(Updates throughout with details, background and reaction)
By David Morgan
WASHINGTON, March 10 The Obama administration,
in an abrupt about-face, said on Monday it would drop proposed
changes to Medicare drug coverage that met wide opposition on
grounds they would harm health benefits for the elderly and
Late last week, more than 370 organizations representing
insurers, drug makers, pharmacies, health providers and patients
urged the Centers for Medicare and Medicaid Services (CMS) to
withdraw changes it had proposed for Medicare Part D.
One of the federal government's most successful and
cost-effective healthcare programs, Part D provides drug
benefits for the elderly and disabled through private insurers
to 36 million enrollees.
Critics said the changes, if adopted in coming months, could
not only undermine Part D benefits but impact drug benefits
available through Medicare Advantage, a program that allows
Medicare beneficiaries to obtain their major medical coverage
through private insurers.
"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," CMS Administrator Marilyn Tavenner advised in a letter
sent on Monday to members of the Senate and House of
The proposals were opposed by both Republicans and Democrats
in Congress. The Republican Party had already begun to look for
ways to leverage popular anger over the changes into campaign
attacks on Democratic incumbents who could be vulnerable in
November's election showdown for control of Congress.
Elated critics of the proposed changes said the government
had effectively agreed to start over in the face of broad,
"We applaud CMS administrator Tavenner for the agency's
sound judgment on this issue," said Mary Grealy, president of
the Healthcare Leadership Council, a coalition member that
represents chief executives from the healthcare industry.
Others noted the move curtails a proposal to broaden
pharmacy access and could hurt Medicare beneficiaries in rural
areas and underserved neighborhoods who might have benefited
from the change.
The new rules, proposed in January, called for ending a
requirement that insurers offer coverage for all drugs classed
as antidepressants and as immunosuppressants, which are used in
transplants. CMS was contemplating a similar change for
antipsychotics after 2015. In addition, the proposals had called
for broadening the number of pharmacies covered by health plans
while limiting the choice of Medicare Part D policies available
in any given region.
"We are deeply disappointed in CMS' decision not to move
forward at this time with the pharmacy choice provision," said
B. Douglas Hoey, chief executive officer of the National
Community Pharmacists Association.
"In many rural communities, independent community pharmacies
are the only pharmacy provider and they are often excluded from
preferred pharmacy arrangements," he said.
CMS officials had argued that the changes were needed to
rein in healthcare spending and create clearer choices for
consumers through greater competition and price transparency.
Senator Ron Wyden, Democratic chairman of the Senate Finance
Committee, defended the agency's new position: "This is good
news and shows that the administration shares our concerns about
potential disruptions for seniors enrolled in the Medicare
prescription drug program."
Republicans said the administrations "backpedaling" on
prescription drugs was not enough to prevent further cuts to
seniors' benefits under President Barack Obama's healthcare
"We remain concerned about the impact of Obamacare's looming
cuts to Medicare Advantage, something that was not addressed in
today's announcement," Senate Republican leader Mitch McConnell
said in a statement issued by his office.
The law known as Obamacare calls for restraining cost growth
in Medicare partly by reducing Medicare Advantage payments to
insurers that for years have made the program more costly than
traditional Medicare. Proposed Medicare Advantage reductions,
which will not be finalized until next month, are already being
portrayed as cuts to Medicare in political advertising.
Meanwhile, Tavenner said CMS would still move forward with
Medicare Part D proposals designed to combat fraud, promote
transparency and ensure access to care in natural disaster.
The $70 billion Part D program launched a decade ago under
former President George W. Bush. Over 10 years, its costs of
$346 billion have been 45 percent lower than initially
(Reporting by David Morgan; Editing by Chizu Nomiyama and