Skip to content

Three Key Changes Proposed For Medicare Part D

The Obama administration is proposing several changes to the Medicare drug program, also known as Part D.  They range from new limits on the number of plans insurers could offer consumers to new rules about what drugs those plans must cover. The plan also would prohibit exclusion of pharmacies from a plan’s “preferred pharmacy network” as long as they agree to the plan’s terms and conditions.  Here’s a quick look at those proposals:

–Reductions in Required Drug Coverage:  The proposal would remove special protections for some classes of drugs, which require insurers to provide access to the vast majority of drugs in that class.

Currently, Medicare has six protected drug categories. The Centers for Medicare & Medicaid Services plans to eliminate two of those, starting in 2015 with antidepressant drugs and those that help suppress the immune system. Antipsychotic drugs may lose protected status in 2016.  CMS says that safeguards in current law will ensure that patients get the drugs they need, and point out that 140 other classes of drugs are offered through the prescription drug program, even though they are not covered by protected status.  CMS also says that special status hurts the prescription plans’ ability to negotiate discounts with drug makers.

Those assurances are giving little comfort to Democratic and Republican lawmakers and patient groups who fear that the change will mean seniors and the disabled won’t get drugs they need. “Frankly, we are worried,” Carl Schmid, deputy executive director of The AIDS Institute, told the House Energy and Commerce health subcommittee last week. “Who will be next? How much longer will people with HIV, cancer or epilepsy have access to all the medications they need through Part D?”

Proposed Changes To Part D

Rep. Tim Murphy, R-Pa., a psychologist and co-chairman of the Congressional Mental Health Caucus, said federal regulators should not interfere with carefully crafted drug regimens that are working for patients with mental illness. “If you restrict access to these drugs you restrict the treatment of mental illness,” Murphy told a top federal official who testified at the hearing. “You raise suicide rates.” 

Limits in Number of Plans Offered:  CMS is proposing to allow insurers to offer no more than two prescription drug plans – one basic plan and one enhanced – in the same service area.  The health law’s ongoing closing of  the Part D “doughnut hole,” the gap in coverage where seniors pay the full cost of coverage before the plan’s catastrophic cap kicks in, “has reduced the need for plans offering enhanced benefits,” according to CMS. The agency says that each region of the country now has nearly three dozen plans and reducing that would help give beneficiaries more clarity about the differences among plans.

Critics counter that having more plans on the market boosts competition, increases plan innovation and keeps prices low.  An analysis from Avalere Health found that the proposal would require that 39 percent of all enhanced plans be eliminated by 2016.  “Interfering in a well-functioning market system simply to reduce choices – not to eliminate poor choices, is not good policy,” Douglas Holtz-Eakin, president of the conservative American Action Forum, told the congressional panel. Holtz-Eakin was head of the Congressional Budget Office when Congress passed the drug benefit in 2003.

Some seniors’ groups hailed the proposal, saying the current number of choices often stops them from considering their options to find a better deal each year. Separately, a Kaiser Family Foundation study found that from 2006 through 2010 only 13 percent of beneficiaries switched drug plans during each annual enrollment period despite changes in premiums, cost sharing and coverage. (KHN is an editorially independent program of the foundation).

Expansion of Preferred Pharmacy Networks:  The government is proposing to give all pharmacies the ability to be in a health plan’s “preferred pharmacy network” if they agree to offer beneficiaries the same price that is available through pharmacies that have negotiated preferred cost sharing with the insurer. 

Critics of the plan say the change will lead to higher prices because Part D plans won’t be able to get the same price concessions from drug makers and pharmacies, and that CMS has no power under the drug law to demand such a change. But community pharmacists, and lawmakers in both parties representing rural districts, are praising the CMS proposal, saying it will offer seniors more convenience.

This article was produced by Kaiser Health News with support from The SCAN Foundation.

Related Topics

Aging Cost and Quality Medicare