Obama administration drops Medicare Part D changes

After surprising industry stakeholders with proposed changes to Medicare Part D, the Obama administration on Monday dropped the proposal due to strong opposition.

The Centers for Medicare & Medicaid Services faced pushback on the Part D changes, which it said would save healthcare costs by letting insurers limit how many drugs they cover and how many plans they offer consumers. But critics, including Democratic and Republican lawmakers alike, claimed the proposal would undermine the well-liked program, Reuters reported.

"Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time," CMS Administrator Marilyn Tavenner wrote yesterday in a letter to lawmakers, adding that the agency would "engage in further stakeholder input before advancing some or all of the changes in future years."

Dropping the proposed changes means Medicare will continue to require insurers cover almost all medications that fall under six different classes of prescription drugs.

As for insurers, Wall Street analysts consider reverting back to the existing drug plan regulations a net positive. "Even though it may hurt plan abilities to control drug spend in three currently protected drug classes, the proposed rule also came with changes to the preferred networks that could have upended currently offered plans and networks," said Peter Costa, a senior analyst with Wells Fargo Securities, the Wall Street Journal reported.

To learn more:
- here's the CMS letter (.pdf)
- read the Reuters article
- see the Wall Street Journal article