Medicare Part D, the federal program that covers pharmaceutical drugs for Medicare recipients, has gone a long way to help patients pay for the rising costs of medicines.
But there are some gaps in coverage that consumers, specifically those coping with serious illnesses, need to understand. Some Medicare patients may find themselves overwhelmed with out-of-pocket drug costs that they may not have anticipated.
Recent data from the Kaiser Family Foundation shows that more than a million Medicare beneficiaries in Part D plans who did not receive low-income subsidies paid an average of $3,200 per person in 2017 for out-of-pocket drug costs after hitting what’s called the “catastrophic threshold”. That’s more than twice as many as in 2007, according to Kaiser’s report.
Why Are More People Reaching the Catastrophic Threshold?
Medicare Part D, an optional plan introduced in 2006, hasn’t kept up with skyrocketing increases in the cost of pharmaceutical drugs. Specialty drugs, such as non-injectable cancer treatments or medicines used to treat autoimmune diseases and Hepatitis C, are particularly expensive.
People with Medicare who opt for Original Medicare (Part A and Part B, including Medicare Supplement) can purchase a separate Part D policy to cover prescription drugs. Meanwhile, Medicare recipients who opt for Medicare Advantage plans (Part C) usually find Part D coverage is bundled into their policy.
Either way, under a government formula, Medicare Part D coverage comes with a deductible and various co-insurance payments for different types of drugs. Once recipients pay more than $5,100 out of pocket for their medicine, they hit the catastrophic threshold. From that point on, Medicare Part D pays 95% of what drugs cost. But beneficiaries still pay 5 percent coinsurance for all medicines.
That’s where the problem begins. There is no lifetime limit on this 5 percent co-insurance. Even after you spend $5,100 each year on drugs, you’ll pay the 5 percent of the cost of your medicines for life, no matter how expensive the drugs you need may be.
Some examples: People suffering from prostate cancer pay $8,181 a year out-of-pocket for Zytiga. And Medicare Part D leukemia patients being treated with Idhifa, rack up $16,551 a year for their share of that drugs’ price, according to Kaiser research.
What’s more, unlike other Medicare out-of-pocket costs, prescription drug co-pays are not covered by Medigap policies.
“At first 5% sounds reasonable,” says Juliette Cubanski, associate director, program on Medicare Policy at the Kaiser Family Foundation. “And for many drugs it is. But 5 percent of the very expensive drugs that didn’t exist back when Medicare Part D was introduced gets unaffordable very quickly,” she explains.
The alarming statistics have captured the attention of Washington. There are several proposals and bills in the works to bring down drug costs overall.
In addition, in May, the Centers for Medicare and Medicaid announced a new rule that would provide clinicians with out-of-pocket cost information on prescription drugs that they can discuss with patients at the time a prescription is written.
Washington likely will continue to wrangle with the problem of high pharmaceutical costs well into the future. In the meantime, what can you do to help keep Medicare Part D out-of-pocket costs down? Here are three suggestions to avoid ongoing catastrophic costs.
1. Check the formulary.
Each drug plan includes a formulary, or in plain English, a list of drugs that are covered under the policy. As you choose between and among Medicare Part D Plans and Medicare Advantage plans, it’s important to make sure that the medicines you need are covered under the plan. Otherwise, you’ll be paying full price yourself for your medicine.
Always check formularies every year during your open enrollment period. Even if you are happy with your coverage and want to stay with the same plan, you may find your insurer has changed the formulary. It may be that medicines you need are no longer covered. Or you may need a new medicine that isn’t part of your plan. Checking formularies is one of the ways to compare Part D and Medicare Advantage plans available in your area.
If you are eligible for dual enrollment in both Medicare and Medicaid – or if you have certain chronic conditions – ask an agent about Medicare Advantage dual eligible special needs plans (D-SNP). Depending on your health issues, you may find you have broader coverage of prescriptions under these plans.
2. Talk to your doctor about drug prices.
Let your healthcare provider know you have Medicare Part D and you are wondering about your long-term out-of-pocket drug costs. Your doctor may be able to suggest a generic with a low copayment to help you keep out-of-pocket costs under control.
If you need to stick with a brand name medicine, your doctor may know of discount offers and coupons that can help manage the price.
3. Get help with expensive specialty drugs.
Unfortunately, when it comes to the most expensive drugs, manufacturers rarely offer rebates or discounts. Cubanski advises patients should again talk to their doctors about the price. “Doctors don’t always know the cost burden patients are facing with these new drugs,” she said. “But when they are made aware they can sometimes help patients find ways to lower their costs.”