PAN joins letter urging transparency around expanded utilization management practices by Medicare Part D plans
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In a letter to the Centers for Medicare & Medicaid Services (CMS), the PAN Foundation joined 67 other organizations urging CMS to protect enrollees by improving transparency around the expanded use of utilization management (UM) practices by Medicare Part D insurance plans.
Effective this year (2025) Medicare Part D plans are responsible for 60 percent of costs in the catastrophic phase, up from 15 percent in 2023. This higher level of cost sharing creates incentives for plans to increase their use of UM tools such as step therapy, fill limits, formulary changes, non-medical switching, and prior authorization requirements. While UM is intended to lower drug expenditures, and can be appropriate in some circumstances, restrictive cost-control measures can delay or prevent beneficiaries from accessing necessary treatments. This can have significant clinical consequences, especially for the populations served by the Part D program.
The Medicare Payment Advisory Commission (MedPAC) reports that the use of UM tools such as quantity limits, step therapy, and prior authorization in Part D has grown. Meanwhile, more Part D formularies are shifting from copayments to coinsurance, which often lead to higher and less predictable out-of-pocket costs for beneficiaries.
Utilization management tools impact healthcare access by beneficiaries and demand significant administrative time and effort from providers and their care teams who must navigate complex and often inconsistent UM requirements across plans, from prior authorizations and appeals to documentations processes.
The Alliance for Aging Research letter outlines commonsense steps that could be taken to better support patient access and decrease administrative burden.
- Outline clear expectations around the use of UM tools in Part D to ensure appropriate use
- Increase transparency around Part D plans’ use of UM tools, such as communicating relevant information in the Medicare Plan Finder