On May 1, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released an interim final rule with comment (“IFC”) that amends Medicare program integrity regulations requiring prescribers to either enroll in Medicare Part D or validly opt out of Medicare.[1] The amendments permit Part D coverage for prescriptions issued by pharmacists with prescribing authority under state law and mandate that Part D sponsors furnish a provisional supply and appropriate notice to facilitate beneficiary access to needed drugs.

The IFC amends a final rule published in May 2014 that requires Part D sponsors and their pharmacy benefit managers to deny pharmacy claims for any Part D drugs that are not prescribed by a “physician” or “eligible professional” who has either enrolled in or opted out of Medicare.[2] The Medicare program integrity regulations were drafted by CMS under the authority of the program integrity provisions in Section 6405 of the Affordable Care Act; those provisions require physicians and eligible professionals to enroll in Medicare before ordering covered items or services. CMS’s regulatory intent is to ensure that Part D beneficiaries are protected against illegitimate prescribers who are not appropriately qualified under state law and the Medicare program. The agency noted that it has identified more than 68,000 prescribers as having been removed from Medicare due to licensure issues or operational status, or because they have been excluded by the Office of Inspector General for the U.S. Department of Health and Human Services.

Under current Medicare laws, pharmacists do not qualify as “physicians” or “eligible professionals” and are therefore barred from enrolling in or opting out of Medicare. The IFC amends Sections 423.120(c)(6)(ii), (iii), and (iv) of the Part D regulations to permit Part D coverage for prescriptions provided by “other authorized prescribers,” who, in turn, have been redefined to include any person other than a physician or eligible professional who is authorized under state or other applicable law to write prescriptions. This amended regulation serves as a significant and propitious development for pharmacists, who unlike many other mid-level practitioners, are generally not recognized as providers under the federal health care programs. The change reflects CMS’s growing awareness that many states have designated pharmacists as providers with broadened scopes of practice, which may include prescriptive authorities. Pharmacists will view the amended regulation as an encouraging, if modest, development that supports the profession’s ultimate aim of attaining expanded authorities and provider status under federal law.

On the other hand, the amended regulation represents unwelcome news for Part D sponsors and prescribers who are facing additional compliance costs and administrative burdens. Although the amended regulation is intended to combat fraud and abuse by illegitimate providers, CMS has placed much of the onus for ensuring compliance on Part D sponsors, which are required to flag inappropriate claims at the point of sale. Sponsors will now need to reconfigure their internal controls to ensure that pharmacists, as well as other prescribers, are not inappropriately excluded from coverage. Moreover, the amended regulation mandates that Part D sponsors furnish an individualized written notice along with a provisional three-month supply of drugs (as prescribed by the prescriber and if allowed by applicable law) to a beneficiary when the prescription is written by a prescriber who has not enrolled or opted out of Medicare. This notice and supply requirement is intended to support beneficiaries’ continuity of care and access to needed drugs by allowing beneficiaries time to inform their prescriber of the requirement or find an alternative prescriber.

The prior final rule had an effective date of June 1, 2015, although CMS previously announced that it would delay enforcement until December 1, 2015. The IFC maintains the effective date but postpones the amended regulation's enforcement date by one month to January 1, 2016. Nonetheless, Part D sponsors will be required to account for any changes needed to comply with the new requirements by the June 1, 2015, statutory bid deadline for the 2016 contract year. As a result, sponsors will need to expedite their installation of internal controls designed to flag inappropriate prescribers and effect the new provisional supply and notice requirements. Sponsors will also need to quickly assess the potential cost increases resulting from these changes and how they may impact the medical loss ratio component of their annual bids. Finally, physicians, mid-level practitioners, and other practitioners must quickly take steps to either enroll in Medicare or validly opt out to ensure that their prescriptions are approved.

In order to implement these changes in time for the 2016 contract year, CMS determined that there was good cause to waive the prior notice and comment procedure for these rulemaking changes. The agency explained that undergoing the normal notice and comment process would delay implementation until 2017 and thereby invite disruptions in beneficiary care. Nevertheless, affected stakeholders may submit comments for CMS consideration in the event that the agency decides to make subsequent changes. In the meantime, stakeholders should remain vigilant for additional subregulatory guidance to be issued by CMS. Among other things, the agency noted that it plans to release additional guidance in the future that addresses how Part D sponsors may implement the provisional supply and notice requirements.