Industry Voices—How the Trump administration’s step therapy policy changes will affect Medicare Advantage plans

Health insurance form payer plan enroll
Some employer-provided health plans already use step therapy, and advocates of the policy change cite this as proof that it will lower the costs of Part B drugs for MA beneficiaries. (Valeriya/Getty)

Last year, the Trump administration, Health and Human Services (HHS), and the Center for Medicare & Medicaid Services (CMS) announced proposed changes to Medicare. One specific change that went into effect at the beginning of 2019 is allowing Medicare Advantage (MA) plans to apply step therapy practices for medications that are covered under Medicare Part B.

Though this change is highly debated, I’m going to break down the details related to step therapy for MA plans and Part B medications.

What exactly does the step therapy policy change mean?

On Aug. 7, 2018, CMS released a memo (PDF) announcing that beginning Jan. 1, 2019, Medicare Part C (Medicare Advantage) plans, which are run by private insurers, can choose to use step therapy for Part B drugs, as a part of patient-centered care coordination. Step therapy means patients are required to try preferred drug or treatment options before "stepping up" to medications that cost more.

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RELATED: Payers, providers clash on CMS' plans for step therapy in Medicare Part B

Generally, drugs covered under Part B are therapies or treatments that are administered in a doctor’s office or hospital outpatient setting, and they are different from prescription drugs that you would get from a pharmacy and use at home. Drugs that aren’t covered under Part B may be covered under Part D plans. Part D plans already use step therapy.

A point that may cause confusion is that as a part of step therapy with Part B drugs, patients may be asked to use Part D prescription drugs before trying more expensive Part B therapy programs and vice versa.

How does step therapy for Part B drugs affect Medicare Advantage patients?

To give an example, if a patient has a health issue, an MA plan can require that the patient starts with therapy X (which is less expensive and research has generally proven effective). If X doesn’t work, then the patient proceeds to therapy Y (slightly more expensive), then finally continues to therapy Z (the most expensive, generally a newer therapy that applies to more nuanced cases). Without step therapy requirements, a physician could automatically prescribe the patient therapy Z.

It is important to note that less expensive therapies do not automatically equate to lower-quality treatment for patients. The Part B medications that are less expensive may have been around longer, with decades of research to prove their effectiveness. They also might be out of patent, which usually lowers their cost.

The administration’s goal with the policy change

“In 2017,” HHS declared, “Medicare Advantage plans spent $11.9 billion on Medicare Part B drugs.” Generally speaking, step therapy for MA Part B medications could help reduce this spending by requiring patients to start with therapies or treatments that are the least expensive.

"By allowing Medicare Advantage plans to negotiate for physician-administered drugs like private-sector insurers already do, we can drive down prices for some of the most expensive drugs seniors use," said Health Secretary Alex Azar. By 2020, insurance companies should be able to pass on these savings to patients in the form of lower premiums.

RELATED: AMA leads nearly 100 medical groups calling on CMS to rethink step therapy for Part B drugs

Some employer-provided health plans already use step therapy, and advocates of the policy change cite this as proof that it will lower the costs of Part B drugs for MA beneficiaries. 

The potential drawbacks with MA plans using step therapy for Part B drugs

Critics of step therapy call it the “fail first” method. Chris Hansen, president of the American Cancer Society Cancer Action Network, explains: “In some instances, utilization management tools like step therapy can create an extra hurdle for cancer patients to go through before getting the appropriate drug they need to treat their cancer. Some patients may be required to try multiple therapies before they can access the one that was prescribed by their doctor.”

Also, now that the change is in effect, MA plans are not required to use step therapy protocols; they merely have the option. Meaning when consumers are shopping for MA plans, they now need to consider that certain plans might require step therapy. This is just one more wrinkle in an already very complicated process.

The triangulation of varying situations, all the plans available, and the complexity within each plan necessitates professional advice and guidance.

But in the end, I believe that providing options to consumers—complicated as they may be—is a benefit to all parties involved.

Michael Z. Stahl serves as executive vice president of HealthMarkets—one of the nation’s largest independent insurance agencies in the Medicare, individual and supplemental health, life, and small group insurance markets.

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