(Reuters Health)—A proposed shift in Medicare coverage for medicines administered by doctors may help reduce total drug spending, but a new study suggests it may also lead to higher out-of-pocket costs for some patients.
Right now, drugs given by infusion or injection in outpatient settings are covered by Medicare Part B, which is part of the original Medicare program. In a push to curb health spending, the Trump administration has proposed moving coverage for many of these physician-administered medicines to standalone drug plans, known as Medicare Part D, which typically contract with pharmacies to fill prescriptions for consumers.
“Currently, Medicare Part B does not actively negotiate drug prices. The idea underlying this policy proposal is that plans in Part D have negotiating power that will help drive total spending down compared to Part B,” study coauthor Nina Jain, MD, of Brigham and Women’s Hospital, Boston, tells Reuters Health by email.
To see how the proposal may impact total drug spending and patients’ out-of-pocket costs, researchers examined data on the 75 brand-name prescription drugs associated with the highest Part B spending among fee-for-service Medicare members in 2016.
These 75 drugs accounted for $19.8 billion—or $21.6 billion at 2018 prices, researchers reported Jan. 14 online in JAMA Internal Medicine.1 Under the proposed policy change, the researchers estimate, total Part D spending would be $17.6 billion to $20.1 billion, after rebates to insurers and pharmacy benefit managers.
This means moving coverage from Part B to Part D may correspond with roughly a 7–18% decrease in drug spending, the analysis found.
However, savings may be limited by several brand-name drugs that are in a protected class that must be covered by insurance. This includes certain physician-administered antipsychotics, anticonvulsants, antidepressants and antiretrovirals.
“About 40% of the drugs we studied were in a protected class,” Jain says. “Part D plans must cover most drugs in protected classes, limiting plans’ ability to negotiate lower prices for these drugs.”
Overall, shifting coverage from Part B to Part D would decrease median out-of-pocket costs for patients by $860.
But patients who purchase Medigap plans to cover co-payments and deductibles not covered by Part B may find their out-of-pocket costs rise.
For people with Medigap insurance, estimated out-of-pocket costs would rise by a median of $1,460 for those with Part D coverage and by a median of $1,952 for those without Part D coverage.
One limitation of the study is that it didn’t account for how the proposed changes might impact insurance premiums or medication use, the study authors note. It also only examined fee-for-service Medicare, and didn’t look at what would happen with people in other types of plans, such as Medicare HMOs.
Patients are affected by rising drug costs through the cost of premiums they pay for part B, and in some instances by other fees like deductibles and co-payments, notes Francis Crosson, MD, coauthor of an accompanying editorial and a member of the Medicare Payment Advisory Commission, Washington, D.C. Rising drug costs can also influence out-of-pocket costs for patients with Plan D coverage.2
“Policymakers interested in reducing what Medicare and beneficiaries pay for drugs will need to decide whether to make adjustments in how Parts B and D currently work or to substantially change either or both payment processes,” Crosson says by email.
- Hwang TJ, Jain N, Lauffenburger JC, et al. Analysis of proposed Medicare Part B to Part D shift with associated changes in total spending and patient cost-sharing for prescription drugs. JAMA Intern Med. 2019 Jan 14. doi: 10.1001/jamainternmed.2018.6417. [Epub ahead of print]
- Crosson FJ, Christianson JB. Managing the cost of Medicare Part B drugs: Implications for the program and beneficiaries. JAMA Intern Med. 2019 Jan 14. doi: 10.1001/jamainternmed.2018.6146. [Epub ahead of print]