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Realigning Medicare Part D incentives: a new model for medication therapy management

The Centers for Medicare and Medicaid Services (CMS) Center for Medicare and Medicaid Innovation (CMMI) is announcing a new demonstration model today to test changes to the Medicare Part D program. These changes are designed to better align the standalone prescription drug plan (“PDP”) sponsor and government financial interests, while also creating incentives for more robust investment and innovation in targeting medication therapy interventions.

The goal of the Part D Enhanced Medication Therapy Management (“MTM”) Model is to deliver greater value and better health outcomes for Medicare and its Part D beneficiaries. This demonstration is consistent with the Department of Health and Human Services’ goal of tying 30 percent of Medicare payments to alternative payment models by the end of 2016 and 50 percent by the end of 2018. Moreover, this demonstration represents an opportunity for CMS, plans, pharmacists, and other providers to unlock the potential of MTM for improving adherence and safety and delivering higher-value prescription drug benefits to Medicare Part D beneficiaries.

Medication Therapy Management Program in Medicare Part D Today

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “MMA”) amended the Social Security Act to provide a voluntary prescription drug coverage program for Medicare beneficiaries. Since January of 2006, subsidized prescription drug coverage has been available to Part D eligible Medicare beneficiaries through Medicare Advantage (“MA-PD”) or through a stand-alone PDP under Part D. As of August of 2015, nearly 40 million Medicare beneficiaries were enrolled in a Medicare-sponsored plan that provides prescription drug coverage, with approximately 24 million Medicare beneficiaries accessing their prescription drugs through a stand-alone PDP.

Providing Medicare beneficiaries access to affordable prescription drugs has been recognized as a needed improvement to the Medicare program. Prescription drugs are often the first line of therapy for many conditions. When used appropriately, prescription drugs can prevent or address acute and chronic illnesses and improve health outcomes.

However, prescription drugs are very often used inappropriately or sub-optimally, leading to adverse drug events, unnecessary hospitalizations, and other unintended health outcomes. Medicare seniors are typically among the highest utilizers of prescription drugs and they are especially vulnerable to negative health outcomes from the inappropriate use of prescription drugs.

The MMA established the MTM Program to assure that covered prescription drugs delivered to Medicare beneficiaries by PDPs under Medicare Part D “are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events, including adverse drug interactions…”. Medicare Part D Plan sponsors are required to incorporate an MTM program into their plans’ benefit structure. However, CMS requires Plan sponsors to account for MTM program services provided to targeted beneficiaries as an administrative cost (included in the plan bid), incident to appropriate drug therapy, and not an additional benefit.

MTM services must be delivered by a qualified health care professional, including pharmacists, to targeted beneficiaries with multiple chronic conditions (sponsor may require two, but no more than three chronic conditions); who are taking multiple medications (sponsor may set minimum number between two and eight Part D drugs); and, who are likely to incur annual costs above a predicted level for that plan year ($3,138 in 2015).

Currently, CMS requires plan sponsors to offer a minimum level of MTM services to each beneficiaryenrolled in the program that includes:

  1. Interventions for both beneficiaries and prescribers;
  2. an annual comprehensive medication review (CMR) with written summaries in CMS’ standardized format (must include an interactive, person-to-person, or telehealth consultation with the beneficiary or beneficiary’s prescriber, caregiver, or other authorized individual performed by a pharmacist or other qualified provider, and may result in a recommended medication action plan) and;
  3. quarterly targeted medication reviews (TMRs) with follow-up interventions when necessary.

Part D plan sponsors must auto-enroll the targeted beneficiaries in MTM when they meet the eligibility criteria, and beneficiaries are considered enrolled unless they decline enrollment. The enrolled beneficiaries may refuse or decline individual services without having to disenroll from the MTM program.

Realigning the Incentives for the Medicare MTM Program

In the preamble to the Part D final rule, CMS stated its belief that the MTM Program would be a “cornerstone of the Medicare Prescription Drug Benefit.” MTM was intended to be to be a “patient-centric and comprehensive approach to improve medication use, reduce the risk of adverse events, and improve medication adherence.” However, CMS has acknowledged that it has not been possible to fully demonstrate the value and success of the Part D MTM Program.

One major study of the Medicare MTM Program by Acumen LLC found evidence that high performing MTM programs consistently and substantially improved medication adherence and quality of prescribing for important medications treating certain conditions (i.e., CHF, COPD, and diabetes). However, the same research indicates that there is substantial variation in performance across Part D parent organizations.

This can be explained, in part, by the design of the plan MTM program and variation of plan sponsor commitment to MTM results. CMS has observed that, rather than committing to the promise of MTM with substantial time and attention, some plan sponsors view MTM as a necessary cost of participating in the Part D program and they do the minimum necessary to engage patients to satisfy CMS requirements.

Proactive approaches to improve care for Part D beneficiaries are neither incentivized nor rewarded by the current MTM program; rather, the emphasis is on procedural processes tied to CMRs and TMRs in order to meet uniform compliance standards for all patients. Similarly, the process of identifying beneficiaries for interventions is largely formulaic and fails to give plan sponsors the flexibility to deliver the right services to the right patients; beneficiaries are both over-identified and under-identified as “at risk” for experiencing medication-related issues. This formulaic targeting often results in a sub-optimal allocation of MTM resources, which diminishes the effectiveness of activities likely to have the greatest impact on beneficiary health outcomes.

Author

S. Lawrence Kocot

Former Brookings Expert

Principal and National Leader, Center for Healthcare Regulatory Insight, KPMG

Experts across the spectrum of plans, pharmacists, academics, and advocates have noted that the success of the MTM program is severely limited by a misalignment of financial incentives; they have also noted that plans that are responsible for a beneficiary’s broader health care needs, such as Medicare Advantage drug plans or private insurers, may be more effective at achieving the objectives of MTM because there is a financial incentive to do so. As one stakeholder interviewed by Acumen observed:

Approximately 2/3 of Medicare enrollees select the standalone plan… [because] standalone plans are structured to keep drug costs down, immediately there is a major conflict with helping people get more medication [if non-adherent], even though doing so will ultimately lead to the most benefit, minimize the risk, and avoid downstream unnecessary medical visits and hospitalizations.

Alignment of financial incentives could be an effective policy tool to motivate Part D plans, health care providers, and pharmacists to achieve more optimal MTM results and better health outcomes for Part D beneficiaries.

The Part D Enhanced MTM Model

CMMI is launching the Part D Enhanced MTM Model in 2017 to test approaches to better align PDP sponsor and government financial interests, while also creating incentives for robust investment and innovation in better MTM targeting and interventions. There are three key elements of the model:

  1. additional regulatory flexibilities to allow for more individualized and risk-stratified interventions;
  2. a prospective payment for more extensive MTM interventions that will be “outside” of a plan’s annual Part D bid; and,
  3. a performance payment, in the form of an increased direct premium subsidy, for plans that successfully achieve a certain level of reduction in fee-for-service expenditures and fulfill quality and other data reporting requirements through the model.

Enhanced and Individualized MTM Strategies

The first key feature of the new model is regulatory flexibility to permit PDP sponsors to risk-stratify the population enrolled in their plans based on medication-related risk and to allow different levels and types of MTM services, as well as cost-sharing assistance for financially needy enrollees who lack access to services. While plan sponsors will be required to produce written plans for their proposed protocols on how they will target beneficiaries, they will not be required to limit interventions to pre-defined beneficiary categories.

For instance, they may choose to prioritize beneficiaries with chronic diseases where treatment and outcome are highly dependent on medication; but they could also target transitions of care, poly-pharmacy combined with multiple prescribers, frequent utilization of health care services, social support needs, or first fills of certain drugs with difficult side-effect or complication profiles.

This flexibility could encourage more communication and create opportunities for medication adjustment on a more ongoing basis for those beneficiaries who need it, while allowing for lower-touch interventions to lower-risk patients who may not need the same intensity in intervention. In short, the model will encourage experimentation with a range of strategies to individualize beneficiary and prescriber outreach and engagement.

New Prospective Payment

The second major feature of the new model is a prospective payment, to be calculated and paid on a per-member-per-month (PMPM) basis, to provide funding for enhanced benefits, items, and services, which could include pharmacy or beneficiary incentives or additional support for interoperable data exchange on MTM services. This funding will be provided outside of the plan bid (as opposed to a plan “administrative cost” included in the bid) to encourage investment and innovation in interventions.

The actual cost of this PMPM payment will vary by plan and be determined by the specific interventions proposed by the plans. All plans will be required to detail their specific targeting and cost assumptions in their application in order for CMS to evaluate the reasonableness of their approaches. The final approved PMPM amount will be paid per enrollee in the plan, regardless of how many enrollees are receiving the enhanced MTM services.

New Performance-Based Payments

The third key feature of the model is a performance-based incentive payment to reward performance and successful data and quality reporting. Plans that demonstrate reductions in Medicare Part A and B costs of care for their members by a minimum of 2 percent (net of model prospective payments) relative to a performance-payment benchmark will receive a fixed $2.00 per-member amount increase in the government subsidy to the plan premium, which will decrease the beneficiary’s portion of the premium and make the successful plans more competitive in subsequent years.

Like many of CMS’ incentive payment programs, performance results in year one (2017) will translate to performance-based payment/premium reduction in year three (2019), and likewise for the next two years. If performance-based payments are earned in years four and five, the sponsor will receive payments in years six and seven (2022 and 2023), after the end of the performance period. Plans will be required to satisfactorily report all required model data elements in order to qualify for the performance payment.

Data Collection And Quality Indicators

As a part of the program, CMS will develop new MTM-related data and metric collection requirements for both monitoring and evaluation purposes, which all plans will be required to meet as a condition of model participation. These will include data on specific beneficiary-level interventions and outcomes. Quality indicators will be developed based on clinical significance and a clear link to improved outcomes and may include metrics such as percent of patients who had medication reconciliation after a transition of care, percentage of patients who had MTM services post discharge and were readmitted to a hospital within 30 days, the percentage of clinically significant drug events resolved, and the proportion of targeted beneficiaries for whom the plan sponsor provided medication history to electronic health records (EHRs). CMS also expects each plan sponsor to identify and propose its own metrics for internal protocols and learning systems.

Improving Care Coordination

The model also aims to incentivize strengthened linkage among sponsors, pharmacies, and prescribers. Incentives will be aligned to detect and prevent medication-related risks, including complementing and reinforcing ACO-provider-based clinical management. The model encourages sponsors to involve prescribers and treating physicians in the MTM referral and consultation process, and suggests sponsors seek to engage pharmacies more extensively in the MTM process. In order to help facilitate improved linkages with integrated care management teams, CMS may provide access to data on beneficiary alignment with integrated care models such as ACO alignment records managed in CMS’ Master Data Management (MDM) system. Medicare Part A and B data for enrollees would be made available to sponsors upon request for operations involving quality improvement and/or care coordination.

Model Participation and Selection

A Request for Applications (RFA) will be released this fall. The model will be tested in five of the existing 34 U.S. Part D Regions: Region 7 (Virginia), Region 11 (Florida), Region 21 (Louisiana), Region 25 (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wyoming), and Region 28 (Arizona). The model will be open to all plans that apply in those regions and meet all minimum requirements of participation, such as a minimum of 2,000 enrolled beneficiaries, experience as a basic plan for at least three years, and no current sanctions by CMS or law enforcement entities, such as the OIG.

A PDP sponsor that chooses to participate in the model test must participate in all test regions in which a qualifying plan is offered each year. Any plan under a contract with a Part D summary score of less than three stars will be required to provide additional documentation in order to participate in the model. The model will run for five performance years (CY 2017 to CY 2021) with two years of additional performance-based payments after the model performance period ends.

Looking Forward

With greater regulatory flexibility and a fundamental realignment of incentives for providing more robust and meaningful MTM, plan sponsors will be encouraged to deliver a more patient-centric and comprehensive approach to improve medication use in Part D. However, in assessing the demonstration, plan sponsors will likely look for the competitive advantage of enhanced MTM in the Part D market.

Plan sponsors may consider whether incentives in the model are sufficient enough to invest the time and effort in the new model; they may also consider whether the efficiencies of more appropriate drug utilization (reductions in overprescribing, duplication of therapy, etc.) will offset the possible competitive disadvantage of higher drug costs that could result from more effective MTM. Additionally, plan sponsors will likely want to know more about how CMS will evaluate MTM cost savings in Part D to assure that attributed reductions in total Medicare Part A and B health spending will generate a competitive reward for the Part D plan.

Despite these considerations, this demonstration has the potential to align Part D and the goals of MTM with other CMS programs, such as the Pioneer ACO Model, Next Generation ACO Model, and Medicare Shared Savings Program that are incentivized to deliver higher value care to Medicare beneficiaries. This could create new competitive opportunities for Part D plan partnerships that could leverage data sharing and provider communications to bring greater value to the Medicare program and Medicare Part D beneficiaries. Specifically, this could encourage plan engagement with more providers, including pharmacists and physicians, to more systematically collaborate, coordinate patient care, and optimize drug therapy.

In addition to providing greater value and a higher quality prescription drug benefit for Medicare beneficiaries, this demonstration will enable CMS to produce important new evidence about the effectiveness of medication therapy interventions in Medicare. If these demonstration objectives are achieved, MTM could live up to its potential as the cornerstone of the Medicare Prescription Drug Program.

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