CMS Clarifies 2007 Rules on ‘Co-Branding’ Drug Plans

CMS officials on Wednesday clarified that insurers sponsoring Medicare drug plans in 2007 still will be allowed to partner with outside organizations to promote their products but will not be permitted to list the organizations' logos on beneficiaries' prescription drug cards, CQ HealthBeat reports (Carey, CQ HealthBeat, 5/24). On Tuesday, CMS Deputy Administrator Leslie Norwalk said in a House Energy and Commerce Subcommittee on Health hearing that drug plans would be prohibited from "co-branding" for the 2007 plan year and beyond (California Healthline, 5/24).

However, in 2007 marketing guidelines for Medicare drug plans released on Wednesday, CMS said that co-branding still will be allowed in promotional materials but that drug plans must not list partner organizations on Medicare drug cards. According to CQ HealthBeat, co-branding on the drug cards has confused some beneficiaries who mistakenly think they can only fill prescriptions at the pharmacies listed on their cards.

The guidelines define co-branding as a relationship between an insurer sponsoring a Medicare drug plan and another organization that is designed to promote enrollment in the drug plan (CQ HealthBeat, 5/24). Drug plans that form co-branding relationships for 2007 must include the phrase "other pharmacies/physicians/providers are available in our network," the guidelines say (Freking, AP/San Francisco Chronicle, 5/25).

Any co-branding relationships that involve compensation between the drug plan and the organization or that could involve the referral of beneficiaries to a particular drug plan "should be carefully scrutinized" for compliance with federal fraud and abuse laws, the guidelines state.

Robert Hayes, president of the Medicare Rights Center, said the previous policy of listing co-brands on beneficiaries' drug cards was "creating confusion and hurting some pharmacies as well."

May 31 is the deadline for public comments on the draft guidelines (CQ HealthBeat, 5/24).

In other news, a CMS spokesperson said on Wednesday that the agency has not conducted a formal survey to determine how long it takes pharmacy benefits managers to pay pharmacy claims under the drug benefit, the Hill reports (Young, The Hill, 5/25).

Groups representing independent pharmacists said PBMs in some cases have delayed payments to them by up to 45 days. However, the Pharmaceutical Care Management Association, which represents PBMs, said its members have pledged to process electronic claims within 30 days (California Healthline, 5/24).

In testimony before the House subcommittee on Tuesday, Norwalk said, "A recent CMS survey found that up to 18 of the top 20 [Medicare prescription drug plans] pay pharmacy claims on a twice-a-month billing cycle of 15 days or less. A 15-day billing cycle generally provides pharmacies with payment within 21 [to] 25 days. The top plans account for more than 90% of the drug coverage for Medicare beneficiaries."

However, the CMS spokesperson said on Wednesday that the agency does not have hard data on billing cycles and based its figures on an "informal" analysis of reports from drug plans on when they pay claims. Pharmacies were not asked about their experiences with payments, the spokesperson said. Drug plans are required to submit data on pharmacy claims to CMS by May 31, and the agency will evaluate and release the information in June, the spokesperson said.

Rep. Tom Allen (D-Maine), a subcommittee member, said, "For the deputy director of CMS to come before us and say they have a survey when they've really just been talking to the plans is something that never should have happened." He added, "CMS is so out of touch with the pharmacies that I suppose it's no surprise that they ask the plans how the pharmacies are doing."

Rep. Charlie Norwood (R-Ga.), also a subcommittee member, said, "There needs to be more data there on what's happening."

Crystal Wright, a spokesperson for the Association of Community Pharmacists Congressional Network, said, "This is absolutely a one-sided investigation on CMS' part, it seems to me," adding, "What CMS is saying is not consistent with what we're hearing" from pharmacies (The Hill, 5/25).

The Senate should "accelerate action on a bill to waive the penalty fee for senior citizens who missed the May 15 deadline to sign up for the new Medicare prescription drug benefit," an Arizona Daily Star editorial states. According to the editorial, "One of the potential impediments to getting the bill passed is the concern that some members of the Senate have about the potential cost of dropping the penalties" -- an estimated $1.7 billion -- but the "so-called" cost "implies that existing money will be lost, which apparently is not the case" (Arizona Daily Star, 5/24).