Medicare Part D Archives - EMPLOYEE BENEFITS BLOG

The Impact of the ACA 1557 Final Regulations on Gender-Affirming Care

by Alden Bianchi | May 30, 2024 | Employee Benefits, Health and Welfare Plans

Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance.

On May 6, 2024, the US Department of Health and Human Services Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services published final regulations (final regulations) implementing Section 1557 (Our summary and overview of the final regulations is available here.) Entities that are subject to Section 1557 (covered entities) include hospitals, health clinics, health insurance issuers, state Medicaid agencies and community health centers. While group health plans are not themselves covered entities unless they receive federal financial assistance (e.g., certain Medicare Part D programs and Employer Group Waiver Plans), carriers that provide administrative services to group health plans may themselves be covered entities if they receive federal financial assistance (e.g., by selling Medicare Advantage products).

Reversing prior law, the final regulations unambiguously prohibit categorical coverage exclusions or limitations for health services related to gender transition or other gender-affirming care. OCR finds support for this change in the US Supreme Court’s decision in Bostock v. Clayton County, which held that Title VII of the Equal Employment Act prohibits an employer from discriminating against an individual on the basis of sexual orientation. But prohibiting categorical coverage exclusions is not the same thing as requiring covered entities to provide access to gender-affirming care under all circumstances. There are limits; covered entities must not:

[D]eny or limit services based on gender identity or sex assigned at birth, adopt any policy of treating individuals differently on the basis of sex, including to the extent it prevents an individual from engaging in a health program or activity consistent with the individual’s gender identity, or deny or limit services sought for gender transition or other gender-affirming care based on sex assigned at birth or gender identity.

The provision would outlaw blanket bans on both gender-affirming care itself and on specific gender-affirming procedures (like facial feminization surgery). But it would also prohibit plans or carriers that qualify as covered entities from covering breast reconstruction for cancer treatment, or hormones to treat post-menopause symptoms, without also covering these procedures to treat gender dysphoria.

The final regulations do not interfere with individualized clinical judgment about the appropriate course of care for a patient. (The preamble makes further claims that OCR has a general practice of deferring to a clinician’s judgment about whether a particular service is medically appropriate for an individual, or whether the clinician has the appropriate expertise to provide care.) A provider’s belief that gender transition or other gender-affirming care can never be beneficial, or its compliance with a state or local law that reflects a similar judgment, is not a sufficient basis for a judgment that a health service is never clinically appropriate, however.

The 2016 final Section 1557 regulations were successfully challenged in Franciscan Alliance v. Burwell (N.D. [...]

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The ACA 1557 Final Regulations: Plans and Plan Sponsors as Covered Entities

by Alden Bianchi | May 21, 2024 | Employee Benefits, Health and Welfare Plans

In a recent On the Subject (available here), we reported on the impact of the final rule (final rule) interpreting Section 1557 of the Affordable Care Act (ACA) on self-funded group health plans that contract with licensed health insurance issuers to provide administrative services. That article considered instances in which neither the plan sponsor nor the group health plan was a covered entity for Section 1557 purposes. This post starts by assuming that either the plan sponsor or the group health plan is or at least may be a covered entity.

Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. The final rule makes clear an employer’s employment practices, including the sponsorship of a group health plan, are not generally subject to the rule. Thus, an employer does not become subject to Section 1557 by simply offering a group health plan, and a group health plan is not a covered entity where it does not receive federal financial assistance. The preamble cites examples of plans that may (or may not) receive federal financial assistance: Employer Group Waiver Plans (EGWPs), Medicare Advantage plans and Medicare Part D plans.

Plan Sponsor/Covered Entity

There are clearly instances in which a plan sponsor is itself a covered entity for Section 1557 purposes. This is the case wherever the plan sponsor is itself principally engaged in providing or administering health programs and activities (e.g., a hospital that accepts Medicare). Where that is the case, all the entities’ operations are also subject to Section 1557. The reference to “all” an entities’ operations usually conjures up images of separate legal entities under common control (e.g., a subsidiary or affiliate of the plan sponsor). But is the covered entity’s group health plan part of the covered entity’s operations? (See, e.g., T.S. v. Heart of CarDon, LLC, holding that Section 1557 applies to all the activities of a covered entity plan sponsor, including its group health plan, regardless of whether the group health plan itself received federal financial assistance.) In the context of the final rule, we are not sure that it matters. The plan sponsor is itself a covered entity that is subject to, and will need to comply with, Section 1557 irrespective of the status of the plan.

Part D and EGWPs

According to the preamble to the final rule, EGWPs, Medicare Advantage plans and Part D plans are covered entities where the plan receives federal financial assistance. EGWPs are types of Medicare Advantage plans or Part D prescription drug plans that qualify for waivers of certain Medicare regulations. Prior to the 2003 Medicare Modernization Act, employer-sponsored Part D coverage was the primary source of coverage for retirees. EGWPs, which came later, provided a more flexible alternative for employers seeking the benefits that could be captured through waivers. Whether the EGWP, Medicare Advantage plan or [...]

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Medicare Coverage of Wegovy Raises Questions Regarding the Affordability and Accessibility of Novel Medications

by Jeffrey Davis, Paul Radensky, Parashar Patel and Amy Kelbick | May 15, 2024 | Employee Benefits, Health and Welfare Plans

The Centers for Medicare & Medicaid Services (CMS) announced in March that it would allow health plans under Medicare Part D (the Medicare prescription drug benefit) to cover Wegovy and other weight-loss medications if they receive Food and Drug Administration (FDA) approval for an additional medically accepted indication.

In Wegovy’s case, the FDA recently approved an additional indication “to reduce the risk of major cardiovascular events (such as cardiovascular death, non-fatal myocardial infarction, or non-fatal strokes) in adults with established cardiovascular disease and either obesity or overweight” in combination with a reduced caloric diet and increased physical activity. As a result, Wegovy can be available for Medicare beneficiaries who have an established cardiovascular disease and are either overweight or obese. Part D coverage is still not available for weight-loss medications in beneficiaries who do not have the additional medically accepted indication.

340B Remedy Rule and Medicare Advantage Rates: Navigating Shifting Payments

by Emily J. Cook and Emily Curran | May 7, 2024 | Employee Benefits, Health and Welfare Plans

On April 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year (CY) 2025 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, otherwise known as the rate announcement. The rate announcement is released annually and includes updates to the methodologies used to calculate MA plan payments, as well as other payment policies that impact Part D. The CY 2025 rate announcement finalizes the policies proposed in CMS’s January 2024 advance notice.

CMS Releases CY 2025 Advance Notice for Medicare Advantage and Part D

by Emily Curran and Kristen O'Brien | Mar 21, 2024 | Employee Benefits, Health and Welfare Plans

On January 31, 2024, the US Centers for Medicare & Medicaid Services (CMS) released the Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and D Payment Policies. CMS also released a press release and fact sheet. The advance notice is released on an annual basis and includes proposed updates to the capitation and risk adjustment methodologies used to calculate payments to MA plans, as well as other payment policies that impact Part D. The final CY 2025 rate announcement will be published no later than April 1, 2024.

The advance notice discusses several updates the Inflation Reduction Act of 2022 (IRA) made for 2025, including:

Newly defined Part D benefit design composed of three phases: annual deductible, initial coverage and catastrophic coverage
Lower out-of-pocket threshold of $2,000
Sunset of the Coverage Gap Discount Program and establishment of the Manufacturer Discount Program, and
Changes to the liability of enrollees, sponsors, manufacturers and CMS (Draft Part D Redesign Program Instructions, Draft Part D Redesign Program Instructions Fact Sheet)

As a result of the IRA, CMS proposes updates to the Part D risk adjustment model to reflect the Part D benefit design.

CMS is annually required to update the parameters for the defined standard Part D drug benefit. This is meant to ensure that the actuarial value of the drug benefit tracks changes in Part D expenses. For non-low-income subsidy beneficiaries, the advance notice outlines the benefit parameters for defined standard benefits in 2025 as follows:

Pharmacy Benefit Manager Reform: What’s on the Horizon? (December 2023 Update)

by Leigh Feldman, Amy Kelbick, Rachel Stauffer, Erica Stocker and Katie Waldo | Dec 27, 2023 | Employee Benefits, Health and Welfare Plans

The price of prescription drugs has brought scrutiny to the entire drug supply chain. Congress and other policymakers continue to seek opportunities to lower costs for patients and the federal government. Pharmacy benefit managers (PBMs) are a key stakeholder in the drug supply chain, functioning as intermediaries between insurance providers and pharmaceutical manufacturers.

Congress and other stakeholders are raising questions about PBMs’ operations and their impact on drug prices and out-of-pocket costs for patients. In the 118th Congress, six key committees have advanced legislation that would increase PBM transparency and reporting obligations and modify other business practices. In the House, three committees combined to introduce H.R. 5378, the Lower Costs, More Transparency Act, which passed the House December 11, 2023. Read on as we review and compare policies in the Lower Costs, More Transparency Act and the PBM bills considered individually by the relevant House and Senate committees.

Access the full report.

Pharmacy Benefit Manager Reform: What’s on the Horizon?

by Rachel Stauffer, Katie Waldo, Amy Kelbick, Leigh Feldman and Erica Stocker | Oct 17, 2023 | Employee Benefits, Health and Welfare Plans

The price of prescription drugs has brought scrutiny to the entire drug supply chain. Congress and other policymakers continue to seek opportunities to lower costs for patients and the federal government.

Pharmacy benefit managers (PBMs) are a key stakeholder in the drug supply chain, functioning as intermediaries between insurance providers and pharmaceutical manufacturers. PBMs administer prescription drug benefits and seek discounts for insurers as standalone plans, such as Medicare Part D plans, or as entities embedded in commercial insurance products, including Medicare Advantage, Medicaid Managed Care Organizations and employer-sponsored coverage.

PBMs are under increased scrutiny from policymakers due to the perceived opaqueness of their operations and their perceived role in increasing drug costs. As part of this scrutiny, Congress and other stakeholders are raising questions about PBMs’ impact on drug prices and out-of-pocket costs for patients. In the 118th Congress, several key committees have advanced legislation that would increase PBM transparency and reporting obligations and modify other business practices.

Read on for a side-by-side comparison of US House and US Senate PBM bills and our forecast of the possible effects of these proposed changes to PBM operations.

Tenth Circuit Reaffirms Preemption of State Pharmacy Network Regulations

by Andrew Liazos, Michael B. Kimberly and Sarah P. Hogarth | Aug 23, 2023 | Employee Benefits, Health and Welfare Plans

The US Court of Appeals for the Tenth Circuit recently held in Pharmaceutical Care Management Association v. Mulready (PCMA) that the Employee Retirement Income Security Act (ERISA) and Medicare Part D preempted several provisions of Oklahoma law regulating pharmacy benefit managers and pharmacy networks. Left unchallenged, these provisions threaten the ability of employers and Medicare Advantage organizations to design uniform nationwide health plans. The Tenth Circuit’s decision in favor of PCMA overturned a lower court decision that caused great concern about the ability of states to indirectly dictate the design of plans governed by ERISA and Medicare Part D.

Medicare Drug Price Negotiation Program and Drug Pricing Reform: Eligible Drugs to Know and Understanding What’s Next

by McDermott Will & Emery | Nov 1, 2022 | Benefit Controversies, Employee Benefits, Health and Welfare Plans

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), which contains prescription drug pricing reform provisions. The three main Medicare prescription drug pricing reform provisions included are as follows:

Drug Price Negotiations: Allows the federal government to negotiate for a select number of vaccines and/or drugs
Inflation-Based Rebates: Mandates that manufacturers pay a rebate to the federal government when the list prices of Part B or Part D drugs grow at a faster rate than the inflation rate
Part D Benefit Redesign: Implements an out-of-pocket maximum for beneficiaries at $2,000 and redistributes liability among manufacturers, health plans, patients and the federal government across phases of the Part D benefit starting in 2024.

Leveraging data from the Centers for Medicare and Medicaid Services’ (CMS’s) Medicare Drug Spending Dashboard and FDA databases, McDermott+Consulting has identified the potential list of drugs subject to negotiations.

This information is particularly valuable for pharmaceutical companies, health plans, patients, pharmacies and other stakeholders as they evaluate and consider the implications of this legislation. In less than one year, on September 1, 2023, the Health and Humans Services (HHS) Secretary will publish the first list of selected drugs subject to drug price negotiations. Understanding the statutorily mandated negotiations framework, timeline and potential drugs that may be included is critical to support stakeholders’ efforts to obtain optimal outcomes.

This report describes the drug price negotiation program, an implementation timeline for drug price reforms from the IRA and information on which drugs are likely to be first subject to price negotiation.

Download the report.

CMS Announces 2023 Medicare Premiums and Deductibles

by McDermott Will & Emery | Oct 3, 2022 | Employee Benefits, Health and Welfare Plans

On September 27, 2022, the Centers for Medicare & Medicaid Services (CMS) released 2023 premiums, deductibles and coinsurance amounts for Medicare Parts A and B, and the Medicare Part D income-related monthly adjustment amounts.

In 2023, the standard monthly premium for Medicare Part B enrollees will be $164.90, a decrease of $5.20 (from $170.10) in 2022, and the deductible for all Medicare Part B beneficiaries will be $226, a decrease of $7 (from $233) in 2022. The decreases stem from a decline in the price of an Alzheimer’s drug and limitations on its usage, as the Alzheimer’s drug was the main factor for the spike in monthly Part B premiums in 2022, according to CMS.

For Part A, the inpatient hospital deductible (which beneficiaries pay if admitted to the hospital) will be $1,600 in 2023, an increase of $44 from $1,556 in 2022.

For Part D, where higher income beneficiaries’ monthly premiums are adjusted based on income, CMS set forth the 2023 monthly adjustment amounts, beginning with beneficiaries with less than $97,000 in modified adjusted gross income (no monthly Part D adjustment) and incrementally increasing to a $76.40 monthly premium adjustment for those whose modified adjusted gross income is greater than $500,000.

Medicare open enrollment for 2023 begins on October 15 and ends on December 7.

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