CMS Takes Hard Look at Prescription Drug Benefit for Exchange Plans

As exchange plans enter their second year of operation, stakeholders have raised growing concerns regarding enrollees’ ability to access and afford prescription drugs. This is in part because of the minimal requirements the Centers for Medicare and Medicaid Services (CMS) established when it set up the Essential Health Benefit (EHB) standards for exchange plans. However, in the agency’s Notice of Benefit and Payment Parameters for CY 2016 Proposed Rule issued on Friday, November 21, CMS has signaled an interest in making proposals that, in its view, may provide enrollees with a more robust formulary list. CMS should use this opportunity to create a more meaningful prescription drug benefit for enrollees, while also ensuring that it is not provided at the expense of cost-shifting to enrollees with serious illnesses.

Among the more notable changes CMS proposes is to replace the requirement for EHB plans to cover the greater of one drug per United States Pharmacopeia (USP) category or class or the same number of drugs covered under each State’s EHB benchmark plan. Many stakeholders have criticized this drug count standard as woefully inadequate to ensure patient access to more than a barebones benefit. Moreover, the use of the USP Medicare Model Guidelines as part of this standard raises further criticisms because the guidelines were created for a primarily elderly population and are updated infrequently. Instead of the current drug count standard, CMS proposes to require that plans establish pharmacy and therapeutics (P&T) committees to develop each plan’s drug formulary based on clinical evidence and existing treatment guidelines – a process that CMS proposes would begin in 2017. In addition to, or instead of, the P&T committee proposal, CMS also considers replacing the USP drug count standard with one based on the American Hospital Formulary Service (AHFS) system.

These proposed changes show CMS’ willingness to take a discerning look at the current prescription drug benefit. Given this opportunity, the agency should take steps to establish a more robust benefit. Recent studies have shown that current standards are inadequate to protect those with serious illnesses. For example, Express Scripts found that, although total spending on specialty drugs was significantly higher in exchange plans than in employer-sponsored plans, exchange plans did not see higher costs because of cost-shifting to patients. Because 2017 is a long time to wait for chronically ill patients that need access to essential treatments now, CMS should incorporate these changes for the 2016 benefit year instead of 2017.

CMS also calls out in the rule certain discriminatory practices by plans. Under the Affordable Care Act (ACA), insurers are prohibited from offering plans with benefit designs that discriminate on the basis of one’s disability, health conditions, age, or expected length of life, among other characteristics. Although CMS does not propose specific provisions regarding enforcement of its non-discrimination standards, the agency cites several types of discriminatory practices about which it has concerns, including instituting certain age limitations on particular treatments and placing all or most drugs that treat a specific condition on the highest cost-sharing tier. The most well-known example of the latter from this past year involved four insurers offering plans in Florida that placed all covered HIV/AIDS drugs in the highest cost-sharing tiers, effectively preventing patients with HIV/AIDS from receiving those treatments. While the agency acknowledges in the rule different types of prohibited discriminatory practices, CMS does not propose any new provisions related to nondiscrimination. The agency should take greater steps to enforce its non-discrimination standards and should articulate clearer guidelines for plans to prevent discrimination in the first place.

Although not a comprehensive solution to the patient access issues that have arisen this past year, action on the part of CMS to finalize more robust requirements would be a positive step toward patching some of the holes in the prescription drug benefit for exchange plans. Without more stringent standards, however, patients may continue to face hurdles in accessing the prescriptions they need. With a new Republican-controlled Congress, the opportunity also exists for legislators to examine the EHB package to further bolster patient access to prescription drugs.


Jeffrey J. Kimbell is the founder and President of Jeffrey J. Kimbell & Associates. James Hennelly is the Senior Manager of Health Policy & Reimbursement at the firm.


Morning Consult