COGC Opposes Part D Power Grab by CMS

The Cost of Government Center opposes the proposed rule change by the Centers for Medicare and Medicaid Services (CMS) as it relates to changes to the Medicare Prescription Drug Benefit Program.

The rule changes would undermine mechanisms in Part D that have led the program to cost less than initial projections. The draft also sets the stage for unilateral interference by CMS into Part D plan negotiations that have historically – and successfully – been managed by the private stakeholders in the program.

The CMS rule change would eliminate pharmacies’ incentives to negotiate drug prices with insurers, who would be required to offer contracts to any other pharmacy that could offer comparable pricing on prescriptions.

Currently, pharmacies can negotiate prices with insurers, who can grant exclusive access to their beneficiaries in return. This year, three quarters of Part D enrollees chose a plan with these “preferred pharmacy networks.”

Analysis shows – including research by CMS itself – that dissolving these networks will likely increase Part D costs. One study found that the use of preferred pharmacy networks could reduce Medicare spending by roughly $870 million this year alone, and save as much as $9.3 billion over the ten year window. With growth in entitlement spending looming as one of the largest threats to economic stability, strategies that discipline Medicare spending should be encouraged, not restricted.

We urge CMS to reject these draft changes; the Centers contend rulemakings are necessary to “strengthen beneficiary protections” as well as “remove consistently poor performers” from the Part D program. We suggest CMS concentrate on working with Congress to enhance its own oversight abilities, and work to eliminate fraud and abuse that wastes tens of billions of dollars each year.

We look forward to working with regulators and lawmakers to rescue Medicare from its impending insolvency through innovative reforms that save taxpayer dollars and secure an efficient safety net for future generations.

TAGS: Spending, Regulation, Entitlement Reforms, Health Care

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