Administration Drops Controversial Medicare Changes

The Medicare agency is abandoning changes that conservatives said would undermine its drug coverage.

WASHINGTON - AUGUST 16: The U.S. Department of Health and Human Services building is shown August 16, 2006 in Washington, DC. The HHS Building, also known as the Hubert H. Humphrey Building, is located at the foot of Capitol Hill and is named for Humphrey, who served as a U.S. senator from Minnesota and Vice President of the United States. (Photo by Mark Wilson/Getty Images)
National Journal
Sam Baker
March 10, 2014, 8:50 a.m.

The fed­er­al gov­ern­ment is back­ing off of con­tro­ver­sial changes to the way Medi­care cov­ers pre­scrip­tion drugs.

Con­ser­vat­ives and many law­makers had as­sailed the pro­posed changes, ar­guing that they would have fun­da­ment­ally changed the nature of Medi­care’s drug be­ne­fit, known as Part D. The Cen­ters for Medi­care and Medi­caid Ser­vices said in a let­ter to mem­bers of Con­gress on Monday that it would not move for­ward with the most con­tro­ver­sial changes.

CMS aban­doned pro­pos­als that would have ex­pan­ded the agency’s power to get in­volved in ne­go­ti­ations between Part D plans and phar­ma­cies. Un­til the pro­posed changes, CMS had be­lieved it did not have the au­thor­ity to be a part of those ne­go­ti­ations. It pro­posed a re­in­ter­pret­a­tion of its power, which promp­ted cri­ti­cism that the agency would un­der­mine a pop­u­lar part of the Medi­care pro­gram.

CMS had also pro­posed, but has now aban­doned, new rules for how Part D plans es­tab­lish their phar­macy net­works. The pro­pos­als would have al­lowed more phar­ma­cies to win deals as “pre­ferred” pro­viders. Ac­cord­ing to an ana­lys­is from the con­ser­vat­ive Amer­ic­an Ac­tion For­um, that would have re­duced the num­ber of pre­ferred phar­ma­cies and po­ten­tially raised seni­ors’ costs.

“Giv­en the com­plex­it­ies of these is­sues and stake­hold­er in­put, we do not plan to fi­nal­ize these pro­pos­als at this time,” CMS said Monday in a let­ter to mem­bers of Con­gress. “We will en­gage in fur­ther stake­hold­er in­put be­fore ad­van­cing some or all of the changes in these areas in fu­ture years.”

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