Medicare Advantage insurers are weighing coverage of pricey new anti-obesity drugs after federal regulators last month announced traditional Medicare would cover Novo Nordisk’s Wegovy for patients with heart disease.
Kaiser Permanente’s Kaiser Health Plan and CVS Health’s Aetna will cover Wegovy for eligible Medicare Advantage enrollees, companies’ spokespeople confirmed in emailed statements. Neither insurer made executives available for interviews or offered details about when they will start coverage and how they will structure formularies.
Related: Insurers, PBMs restrict access to weight loss drugs as demand soars
Medicare Advantage industry leader UnitedHealthcare and Elevance Health did not respond to interview requests. Humana, the nation's second-largest Medicare Advantage insurer by membership, declined to comment.
“Plans are going to be treating Wegovy as though it were any other drug that was recently approved by the [Food and Drug Administration], with a price tag that is too high for its benefits, but that still may be an important clinical tool,” said Mark Hamelburg, senior vice president of federal programs at AHIP, an insurance trade group.
The Centers for Medicare and Medicaid Services bars Medicare from paying for weight loss drugs, but has allowed carriers to offer glucagon-like peptide 1 agonists for Type 2 diabetes management since 2018. New coverage for heart disease opens the door to big costs for insurers and an even bigger market for drugmakers. It also could be the beginning of much broader access to GLP-1s if manufacturers are able to prove benefits for additional conditions. CMS' obesity coverage prohibition could eventually become irrelevant, said Matthew Fiedler, a senior fellow at the Brookings Institution’s Center on Health Policy.
"If all of these drugs end up with fairly broad cardiovascular or other indications, the fact that Medicare won't cover them for weight loss per se might not matter very much," Fiedler said.
Novo Nordisk is testing Wegovy for chronic kidney disease, Alzheimer's disease and liver disease treatment. The company prices Wegovy at more than $16,000 per patient per year before rebates. Patients must remain on the drug indefinitely to realize its benefits.
In a presentation last month for financial analysts, the drugmaker estimated that 18.3% of the 115 million people suffering from obesity in the U.S., or 21 million, also have heart disease and could benefit from Wegovy. About 3.6 million of these people are Medicare enrollees, according to a KFF study published April 24. Medicare could spend $2.8 billion annually on Wegovy, according to KFF.
At its current list price, Wegovy is not cost effective for coverage of obesity and related conditions, such as heart disease, the Congressional Budget Office reported last month. The CBO said it anticipates regulators will select semaglutide, which Novo Nordisk sells as Wegovy for heart disease, and Ozempic for Type 2 diabetes, for federal drug price negotiation within the next few years. The Inflation Reduction Act of 2022 allowed Medicare to negotiate medication prices with drugmakers for the first time. Sen. Bernie Sanders (I-Vt.), chair of the powerful Health, Education, Labor and Pensions Committee, launched an investigation into Novo Nordisk's pricing for Wegovy and Ozempic on Wednesday.
Novo Nordisk declined to make an executive available for an interview.
Insurers that cover Wegovy will likely pass along the costs to members through higher premiums or other cost-sharing requirements, said Julie Balter, senior manager of clinical policy at the Alliance of Community Health Plans, a trade group for nonprofit insurers. Patients' out-of-pocket expenses for Wegovy could reach $430 monthly, according to KFF.
“Even if they're covering it, there's still a portion that the patient will likely be responsible for,” Balter said. “At the prices that the manufacturers are currently charging, that presents a real barrier for a lot of people.”
Medicare Advantage insurers’ focus is on managing chronic conditions like heart disease through primary care, rather than reactive treatments, said Kaitlyn Saal-Ridpath, senior director of policy and research at the Better Medicare Alliance, an industry coalition for Medicare Advantage insurers, providers and technology companies.
“MA really does prioritize primary care as a point of earlier intervention, and a lot of those intervention efforts can mitigate, potentially, the needs for these medications,” Saal-Ridpath said.
Medicare Advantage insurers are in the process of structuring their plans for next year and must submit their bids to CMS by June 3. Information on whether — or how — individual plans cover Wegovy will be available on Medicare's consumer shopping site in October.
Price, public relations trade-offs
Some of the largest Medicare Advantage insurers are also big commer cial carriers, so companies could look to their commercial policies for insight on how to incorporate Wegovy into their Medicare formularies.
The FDA says patients should get Wegovy if they have a body mass index of at least 30, but commercial insurers often set a bigger barrier and require them to have a higher BMI to get the drug. Carriers enact strict step therapy, prior authorization and diet and exercise requirements to control enrollees' use. Some even promote bariatric surgery as an alternative. Still, companies such as Elevance Health, Highmark Health and Molina Healthcare reported GLP-1 use surpassing expectations last year.
Because Medicare Advantage plans take on more risk than employer-sponsored coverage, carriers will likely enact more stringent medical management techniques for the drug, Fiedler said. CMS pays Medicare Advantage plans a flat monthly fee to cover enrollees’ expected healthcare expenses, so plans are on the hook for any costs that exceed the capitated rate. Employers, meanwhile, generally pay insurers a percentage of their workers’ total healthcare costs.
The threat of attracting sicker, higher-cost enrollees could dissuade some Medicare Advantage insurers from offering Wegovy, Fiedler said.
"You might not want beneficiaries to think of you as the plan that offers really generous coverage for Wegovy," he said. "But you might want regulators to think of you that way. There are trade-offs."
CMS’ coverage decision will likely spur more employer and exchange carriers to pay for Wegovy for heart disease, given commercial insurers often follow Medicare’s lead. Medicaid insurers are generally expected to cover all FDA-approved drugs and will likely cover Wegovy, Fiedler said.
Broadening coverage could spark another debate from Medicare Advantage carriers over federal actuaries' medical cost projections. Regulators look at historical utilization data when developing plans’ reimbursement rates, but the Medicare Advantage risk-adjustment system may not immediately reflect the introduction of high-cost drugs like Wegovy, AHIP’s Hamelburg said. Exchange insurers have said federal reimbursement has not kept up with marketplace enrollees' increased demand for weight loss drugs for diabetes management.
CMS this month said exchange insurers are adequately compensated, but it is monitoring how use of GLP-1s changes and will refine the exchange risk-adjustment model if necessary. The Medicare Advantage risk-adjustment system will likely also need to be updated to reflect the addition of Wegovy, and federal payments may need to be increased, Hamelburg said.
"There will be a data lag," Hamelburg said.
