Radar on Medicare Advantage

The April 1 release of final rate projections for Medicare Advantage and Part D plans was largely uneventful as CMS maintained the same all-in estimate of what plans can expect to see, on average, in terms of a reimbursement update next year. But the market did not respond well: MA-exposed insurers’ shares took a tumble and equity analysts warned that a revenue decline — before coding trend — could lead to benefit cuts and footprint reductions.

Industry trade groups did not respond favorably, either. In a statement released immediately after the rate announcement, AHIP President and CEO Mike Tuffin said the finalized policies would “put even more pressure on the benefits and premiums of 33 million Medicare Advantage beneficiaries who will be renewing their coverage this fall,” particularly as the MA and Part D programs face regulatory and legislative changes.

Thanks to a final rule published just one year ago, Medicare Advantage plans as of Jan. 1 were expected to meet new constraints when it comes to applying their utilization management (UM) policies, including prior authorization. CMS has said it aims to assess UM-related performance of plans serving 88% of beneficiaries this year, and it intends to accomplish this through both routine program audits and “focused audits.” According to compliance experts, the volume of audit activity since CMS began sending engagement letters in late February suggests the agency is eager to meet its goal, but it may not like what it finds.

Medicare is spending billions on GLP-1s, the groundbreaking diabetes drugs that are now seeing skyrocketing demand for their ability to help patients lose weight. While Medicare Part D plans are prohibited from covering weight loss therapies, a new FDA decision for Novo Nordisk’s Wegovy (semaglutide) could reshape the coverage landscape for some GLP-1s — and drive Part D spending even higher. 

A March 22 analysis from KFF found that Part D spending on Novo’s Ozempic (semaglutide) alone reached $4.6 billion in 2022, a 77% increase from the prior year and a 207% increase from 2020. (Novo brands its injectable semaglutide as Ozempic for the treatment of type 2 diabetes and as Wegovy for weight loss.) KFF found that Part D spending on GLP-1s has grown exponentially every year since 2018. Eli Lilly’s Trulicity (dulaglutide), an older GLP-1 that hit the market in 2014, saw the second-highest gross Part D spending among all therapies in 2022 at $6.2 billion. Ozempic, meanwhile, sat at No. 6. KFF speculated that both Ozempic and Novo’s oral semaglutide Rybelsus could be selected for Medicare drug price negotiation as early as 2025. 

In newly released guidance, CMS told Medicare Part D plans that they’re allowed to cover weight-loss drugs if they’ve been approved for another medical use — a description fitting Novo Nordisk’s Wegovy (semaglutide) after it recently received an FDA nod for preventing major heart problems.

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have said their Part D plans will cover Wegovy for its newest approved use: reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria, the Wall Street Journal reported on March 28.

For other insurers that sell Part D plans, the decision about whether to cover Wegovy represents an additional challenge to grapple with, as they’re also facing significant regulatory changes.