Part D 11

12. Part D Rx Notes New limit of 225 characters Used only to clarify information that cannot otherwise be entered in PBP Used infrequently, if at all Must not modify, qualify or contradict information in PBP nor limit the benefit No changes after bid approval 12

13. Supplemental file Changes 13

14. Home Infusion Supplemental File Plans may elect to bundle home infusion (HI) Part D drugs under Part C as a mandatory supplemental benefit Bundled drugs must be submitted on both the Formulary file and the Home Infusion (HI) supplemental file New HPMS validation to ensure that only drugs appropriate for home infusion are submitted on HI supplemental files 14

15. Over-the-Counter (OTC) Supplemental File Sponsors electing to offer OTCs must upload an OTC supplemental file New OTC supplemental file record layout Includes Step Therapy UM type indicator Includes same Step Therapy fields as Formulary Step Therapy files OTC step information must be consistent with PBP and Formulary file information 15

16. Benefit Review 16

17. Meaningful Differences Plan offerings within a service area must be meaningfully different with respect to benefit packages and cost structures Stand-alone prescription drug plans (PDPs) must have 1 basic offering in a service area If offered, the Enhanced Alternative (EA) PDP in the same service area must demonstrate greater value than the Basic plan 17

18. Meaningful Differences Out-of-pocket (OOPC) Cost comparisons Calculated using market basket of all drugs by a nationally representative cohort from Medicare Current Beneficiary Survey (MCBS file) Estimated based on each Part D sponsor�s benefit design 2010 values will be available in HPMS 18

19. Meaningful Differences OOPC (cont.) Multiple PDP offerings within a service area must be meaningfully different OOPC differential between an enhanced and basic plan must be at least $22 monthly ($264 annually) Exclusive of premium amounts Reflects $22 less in expected out-of-pocket costs for enhanced plan If 2 enhanced PDPs are offered the second must have higher value than the 1st and include coverage of at least �some� brand drugs 19

20. Meaningful Differences Low enrollment Plans CMS will scrutinize stand-alone Part D plans within the lowest quintile of enrollment in 2010 Applies to non-employer plans May use authority to non-renew in 2011 Encourage withdrawal or consolidation of any plans with less than 1,000 enrollees prior to bid submission 20

21. Part D Cost Sharing Review cost-shares for tiered benefit designs Establish nondiscriminatory cost-sharing thresholds based on 2011 benefit package data for PDPs and MA-PDs 2010 thresholds: Tier 1 $10, Tier 2 $45, Tier 3 $95 Identify outliers based on thresholds Atypical tiering structures and specialty tier placement will be considered 21

22. Part D Cost Sharing (cont.) New for 2011: Increased scrutiny of coinsurance tiers Calculation of average expected cost sharing using 2009 PDE data May request sponsor documentation regarding average expected price for medications 22

23. compliance 23

24. Formulary Administration Issues Failure to add protected class drugs to formulary Failure to adhere to CMS transition policy Utilization of unapproved prior authorization or step therapy edits and/or criteria 24

25. Formulary Administration Issues (cont.) Dissemination of marketing materials that are not consistent with approved formulary information Failure to process claims in accordance with the approved formulary Inadequate oversight of subcontractors 25

26. 26 Transition Process

27. 27 �A Plan�s transition process must address situations in which an individual first presents at a participating pharmacy with a prescription for a drug that is not on the formulary, unaware of what is covered by the plan or of the plan�s exception process to provide access to Part D drugs that are not covered� Plans must provide One-time, temporary supply of non-formulary Part D drugs Sufficient time to work situation out with prescriber Applies to Initial transfer to The Benefit New enrollees Between PDP�s New treatment setting Background

28. 28 Enrollees Changing PDP�s and Newly-Eligibles Temporary 30-day refill on non-formulary drug beneficiary was taking prior to enrollment in new plan(unless the enrollee presents with a prescription written < 30 days, in which case the Part D sponsor must allow multiple fills totaling 30 days). Duration 90 days from initiation of coverage

29. 29 LTC Residents Differences 31-day supply vs. 30-day supply Multiple fills must be honored Up to 93-day supply to be provided in first 90 days of enrollment

30. 30 Negative Formulary Changes Enrollees in same PDP but experiencing negative formulary changes from previous year Two options for plan sponsors Provide transition process in line with process for new enrollees Temporary drug supply Inform enrollee of their options Switch to a therapeutically appropriate drug on the formulary Seek an exception

31. 31 Effectuate transition process prior to start of year of change Prospectively transition enrollees to therapeutically appropriate formulary alternative Complete requests for formulary and tiering exceptions prior to start of year Negative Formulary Changes (cont�d)

32. 32 Exceptions Exceptions granted in the previous year Can choose to honor past the end of the year Must notify enrollee at least 60 days before end of year if not honoring and either Offer to process a prospective exception request for the next year Go through the transition process

33. 33 Exceptions (cont�d) What happens if a timely decision on an exception request isn�t made by the end of the transition period? Plans to arrange for an extension of the transition period on a case-by-case basis

34. 34 Level of Care Changes Pertains to enrollees who go from one treatment setting to another outside of the transition period e.g. Discharge of hospital patient with continuing antibiotic regimen Plans strongly encouraged to implement process for enrollees to obtain transition supplies

35. 35 LTC Enrollees Current enrollees entering LTC settings Emergency supplies of non-formulary drugs to be provided Includes formulary drugs with UM edits Not limited to initial enrollment Minimum 31-day supply

36. 36 Six Classes of Clinical Concern Must include all or �substantially all� (discussed on next slide) drugs in the six protected classes Anticonvulsants Antidepressants Antineoplastics Antipsychotics Antiretrovirals Immunosuppressants New drugs and/or new uses subject to expedited P&T committee review 90 days vs. usual 180 days

37. 37 �Substantially All� All drugs and unique dosage forms in these categories Exceptions Multi-source brands of identical molecular structure XR products when IR product is included Products with same active ingredient or moiety Dosage forms that don�t have unique route of administration e.g., tablet vs. capsule

38. 38 UM Edits on Protected Classes PA and ST edits not allowed to steer enrollees to preferred alternatives in these drug classes to those currently on a drug Treat enrollee as currently taking drug if unable to determine at point-of-sale (POS) Note for HIV/AIDS drugs UM edits not generally used in widely used, best practice formulary models

39. 39 Methods to Facilitate Transition Overrides SAMPLES Use of smart systems built into the claims processing system For new enrollees Based on enrollment files Telecommunications messaging to pharmacy with override codes or instructions on how to obtain it

40. 40 Background National Council for Prescription Drug Programs (NCPDP) Telecommunication Standard Version 5.1 reject error codes Two-character field that displays a brief explanation for reject to pharmacy, e.g. 70 = �Product/Service Not Covered� 75 = �Prior Authorization Required� 76 = �Plan Limitations Exceeded� 78 = �Cost Exceeds Maximum� Secondary messaging field Space for additional information Opportunity to provide guidance to pharmacies on how to proceed Emphasis on improving primary and secondary messaging Give clear reason for reject vs. nondescript message Instruct pharmacy on appropriate next step Reduces risk of beneficiary leaving pharmacy without needed medication

41. 41 Scenarios

42. 42 Scenario 1 A beneficiary goes to a pharmacy to have the antiretroviral drug Atripla filled for the first time. The drug is on the prescription drug plan�s (PDP�s) formulary. At the point-of-sale the claim denies because of the PDP�s high dollar cost edit.

43. 43 Scenario 1 Discussion Is the beneficiary entitled to the medication? Yes. The PDP is allowed to utilize this type of edit even on antiretrovirals, provided that the prescription can still be processed at the POS by the pharmacy so the beneficiary can leave with the drug. Inadequate messaging NCPDP error code 75 �Prior Authorization Required� No direction outside of PA message given Puts beneficiary at risk of leaving pharmacy without vital medication More appropriate messaging NCPDP error code 78 �Cost Exceeds Maximum� Provide phone number for pharmacy to obtain override to process prescription

44. 44 Scenario 2 A beneficiary drops off a prescription for Lexapro, an antidepressant. Her PDP has a new step therapy edit on Lexapro, necessitating the use of the preferred alternative citalopram first. She is a new enrollee who was previously stabilized on Lexapro.

45. 45 Scenario 2 Discussion Is the beneficiary entitled to a transition supply? No. Since CMS prohibits sponsors from utilizing these UM edits on enrollees currently taking a drug in one of the six classes of clinical concern, a UM override needs to be granted at the POS and not a temporary transitional supply, see section 30.2.5. Appropriate messaging NCPDP error code 75 �Prior Authorization Required� Step therapy required for new starts only. Call 1-800-XXX-XXXX for override or transition supply.

46. 46 Scenario 3 On January 2nd, a beneficiary goes to a pharmacy and drops off a prescription for Prozac, an antidepressant. It�s a non-formulary medication, but the generic version fluoxetine is on the formulary. She is a continuing member of the PDP.

47. 47 Scenario 3 Discussion 1(Prozac Non Formulary in Previous Year) Is the beneficiary entitled to a transition supply? No. This requires understanding of Chapter 6 of the Medicare Prescription Drug Benefit Manual, Section 30.2.5 . Appropriate messaging NCPDP error code 70 �Product/Service Not Covered� Secondary messaging: Non formulary contact plan for exception or formulary alternatives 1-800-XXX-XXXX Less appropriate messaging NCPDP error code 70 �Product/Service Not Covered� No secondary messaging

48. 48 Scenario 3 Discussion 2(Prozac Formulary in Previous Year) Is the beneficiary entitled to a transition supply? Yes. This requires understanding of Chapter 6 of the Medicare Prescription Drug Benefit Manual, Section 30.2.5 . Appropriate messaging NCPDP error code 70 �Product/Service Not Covered� Secondary messaging: Non formulary contact plan for exception or formulary alternatives 1-800-XXX-XXXX Less appropriate messaging NCPDP error code 70 �Product/Service Not Covered� No secondary messaging

49. 49 Medicare Coverage Gap Discount Program Beginning in 2011

50. Medicare Coverage Gap Discount Program Beginning in 2011 Coverage Gap Changes For 2010, Immediate Reduction to Coverage Gap - $250 Manufacturer Coverage Gap Discount Program 2011 Guidance released via HPMS on April 30,2010 50

51. Other Updates CMS has begun working on a regulation to implement the Affordable Care Act (ACA). Proposed regulation will hopefully be out in the Fall of 2010 51

52. Thank-you Questions? 52