Court Requires Part D Plans to Cover Cost Of Medically Necessary Off-Label Drugs

Court Requires Part D Plans to Cover Cost Of Medically Necessary Off-Label Drugs

Reprinted from MEDICARE PART D NEWS, monthly business, compliance and management news and strategies to help Part D plans increase enrollment, boost revenues and minimize their risks of CMS fines, penalties and repayments.

By Barbra Golub, Editor

May 2011 Volume 6 Issue 5

The discussion surrounding off-label coverage of Part D drugs is back on the table with two recent developments — reintroduction of the Part D Off-Label Prescription Parity Act and a court ruling that Part D plans should cover medically necessary off-label prescription drug costs. Although the court case does not have the effect of law, one health care consultant says the decision will “have a huge impact on plans.”

Jennifer Levinson, vice president at Avalere Health LLC, tells PDN that the “primary reason beneficiaries appeal [drug coverage decisions] is off-label usage.” Part D plans have always had an easy time defending coverage decisions on appeal “based on compendia,” she adds. Now, though, they face a “tough situation.”

The U.S. District Court for the Southern District of New York ruled on March 7 that regulations barring Part D plans from covering medically necessary off-label prescription drugs are unreasonable and do not reflect Congress’ intent.

In Layzer v. Leavitt (07 Civ. 11339), the Part D independent review entity (IRE), Maximus Federal Services, determined that there was no evidence supporting the use of a particular drug for Layzer’s medical condition. However, after Congress amended Medicare regulations through the 2008 Medicare Improvements for Patients and Providers Act, expanding Part D coverage to off-label uses of anti-cancer drugs, Maximus reversed its decision. It decided that a search of relevant compendia was sufficient to find that using a certain drug to treat ovarian cancer was a medically accepted indication.

Eventually, the Medicare Rights Center added a plaintiff to the Layzer case, Ray Fischer, who suffers from muscular dystrophy.

On appeal, CMS argued that the Medicare drug benefit law limits coverage to drugs prescribed for on-label uses or off-label uses found in compendia. The district court ruled that the statutory language of the law indicated that Congress did not intend to impose the “compendia requirement.” Congress included compendia as an illustrative example of materials that may be used to determine coverage, said the court.

Evening Things Out

The Part D Off-Label Prescription Parity Act (H.R. 1055) would also aid beneficiaries in accessing off-label prescriptions by creating coverage parity across the Medicare program.

Originally introduced in July 2010 (PDN 8/10, p. 10) and reintroduced March 18, the bill would allow Medicare Part D carriers to cover the off-label use of drugs prescribed to people living with chronic diseases when its use is supported by peer-reviewed medical literature. This would put the Part D benefit in sync with Medicare Part B and give Part D plans the same flexibility as commercial plans have.

Now off-label indications supported by peer-reviewed literature are covered under Medicare Part B. CMS allows carriers to consider the major drug compendia, authoritative medical literature and/or accepted standards of medical practice in determining whether an off-label use is medically accepted.

According to co-sponsor Rep. Mac Thornberry (R-Texas), “right now, the requirements for coverage of the off-label use of a drug are burdensome and often result in Medicare patients not being able to get the drug coverage they need.”

H.R. 1055 “takes a balanced approach to keeping patients safe from improper prescribing while allowing access to the most up-to-date treatments available,“ said Joe Baker, president of the Medicare Rights Center. “Doctors routinely prescribe medications for uses other than those on the FDA label, according to their professional judgment and evidence in the medical literature,” he added in expressing support for the bill.

This bill and the court decision open up “access to Part D drugs for beneficiaries,” says Levinson. But they also present plans with some issues regarding what drugs to cover. She suggests that plans look at denials of coverage based on what district court the beneficiaries reside in and what constitutes “adequate peer-reviewed literature.”

In some situations, Levinson contends, it may make sense for plans to cover off-label usages instead of denying them and having to defend their position during the appeals process.

However, she maintains that the court decision does not have the effect of law for all plans. The decision only affects plans and beneficiaries in that district. Levinson adds that she expects CMS to issue some type of guidance on the issue, however.