Filed Under:Health Insurance, Medicare

Medicare head defends proposed regs

Jonathan Blum (Senate Finance Committee screen capture)
Jonathan Blum (Senate Finance Committee screen capture)

Concerns about pharmaceutical manufacturers, community pharmacies and patients who need specific brand-name drugs dominated discussion today during a hearing on proposed Medicare Part D prescription drug program regulations.

But witnesses did touch on provisions relating to insurance plan design, especially in the written versions of their testimony.

The House Energy & Commerce health subcommittee brought Jonathan Blum, the Medicare program director, in to defend the proposed Part D regulations, which were released in January.

Congress created the Part D program with a provision in the Medicare Modernization Act of 2003. The act created a private Medicare drug plan market that is similar in some ways to the new Patient Protection and Affordable Care Act (PPACA) public major medical insurance exchange system.

The Centers for Medicare & Medicaid Services (CMS), the U.S. Department of Health and Human Services (HHS), wants the Medicare drug plans sold in 2015 to publish any information about drug manufacturer price concessions, or rebates, in a consistent fashion, and to pass most or all of the savings on to plan enrollees or to the Medicare program itself.

CMS has also proposed that the Part D program should reduce menu clutter by limiting each carrier to offering no more than two Medicare drug plans in the same market.

Some carriers now offer three plans in some markets, and, historically, insurers made the third plan different from the second by offering extra coverage for enrollees who "enter the doughnut hole" -- the gap between the point at which routine drug coverage ends and catastrophic coverage begins.

PPACA is eliminating plans' ability to promote doughnut hole benefits by phasing out the doughnut hole, and enrollment in the "third plans" now accounts for just 2 percent of enrollment in stand-alone plans, officials say.

At the hearing, lawmakers cited estimates from analysts at Avalere Health and other organizations suggesting that the new "meaningful difference" rules might raise premiums and require most drug plan enrollees either to change plans or to stay in plans being merged into other plans.

Blum shrugged off predictions that the proposed changes would do much to increase premiums.

In the past, he said, analysts made similar predictions when CMS cut the number of drug plans a carrier could offer in a market to three, from five.

"The Part D premium has stayed constant," Blum said.

Some lawmakers suggested that requiring plans and pharmaceutical companies to report negotiated drug prices in a consistent way and include rebates in the prices paid by enrollees and government agencies would constitute a kind of interference in the negotiations that is banned by the Medicare Part D program statutes.

Blum said CMS believes the enrollees, and the programs that help pay for Medicare coverage for some low-income enrollees, should get the rebate savings.

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