CMS Backs Up CVS Network Exclusions Under Part D

Tony Hagen @oncobiz
Published: Tuesday, Sep 20, 2016
Josh Cox, PharmD,

Josh Cox, PharmD, BCPS

In its re-interpretation of CMS policy for Medicare Part D drug dispensing, CVS Health has gone against years of allowing in-house physician dispensaries to participate in Medicare Part D. Across the country, many oncology practices are reeling at the news that CVS intends to rule them out-of-network starting in January.

“We would essentially be forced to tell a large fraction of our Medicare Part D patients that they’d have to go to an outside specialty pharmacy,” said Josh Cox, PharmD, BCPS, director of pharmacy services for Dayton Physicians Network in Dayton, Ohio. Cox said as much as 30% of Dayton’s in-house prescription activity would be affected by the CVS change. As a pharmacy benefit manager, CVS functions as a Part D sponsor for the purposes of providing covered Part D drugs at negotiated prices to plan enrollees. However, its willingness to continue contracting with in-house practices for Part D drug dispensing ended this year—not because of a policy change by CMS, the pharmacy company says, but because in-house physician dispensing operations were never intended to be able to participate in Medicare Part D drug distribution, a discovery made through its regulatory review process.

That apparently is the case, based on relevant CMS policy, and oncology practices now are in the difficult position of facing the loss of a substantial portion of their business and their clinical involvement in the Medicare population. The oncology community also has the tough job of having to defend a right to distribute under Medicare Part D that may never have existed.

“CMS Medicare Part D rules define ‘[Part D] sponsor networks’ as pharmacy-only networks,” said Christine Cramer, senior director of communications for CVS, underscoring the legal basis for the out-of-network exclusions. The change in CVS network inclusion will have a vast impact on in-house dispensing, and there is no indication that CMS intends to intervene. The agency has a longstanding policy that Part D formulary drugs must be obtained in-network, with the exception that under unusual circumstances, a drug may be obtained out-of-network when a beneficiary cannot reasonably get to a network pharmacy. What puts a sharper edge on the CMS policy is regulation 42 CFR 423.124(a)(2), which stipulates that, by definition, physician offices not otherwise licensed as pharmacies are always considered out-of-network.

Cramer said CVS checked with CMS before going ahead with this change, and contends that patient access will be unaffected. “We will notify affected plan members well in advance of the January 1, 2017, implementation date in order to provide them with ample time to select a participating pharmacy in our network,” Cramer said.

The Community Oncology Association (COA) alleges that this is little more than a thinly veiled attempt by CVS Health to redirect Part D patients to the company’s own pharmacies. CMS has led the charge for better coordinated, high-value care, COA argues, so why allow drug administration to be removed from the point of care now? “If you look at where healthcare reform is going, it’s certainly about coordinated care, and when you start ripping a part of healthcare (dispensaries) out of the site of care, you’re going to start running into problems,” said Ted Okon, executive director of COA.

CVS owns CVS Caremark, which includes a pharmacy benefit manager and mail service pharmacy, which also meets in-network qualifications for Part D administration under CMS policy. The company also owns CVS Pharmacy, which has 9600 locations.

In-house dispensing of Part D drugs could grow more complicated with patients going to outside pharmacies for their medications, Cox says. In cases where outside pharmacy currently is the only option, there’s already a lot of back-and-forth communication between oncology practices and pharmacies to ensure that authorizations are in place and patients receive the correct medications. This keeps the staff occupied, and it’s not necessarily the most efficient way of getting drugs into the hands of patients who need them, Cox says. Further, access to Part D distribution through CVS helps to subsidize many of the patient management roles that contribute to good care, he adds.

Sending patients to an outside pharmacy “makes it harder to determine when a patient is receiving the medication. That makes it difficult to schedule their treatment, and it leads to delays in treatment. More important, it impacts quality of care and our ability to coordinate patient care, which is our primary concern,” he says.

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