On November 26, 2024, CMS announced a 180-degree turn in its coverage of weight loss drugs like Wegovy, based on a policy re-interprertation. The policy flip also goes opposite the interpretation of law in a Congressional Budget Office (CBO) report in October 2024.
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See the CMS fact sheet here.
See the CMS proposed regulation here.
See the October 2024 CBO interpretation and analysis here.
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The CBO report from October states the classic view of the law. A clause prohibiting weight loss drug coverage exists in Medicaid law, and is adopted by reference in Medicare Part D law as well (Medicare Modernization Act, 2003). [*]
Part D plans, which administer Medicare’s outpatient prescription drug program, are prohibited from covering AOMs as part of the standard prescription drug benefit under the terms of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.11 Those plans can cover such drugs as a supplemental benefit, but that coverage is not subsidized by the federal government and must be funded entirely by beneficiaries through additional premiums.
I don't believe that this Part D law prevents coverage of Part B physician-injected drugs, but Wegovy and similar drugs are classed as "self administered drugs" by Medicare MACs, and therefore, aren't eligible to escape into Part B coverage.
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Here's the summary of the change, which the rule goes on to discuss at more length. Page 5-6 of inspection copy version.
Part D Coverage of Anti-Obesity Medications (§ 423.100) and Application to the Medicaid Program
The statutory definition of a covered Part D drug at section 1860D-2(e)(2) of the Social Security Act (the Act) excludes certain drugs and uses—specifically, those that may be excluded by Medicaid under section 1927(d)(2) of the Act. This includes, at section 1927(d)(2)(A) of the Act, “agents when used for anorexia, weight loss, or weight gain.” Historically, drugs used for weight loss have been excluded from the definition of covered Part D drug, regardless of their use for treatment of individuals with obesity, and have been an optional drug benefit for Medicaid programs. Increases in the prevalence of obesity in the United States and changes in the prevailing medical consensus towards recognizing obesity as a disease since the beginning of the Part D program in 2006 have compelled CMS to re-evaluate Part D coverage of anti-obesity medications (AOMs) for Medicare Part D enrollees with obesity where the drug’s prescribed use is not for a medically accepted indication (MAI) that is currently covered under Part D. We are proposing to reinterpret the statutory exclusion of agents when used for weight loss to allow Part D coverage of AOMs when used to treat obesity by reducing excess body weight or maintaining weight reduction long-term for individuals with obesity who do not have another condition for which the prescribed use is an MAI that is covered under the current Part D policy. The proposed reinterpretation would also apply to the Medicaid program. Thus, AOMs could not be excluded from Medicaid coverage under this interpretation when used for weight loss or chronic weight management for the treatment of obesity. Coverage of AOMs and drugs that contain the same active ingredient as AOMs that meet the definition of a covered outpatient drug are already subject to section 1927 requirements when used for an indication, other than weight loss, that is an MAI, and Medicaid must cover those products when they are medically necessary. Under our proposed reinterpretation, AOMs approved for weight loss and chronic weight management that are used for weight loss in individuals who do not have obesity or another condition that is an MAI for the AOM would remain excluded from the definition of covered Part D drug and would remain optional benefit for Medicaid programs.
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- I asked Chat GPT to rewrite this CMS summary in even simpler English.
- Further below, under "AI Corner," I ask Chat GPT to write an essay about the policy, in the style of a law school professor.
Simple English Summary:
- Historically, Medicare Part D and Medicaid have excluded coverage for drugs used for weight loss. This was based on a rule that allowed Medicaid to exclude drugs used "for anorexia, weight loss, or weight gain." However, with rising obesity rates and a shift in medical thinking that recognizes obesity as a disease, CMS is proposing a new approach.
- The change would reinterpret the rules to allow Medicare Part D and Medicaid to cover drugs specifically prescribed to treat obesity. These drugs would help individuals with obesity reduce or maintain their weight over the long term. Importantly, the reinterpretation distinguishes between using drugs for general weight loss (still excluded) and using them for treating obesity (now potentially covered).
- This proposal also applies to Medicaid, meaning drugs for managing obesity would no longer be excluded if prescribed to treat the condition. However, drugs used for weight loss in people without obesity or another qualifying condition would still not be covered by Part D and would remain an optional Medicaid benefit.
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Other flip-flops.
HHS's interpretation of whether the term sex discrimination (in the ACA, 2010) includes transgender issues has flip-flopped from Obama, to Trump I, to Biden, and no doubt another flip with Trump II.
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Trump II
Commenters have noted this leaves a hot potato for the Trump administration. If finalized as proposed, it could have budget implications. If canceled, it could be framed as a withdrawal of coverage under Trump II.
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Minimal Voluntary Coverage
The budget projections generally focus on drug cost and not health benefit savings (see October CBO report on this.) However, Medicare Advantage plans appear to have rarely covered AOM voluntarily (remarks in proposed rule), suggesting Medicare Advantage plans see commercial doubt that the drugs save the plans lots of money and simply pay for themselves. On page 541, CMS notes, as did CBO, "Magnitude and timing of any potential savings [are] highly uncertain" and states that costs will have a larger impact on the financials...savings will be much slower to emerge.
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SSA 1927, SSA 1860D.
See page 5 of the Part D proposed rule, inspection version, stating that Part D drugs are defined at 1860D-2 (e)(2) which points to Medicaid law at SSA 1927(d)(2)(A) which blocks coverage of "agents when used for anorexia, weight loss, or weight gain." CMS states on page 525 of the inspection copy, "Rulemaking is required for CMS to amend its longstanding interpretation [of 1927...]." Financial estimates follow (p. 525ff). While "rulemaking" with notice and comment is required, no regulatory change (in the Code of Federal Regulations) is being made.
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AI Corner
I asked Chat GPT 4o to take the stance of a law school professor and discuss the sections of the rule regarding anti-obesity medications (inspection copy pages 109-123). Here is the result.
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Detailed Discussion of CMS Rulemaking on
Part D Coverage of Anti-Obesity Medications
Background and Policy Shift
CMS's recent proposal to reinterpret the statutory exclusion of weight-loss drugs under the Social Security Act (SSA) §§ 1860D-2 and 1927 represents a significant policy reversal. Historically, Medicare Part D and Medicaid excluded coverage of drugs "used for anorexia, weight loss, or weight gain," a stance reinforced as recently as October 2024 in a Congressional Budget Office report.
CMS now proposes that anti-obesity medications (AOMs) should be covered when used to treat obesity, reflecting shifts in medical consensus that recognize obesity as a chronic disease rather than a cosmetic issue.
Pros of the Proposed Rule
Alignment with Modern Medical Standards
- The reinterpretation reflects the growing recognition of obesity as a chronic disease that contributes to numerous serious conditions, such as diabetes, cardiovascular disease, and certain cancers. By including AOMs in coverage, CMS aligns its policy with medical guidelines and organizations like the AMA, which classified obesity as a disease in 2013.
Addressing a Public Health Crisis
- Obesity rates have risen dramatically, with approximately 42% of the U.S. population now classified as obese. The policy could help mitigate health disparities, particularly in populations disproportionately affected, such as Black and Hispanic communities.
Potential for Cost Savings
- While initially costly, AOM coverage might reduce long-term healthcare costs by lowering rates of obesity-related diseases, such as type 2 diabetes and cardiovascular complications, which are expensive to treat.
Equity in Access
- The reinterpretation ensures that low-income populations covered by Medicaid and Medicare have access to AOMs, potentially addressing health inequities exacerbated by limited access to effective obesity treatments.
Consistency in Statutory Interpretation
- CMS aims to harmonize its approach to weight-loss agents with existing policy that permits coverage of drugs used for "weight gain" in conditions like AIDS-related cachexia. This consistency enhances the credibility of the reinterpretation.
Cons and Weak Points
Deviation from Congressional Intent
- The longstanding exclusion of weight-loss drugs under SSA § 1927 was likely intended to prevent coverage for medications perceived as elective or cosmetic. Critics may argue that CMS's reinterpretation undermines Congressional intent and sets a precedent for reinterpreting statutory exclusions.
Budgetary Concerns
- Expanding coverage to include AOMs could lead to significant short-term cost increases for Medicare and Medicaid. The CBO's recent acknowledgment of the exclusion as "settled law" highlights uncertainty about the fiscal impact of such a reversal.
Potential Abuse or Misuse
- The expanded coverage could lead to inappropriate prescriptions for individuals without obesity, particularly in cases where AOMs are prescribed for minor weight management or for off-label uses. CMS acknowledges this risk and seeks comment on implementation strategies.
Complex Implementation
- For Medicaid, aligning state coverage policies with the new rule may be challenging, particularly for states that already operate on tight budgets or that may resist mandates perceived as federal overreach. The rule also leaves room for states to exercise discretion in some cases, which could lead to variability in access.
Unclear Criteria for Obesity
- CMS does not propose a universal definition of obesity for coverage purposes, deferring to Part D sponsors to set prior authorization criteria. This could lead to inconsistent access and potential administrative burdens for providers and beneficiaries.
Perverse Incentives
- By limiting coverage to individuals with obesity (e.g., BMI ≥ 30), the policy may inadvertently encourage individuals with overweight (BMI 27–29.9) to gain weight to qualify for treatment. CMS recognizes this risk but has not proposed clear safeguards.
Implications for Broader Policy
The proposed rule is a watershed moment in healthcare policy, signaling a broader shift toward treating obesity as a public health priority. However, it also reflects the tension between evolving medical science and historical legislative frameworks. By seeking public comment, CMS acknowledges the complexities of implementation and the need to balance medical advances with fiscal responsibility.
From a legal standpoint, this rule raises questions about agency authority to reinterpret statutes without Congressional approval, which could invite judicial scrutiny. The decision, if finalized, will likely serve as a test case for CMS's regulatory flexibility under the Social Security Act.
Conclusion
The CMS proposal to cover AOMs under Medicare Part D and Medicaid marks a critical step in addressing obesity as a chronic disease. While it offers substantial public health benefits, the policy shift raises questions about statutory interpretation, cost management, and implementation logistics. As this rulemaking progresses, it will be important to watch how stakeholders—states, insurers, and beneficiaries—respond to the proposal and how CMS addresses these challenges through its final rule.
