CMS Proposes Major Medicare Advantage Overhaul: Anti-Obesity Drug Coverage and Stricter Prior Authorization Rules

What Happened

On November 26, 2024, the Centers for Medicare & Medicaid Services issued a proposed rule revising the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. The comprehensive 714-page proposal represents the Biden administration's final significant regulatory effort to reshape Medicare before the transition to the Trump administration in January 2025.

The most high-profile provision addresses obesity treatment. CMS proposes reinterpreting the statutory Medicare coverage exclusion for weight loss drugs, arguing that the exclusion would not apply to drugs when used for weight loss or chronic weight management for the treatment of obesity. Under current policy, Medicare Part D only covers medications like Ozempic and Mounjaro when prescribed for diabetes or cardiovascular disease, not for weight management alone.

The new rule would expand access to drugs such as Wegovy and Zepbound for an additional 3.4 million Americans who use Medicare and another 4 million people enrolled in Medicaid. The proposal cites changing medical consensus that recognizes obesity as a chronic disease rather than a lifestyle choice.

The rule also tackles longstanding complaints about Medicare Advantage prior authorization practices. Through engagement with MA organizations, incoming inquiries from industry stakeholders, and ongoing 2024 program audits, CMS learned about common misunderstandings related to coverage rules and determined that additional rulemaking could clarify policies to ensure access to medically necessary care.

According to the proposal, CMS seeks to define internal coverage criteria to clarify when MA plans may apply utilization management, ensure MA plans' internal coverage policies are transparent and readily available to the public, and require plans to inform beneficiaries of their appeal rights.

Why This Matters for Medicare Beneficiaries

The anti-obesity medication proposal could dramatically shift treatment options for millions of seniors. More than 40% of Americans are considered obese, a chronic disease that puts people at risk for heart disease, diabetes, breathing problems, stroke and some cancers. Current Medicare restrictions mean beneficiaries pay between $900 and $1,350 out of pocket monthly for drugs like Wegovy or Zepbound when used solely for weight management.

However, the cost implications are substantial. Lawmakers, notably Sen. Bernie Sanders, have said that due to the high cost of the drugs, expanded coverage could "bankrupt" the health care system if the federal government provided coverage. The Congressional Budget Office has estimated the proposal could cost Medicare approximately $25 billion over a decade, with additional projections reaching $35 billion between 2026 and 2034.

The prior authorization reforms address a persistent source of frustration for beneficiaries and providers. Data show that a low percentage of denied claims are appealed, meaning many more could potentially be overturned by the plan if they were appealed. The proposed changes would require Medicare Advantage plans to be more transparent about which treatments require prior approval and establish clearer appeal processes when coverage is denied.

The artificial intelligence guardrails represent a forward-looking protection. When AI or automated systems are used, the systems must be used in a way that ensures equitable service access. This addresses growing concerns that insurers might use algorithms to systematically deny certain types of care without proper human oversight.

Impact on 2026 Medicare Policies

If finalized, these changes would take effect for contract year 2026, coinciding with other significant Medicare adjustments already in motion. Learn more about the comprehensive 2026 Medicare changes and cost updates affecting beneficiaries nationwide.

The Part D out-of-pocket cap rises from $2,000 in 2025 to $2,100 in 2026, providing continued protection against catastrophic prescription costs. Payments from the government to MA plans are expected to increase on average by 4.33%, or over $21 billion, from 2025 to 2026, as proposed. This payment increase could help insurers absorb new regulatory requirements while maintaining competitive premiums and benefits.

The proposal also codifies existing guidance for the Medicare Prescription Payment Plan, which allows beneficiaries to spread drug costs throughout the year. CMS proposes an automatic election renewal process that would extend a participant's current enrollment into the next calendar year, unless the enrollee opts out.

For Medicare Advantage enrollees, the proposed rule would require MA plans to make provider directory information more widely available through Medicare Plan Finder, limit enrollee cost sharing for behavioral health services to an amount that is no greater than Traditional Medicare, and enhance CMS oversight of MA agent and broker activities.

The medical loss ratio reporting requirements would also receive updates to improve oversight of vertically integrated insurers and ensure that insurance companies spend an appropriate share of premiums on actual medical care rather than administrative costs or profits.

Expert Reactions

Healthcare organizations and advocacy groups offered mixed responses to the ambitious proposal.

American Hospital Association Senior Vice President Ashley Thompson said the organization "commends CMS for taking important steps to increase oversight of 2026 Medicare Advantage plans to help ensure enrollees have equal access to medically necessary health care services." The AHA has previously raised concerns about Medicare Advantage practices that delay or deny covered services.

Thompson added that the organization "appreciate[s] that CMS' proposed rule builds upon prior rulemaking to strengthen limitations on commercial insurer use of internal or proprietary coverage criteria that can impede patient access to care."

However, the anti-obesity medication provision faces significant opposition from payer groups. Insurance industry representatives have expressed concerns about the fiscal sustainability of covering expensive weight-loss drugs for Medicare's 68 million beneficiaries.

Sen. Bernie Sanders acknowledged the complexity, stating "The good news is that HHS recognizes that vitally important anti-obesity medicines like Wegovy and Zepbound should be made available to all Americans, regardless of income," but warned that "unless Medicare demands that Novo Nordisk and Eli Lilly substantially reduce the prices for these anti-obesity drugs, Medicare premiums for all seniors would skyrocket."

The timing of the proposal adds another layer of uncertainty. Comments on the proposed rule are due by January 27, 2025, and the incoming Trump Administration could make significant changes before finalization, with new administration officials potentially choosing to delay certain provisions, scale back, or eliminate certain proposed policy changes.

What Consumers Should Do Now

Medicare beneficiaries should stay informed about these proposed changes, though nothing requires immediate action. The rule remains in proposal stage, and final decisions won't come until spring 2025 at the earliest.

Those interested in weight-loss medications should understand current coverage rules. Medicare Part D already covers drugs like Wegovy when prescribed to reduce cardiovascular risk in adults with established heart disease who are overweight or obese. Beneficiaries meeting these criteria should check their specific plan's formulary and prior authorization requirements.

For Medicare Advantage enrollees concerned about prior authorization delays, the proposed changes could improve access to care if finalized. Keep records of any authorization denials and understand your appeal rights. If you experience inappropriate denials, consider filing complaints with CMS through 1-800-MEDICARE.

Consider reviewing your plan options during the remaining days of Medicare Open Enrollment, which ends December 7. While these proposed changes won't take effect until 2026 at the earliest, understanding your current plan's authorization requirements and provider network accuracy matters now.

If you use or anticipate needing anti-obesity medications, monitor developments closely. The final rule could significantly change coverage options, but the Trump administration's position on this provision remains unclear. Some healthcare policy experts predict the new administration might scale back or eliminate the obesity drug coverage expansion due to cost concerns.

Those who support or oppose specific provisions can submit comments to CMS through January 27, 2025, via the Federal Register docket. Public input influences final rulemaking decisions, though political considerations will also play a significant role given the administration transition.

Understanding how these changes might affect your IRMAA brackets and Medicare premiums is also important as you plan for 2026. Check with your Medicare plan about current AI use in coverage decisions. While the proposed guardrails aren't yet in effect, plans should be able to explain how automated systems factor into authorization processes and assure that human oversight prevents discriminatory outcomes.

For foundational information about Medicare coverage, review our comprehensive Medicare 101 guide to better understand how these proposed changes fit into the broader Medicare program.

Sources