The Centers for Medicare and Medicaid Services (CMS) has put out a proposal to curb "lock-in" pricing by private insurers participating in the Medicare prescription drug plans. This proposal hopes to curb inflation for Medicare Part D beneficiaries.
 
Medicare drug plans are provided through private insurers. Many insurers in turn contract with pharmacy benefit managers (PBMs) to run the plans, including negotiating low prices with pharmacies. But some PBMs charge a higher price to the health insurers which affects the government and consumers because of copays.
 
A new proposal would require the PBMs to declare the extra amounts they receive as "administrative" costs an insurance company pays. And patients' drug costs would be calculated without the extra amount included, lowering prices to consumers.

This article originally appeared in the August 2008 issue of AAKP Public Policy Briefing.