Controversial Proposed Changes to Medicare Part D Withdrawn

Since the January 10, 2014, publication of its omnibus proposed rule (79 FR 1918) to fundamentally change the Medicare Part D drug benefits program, CMS has received numerous letters and criticism from a broad bipartisan coalition of insurers, drug manufacturers, healthcare providers, pharmacy benefits managers, patient advocate organizations, the Republican leadership, and a bipartisan letter from the Senate urging withdrawal of all or part of the proposed  rule.

On March 10, 2014, in a letter to Congress, CMS Administrator Marilyn Tavenner succumbed to this unprecedented pressure and announced the withdrawal of the most controversial portions of the proposed rule, including the proposals: (1) to lift the protected class definition on three drug classes; (2) imposing costly new restrictions on preferred pharmacy and mail-order prescriptions; (3) to reduce the number of Part D plans a sponsor may offer to one basic plan and one enhanced plan per region; and (4) allowing CMS to be involved in contract negotiations between plans and pharmacies (i.e., an alteration of long-standing statutory non-interference provisions).

While the Part D proposed rule was not part of the Affordable Care Act (ACA), the current controversy over the ACA implementation and the upcoming November elections meant the timing was not good for another health care battle. It is no coincidence that Tavenner’s letter to Congress was issued just one day before a House vote was expected on the “Keep the Promise to Seniors Act” (H.R. 4160), a bill to block the proposed changes. The bill was expected to garner bipartisan support.

The announcement of withdrawal of the four provisions, however, does not mean the proposed rule is completely dead. Instead, according to Tavenner’s letter to Congress, after taking into consideration the comments received during the public comment period, CMS intends to finalize the remaining proposals related to consumer protections (ensuring access to care during natural disasters), anti-fraud provisions that have bipartisan support (strengthening standards for prescribers of prescription drugs), and transparency (broadening the release of privacy-protected Part D data).

In addition, and more importantly, it is likely that the four controversial provisions will be back in one form or another before the Obama Administration leaves office. As Tavenner states in her March 10 letter, “Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time. We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years.”