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CMS Allows MA Plans to Apply Step Therapy to Part B Drugs in 2019

Updated: Aug 28, 2018

By Jon Larsen, JD, MPP, McGA Policy Consultant


In August 2018, the Centers for Medicare and Medicaid Services (CMS) rescinded 2012 guidance that prohibited step therapy from applying to Part B drugs covered by Medicare Advantage (MA) plans. Step therapy is a utilization management tool that requires patients to try often less expensive drug alternatives before being eligible for another drug originally prescribed by their physician. CMS views this change as a way to provide MA plans with more leverage to lower prices on certain Part B drugs by allowing PBMs to determine Part D or Part B step therapy alternatives to certain Part B drugs. This guidance aligns closely with June’s HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. The guidance would also allow Part B drugs to precede Part D drugs in step therapy, if considered medically appropriate by the MA plan’s Part D PBM. According to the Kaiser Family Foundation, as of 2017, 19 million or 33% of Medicare beneficiaries received their insurance coverage through MA plans.


Provider groups such as the American Society of Clinical Oncology and the Community Oncology Alliance expressed immediate concerns that step therapy applied to Part B cancer drugs risks delaying access to treatments prescribed by oncologists, interfering directly with the patient-provider relationship and the physician’s ability to provide their own recommended course of care.


As noted in the original 2012 guidance, CMS had interpreted regulations (42 C.F.R. §§ 417.414(b) and 422.101(a) and (b)) to prohibit MA plans from using step therapy as MA plans needed to “provide coverage of, by furnishing, arranging for, or making payment for, all services that are covered by Part A and Part B of Medicare…” Further, the 2012 guidance emphasized that Medicare Advantage plans are required to follow Medicare national coverage decisions (NCDs), local coverage determinations (LCDs), and coverage instructions and guidance provided by Medicare. CMS at that time was wary of allowing MA plans to use step therapy, believing it could lead to disparate coverage between MA plan beneficiaries and beneficiaries covered under traditional Medicare, who would not be subject to step therapy.


The new August, 2018 guidance specifically limits the scope of MA plan step therapy to areas where no Medicare NCDs or LCDs exist, requires a clear exceptions process for step therapy requirements, and would require the same type of utilization management notice beneficiaries currently receive for Part D drugs. The guidance emphasizes that MA plan step therapy should also be paired with drug management coordination, including appropriate beneficiary rewards and incentives to encourage participation. Finally, the guidance acknowledges that existing Part B and D cost-sharing will remain in place, leading to some instances of higher out-of-pocket costs depending on the individual scenario.


The very short timeframe provided in the August guidance for MA plans and their PBMs to develop and submit Part B step therapy edits for January 2019 will likely limit their use in this round. Some plans will likely opt to wait to implement step therapy edits pending more guidance for the 2020 plan year. Extension of step therapy to Medicare Part B will only serve to further encourage its use in commercial plans. Expressed provider concerns over patient access are certainly valid, considering that some Medicare beneficiaries may experience delays in receiving their originally prescribed treatments that may be the most efficacious course of care. How MA plans take up step therapy in 2019 and beyond will have important implications for patient access to care across disease types and should be monitored closely.

© McGivney Global Advisors 2019