June 1, 2014 at 1:24 pm ET
Part D for Disaster
Spring officially ended last week, bringing to a close the season of open enrollment on the Affordable Care Act’s health insurance exchanges.
It also marked the end of what might have been the administration’s greatest unforced political error of 2014 when it comes to health policy. No, it’s not those Obamacare insurance exchanges, which ended on a high note with 8 million plus enrollees. It’s Medicare Part D.
In addition to getting the insurance exchanges off technological life support and hitting the airwaves to encourage millions to sign up, the administration had to fight two other major health battles this spring, both over Medicare.
One was arguably a game of political cat and mouse over Medicare Advantage, with the administration proposing steep cuts in order to make the final adjustment seem not quite so bad.
But the other was over significant changes to Medicare’s prescription drug program. And with it came a lesson on how putting policy before politics in healthcare, particularly ahead of a tough midterm election and without the support of your usual allies on Capitol Hill, can be dangerous.
Late last month the administration gave in on all of its controversial Medicare Part D proposals, arguably putting at risk changes to the popular prescription drug plan for seniors that they had been working towards for the entire Obama administration.
When the administration released the Medicare Part D rule in January, it took some time before the myriad constituencies with interests in the program grasped exactly what the rule did. The proposal was 157 pages long and included major changes to an already complex program that has insurance companies bid through the federal government to offer seniors prescription drug plans.
The most controversial changes included limiting the number of plans that an insurer could offer in a region down to two. Seniors had a choice of at least 23 plans in every region, according to the Congressional Budget Office in 2013. The administration had already moved towards this goal, requiring that plans had “meaningful differences” from one another. Their argument was that this change would simplify things for enrollees who didn’t always pick plans with the best value and prevent insurers from putting sicker, poorer seniors into basic plans.
It also opened up the “preferred pharmacy network” to any pharmacy that wanted to participate and expanded a medication therapy management program. Finally, what arguably sunk the rule because it garnered the ire of Democrats, it would end rules that required insurers to cover all antidepressant and immunosuppressant drugs. Those were two “protected classes” of drugs that were established early on in the program, in an effort to prevent plans from keeping sicker patients out of plans by simply not covering the drugs they need.
In any other year, these wonky yet significant changes may have been argued about in the backrooms of Washington. But thanks to the midterm elections, they hit the campaign trail.
“The whole rule torpedoed Medicare Part D,” Mark Merritt, CEO of the Pharmaceutical Care Management Association, said in an interview. The trade group represents pharmacy benefit managers, which vehemently opposed many of the changes.
“We had to start early on with the fact that this is a major campaign issue, as open enrollment is October,” for Medicare prescription drug plans, Merritt said. That was when seniors might find out they’d have to go on a different drug plan, conjuring memories of the uproar that was created when insurers canceled individual plans when the ACA’s insurance exchanges launched.
“This couldn’t fester as boring regulatory issue no one cares about,” Merritt said. “Members of Congress don’t usually support things that aren’t for their political health…What wasn’t going to work was bilateral green eyeshade discussion between our coalition and CMS.”
PCMA and other groups that opposed the rule did political polling on the proposals. The potential changes became ammunition for Republicans, particularly after the rocky rollout of Obamacare’s insurance exchanges. That alone would have been a major obstacle for the administration to clear to get this rule final, but it was the swift pushback from Democrats on Capitol Hill that was likely the nail in the rule’s coffin.
The change that had little Democratic support on Capitol Hill was removing the protected classes of drugs. While Republicans argued that changes would introduce too much government regulation into the free market of Part D plans, the pieces that Democrats didn’t like would loosen requirements on what drugs had to be covered by plans in an effort to reduce costs. That garnered strong opposition from patient advocacy groups and some of the administration’s typically strongest allies.
“There are other places where I would like to see the agency rethink its approach. In particular, the six protected classes policy,” Energy and Commerce ranking member Henry Waxman (D-Calif.) told CMS’ Jonathan Blum at a hearing at the end of February. Rep. Frank Pallone (D-N.J.), the top Democrat on the committee’s health subcommittee, echoed those concerns.
Two days later, Sen. Ron Wyden (D-Ore.), who had officially been in the top spot of the Senate Finance Committee for just over a week and was heavily focused on negotiating a bipartisan, permanent fix to the Medicare sustainable growth rate, sent a bipartisan letter from members of the Finance committee urging CMS to start over completely.
“Many of the proposed changes are untested and unstudied and could result in significant loss of beneficiary choice, access, and consumer protections,” the letter said. “We urge you to begin a new dialogue with Congress, Medicare beneficiaries, and relevant stakeholders on how best to achieve the universal goal of a sustainable and successful Part D program.”
A little over one week later, CMS Administrator Marilyn Tavenner raised the white flag, sending a letter to Congress that said the agency would not finalize the most controversial proposals.
The final rule came out late last month, and CMS was true to its word, dropping every controversial provision they had initially proposed.
“The most instructive part of whole communication was Table 3, where they had the whole list of things that they did not make a decision on,” said Debra Devereaux, a pharamceuticals analyst at Gorman Health Group.
It is unclear if the Obama administration will go back and reconsider those rules in the near future, and staff is turning over significantly. Blum announced he would step down from his position in the coming months, and Sylvia Burwell is nearing confirmation to lead Health and Human Services. She has promised Capitol Hill that if the administration considers those proposals again, they will go through regular order. Perhaps next time around, the politics will be different.