CMS Announces Medicare Advantage (MA) Plans May Begin Using Step Therapy in January 2019

CMS has announced it is eliminating an existing prohibition for MA plans to use a cost containment strategy known as “step therapy” for drugs administered in the physician’s office or facility. Step therapy requires physicians to prescribe an insurer’s preferred treatment first, and only covers more expensive treatments if the patient does not respond to the initial treatment. CMS issued new guidance that would allow MA plans to incorporate step therapy for new prescriptions beginning in 2019. The new guidance also permits MA plans that offer Part D drug coverage to use step therapy to require a Part D drug prior to using a Part B drug, or vice versa. This announcement is in conjunction with the Trump Administration’s push to reduce drug costs and seeks to incentivize drug makers to lower their prices.

The new guidance also requires insurers to notify beneficiaries if they will incorporate step therapy in MA or Part D plans. To encourage beneficiaries to participate in these programs, the guidance allows plans to offer rewards, such as gift cards, in exchange for participation. Rewards may not be made in the form of monetary or cash rebates and the value must be reasonable or appropriate. CMS will consider a reward or incentive of reasonable or appropriate value if it is equivalent to more than half the amount saved on average per participant by a more efficient use of healthcare resources, promotion of improved health, or prevention of injuries and illness.

ASCRS•ASOA and the medical community oppose the use of step therapy, as it potentially limits or delays patient access to needed care. ASCRS•ASOA and the Alliance of Specialty Medicine recently lobbied against step therapy at our Legislative Fly-In in Washington, D.C.

We will provide additional updates in future issues of Washington Watch Weekly. If you have additional questions, please contact Allison Madson, manager of regulatory affairs, at amadson@ascrs.org or 703-791-2220.