Optional, Not Mandatory: NAMD’s Recommendations on Anti-Obesity Medication Coverage

This resource provides a high-level summary of NAMD’s full comments on CMS’s proposed rule (CMS-4208-P) regarding Anti-Obesity Medication (AOM) coverage. For a more detailed analysis, read the full comments here.

NAMD’s Policy Perspective

NAMD strongly recommends to CMS that coverage for Anti-Obesity Medications (AOMs) under Medicaid remain optional rather than mandatory for Medicaid agencies. Mandating coverage would impose fiscal and operational challenges on Medicaid programs, threatening their sustainability and ability to serve members effectively.

Background

Under the Medicaid Drug Rebate Program, Medicaid agencies are currently required to cover almost all FDA-approved outpatient drugs. However, in statute, there is an exception for drugs that are used for weight loss, meaning states have the option to cover AOMs for obesity treatment. Despite this flexibility, uptake has been limited, with only 13 state Medicaid programs covering GLP-1 medications for this purpose. Even under optional and limited uptake, Medicaid spending on GLP-1 drugs increased by over 500% from 2019 to 2023. CMS’s proposed rule would change this landscape by requiring states to cover AOMs for the treatment of obesity. While AOMs offer potential health benefits, this mandate poses fiscal and operational risks for Medicaid agencies, which are already facing constrained budgets and administrative demands.

Key Challenges and Concerns

Fiscal Impacts: Mandatory coverage of AOMs could lead to substantial costs for states. Medicaid agencies have projected that the requirement could result in $30 million to $79 million in annual spending for small states and $50 million to $126 million for medium-sized states. These projections align with fiscal impacts in states who already cover AOMs for weight loss: one medium-sized state reported approximately $15 million in spending on GLP-1s for weight loss in a single fiscal quarter, while another medium-sized state spent $172 million on these medications in fiscal year 2024. These estimates do not include potential increases from new AOMs entering the market or existing drugs gaining additional indications for obesity treatment. Furthermore, there is limited evidence that AOMs yield significant savings in health care costs. Analyses, including one from the Congressional Budget Office, show no conclusive link between AOM use and overall reductions in healthcare spending.

Operational Impacts: States would face considerable administrative burdens in implementing mandatory coverage of AOMs. Adjustments would include revising state regulations, modifying managed care contracts, updating capitation rates, and hiring additional staff to manage utilization reviews and call centers. Given these demands, Medicaid programs would require at least two years to prepare for this change.

Coverage and Utilization Concerns: The proposed eligibility criteria for AOMs may lead to confusion with providers and members, as it can be difficult to explain why AOMs are covered for individuals with obesity but not for those who are overweight and have weight-related comorbidities. Given this concern, NAMD recommends that states retain the flexibility to establish their own coverage criteria to ensure policies align with local needs and fiscal realities.

Implementation Timeline: CMS’ proposed implementation timeline for mandatory AOM coverage—60 days after publication of the final rule—does not provide states with adequate time to make necessary administrative and budgetary adjustments, such as incorporating the costs of GLP-1s into their budgets, updating policies, modifying managed care contracts, and establishing appropriate utilization management measures. Without a reasonable timeline, states may face implementation challenges that could disrupt Medicaid operations and strain resources.

Misalignment Between Medicaid and Medicare Part D Effective Dates: The proposed rule would create misaligned implementation timelines between Medicaid and Medicare Part D. Medicaid agencies reported that they would be required to cover AOMs before Medicare Part D coverage begins, temporarily bearing the full cost of these medications for dually eligible individuals. This added financial responsibility would further strain budgets and resources. Additionally, from the member’s perspective, differences in formularies between Medicaid and Medicare Part D could lead to disruptions in medication continuity, potentially requiring members to change medications when transitioning coverage. Administrative complexities would also increase as Medicaid agencies would need to navigate misaligned drug utilization reviews and reimbursement systems.

Recommendations

NAMD urges CMS to maintain state flexibility in deciding whether to cover AOMs. If CMS finalizes a mandate, NAMD recommends:

1. Extending the implementation timeline to at least two years to allow states to prepare adequately.

1. Allowing states to define coverage criteria tailored to their specific needs and resources.

1. Aligning Medicaid and Medicare Part D timelines to minimize disruptions for dually eligible members.

Moving Forward

NAMD is committed to improving access to care for Medicaid members, while ensuring the fiscal and operational sustainability of Medicaid programs. We encourage CMS to collaborate closely with states to strengthen the Medicaid program’s ability to deliver high-value care and improve health outcomes for members.