Biden-Harris Admin proposes requiring obesity drug coverage for many Medicare & Medicaid enrollees

Via the Centers for Medicare & Medicaid Services (CMS):

Biden-Harris Administration Announces Medicare Advantage and Medicare Part D Prescription Drug Proposals that Aim to Improve Care and Access for Enrollees

Today, the Centers for Medicare & Medicaid Services (CMS) is proposing actions in the Medicare Advantage (MA) and Medicare Part D prescription drug programs to continue to strengthen protections and access to care for people with Medicare. The Contract Year (CY) 2026 MA and Part D proposed rule aims to hold MA and Part D plans more accountable for delivering high-quality coverage so that people with Medicare are connected to the care they need when they need it.

In recognition of the prevailing medical consensus that obesity is a disease, CMS is proposing to reinterpret the 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. This proposal would provide more Americans access to these transformative medications, improving the health and quality of life for millions of people who have obesity.

As KFF Exec. VP for Health Policy Larry Levitt notes:

The Biden administration is proposing to cover drugs for obesity in Medicare and Medicaid, not for weight loss generally. That's an important distinction medically, and also legally, since Medicare is prohibited from covering drugs for weight loss.

In other words, this doesn't mean that Ozempic, Wegovy or other GLP-1 medications will be covered for just anyone looking to drop a few pounds; you have to be medically diagnosed as being obese, for starters. I don't know what specific the threshold for coverage would be, but according to the World Health Organization, "obesity" is defined as having a body mass index (BMI) over 30.

Then again, according to the National Institute of Health, 42% of U.S. adults and 19% of U.S. children are obese, so there you go.

This proposed rule continues the Biden-Harris Administration’s work to ensure the MA and Part D programs meet the needs of people with Medicare. In recent years, there have been increasing calls for reforms related to MA prior authorization, utilization management, and coverage decisions. CMS remains concerned about barriers to accessing care and high burden on the system. For example, 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. These data also show that less than 4% of denied claims are appealed in the first place, meaning many more denials could potentially be overturned by the plan if they were appealed.

Ultimately, what these and other data show is that MA enrollees may not be getting access to the care they need.  The proposed rule builds on CMS’ work to remove unnecessary barriers to care resulting from the inappropriate use of prior authorization and internal coverage criteria. The rule would also increase guardrails on the use of artificial intelligence (AI) to protect access to health services. Other proposed policies will promote competition on the things that matter to people enrolled in MA and Part D plans,further addressing misleading marketing practices, and enhancing consumer tools on Medicare.gov. 

“Our loved ones with Medicare deserve care that puts their interests first. HHS is proposing to improve transparency, accountability, and consumer protections in Medicare Advantage and Part D plans so that everyone receives high-quality care,” said HHS Secretary Xavier Becerra. “To achieve that, we want to remove barriers that delay care or deny people services and medications they need to be healthy. In addition, we continue to promote competition for pharmacies and other health care businesses.”

“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.” 

Over the past few years, CMS has made improvements to Medicare Plan Finder based on research and feedback from the public. CMS has enhanced Medicare Plan Finder’s capabilities as an online tool that helps people with Medicare to compare Medicare options, including shopping for MA and Part D plans and comparing to Traditional Medicare. In this proposed rule, CMS is further proposing to enhance Medicare Plan Finder’s ability to provide a personalized experience for people with Medicare and their caregivers by proposing that MA organizations make their entire provider directory available to CMS, for the purpose of incorporating it into Medicare Plan Finder. This would enable people with Medicare and their caregivers to search for providers and more easily compare their availability across different MA plans. 

“We continue to hear from people enrolled in Medicare Advantage who are having difficulty accessing the care they need and are entitled to, and CMS remains focused on removing these barriers,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “Whether it’s difficulty navigating options, being able to afford the lifesaving medications you are prescribed by your doctor, or receiving the inpatient or rehabilitation care you need to get well, no senior or person with disabilities on Medicare should be having these challenges.” 

CMS is also addressing competition in the MA and Part D programs in this proposed rule. In line with the Biden-Harris Administration’s focus on promoting competition for consumers in health care, CMS is proposing to update the MA and Part D Medical Loss Ratio (MLR) 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. In addition, CMS is taking steps to promote transparency for pharmacies. 

Additionally, CMS is strengthening consumer protections by proposing changes to expand CMS oversight of MA advertisements, which would build 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 non-compliant and misleading to consumers. CMS is also improving the proper administration of MA supplemental benefits through debit cards, better ensuring 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 5-year period starting in 2026. 

To review or comment on the CY 2026 MA and Part D proposed rule during its 60-day public comment period, visit the Federal Register. Comments must be submitted no later than January 27, 2025.

They also published a Fact Sheet to accompany the press release:

Background

On November 26, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would revise the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit Program (Part D), Medicare Cost Plan Program, Programs of All-Inclusive Care for the Elderly (PACE). The Contract Year (CY) 2026 MA and Part D proposed rule aims to hold MA and Part D plans more accountable for delivering high-quality coverage so that people with Medicare are connected to the care they need when they need it. This proposed rule includes more policies to remove unnecessary barriers to care stemming from the use of inappropriate prior authorization by clarifying requirements for plan use of internal coverage criteria and proposing guardrails for the use of artificial intelligence (AI) to protect access to health services. It would also expand access to transformative anti-obesity medications under the Medicare Part D and Medicaid programs, helping to ensure more Americans have access to these medications.

The proposed rule further promotes access to behavioral health care providers and improves the administration of MA supplemental benefits. Other proposals take steps to ensure that MA and Part D plans compete on the things that matter to Medicare consumers such as further addressing marketing practices that are misleading to seniors and persons with disabilities and improving consumer tools on Medicare.gov. This proposed rule continues the Biden-Harris Administration’s work to ensure the MA and Part D programs meet the needs of people with Medicare.

This fact sheet discusses the major provisions of the 2026 proposed rule. The proposed rule can be downloaded here.

Coverage of Anti-Obesity Medication

Since the inception of the Part D program, CMS has interpreted the statutory exclusion of “agents when used for weight loss” to mean that a drug, when used for weight loss, is excluded from the definition of a covered Part D drug. This historical interpretation does not distinguish between use of a drug for treatment of individuals with obesity and individuals without obesity. Therefore, under current policy, anti-obesity medications are only coverable in Part D if the drug is being used to treat another condition that is a medically accepted indication other than weight loss or weight management (for example, type 2 diabetes or to reduce the risk of major adverse cardiovascular events in adults with established cardiovascular disease and either obesity or overweight). However, CMS has re-evaluated the exclusion and considered changes in the prevailing medical consensus towards recognizing obesity as a disease and the increasing prevalence of obesity in the U.S. population generally, and in the Medicare population more specifically. 

CMS now proposes to reinterpret the statute to permit coverage of anti-obesity medications for the treatment of obesity when such drugs are indicated to reduce excess body weight and maintain weight reduction long-term for individuals with obesity. In so doing, we would be aligned with existing policies under which we permit Part D coverage for drugs that would otherwise be excluded when they are being used to treat certain specific diseases (e.g., drugs used to treat acquired immunodeficiency syndrome (AIDS) wasting and cachexia). CMS’ revised interpretation would recognize obesity to be a chronic disease based on changes in medical consensus. However, CMS would not consider that interpretation to extend to individuals who are overweight but do not have obesity as overweight is not considered a disease. Therefore, we would continue to exclude anti-obesity medications from Part D coverage when being used in individuals who are overweight but without obesity or another condition that is a medically accepted indication. 

Because our proposal reinterprets the Medicaid statute, this reinterpretation would also apply to the Medicaid program. As a result, anti-obesity medications, when used to reduce excess body weight and maintain weight reduction long-term to treat obesity, could not be excluded from Medicaid coverage and would be considered covered outpatient drugs. 

Enhancements to Medicare Advantage and Medicare Part D

Strengthening Prior Authorization and Utilization Management Guardrails

In recent years there have been increasing calls for reforms related to MA prior authorization, utilization management, and coverage decisions. CMS remains concerned about barriers accessing care and high burden on the system. For example, 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. These data also show that a low percentage of denied claims are appealed, meaning many more could potentially be overturned by the plan if they were appealed. CMS has taken – and continues to take -- impactful steps to continue to rein in inappropriate prior authorization and other utilization management practices that unnecessarily limit access to care, create a system-wide burden, and negatively impact rural hospitals and other providers.

The proposals in this rule have been informed by the utilization management audits CMS conducted throughout 2024 that will continue into 2025. Key proposals include defining the meaning of “internal coverage criteria” to clarify when MA plans can apply utilization management, ensuring plan internal coverage policies are transparent and readily available to the public, ensuring plans are making enrollees aware of appeals rights, and addressing after-the-fact overturns that can impact payment, including for rural hospitals. In addition, efforts are underway that will allow CMS to collect detailed information from initial coverage decisions and plan-level appeals, such as decision rationales for items, services, or diagnosis codes that will provide a better line of sight on utilization management and prior authorization practices, among many other issues. 

In the Contract Year 2024 MA and Part D final rule, CMS codified regulations that clarified the obligations and responsibilities of MA organizations in covering basic benefits and established guardrails for when MA organizations may develop and use internal coverage criteria to achieve better alignment with Traditional Medicare. We clarified at 42 CFR 422.101(b)(2) that statutes and regulations that set the scope of coverage in the Traditional Medicare program are applicable to MA organizations in setting the scope of basic benefits that must be covered by MA plans. In the final rule, we codified requirements for making medical necessity determinations, which include using applicable coverage criteria in Traditional Medicare laws, CMS’ national coverage determinations (NCDs), applicable local coverage determinations (LCDs), and— when Traditional Medicare coverage criteria are not fully established—internal coverage criteria. We also codified specific requirements that determine when MA organizations may use internal coverage criteria, what the criteria must be based on, and rules for making the internal coverage criteria publicly accessible. Finally, we codified enrollee protections related to the use of prior authorization and required MA organizations to establish a utilization management committee that reviews and approves all plan utilization management policies. These rules were applicable to coverage for MA organizations beginning January 1, 2024. 

Since then, CMS has received numerous questions about the application of these rules. As a result, we issued a memo titled “Frequently Asked Questions related to Coverage Criteria and Utilization Management Requirements in CMS Final Rule (CMS-4201-F)” on February 6, 2024 (hereinafter referred to as the “February 2024 HPMS memo”) to provide answers to commonly asked questions and provide additional clarifying information to MA organizations about how these new rules apply to basic benefits. Additionally, through engagement with MA organizations, incoming inquiries from industry stakeholders, and our ongoing 2024 program audits, we have learned a great deal about common misunderstandings related to these new rules and where these new policies could be further clarified with additional rulemaking to achieve the intended goal of ensuring access to medically necessary care for MA enrollees. Therefore, in this proposed rule, we are building upon and enhancing the regulations from the CY 2024 MA and Part D final rule, specifically, the policies related to the use of internal coverage criteria, by defining the phrase “internal coverage criteria,” establishing guardrails to preserve access to benefits, and adding more specific rules about publicly posting internal coverage criteria content on MA organization websites. 

Additionally, we are proposing four modifications to strengthen existing regulations regarding MA organizations’ coverage of and responsibility to provide all reasonable and necessary Medicare Part A and B benefits. First, we are proposing to clarify the rule that if an enrollee has no further liability to pay for services furnished by an MA organization, a determination regarding these services is not subject to CMS’ administrative appeal process. Specifically, we are clarifying that an enrollee’s further liability to pay for services cannot be determined until an MA organization has made a determination on a request for payment. Second, we are proposing to modify the definition of an organization determination to clarify that a coverage decision made by an MA organization contemporaneously with when an enrollee is receiving such services, including level of care decisions (such as inpatient or outpatient coverage), is an organization determination subject to appeal and other existing requirements. Third, we are proposing to strengthen the notice requirements to ensure that a provider who has made a standard organization determination or integrated organization determination request on an enrollee’s behalf, or when it is otherwise appropriate, receives notice of the MA organization’s decision. Finally, we are proposing a change to the reopening rules to eliminate the discretion of an MA organization to reopen an approved authorization for an inpatient hospital admission.

Guardrails for Artificial Intelligence (AI)

On October 30, 2023, the Biden-Harris Administration released an Executive Order, “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” directing agencies to ensure that artificial intelligence tools do not impede the advancement of equity and civil rights and that the use of AI within health care organizations does not deny equal opportunity and justice for the American people.[1]Given the growing use of AI within the health care sector, such as, but not limited to, AI-based patient care decision-support tools, we believe it is necessary to ensure that the use of AI does not result in inequitable treatment, bias, or both, within the healthcare system, and instead is used to promote equitable access to care and person-centered care for all enrollees. As such, we propose to revise 42 CFR 422.112(a)(8) to require MA plans to ensure services are provided equitably, irrespective of delivery method or origin, whether from human or automated systems. We also clarify that in the event that an MA plan uses AI or automated systems, they must comply with section 1852(b) of the Social Security Act and 42 CFR 422.110(a) and other applicable regulations and requirements and provide equitable access to services and not discriminate on the basis of any factor that is related to the enrollee’s health status. 

Format Provider Directories for Medicare Plan Finder (MPF)

MPF is an online tool where current and prospective people with Medicare can explore their Medicare coverage options by comparing and shopping for Medicare Advantage and Part D plans. MPF allows individuals to shop around and make choices based on a variety of search criteria, such as plan benefits, premiums, deductibles, and Star Ratings. However, MPF does not currently include information on provider networks. Instead, we currently require that MA organizations include on their plan websites a PDF or copy of a printable provider directory and a searchable provider directory, as well as provide a complete and accurate directory through a publicly accessible, standards-based Application Programming Interface. This can be cumbersome for individuals when they must search MPF as well as a plan’s website to find provider network information. We propose to further promote informed choice and transparency by requiring MA organizations to make provider directory data available to CMS to populate MPF. Specifically, we propose enhancing MPF with searchable provider information for all MA organizations and requiring that MA organizations attest to accurate provider directory data, make provider data available to CMS to populate MPF, and update the data accessed by MPF no later than 30 days after being notified of a change in provider information. To ensure the information in provider directories on Medicare Plan Finder is accurate, CMS would require plans to meet data compliance and quality checks, which will be outlined in upcoming technical guidance.

Ensuring Equitable Access to Behavioral Health Benefits Through Section 1876 Cost Plan and MA Cost Sharing Limits

CMS is taking steps to improve access to behavioral health care for enrollees by ensuring that MA and Section 1876 Cost Plans’ in-network cost sharing may be no greater than cost sharing in Traditional Medicare for these services. We believe applying a limit of cost sharing no greater than Traditional Medicare to the behavioral health service categories will strike an appropriate balance between individual affordability and minimizing disruption to MA enrollees’ access to care and coverage options. Specifically, we propose the following standards:

• 20% coinsurance or an actuarially equivalent copayment limit for mental health specialty services, psychiatric services, partial hospitalization/intensive outpatient services, and outpatient substance abuse services (current standard: 30% to 50% coinsurance or actuarially equivalent copayment, based on the plan’s maximum out-of-pocket (MOOP) type).

• Zero cost sharing for opioid treatment program services (current standard: 50% coinsurance or actuarially equivalent copayment for all MOOP types).

• 100% of estimated Medicare Fee-For-Service (FFS) cost sharing for inpatient hospital psychiatric services (current standard: 100% to 125% of estimated Medicare FFS cost sharing, based on the plan’s MOOP type).

In response to concerns that cost sharing in other service categories will be raised in response to this movement in behavioral health, we also emphasize that the extent to which organizations may shift costs to services utilized by certain groups of enrollees is limited by statutory and regulatory requirements that ensure beneficiaries can access needed health services regardless of their health condition. Finally, we are soliciting comment on applying a possible transition period to implement the proposed cost-sharing standard for select benefits and avoid potentially disruptive changes in MA cost-sharing standards (such as for opioid treatment program services that would decrease from 50% coinsurance to zero cost sharing).

Promoting Informed Choice through Agent and Broker Requirements on Programs to Help Beneficiaries & Enhanced Review of Marketing & Communications

We propose two new protections to enhance CMS oversight of marketing and communications materials and help people with Medicare make fully informed enrollment decisions when using agents and brokers.

CMS continues to receive complaints related to advertisements, such as television, web-based, and direct mail advertisements, that clearly attempt to draw an individual’s attention to a plan or plans or influence an individual’s enrollment decisions, such as by mentioning potential plan or benefit changes, or touting “new” benefits or non-specific “Medicare options” (for example, through a call to attention such as “Do you know if your Medicare benefits are changing next year? Call us at the 1-800 number to speak to a licensed agent”). Since 2023, CMS has issued denials for over 1,500 TV ad submissions that were non-compliant and misleading to consumers.

However, under the current requirements, if an advertisement is general and does not include specific content, then plans and third-party marketing organizations are not required to prospectively submit these advertisements to CMS and be subject to review and approval before their use. To enhance CMS’ oversight of the marketing and communications materials likely to influence an individual’s enrollment decision, we propose changes to our definition of “marketing” to increase the number and type of advertisements that are required to be submitted to CMS and subject to review before their use. By broadening the “marketing” definition and CMS oversight, CMS can better ensure that current or potential enrollees are not receiving misleading, inaccurate, or confusing information.

In 2023, CMS modified its regulations to define a list of topics MA organizations must ensure agents and brokers discuss with an individual before their enrollment in a new MA plan to ensure the individual’s health needs are fully discussed. Some of these topics include information on an individual’s providers, pharmacies, prescription drug coverage and costs, premiums, and benefits. To further promote informed enrollment decisions, we are proposing to expand the number of required topics that an agent or broker must cover before an individual’s enrollment to ensure the individual is educated on important topics and options that may factor into their enrollment decision. We propose requiring agents and brokers to discuss the individual’s potential eligibility for the Low-Income Subsidy and Medicare Savings Programs, as well as the potential impact of MA enrollment on future Medigap guaranteed issue rights and where an individual might access additional information about these programs.

Administration of Supplemental Benefits Coverage Through Debit Cards

MA rebate dollars represent a large portion of MA spending. In fact, the 2024 Medicare Trustees Report estimates that MA rebate dollars used for supplemental benefits and premium buy-downs will total over $79 billion in 2026 and amount to approximately $500 billion over a 5-year period starting in 2026. Over the last several years we have made a concerted effort to better understand how supplemental benefits are provided by MA plans to enrollees, and we have focused on ensuring supplemental benefits increase enrollee experiences and improve health outcomes. In our annual bid review, we’ve observed that MA organizations appear to regularly use debit cards to administer several mandatory supplemental benefits. We have received various questions from stakeholders, including people with Medicare, requesting clarity on the use of debit cards, and for guidance on which plan-covered supplemental benefits can be purchased with their debit card and/or where and how the cards can be used. 

To provide further clarity to both MA organizations and beneficiaries on the parameters around the appropriate use of plan debit cards, we are proposing requirements on the proper administration of supplemental benefits. Specifically, we are proposing to: 1) describe when, how, and in what manner debit cards can be used by an MA organization and enrollee; 2) introduce additional disclosure requirements to increase transparency, including additional disclosure rules around supplemental benefits and plan debit cards; 3) further protect access to plan-covered services for MA enrollees by requiring MA organizations to allow an enrollee to receive covered benefits through an alternative process if there is an issue with a plan debit card; 4) ensure debit cards are electronically linked to plan covered items and services through a real-time identification mechanism; and 5) clarify what types of over-the-counter products are acceptable as primarily health-related supplemental benefits. Finally, we are proposing to prohibit MA organizations from marketing the dollar value of a supplemental benefit or the method by which a supplemental benefit is administered, such as use of a debit card by the enrollee to provide the plan’s payment to the provider for the covered item or service.

MA and Part D Medical Loss Ratio (MLR) Reporting

We are proposing to update the MA and Part D MLR regulations to add the following provisions that will improve the meaningfulness and comparability of the MLR across plan contracts, as well as align the MA and Part D MLR regulations with the regulations in the commercial and Medicaid MLR programs:

Require that provider incentive and bonus arrangements are tied to clinical or quality improvement standards in order to be included in the MA MLR numerator;

• Require administrative costs to be excluded from quality-improving activities in the MA and Part D MLR numerators;

• Codify the current practice by which MA and Part D MLR reports include a description of how expenses are allocated across lines of business;

• Establish compliance standards for MA and Part D MLR audits. CMS already has the authority to review and audit MA organization and Part D sponsor MLR reports. However, we are proposing to regulate the actions that we intend to take as a result of audit findings. Specifically, we are setting forth standards for selecting contracts for audit examinations, clarifying compliance actions that will be taken as a result of audit findings, and outlining an appeals process;

• Change Medicare MLR regulations authorizing the release of Part C and Part D MLR data to add exclusions;

• Exclude Medicare Prescription Payment Plan unsettled balances from the MLR;

• Request information on MLR and vertical integration in MA and Part D; and,

• Collect additional details regarding plan expenditures categorized by different provider payment arrangements.

Improving Experiences for Dually Eligible Enrollees

We are proposing to establish new federal requirements for certain dual eligible special needs plans (D-SNPs) to: 1) have integrated member identification (ID) cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled; and 2) conduct an integrated health risk assessment (HRA) for Medicare and Medicaid, rather than separate HRAs for each program. We are also proposing to codify timeframes for all SNPs to conduct HRAs and individualized care plans (ICPs) and prioritize the involvement of the enrollee or the enrollee’s representative, as applicable, in the development of the ICPs.

Medicare Prescription Payment Plan

Beginning in 2025, the Inflation Reduction Act of 2022 requires all Medicare Prescription Drug Plans (Part D plans)—including both stand-alone Medicare prescription drug plans and MA plans with prescription drug coverage—to offer Part D enrollees the option to pay out-of-pocket prescription drug costs in the form of monthly payments instead of all at once at the pharmacy. This program, called the Medicare Prescription Payment Plan, may help people with Medicare Part D who have high-cost sharing earlier in the plan year by spreading out those expenses over the course of the year. 

CMS issued two parts of final guidance to implement the Medicare Prescription Payment Plan for CY 2025 after considering comments received during public comment periods in response to the two parts of draft guidance. The final part one guidance, issued February 29, 2024, focused primarily on operations requirements for the program, and the final part two guidance, issued July 16, 2024, focused on Part D enrollee education, outreach, and communications related to the program. CMS proposes to codify the requirements established in the final part one and final part two guidance for 2026 and future years of the Medicare Prescription Payment Plan. While the majority of the provisions in the proposed rule would continue 2025 program requirements for 2026 and future years, CMS also proposes an automatic election renewal process that extends a Part D enrollee’s participation in the program for the next calendar year, unless the enrollee opts out. Additionally, CMS solicits comments on a potential requirement for Part D sponsors to effectuate election requests received via phone or web in real-time for 2026 or future years. 

Formulary Inclusion and Placement of Generics and Biosimilars

Multiple recent reports, actions, and findings published or taken by external entities have raised concerns that Part D sponsors and their pharmacy benefit managers (PBMs) engage in practices that favor, intentionally or unintentionally, more expensive brand drugs and reference biological products over generics, biosimilars, and other lower-cost drugs in terms of formulary placement or non-placement. These reports, actions, and findings are concerning because of the potential for higher out-of-pocket prescription drug costs for Medicare beneficiaries. CMS reminds Part D sponsors that section 1860D-4(c)(1)(A) of the Social Security Act requires sponsors to have in place a cost-effective drug utilization management program, including incentives to reduce costs when medically appropriate, such as through the use of generics and biosimilars. This statutory requirement is codified at § 423.153(b)(1). In this proposed rule, CMS clarifies pursuant to these authorities that plan formularies must provide beneficiaries with broad access to generics, biosimilars, and other lower-cost drugs to be compliant with this requirement. 

Promoting Transparency for Pharmacies and Protecting Beneficiaries from Disruptions

We are proposing two new provisions to promote better service to Part D beneficiaries and prevent instability in pharmacy networks by promoting transparency in pharmacy network contracts. The first provision would require Part D plans (or first tier, downstream, or related entities, such as PBMs, acting on the Part D sponsors’ behalf) to provide contracted pharmacies with information about which Part D plans they are in-network for before open enrollment and on request thereafter. The second would require Part D sponsors (or first tier, downstream, or related entities, such as PBMs, acting on the Part D sponsors’ behalf) to allow pharmacies to terminate their network contracts without cause after the same notice period that the sponsor is allowed to terminate pharmacy network contracts without cause.

Part D Medication Therapy Management (MTM) Program Eligibility Criteria

Part D sponsors must have an MTM program designed to ensure that targeted beneficiaries appropriately use covered Part D drugs to optimize therapeutic outcomes and reduce the risk of adverse events. It also requires Part D sponsors to target enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet an annual cost threshold for covered Part D drugs. CMS established improved targeting criteria for the Part D MTM program to help ensure more consistent, equitable, and expanded access to MTM services, effective January 1, 2025, in the CY 2024 MA and Part D final rule. Part D sponsors must include 10 core chronic diseases in their targeting criteria for identifying beneficiaries with multiple chronic diseases, including Alzheimer’s disease. In response to the CY 2024 MA and Part D proposed rule, we received suggestions to expand the list of core chronic diseases to include other causes of dementia to allow enrollment of more beneficiaries with other causes of dementia who could potentially benefit from MTM services. We are therefore proposing to expand the reference to Alzheimer’s disease on the list of core chronic diseases to include other dementias.

Promoting Community-Based Services and Enhancing Transparency of In-Home Service Contractors

CMS has become aware that some entities that provide covered benefits may not be included in an MA organization’s provider directory. These concerns relate to safety and a lack of transparency regarding supplemental benefit service providers and their access to an enrollee’s home, as well as ensuring individuals know which providers are deeply rooted within the communities they serve. This is particularly of concern when the enrollee may not have information about who may have access to their home, personally identifiable information (PII), or protected health information (PHI). As such, to strengthen individual protections and transparency, we propose to: 1) codify definitions of community-based organizations (CBOs) and in-home or at-home supplemental benefit providers and direct furnishing entities; 2) require plans to identify, within the provider directory, which providers and direct furnishing entities meet the proposed definition of a CBO; 3) require plans to identify in-home or at-home supplemental benefit providers and direct furnishing entities, including those that provide a hybrid of services (both in-home or at-home, and in-office services), either through a subset list within the provider directory or through a separate list comprising in-home or at-home supplemental benefit providers and direct furnishing entities; and 4) clarify existing policy by stating that all direct furnishing entities must be included within the provider directory.