CMS Anti-Obesity Drug Proposal Improves Care, Raises Cost of Work Comp Medicare Set Asides

Rafael Gonzalez, Esq.

Medicare & Medicaid Update Newsletter 5

At this year's Southern Association of Workers’ Compensation Administrators (SAWCA) All Committee Conference (ACC) held two weeks ago in beautiful Amelia Island, FL, I had various conversations with multiple attendees about diabetes medications prescribed as anti-obesity agents, Medicare's policy on same, and how these policies affect the workers compensation system, including the value of future medical care, especially when considering settlement and a workers compensation medicare set aside (WCMSA).

As had been anticipated, over the Thanksgiving holiday, the Centers for Medicare & Medicaid Services (CMS) published its proposed actions in the Medicare Advantage (MA) and Medicare Part D prescription drug programs. In recognition of the prevailing medical consensus that obesity is a disease, CMS is proposing to no longer exclude anti-obesity medications for the treatment of obesity from coverage under Medicare and to require Medicaid programs to cover these medications when used to treat obesity. This proposal would provide more Americans access to these transformative medications, improving the health and quality of life for millions of people who are obese.

Effect on Workers Compensation Claims, Costs, and Settlements

It is also undeniable that authorizing anti-obesity medications will have a direct effect on workers compensation claims, costs, and settlement preparations. Today, such obesity medications are not covered by work comp systems and are generally therefore not included in WCMSAs when anticipating settlement of future medical care in work comp claims. But if the Medicare and Medicaid systems begin to cover such medications, that act, in and of itself, if causation and medical necessity is appropriately proven, may persuade lots of work comp payers and systems around the country to authorize same.

And of course, should such anti-obesity medications become authorized under the Medicare system, then recommendations for future use of such medications would become a part of the review and analysis that Medicare would require of parties settling future medical care entitlement. In other words, if the injured worker currently is a Medicare beneficiary, or may become one within 30 months of settlement, there would be an expectation that when settling future medical entitlement under the state work comp law, that the settling parties take Medicare's future interest into account by allocating a portion of the settlement dollars for payment of future anti-obesity medication related to the work comp claim.

Proposed Rule Removes Unnecessary Barriers

This proposed rule continues many years of work to ensure the MA and Part D programs meet the needs of people with Medicare. In recent years, there have been increasing calls for reforms related to MA prior authorization, utilization management, and coverage decisions as data reported to CMS by MA plans indicate that, on average, MA plans overturn 80% of their decisions to deny claims when those claims are appealed to the plan. However, the data also shows that less than 4% of denied claims are appealed in the first place, meaning many more denials could potentially be overturned by the plan if they were appealed.

Ultimately, what the data indicated to CMS is that MA enrollees may not have been getting access to the care they needed.  The proposed rule builds on CMS’ work to remove unnecessary barriers to care resulting from the inappropriate use of prior authorization and internal coverage criteria. The rule would also increase guardrails on the use of artificial intelligence (AI) to protect access to health services. Other proposed policies will promote competition on the things that matter to people enrolled in MA and Part D plans, further addressing misleading marketing practices, and enhancing consumer tools.

Proposed Rule Improves Transparency and Accountability

The CMS proposed rule improves transparency, accountability, and consumer protections in Medicare Advantage and Part D plans so that everyone receives high-quality care by removing barriers that delay care or deny people services and medications they need to be healthy. If adopted, these policies will hold plans accountable for providing high-quality health care by expanding access to anti-obesity medications for people with Medicare and Medicaid, further addressing prior authorization concerns in Medicare Advantage, and promoting informed choice and transparency by requiring Medicare Advantage plans to share provider directory information on Medicare Plan Finder.

Over the past few years, CMS has enhanced Medicare Plan Finder’s capabilities as an online tool that helps people with Medicare to compare Medicare options, including shopping for MA and Part D plans and comparing to Traditional Medicare. In this proposed rule, CMS is further proposing to enhance Medicare Plan Finder’s ability to provide a personalized experience for people with Medicare and their caregivers by proposing that MA organizations make their entire provider directory available to CMS, for the purpose of incorporating it into Medicare Plan Finder. This would enable people with Medicare and their caregivers to search for providers and more easily compare their availability across different MA plans.

Proposed Rule Promotes Competition and Consumer Protection

CMS is also addressing competition in the MA and Part D programs in this proposed rule. In line with promoting competition for consumers in health care, CMS is proposing to update the MA and Part D Medical Loss Ratio (MLR) regulations to improve the data reported by plans. CMS is seeking comment on policies regarding how the MA and Part D MLRs are calculated to help enable policymakers to address concerns surrounding vertical integration in MA organizations and Part D sponsors. In addition, CMS is taking steps to promote transparency for pharmacies.

Additionally, CMS is strengthening consumer protections by proposing changes to expand CMS oversight of MA advertisements, which would build on previously finalized policies to protect people with Medicare from predatory behavior, such as misleading television, web-based, and direct mail advertisements. Since 2023, CMS has issued denials for over 1,500 TV ad submissions that were non-compliant and misleading to consumers. CMS is also improving the proper administration of MA supplemental benefits through debit cards, better ensuring that CMS is a good steward of MA rebate dollars used for supplemental benefits and premium buy-downs, which, according to the Medicare Trustees, are estimated to amount to over $79 billion in 2026 and amount to approximately $500 billion over a 5-year period starting in 2026.

To View and Comment on Proposed Rule

To review or comment on the CY 2026 MA and Part D proposed rule during its 60-day public comment period, visit the Federal Register. Comments must be submitted no later than January 27, 2025. For more information on the CY 2026 MA and Part D proposed rule, view the fact sheet.

To learn more about Cattie & Gonzalez, PLLC , our products, including our mandatory reporting, conditional payments, and set aside services, please visit us at www.cattielaw.com, email us at info@cattielaw.com, or call us at 844.546.3500. In addition, you may follow us on LinkedIn at www.linkedin.com/company/cattie-gonzalez, on Twitter/X at www.x.com/cattiegonzalez, and YouTube at www.youtube.com/@CattieAndGonzalez.