New MA And Part D Rule Issued As Parting Policy Shot By Biden Administration
The Biden administration issued its draft 2026 Medicare Advantage (MA) and Part D rule today. A draft is available, but the Federal Register indicates the rule was pulled back for additional clarifications and would be reposted on December 10. Due to its late posting, the rule would not be finalized before the Trump administration takes office and therefore could simply be revamped rather than be rescinded.
In some ways, the rule does not have some of the mega changes that some expected in the areas of Star, risk adjustment, and more. This could be due to some sensitivity to the current financial woes of the MA industry. But there is plenty for the industry to object to. I have not done a thorough read yet of the 700-plus page draft rule, but I will do so over the Thanksgiving holiday weekend. I will publish a few blogs next week.
Here are some of the key changes based on the Centers for Medicare and Medicaid Services (CMS) press release, fact sheet, and my perusal of the rule thus far.
GLP-1 coverage: CMS is proposing to reinterpret the existing Part D statute to no longer exclude anti-obesity medications for the treatment of obesity from coverage under Medicare Part D and to require Medicaid programs to cover these medications when used to treat obesity. Today, the rule is interpreted to be available in Part D for those who are obese or overweight and have a qualifying disease state. The change would classify obesity as a disease state to enable coverage (those who are only overweight would not be covered). I will need to read the rule closer to see if this is mandatory coverage or the ability to cover. CMS uses the word “permit.”
Regardless, it would serve to further drive up premiums and costs in the programs. MA would be hurt, but standalone Part D (PDP) plans could be crippled over time. The administration is expected to make some GLP-1s subject to drug price negotiation, but that alone will not mitigate huge costs to the program. We know that price reductions in the negotiation process have not been terribly aggressive. Expanding Medicare coverage for GLP-1s likely will cost $35 billion over nine years, according to a Congressional Budget Office (CBO). CMS ridiculously argues there would be no short-term impact on premiums. CMS and the CBO famously said the Inflation Reduction Act’s Part D cost-sharing changes would not impact premiums, either.
Prior authorization: For 2024, CMS included via rule major restrictions on the prior authorization process for MA plans by requiring them to follow fee-for-service program polices. Now, CMS is proposing further changes. CMS wants to define “internal coverage criteria” to clarify when MA plans can apply utilization management and prior authorization, ensure plan internal coverage policies are transparent and readily available to the public, ensure plans are making enrollees aware of appeals rights, and bar after-the-fact overturns of prior authorization that can negate payments. Additional gathering of data and reporting to examine prior authorization processes are included as well. The rule would also increase guardrails on the use of artificial intelligence (AI) to protect access to health services.
Marketing practices: Surprisingly, CMS is not seeking to reimplement the overturned rule barring extraordinary compensation to brokers that essentially steer members to certain plans. That was a great proposal. CMS instead is expanding oversight of MA advertisements and expanding what agents and brokers must discuss with potential enrollees.
Medical loss ratio changes: MA and Part D medical loss ratio (MLR) regulations will be changed to improve the meaningfulness and comparability of the MLR across plan contracts and align them with commercial and Medicaid requirements.
I will need to dig into this, but the rule would also require that provider incentive and bonus arrangements are tied to clinical or quality improvement standards in order to be included in the minimum MLR calculation. In addition, CMS will collect additional details regarding plan expenditures categorized by different provider payment arrangements, especially as it relates to vertically integrated organizations.
These provisions are a clear shot across the bow regarding intracompany arrangements between health plans and related entities to get around the minimum 85% MLR. It also would exclude administrative costs of quality-improving activities in the MLR calculation. The rule would also expand audit of MLRs.
Access to generics and biosimilars: In an effort to stop pharmacy benefits managers (PBMs) from favoring brand drugs due to the rebate arrangements with brand drug makers, the new rule would require plan formularies to provide enrollees with broad access to generics, biosimilars, and other lower-cost drugs. This will help with the uptake of biosimilars and likely help consumers at the point of sales as brand rebates often do not get passed through in part or full at the drug counter.
Star program changes: The rule includes various changes to Star measures and sets the road map for the future. I will have a separate blog soon on these important changes.
CMS Fact Sheet and Press Release: https://www.cms.gov/newsroom/fact-sheets/contract-year-2026-policy-and-technical-changes-medicare-advantage-program-medicare-prescription and https://www.cms.gov/newsroom/press-releases/biden-harris-administration-announces-medicare-advantage-and-medicare-part-d-prescription-drug
Additional articles: https://www.healthcaredive.com/news/medicare-medicaid-weight-loss-drug-coverage-rule-glp1-obesity/733994/ and https://www.modernhealthcare.com/policy/biden-rule-medicare-medicaid-coverage-ozempic-wegovy-mounjaro-zepbound-glp-1s and https://www.modernhealthcare.com/policy/medicare-advantage-proposal-prior-authorization-brokers-glp-1s-cms and https://insidehealthpolicy.com/daily-news/cms-ma-orgs-using-ai-must-ensure-equitable-access-services and https://thehill.com/policy/healthcare/5010254-biden-administration-proposes-obesity-drug-coverage-medicare-medicaid/ and https://www.medpagetoday.com/publichealthpolicy/medicare/113131 and https://www.beckerspayer.com/policy-updates/cms-pitches-major-medicare-advantage-changes-10-notes.html and https://www.kff.org/policy-watch/proposed-coverage-of-anti-obesity-drugs-in-medicare-and-medicaid-would-expand-access-to-millions-of-people-with-obesity/ and https://www.beckershospitalreview.com/glp-1s/glp-1s-411b-conundrum.html
(Some articles may require a subscription.)
#cms #regulations #medicareadvantage #partd #pdp #glp1s #weightlossdrugs #priorauthorization #marketing #minimummlr #generics #biosimilars #drugpricing #stars
https://www.fiercehealthcare.com/payers/biden-proposes-medicare-medicaid-cover-anti-obesity-drugs
Sanofi Joins Other Brand Drug Makers Seeking To Implement 340B Rebate Model
Brand drug maker Sanofi is the next brand drug maker seeking to implement a 340B rebate model in an effort to bring more transparency and curb excess in the discount program. Sanofi joins Johnson & Johnson and Eli Lilly in wanting to move from upfront discounts to eligible 340B entities to a rebate model. The Health Resources and Services Administration (HRSA), which administers the program, has barred drug makers from moving to the model thus far and now faces litigation from the companies. Sanofi plans to phase in its rebate model for 25 drugs — including anti-inflammatory injectable Dupixent, one of the top 10 drugs in global sales — early next year.
I am no fan of the brand drug makers, but as I have stated time and again they are right on this issue. Plenty of studies show that the 340B program no longer lives up to its intent, which was to grant discounts to entities in return for ensuring low-income populations have access to the covered drugs. The reality is that many hospitals now pocket the discounts and add to margin rather than using the dollars for the intended purpose.
#340b #drugpricing #branddrugmakers #hospitals
https://www.healthcaredive.com/news/sanofi-340b-drug-rebate-model/733931
WTW Says Medical Costs To Surge
In the worst news yet on healthcare trends, a WTW survey says that insurers are projecting medical costs to increase globally by about 10.4% in 2025. U.S. insurers project a 10.2% increase in 2025, up from 9.3% this year. One big driver will be GLP-1 costs. Mercer found that GLP-1s ticked up 44% among companies employing 500 or more workers, similar to the 41% increase of the year prior.
#glp1s #weightlossdrugs #employercoverage #healthcare
https://www.healthcaredive.com/news/healthcare-costs-increase-by-double-digits-again-wtw/733745
— Marc S. Ryan
