CMS’s Newly Proposed Rules Might Level the Playing Field for Independents in 2015

CMS’s Newly Proposed Rules Might Level the Playing Field for Independents in 2015
Posted by: by Kaitlin Strickland on January 24, 2014

In early January, CMS released CMS-4159-P, a document outlining proposed changes for Medicare Advantage and Medicare Part-D in 2015. While these changes are still just proposals, many of the rules are potentially big wins for independent pharmacies. After lobbying hard, it appears CMS has answered the NCPA’s calls on three key issues:

Preferred Pharmacy Networks

CMS’s proposed changes take a stab controlling the rapid and unequal expansion of preferred networks. In 2011, Walmart ushered in the era of preferred pharmacy networks with its Humana-Walmart plan. Now, only a few years later, roughly ¾ of all Part-D plans have a preferred network. Unsurprisingly, independent pharmacies are barely represented in these networks, and as NCPA research has shown, using a preferred pharmacy does not ultimately guarantee lower cost sharing.

CMS’s proposal would give every retail pharmacy, regardless of affiliation, the right to join a preferred network, provided they agree to the plan’s terms and price cuts. On top of that, CMS is also proposing a nomenclature change. “Preferred Pharmacies” are out, and “Preferred Cost Sharing” is in. CMS hopes to remove the perceived fault assigned to “non-preferred pharmacies”, which, for the most part, have never had the chance to join a preferred network to begin with. While this change may seem subtle, it goes to show that CMS understands how uneven the playing field has become in such a short time.

Mail Order Pharmacies

According to the Journal of Managed Care Pharmacy, mail order pharmacies now dispense 23.5% of all prescriptions, with that number being even higher in the senior population. Part-D plans are increasingly pressuring seniors to use mail order, and seniors are switching – often because they don’t fully understand their rights and options.

While mail order pharmacies may be cheaper for the patient, the lower price often isn’t worth the hassle. If there is an issue while filling a prescription via mail, the margin for error is too small to guarantee the patient will get their meds on time. CMS took note of this in their 2015 proposed changes. The new rule would continue to allow mail order pharmacies to offer lower cost sharing than preferred pharmacies in the case of extended days supply, but not in the case of a 1-month supply. CMS even goes on to say that they believe “filling initial prescriptions or routine 30-day supplies at mail-order is not good practice.” It seems CMS is recognizing the difficulties many customers face during the mail order process, and are proposing a fix. The new regulation will also allow for increased competition. Obviously, this is great news for the independent pharmacies. They may actually stand a chance of regaining the monthly customers they lost to mail order.

MAC (Maximum Allowable Cost)

Ignorance is not Bliss. CMS is aware that pharmacies are basically forced into signing contracts without any promises or guarantees on their future reimbursements. This issue rose to the forefront in 2013 after the huge spike in generic drug prices. Of course, there are a variety of reasons for the recent increase in generic drug prices (low supply, market consolidation, etc), but common generics are now chipping away at pharmacy revenue, and independents need to know what they’re getting themselves into. Thankfully, CMS’s new proposal would be a fantastic step in the right direction towards pricing transparency. The proposal redefines the meaning of “prescription drug pricing standards”, closing the semantic loophole that has allowed PBMs to keep their pricing secret. If passed, the proposal requires that all prescription drug pricing standards must be updated on “January 1st of each contract year, and not less frequently than once every 7 days”, essentially every week. This means your reimbursement estimates just got a lot more accurate.

We won’t find out the final word on these proposed rules until later in the year, but in the meantime, the plan is open for comments until March 7th. The NCPA’s initial response was positive, and it went on to thank CMS for listening to the requests they’ve been making for years. Seems like big changes are ahead.

You can read the NCPA’s response here, or make your own comment on the rule by visiting and referencing CMS-4159-P. Make your voice heard!

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