AH096 - A Quick Government Programs Update: The IRA & MPPP, Managing D-SNPs, and More, with Jason Barretto

Transcript

Lightly edited for clarity.

[00:22] Justin Venneri: Hello and thank you for joining us for another episode of the Astonishing Healthcare Podcast. This is Justin Venneri, your host and senior director of communications at Judi Health, and I'm excited to welcome Jason Barreto back to the podcast for a government programs episode. Jason was last on, it was too long ago, actually. It was Episode 11, navigating CMS's M3P, which is no longer called that. Right? It's MPPP.

[00:45] Jason Barretto: MPPP, yes…

[00:46] Justin Venneri: PDE and other regulatory changes since then. We've had Jessin Joseph on the show a couple of times to talk about some Medicaid sort of macro and other drug pricing trend issues. And you co-led a webinar for us since then, so it's not like there's been radio silence. But I am excited to catch up with you today and I think congrats are in order. Right? You were promoted to Senior Vice President since recording that episode from VP, and your team's growing pretty rapidly.

[01:11] Jason Barreto: Yes, we've been growing in all sorts of directions. That's great.

[01:15] Justin Venneri: That's great; so thanks for coming back on the show.

[01:16] Jason Barreto: Thank you for having me. It's great to be on.

[01:18] Justin Venneri: Just super quick in case anybody is new to the show, hasn't met you before, heard your background. Give us 30 seconds on your background and what you did before you joined us, Jason.

[01:28] Jason Barreto: Sure. I've spent my entire career in managed care, mainly on the pharmacy side of the house, managing PBMs for health plans. And so this is actually my first foray into the PBM space and working with health plans on the other side of the table. So I use a lot of my background to navigate various new requirements, our relationships with our clients, and any nuances that health plans bring to a PBM.

The Demand for Transparency in Pharmacy Benefits Extends Beyond the Employer Market

[01:58] Justin Venneri: Okay, so demand for transparent and aligned commercial pharmacy benefits partners has been up and to the right, as the old Wall Street saying goes. And you, as you just described, work with health plans primarily. What's been going on on the health plan side of the house?

[02:13] Jason Barreto: Yeah, I mean, I'm seeing the same thing. Every conversation I have and every RFP that we receive is demanding transparency. And you know, when I use the word transparency, I'm not just referring to our pricing and rebate model. Right. I'm referring to Capital Rx as an entity. You know, our processes, our workflows, everything. We're very transparent with our clients. And that's really important to me because again, my background, my experience, my career is being on the health plan side of things. And so when I was a client and I requested information from a legacy PBM in order to do what's required of me by the government, whether it's federal government or state government, as a contract holder, you're obligated to oversee any delegated vendors. And so a lot of time I would hear, you know, "hey, that's proprietary." And so it's very challenging for me to monitor, for me to oversee those downstream entities and, you know, meet my obligation, my contractual obligation. And so what we've done here at Capital Rx is take a transparent approach to, again, not just the pricing and the rebate modeling, but how we do business as a whole. And so we work with our clients when it comes to delegation, oversight, audits, or any inquiries they may have. And we're transparent with them about what it is that they're seeing and how we got there and provide them as much information as necessary in order to make them feel comfortable with what we're doing on their behalf.

Pharmacy Benefit Administration-Related Content

• How Our Favorite New Judi® Features Aid Government Programs
• Judi Health Policy Pulse: 2025 Regulatory Roundup, the Push for PBM Reform
• Judi® is a Tech-Enabler – A Case Study
• AH058 - Building Judi®, the Healthcare Infrastructure of the Future, with Liya Lomsadze
• Partnership & Collaboration: Why PBMs and Health Plans Should Sync on Regulatory Change Management

[03:46] Justin Venneri: Got it. I think in general, just understanding how people make money and what their incentives are and trying to bring alignment to these relationships is a big trend heading into the new year here.

[03:56] Jason Barreto: Yeah, I mean, it's pretty interesting. You know, one of the common questions I'm seeing in the RFPs around transparency is, how is that impacting your DIR reporting ever since the rules changed? And so for folks that don't know, in addition to claims that you have to submit to the government, you also have to submit financial reporting to the government, known as DIR, direct and indirect remuneration. And so that information has to be created and submitted every year to CMS in addition to claims. And the change in CMS requirements in 2024 seems to have had a huge impact on legacy PBMs, which is why the question continues to come up. But for Capital Rx, it had no bearing on our operations, on our financials, on anything, because again, we are a transparent PBM. So our pricing model, our rebates, everything that is set up with our networks on paper, you know, paper meaning contracts, right? There's really nothing for us to report because we're not doing any type of clawbacks when we make a payment. Whatever we paid at point of sale is what we charge the client, and that's it. That's essentially the long and short of it. And so I love having these types of conversations with prospects, with clients because it's pretty eye-opening to them and it just shows our value. And now as Judi Health, we will continue to be a transparent entity, right? We will continue to bring transparency to the industry and provide our clients with that level of insight.

Navigating the Inflation Reduction Act (IRA) and Maximum Fair Prices (MFP)

[05:32] Justin Venneri: That's awesome. And that makes a ton of sense. Like you're saying, those are very logical expectations I think for prospective clients to have of their vendors. And you know, in our old, and I can't believe it's old now, blog series we worked on together way back, you explained how meeting the intent of regulations and flexibility or configurability are so important, along with alignment, of course. Can you provide some updates on what we're working on, what you're working on, on what health plans are dealing with as it relates to some of the things we've seen, you know, MPPP or the IRA come to mind?

[06:05] Jason Barreto: Yeah, I mean the IRA was a huge piece of legislation in 2022. We've implemented most of it since. For 2026, the last big piece was—we love acronyms in our industry, right?—so MFP, Maximum Fair Prices. And so this is a huge piece of the legislation that we had to pull through for 1/1/26. And essentially what it is is CMS took the top 10 drugs and they negotiated directly with manufacturers to set a price for those drugs. And so you have things like Jardiance®, Januvia®, Stelara® on that list... Enbrel®, NovoLog®. So you have some pretty impactful drugs on that list that have a much better list price because CMS negotiated these deals. Right. And so essentially the way it works is CMS set these prices, they publish a list, and we load it into Judi. Judi will then look at what is the lowest price in the system. Is it going to be our ingredient cost? Is it going to be the MFP price? And depending on which is going to be cheaper, Judi will pick that price and apply it to the claim, and the member will reap the benefits of this new program. But essentially it's an annual drug list that will come out and it'll get evaluated each year against, again, what are the top high-cost drugs for that plan year. And so CMS has drafted a list for '27. So we already know what '27 will look like, more or less. And so this year's 10 drugs, next year it'll be 15, and it'll continue to progress in following years, going up to 20 drugs in '28.

[08:03] Justin Venneri: The prices on those are just TBD based on whatever the negotiations spit out.

[08:07] Jason Barreto: For '26 is already set. So we already know what those prices are. But for future prices, it's kind of TBD. There's another factor that comes into it, not just what the utilization looked like at the time they did the analysis, but they use a consumer price index to adjust for inflation.

[08:27] Justin Venneri: Yeah. I remember looking at the first 10 and thinking what those looked like pretty good prices on some of those drugs. They were pretty solid compared to the bubbly prices that are out there in the market. Right?

[08:36] Jason Barreto: Yeah. I mean, the prices are pretty insane when you compare it to the manufacturer's list price. Obviously, we don't ever pay list price; we pay a negotiated version of that. But even these newly negotiated prices by CMS, at least some of the ones I looked at, are better than what I've seen in the industry. So all in all, it looks like the members will benefit from this new requirement.

Updates on the Medicare Prescription Payment Plan (MPPP)

[08:59] Justin Venneri: And then how about on the MPPP front? Anything to report there? Any updates? I think that program kind of got off to a little bit of a slow start in communication around it.

[09:08] Jason Barreto: Yeah, I mean, you know, CMS initially estimated about 6% of the population will qualify and be part of this program, but nationally about 0.5% of the population has decided to participate in some shape or form with the program. And so what CMS has done to help with the participation is they're allowing members to automatically renew year over year. It seemed like initially that they were going to require health plans to terminate everyone at the end of each plan year and start everyone anew, meaning they would have to opt in again. But they changed course and are allowing members to automatically roll over year over year, which is great for adoption. Right? It's one less barrier that they have to face with this program.

[09:58] Justin Venneri: That seems smart. And then if the experience is good for any of those members, maybe through a little bit of word of mouth or otherwise, it could help.

[10:04] Jason Barreto: Exactly.

Simplifying D-SNP Management with a Unified Claims Processing System

[10:05] Justin Venneri: And then, you know, with your example earlier, you alluded to some of the flexibility just in how the system actually works. One thing we talked about a lot is customizations, configurability, et cetera. How flexible Judi is. Of the things we've, quote unquote, "turned on" in Judi that are safe to share, can you give us an example or two of a problem or problems that you've been able to solve using the system that might have been more challenging in your previous life over the last 12 months?

[10:31] Jason Barreto: It was actually a great conversation that I had with a new client that we're implementing for 1/1/26. When we're talking about their benefit and how we were going to set it up in the system, they started to ask questions around D-SNPs. So D-SNPs are Dual Special Needs Programs. These are members who qualify for both Medicare and Medicaid, usually the sickest of the sick, the poorest of the poor. So you want to make sure that whatever you have set up for them is working as intended. And so in my prior life and in this client's current life, the way their D-SNP is set up in a system is it's two of everything. So you have two lines of eligibility, two groups, two networks, two benefit configurations. And it's because the way that the system administers the benefit is it processes one claim through Medicare as the primary and then another claim. So, that's right - two claims for one transaction, for one prescription. You'll see that second transaction for Medicaid as secondary to Medicare. So when I came to Capital Rx, that was one of the problems I wanted to solve. I hated the two-transaction method for D-SNPs. It was very, very challenging for us at the health plan to manage and marry those two records back together, et cetera, et cetera. And so what we've implemented is we've been able to keep one benefit, one network, one line of eligibility, one claim, which has been a tremendous help for our clients that have D-SNPs in their financial reporting and clinical reporting and everything else.

[12:05] Justin Venneri: Very cool. And aside from just what sounds like a lot of duplicative reporting and challenges combining data, how much time are we talking here? Just curious.

[12:13] Jason Barreto: I mean, think about having to maintain everything twice. One of the issues that I used to constantly run into was sometimes we would implement a Medicare network on the primary and a Medicaid network on the secondary because someone saw Medicaid and thought, "Oh, it needs to be the Medicaid network." And so when the member would go to the pharmacy, the claim would pay on the Medicare and then reject on Medicaid if the networks weren't the same. So you avoid things like that. Using our methodology, even with benefit configuration, sometimes someone would forget to activate a plan code or something on the other side. Usually, the Medicaid side was the one that suffered because it was kind of a second thought. And so having it all in one place in one system on one claim eliminates all that hassle.

GLP-1s - A Cultural Phenomenon

[13:01] Justin Venneri: Awesome. Okay, and then we just released a special episode, and I'm gonna put you on the spot here. I'm sorry, but I gotta do it. A handful of our folks and external guests shared, you know, particularly astonishing things they saw, read, thought were interesting in 2025 that left a mark of some sort, could be positive, negative. Just has to be safe to share. Any news or events or observations over the last year that struck you as particularly interesting that you'd want to share, call attention to?

[13:29] Jason Barreto: I mean, the only thing that was really surprising to me was how much we talked about GLP-1s this year. I understand that it was something that no one really expected as far as how cultural it would become. I mean, GLP-1s are in the average American vernacular now, like everyone knows what a GLP-1 is. And I mean, you can't say that for most drugs. It's kind of crazy that that class of drugs has become so popular and, you know, just pop culture in general. It's just out there so much that everyone and anyone knows what they are and even knows what they're priced at. It's pretty crazy.

[14:06] Justin Venneri: It is amazing, the exchange of information there around these. And to think Sara Zadi said it a while back, you know, she saw it kind of start in little social circles and on Instagram and it just took off like wildfire, I guess.

[14:18] Jason Barreto: Yeah.

Looking Ahead: The Importance of CMS Audit Readiness

[14:18] Justin Venneri: So, last question for you today. Thank you so much for taking the time. What should health plan executives be watching for or planning for this year? If you look out 12 months, what are the big things that you think are key to pay attention to and work with their vendors to get right for their plans and their members?

[14:33] Jason Barreto: Yeah, I think one of the big things for me this year is audit readiness. You know, CMS has recently changed their approach to Medicare program audits. So for me, it's going to be interesting to see what they focus on, especially now that they've extended their audit period and they've changed their scoring mechanism for health plans. And I'm sure they're not done with their changes to how they audit health plans. So it'll be an interesting year to see how all that plays out and if that drives any changes on the PBM side of things.

[15:05] Justin Venneri: Got it. Jason, thank you so much for taking the time today. Pleasure having you back in the studio and I look forward to staying in touch, seeing how things evolve over 2026.

[15:13] Jason Barreto: Thanks for having me. You have a good rest of your day.

‍

‍

‍

Want to stay apprised of the latest Judi Health news? Sign up for our monthly newsletter!

‍

Interested in transitioning to an aligned and transparent pharmacy and health benefit partner? Click here to get in touch with our team!

‍