Politics & Government

Obama administration abandons Medicare changes

The Obama administration announced Monday that it will not proceed with several contentious proposals to change the Medicare prescription drug program in 2015 after congressional Democrats and Republicans expressed major concerns about the plans.

"Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time," wrote Medicare Administrator Maryilyn Tavenner in a letter to Congress on Monday. "We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years."

The hasty political retreat comes amid mounting pressure to diffuse any election-year controversies that could magnify the administration's messy implementation of the Affordable Care Act.

One of the newly scuttled proposals would have removed a requirement that each Medicare drug plan cover "all or substantially all" antidepressant and immunosuppressant medications. The proposal also considered dropping mandatory coverage for the vast majority of antipsychotic medications at a later date.

Some experts say mandatory coverage of these "protected classes" of drugs contributes to over-prescribing and makes it harder for plans to negotiate lower prices.

Insurers and pharmacy benefit managers backed the proposed changes, but patient advocates and drug companies said the current rules help assure patient access to vital medications.

Another administrative proposal would have reduced from three to two the number of Medicare drug plans an insurer could offer in any of the program's ten service regions. The move was designed to reduce confusion and duplication among plan offerings.

But in a letter to the Centers for Medicare and Medicaid Services on Monday, a dozen Democratic senators, including Kay Hagan of North Carolina and Mark Begich of Alaska, urged the agency to abandon both proposals.

"The features that beneficiaries value - access to a choice of plans and access to needed prescription drugs - are at risk if the rule proposed by the agency is finalized unchanged," the senators wrote. Thus, we strongly urge you not to move forward with finalizing any proposed changes that would limit seniors' access to plans or medicines."

In February, a bipartisan group of 20 U.S. Senators expressed similar concerns about the plans. Among them was Orrin Hatch, ranking member of the Senate Finance Committee, who said Monday, the "Obama Administration did the right thing by undoing the majority of what it proposed to the highly successful Medicare Part D program."

The Obama administration also shelved a plan to increase the number of pharmacies offering "preferred' or lower-cost prescription drug prices. That proposal was projected to lower program costs over time and ensure that beneficiaries have easy access to the best prescription drug prices.

Independent pharmacists supported the plan, but drug plans and PBMs objected to the proposal because it allowed the government to revisit a "non-interference" clause that currently prohibits the Department of Health and Human Services from getting in the middle of price negotiations with insurers, drug plans and pharmacies.

Seemingly chastened by the cascade of criticism in public comments about the proposals, the administration will instead move ahead with proposals to fight fraud and abuse and improve consumer protections and program transparency.