CMS’s $40B GLP-1 Proposal Offers Leeway for Part D Plans to Define Obesity

Acknowledging the growing prevalence of obesity in the U.S. and its existence as a chronic disease, CMS in its proposed Medicare Advantage and Part D rule for the 2026 contract year included a landmark provision to expand Medicare and Medicaid coverage of anti-obesity medications (AOMs). The proposal opens the door to more Part D coverage of costly glucagon-like peptide-1 (GLP-1) medications — which are now covered for the treatment of Type 2 diabetes or major adverse cardiovascular events — and industry experts question how sponsors will determine eligibility and control what’s likely to be a significant increase in costs.

In the rule, which was issued on Nov. 26 and is slated for Federal Register publication on Dec. 10, CMS proposed a reinterpretation of Medicare and Medicaid law to provide coverage of AOMs for the treatment of obesity under Medicare Part D and Medicaid. CMS estimated that some 3.4 million Part D beneficiaries would become newly eligible to gain coverage for AOMs, at a 10-year program cost of about $25 billion (out of expected Part D spending of $2.1 trillion). With the revision to current Medicaid exclusions, coverage of AOMs would increase federal and state spending by a total of $40 billion over 10 years, CMS estimated.

CMS said reinterpretation is warranted given mounting clinical evidence around obesity as a chronic condition and an earlier reinterpretation of the Medicare and Medicaid statutes to provide coverage of drugs for AIDS wasting syndrome.

The prevalence of obesity increased from 30.5% of the U.S. population in 1999 and 2000 to 41.9% of the U.S. population between 2017 and March 2020, CMS noted in the rule. (Data from the National Health and Nutrition Examination Survey also showed that 41.5% of U.S. adults aged 60 and older were obese during the latter period, according to the rule.)

Medicare data suggests those figures will only get worse. “Our data shows that 22% of people with Medicare had a diagnosis of obesity in 2022 — more than double the number from a decade earlier — and many more likely have…obesity without a diagnosis,” stated CMS Administrator Chiquita Brooks-LaSure during a Nov. 26 call with reporters.

“During my time as CMS administrator, I have heard from countless people about how this coverage exclusion is a barrier preventing people from treating obesity and living their lives,” said Brooks-LaSure, who has served as administrator throughout Joe Biden’s presidency. “People with obesity deserve to have affordable access to medical treatment and support, including anti-obesity medications for this disease, just as a person with Type 2 diabetes can access these medications to get healthy.”

When asked during the call whether CMS has estimated any medical savings associated with covering the drugs for obesity, an official said the agency expects there “could be some offsetting medical savings,” but the proposed rule did not assume savings in its estimates. The Congressional Budget Office has previously estimated a “small amount of savings” associated with covering AOMs of less than $50 million in 2026, but that could grow to about $1 billion in 2034, remarked the official. 

The agency is soliciting comments on the AOM proposal and other provisions in the rule no later than Jan. 27, 2025, just seven days after the inauguration of President-elect Donald Trump.

State Medicaid coverage of GLP-1s such as Novo Nordisk’s Wegovy (semaglutide), which was initially approved to treat Type 2 diabetes under the brand name Ozempic, is currently very limited. Meanwhile, Medicare Part D guidance issued by CMS earlier this year allowed for the coverage of weight loss drugs if they’ve been approved for another medical use. That was after Wegovy in March was approved for use in reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria. As of August 2024, more than 90% of Medicare enrollees in all states except Utah have access to Ozempic with utilization management restrictions, according to MMIT Analytics. 

CMS Will Allow Sponsors to Set Criteria

CMS in the proposed rule did not explicitly define obesity as determined by body mass index (BMI). Instead, CMS noted that obesity is “most commonly defined” as having a BMI of 30.0 or higher and said it intends to “permit Part D sponsors to define obesity for the purposes of their prior authorization (PA) criteria as long as the Part D sponsor’s PA criteria are not more restrictive than the FDA labeling for the particular AOM.” CMS also proposed to limit its reinterpretation to AOMs used for weight loss or weight management for the treatment of obesity, separate from individuals who are overweight and have at least one weight-related comorbidity, but it asked for comments on that distinction.

The question for health plans then becomes what additional criteria can be applied, which may come up in the comments to CMS, points out Steve Arbaugh, president and CEO of ATTAC Consulting Group. “Let’s say you have someone who currently has a BMI of 31, but six months ago when they saw the doctor, the BMI was 28 and before that, it was 27. [They gained weight], but are they chronically obese?” asks Arbaugh. “The question will be, and CMS has left it up to the plans to decide, what additional criteria within a prior authorization or a step therapy program they might implement around the definition of obesity.” 

The provision, if finalized by the next administration, could also open the door to additional fraud, waste and abuse if providers start freely writing prescriptions for these in-demand medications. “Plans are already facing headwinds with regard to risk adjustment changes, Star Ratings and everything else that’s putting pressure on benefit designs and premium dollars,” remarks Arbaugh. “This is adding potentially another significant expense…and plans would have to adjust other elements of what they’re doing to accommodate [for those changes and] remain competitive. If CMS moves forward with this change, the financial impact will not be modest."

But whether the incoming administration will preserve the provision is anyone’s guess. Robert F. Kennedy, Jr. and Mehmet Oz, M.D., who have been tapped as respective HHS and CMS leaders, have expressed an interest in preventive care and healthier living.

“I think that the anti-obesity drug [provision] is definitely a tricky area and it will be interesting to see how that plays into ‘make America healthy again,’” says Faegre Drinker Consulting’s Tricia Beckmann, referring to Kennedy’s movement to reverse chronic disease in the U.S. “And in an administration that, on the one hand, says they want to curb spending. But I think what they’re mostly concerned about is program integrity concerns, and not necessarily better services for which there might be a good policy reason to keep certain reforms in place around what it means to have a chronic disease, and if obesity itself is a chronic disease.”

Meanwhile, the House Ways & Means Committee in June advanced the Treat and Reduce Obesity Act (H.R. 4818), or TROA, of 2023. In addition to expanding coverage of intensive behavioral therapy for obesity, the bill would allow Part D coverage of drugs used for the treatment of obesity or weight loss management in individuals who are obese.

“There’s talk that maybe the TROA legislation would pass in a lame duck Congress. Does this proposal make it any more likely that it gets passed? I don’t know,” says Beckmann, who is principal with Faegre Drinker and a former director with the CMS Center for Consumer Information and Insurance Oversight. One possibility is that the TROA provisions are included in a legislative package with guardrails around who would qualify, she suggests. For example, Congress could require that a beneficiary take the drug for a year before Part D coverage kicks in, which was included in a June amendment to the bill. 

This article was reprinted from AIS Health’s subscription publication Radar on Drug Benefits.