CMS announces obesity drug coverage in Medicare, Medicaid

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On Tuesday, the Centers for Medicare and Medicaid Services announced a proposed rule for coverage of obesity drugs in Medicare and Medicaid, starting in 2026.

After notice and comment rulemaking, the rule would need to be finalized under the Trump Administration. Comments must be submitted no later than January 27, 2025.

An estimated 3.4 million people would be newly able to obtain coverage for obesity drugs under Medicare Part D, CMS estimated. The cost to the federal government over 10 years would be $25 billion.

CMS expects no short-term premium impact, said Dr. Meena Seshamani, deputy administrator and director, CMS, during a call with reporters on Tuesday morning.

Medicare beneficiaries are being protected by a $2,000 out-of-pocket annual cap for prescription drugs that goes into effect January 1.

Current law excludes obesity drugs from being covered. Some states offer coverage for Medicaid, but the majority do not.

The proposed rule revises the interpretation of the law and reclassifies obesity drugs as treatment for chronic disease.

The medical community agrees obesity is a chronic disease leading to heart disease, stroke and diabetes, CMS said. 

More than 40% of people in this country are considered obese, and 22% of people with Medicare have a diagnosis of obesity, according to CMS.

CMS Administrator Chaquita Brooks-LaSure called the coverage "an historic step."

As FDA Commissioner Robert M. Califf said, "'It's the beginning of a revolution of the way weight is controlled,'" Seshamani said.

CMS did not specify the names of the obesity drugs coverage. 

The federal government would help states with the cost to Medicaid, according to Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services at CMS. The federal government would pick up $11 billion of the cost over the next 10 years, while states would be expected to cover $3.8 billion.

Questions on possible drug supply chain issues were referred to the Food and Drug Administration.

OTHER CHANGES: PRIOR AUTHORIZATION

In recent years, there have been increasing calls for reforms related to Medicare Advantage prior authorization, CMS said.

Data reported to CMS by MA plans indicate that, on average, MA plans overturn 80% of their decisions to deny claims when those claims are appealed to the plan. It also shows that less than 4% of denied claims are appealed, meaning many more denials could potentially be overturned by the plan if they were appealed, CMS said.
CMS is proposing to make insurer internal coverage criteria more transparent and requiring plans to provide information on appeals rights to enrollees.

PROVIDER DIRECTORIES

CMS wants Medicare Advantage plans to put their entire provider directories in the CMS Medicare Plan Finder.

AI

The rule would also increase guardrails on the use of artificial intelligence to protect access to health services. 

MEDICAL LOSS RATIOS

CMS is also addressing competition in the MA and Part D programs in the proposed rule.

CMS said it is proposing to update the MA and Part D Medical Loss Ratio regulations to improve the data reported by plans. CMS is seeking comment on policies regarding how the MA and Part D MLRs are calculated to help enable policymakers to address concerns surrounding vertical integration in MA organizations and Part D sponsors.

MA ADVERTISEMENTS

CMS is expanding oversight of MA advertisements after finding some that were misleading.

This builds on previously finalized policies to protect people with Medicare from predatory behavior, such as misleading television, web-based and direct mail advertisements.

Since 2023, CMS has issued denials for over 1,500 TV ad submissions that were noncompliant and misleading to consumers. 

DEBIT CARDS

CMS is also improving the proper administration of MA supplemental benefits through debit cards. This ensures that CMS is a good steward of MA rebate dollars used for supplemental benefits and premium buy-downs, which, according to the Medicare Trustees, are estimated to amount to over $79 billion in 2026 and amount to approximately $500 billion over a five-year period starting in 2026.

ON THE RECORD

"The Biden-Harris Administration has worked to ensure that the Medicare Advantage and Part D prescription drug programs work for people with Medicare, adopted policies holding plans accountable for providing high-quality health care, and protected the sustainability of the Medicare program," said CMS Administrator Chiquita Brooks-LaSure. "This proposed rule continues to build on this work by expanding access to anti-obesity medications for people with Medicare and Medicaid, further addressing prior authorization concerns in Medicare Advantage, and promoting informed choice and transparency by requiring Medicare Advantage plans to share provider directory information on Medicare Plan Finder." 
 
 

Email the writer: SMorse@himss.org