Feb. 19—Some healthcare advocacy groups this week urged the Obama administration to reverse proposed changes to Medicare’s Part D program that recent analyses concluded could cut coverage and increase beneficiary costs.

More than 200 organizations representing a range of healthcare advocacy groups wrote the Centers for Medicare & Medicaid Services (CMS) to withdraw regulatory changes proposed in January to reduce costs and fraud. The organizations contend that the regulatory changes would limit the number of Part D plans, which enrolled nearly 37 million beneficiaries in January.

“Millions of seniors and beneficiaries with disabilities would lose their current plan of choice or face changes in coverage,” the letter stated.

Other changes to move from “market-based pricing” toward a greater government role in pricing plans “will neither improve quality and affordability, nor incentivize plan innovation,” the letter said. Instead, the changes would undermine central elements of the program that have allowed it to achieve a 90 percent approval rating among seniors while keeping costs more than 40 percent below original Congressional Budget Office projections.

Studies Critical of Changes

The criticisms of the healthcare groups followed recent analyses that were similarly critical of the effect of the proposed rules.

For instance, Avalere Health, a healthcare consultancy, concluded that the proposed rule change limiting the number of prescription drug plans (PDPs) that insurers may offer could require elimination of 39 percent of all enhanced plans in 2016. The proposed change would limit standalone PDP sponsors—beginning in 2016—to one basic and one enhanced plan per region, which Avalere estimated would require termination or consolidation of 214 of the 552 enhanced PDPs.

“Many health plans have designed low-premium, enhanced PDPs to attract cost-conscious enrollees and more comprehensive options for higher-need beneficiaries,” Matt Eyles, executive vice president at Avalere Heath, said in a release. “Plans are likely to respond to this change by rolling the more comprehensive PDP into the lower-cost plan, which could increase premiums for beneficiaries.”

The changes would impact 7.4 million, or 94 percent, of Medicare beneficiaries enrolled in an enhanced plan.

CMS defended the change as needed to ensure better beneficiary access to plans with “meaningfully different benefits and transparent costs.” Additionally, multiple plans offering “enhanced benefits” were no longer needed since the Affordable Care Act required closing of the so-called donut hole, in which beneficiaries lost assistance for drug costs.

An early February analysis by the American Action Forum, a Washington, D.C. think tank, was similarly critical of the changes. Its analysis concluded the changes in the proposed rules would increase premium and copayment costs by limiting competition, while decreasing incentives for insurers to control costs. 

Rich Daly is based in HFMA’s Washington, D.C. office. Follow him on Twitter at @rdalyhealthcare.


Publication Date: Wednesday, February 19, 2014