Two Wrongs Don’t Make a Right


By Marc Boutin, JD,

NHC Chief Executive Officer

Last week, the Centers for Medicare and Medicaid Services (CMS) issued a new policy touted as a way to cut drug spending by allowing commercial Medicare Advantage plans to negotiate drug prices for its Part B coverage – those drugs administered in a physician’s office or hospital. However, this new negotiating power is actually an old cost-containment approach, that of “step therapy” (also called “fail first”).

It is well recognized that current payment incentives in the Part B program are misaligned and can contribute to high costs for the health care system. However, the solution to this long-existing problem is not roadblocks for some of the sickest patients who are seeking access to potentially life-saving medicines. This could be especially dangerous for patients who have already gone through step therapy and found a treatment that works and controls their disease. If they change insurers and are forced to go through step therapy again, a condition that was being well managed may now require unnecessary treatments or hospitalizations. So instead of saving money, those forced to go through a new round of step therapy – though they had been on a treatment that works for them – could cost the system more.

We are pleased the policy will require some patient safeguards. The new policy will not allow step therapy for treatments that beneficiaries are already receiving. However, we are concerned about the feasibility of enforcing this patient protection. We are troubled about whether or not Medicare Advantage plans will have correct, real-time information to prevent a forced step-therapy redo when beneficiaries switch plans. CMS needs to ensure that this patient protection can be effectively operationalized.

Other protections include that plans must notify beneficiaries it uses step therapy, create a process for patients to appeal step therapy requirements, and pass potential savings onto patients. All of these patient protections are important. But, their impact will depend greatly on how they are implemented and how well CMS enforces them. Again, we are concerned about CMS’ ability to create the processes required for implementing the protections in a timely and reliable fashion. If CMS is going to implement this program, they should put the protections in place, pilot test and evaluate it, and then expand it if it works.

We also recommend some additional patient protections beyond those described in the policy to date. They include, prohibiting plans from requiring patients to fail on off-label medications before they are allowed access to appropriate on-label treatments and plans should be required to report data to CMS on how many patient step-therapy appeal requests were made, how many were granted, and the average length of appeals process.

We all know that the current way we pay for medicines and treatments is unworkable and creates affordability challenges for patients. Suggesting that step therapy can fix a failing system with misdirected incentives by limiting patient access to treatment, is not the right way to do it. Two wrongs don’t make a right.