The Centers for Medicare & Medicaid Services will give Part D plans free rein in implementing required medication therapy management programs.

"We believe that at the outset of the Medicare Prescription Drug Benefit, plans must have maximum flexibility to develop MTMPs that can achieve the statutory goal of improving therapeutic outcomes," CMS states in the preamble to the Medicare Modernization Act regulations.

MMA requires Medicare prescription drug plans to include "medication therapy management programs" to help control costs and improve quality.

Under MMA, medication therapy management is intended to enhance enrollee understanding of appropriate drug use, increase beneficiary compliance with medications and improve detection of adverse drug events (¹ Also see "“Medication Therapy Management” To Be Defined In Final Medicare Rule" - Pink Sheet, 9 August, 2004., p. 15).

In the proposed rules implementing MMA, CMS asked for further input on how medication therapy management programs should work.

"After reviewing extensive comments and conducting additional research, we believe that insufficient standards and performance measures exist to support further specification for MTMP services and service level requirements, and therefore we are adopting the flexibility proposed in the proposed rule," CMS says.

"Further premature regulatory requirements at this time might not only fail to improve MTMPs, but could negatively impact their development."

Although the definition of MTMPs remains nebulous, the programs are an important part of the Medicare drug benefit, CMS maintains.

"Notwithstanding the lack of current MTMP standards and performance measures, we believe that MTMP must evolve and become a cornerstone of the Medicare Prescription Drug Benefit."

The implementation of MTMPs by Part D plans will result in the adoption of standards through the evaluation of individual programs, CMS maintains.

"We require plans to report details on their respective MTMPs, and we intend to collaborate further with industry to develop measures that can be used to evaluate programs."

The final rule includes an MTMP reporting requirement, although CMS has deferred any detailed discussion of the information it will collect to a separate guidance.

MTMPs will be evaluated in the context of similar programs such as drug utilization management and review, CMS notes.

"In so doing, we believe that we will identify best practices that will evolve into industry practice standards and could eventually be adopted as our standards."

CMS does plan to set a "cost threshold" to assist in identifying patients appropriate for medication therapy management. "Despite our discussion in the proposed rule about leaving this determination to the plans, we do not believe we have the authority to delegate the cost threshold determination to plans and therefore, we will set a cost threshold," the final rule states.

In calculating the specific threshold, which CMS will provide in separate guidance, the agency will consider costs associated with common chronic diseases, the size of the population meeting the threshold and the relationship between cost and the number of medications (² Also see "CMS Finalizes Medicare Rx Regs; Rebate Rules Await Further Guidance" - Pink Sheet, 31 January, 2005., p. 13).

Plans are also encouraged to "take notice of the statutory examples of chronic diseases when developing MTMPs." MMA specifically mentions diabetes, asthma, hypertension, hyperlipidemia, and congestive heart failure in its discussion of MTMPs.

CMS reiterated its intention, described in the proposed rule, to consider MTMPs as an "administrative cost" for plans in order to encourage participation by the target population.

"Direct beneficiary cost sharing for MTMP services could negatively impact targeted beneficiary participation and therefore, our final policy is to consider MTMP as an administrative cost (included in the plan bid), incident to appropriate drug therapy, and not an additional benefit."

CMS also retained its proposed rules for medication therapy management pharmacy fees.

Although "many commenters recommended that we provide further requirements for MTMP fees....we do not believe the MMA provides us with the authority to establish fee schedules or interfere with the contracts between plans and providers."

However, "in evaluating the administrative component of a Part D plan's bid, we will ask a Part D sponsor to disclose the fees it pays to pharmacists or others, including an explanation of those fees attributable to MTMP services."

CMS will not adjudicate specific disputes between pharmacies and plans over MTMP fees, but the agency could take action against plans that systematically do not pay promised fees, a policy unchanged from the proposed rule.

Pharmacists have expressed enthusiasm about medication therapy management, citing it as the first time pharmacists are formally recognized as health care providers (³ Also see "Medicare Drug Management Is Unprecedented Opportunity, Pharmacists Say" - Pink Sheet, 6 September, 2004., p. 30).

Specific MTMP fees are not set by CMS, but they represent a pharmacy income opportunity separate from traditional dispensing fees.

CMS narrowly defines the term "dispensing fee" to include "only those activities related to the transfer of possession of the covered Part D drug from the pharmacy to the beneficiary, including charges associated with mixing drugs, delivery, and overhead."

"The dispensing fee will not include any activities beyond the point of sale (that is, pharmacy follow-up phone calls) or any activities for entities other than the pharmacy," CMS notes.

"We clarify that we expect Part D plans and pharmacies to account for pharmacy profit as part of negotiated prices - either as part of overhead costs accounted for in dispensing fees or in the reimbursement rates for ingredient costs negotiated with pharmacies," the rule states.

Actual dispensing fees will be determined through negotiations between pharmacies and plans.

"We note that Part D plans have the flexibility to vary the actual dispensing fee paid to pharmacies. For example, Part D plans may need to increase the dispensing fee paid to rural or long-term care pharmacies in order to obtain their participation in networks and meet pharmacy access standards."

Under the final rule, prescription drug plans must accept any pharmacy "willing to accept the plan's terms and conditions," although plans may reduce cost-sharing for beneficiaries using "preferred" pharmacies.

"We believe that our policy of permitting cost-sharing discounts for preferred pharmacies...strikes an appropriate balance between the need for broad pharmacy access and the need for Part D plans to have appropriate contracting tools to lower costs," CMS says.

CMS notes that "any willing pharmacist laws" in some states "would be preempted as applicable to plans' Part D business."

Under MMA, plans must also meet the pharmacy access standards of the Department of Defense's TRICARE Retail Pharmacy Program, which sets geographic limits on how far a beneficiary can be from a network retail pharmacy in rural, suburban and urban areas.

The TRICARE standard will be applied at the state level, rather than at the local (zip code or county) or regional level, CMS says in the final rule.

"A multi-region or national service area could not meet the access standards...by applying them across the entire geographic area serviced by the plan; instead, it would have to meet the standards in each state of its multi-region or national service area," the rule states.

"We believe that such an interpretation is a reasonable compromise between application at the local level and application at the regional or national level, and maximizes Part D plan flexibility while ensuring convenient access to network pharmacies for Part D enrollees," the rule states.

"Both preferred and non-preferred pharmacies form part of a Part D plan network, and plans may count both of these types of network pharmacies toward their access standards," CMS notes.

CMS is deferring to state law and individual plans in the area of pharmacy quality assurance.

In the proposed rule, CMS suggested Part D sponsors include quality assurance and measurement systems using the OBRA '90 Medicaid standards, but based on comments received, CMS decided not to establish Medicare Part D standards separate from state regulation.

Medication Therapy Management Standards Will Be Set In Practice, Not Regs

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