Category Archives: Medicare Part D

Medicare Can Cover Anti-Obesity Drugs for Heart Disease — But at What Cost?

Posted on by • Posted in Cardiovascular Disease, Chronic Diseases, Congressional Budget Office (CBO), Food and Drug Administration (FDA), Health Equity, Health Policy, Medicare Part D, Obesity, Obesity Treatment, Public Health, Wegovy, Weight Loss Drugs • Leave a comment
https://www.medpagetoday.com/opinion/the-health-docket/109555?xid=nl_secondopinion_2024-04-09&eun=g885344d0r

On March 8, 2024, FDA approved Wegovy (semaglutide)opens in a new tab or window to treat cardiovascular disease risks — heart attack, stroke, and death — for obese or overweight adults with a history of cardiovascular disease, making it the first anti-obesity medication (AOM) to obtain such approval. Studies showopens in a new tab or window that semaglutide reduces heart disease risks when accompanied by blood pressure and cholesterol management and healthy lifestyle counseling. FDA noted that this approval is “a major advance in public health.”

Less than 2 weeks after FDA approved the new indication (semaglutide is also approved for chronic weight management and type 2 diabetes), CMS issued a memorandumopens in a new tab or window stating that Medicare Part D plans may cover AOMs if they are FDA approved for an additional medically accepted indication beyond only weight management. CMS’ guidance is prospective and is not limited to semaglutide. The guidance applies to all AOMs that may be approved in the future to treat other conditions. To ensure that AOMs are used for medically accepted indications, CMS clarified that Part D sponsors may employ common utilization management tools like step therapy and prior authorization.

Notably, FDA’s approval of semaglutide for cardiovascular disease is likely a harbinger of similar approvals in the near future — along with their coverage by Medicare. While the benefits are substantial, so too may be the costs as more and more drugs and patients receive coverage.

Obesity and Public Health

Obesity is a pressing public health crisis that requires robust, multidimensional solutions, including medical interventionsopens in a new tab or window. The CDC considers obesity an epidemicopens in a new tab or window, and in 2013, the American Medical Association recognized obesity as a diseaseopens in a new tab or window. Although there isn’t consensus in the scientific community as to whether obesity is a disease, one thing is clear: medical interventions (including AOMs) are key to addressing obesity, along with other public health measures.

Obesity prevalence in the U.S. is 41.9%opens in a new tab or window, with rates higher for Black and Hispanic adults — the very populations that face the greatest socioeconomic barriersopens in a new tab or window to accessing healthcare and medications. While AOMs offer a significant public health benefit, ensuring equitable and affordable access is vital.

Economic Implications

Analyses have foundopens in a new tab or window extraordinarily high prices for Wegovy , with a list price up to $1,349 and a net price (received by the manufacturer) of $701 for a 4-week supply. It is estimated that 6.6 million Americans opens in a new tab or window would benefit from medications like semaglutide for cardiovascular event reduction. Because AOMs are so costly, increasing their coverage and use could result in substantial Medicare spending, as well as higher premiums and cost-sharing for enrollees.

In 2022, Medicare gross total spending on semaglutide and tirzepatide for diabetes reached $5.7 billionopens in a new tab or window, up from $57 million in 2018. With FDA’s approval of these drugs as AOMs, Medicare spending for new indications can be expected to increase dramatically in the next few years.

In March 2024, the Congressional Budget Office (CBO) found that Medicare coverage of AOMs would result in considerable demand for and use of AOMsopens in a new tab or window by enrollees. CBO expects that generic competition, which could moderate prices and lead to higher rebates, would start in earnest only in the second decade of a policy allowing Medicare Part D to cover AOMs. However, even that assumption is not certain as pharmaceutical companies seek to “evergreen”opens in a new tab or window patent protection and market exclusives. CBO also acknowledges the possibility of new drugs that are more effective, have fewer side effects, or can be taken less often, which could translate to higher prices. Furthermore, if AOMs are stopped, weight then increases, meaning that these medications may have to be taken lifelong.

Arguably, reducing obesity rates could reduce the incidence of many chronic diseases such as diabetes and heart disease, potentially creating a net benefit in the long term. And even in the near-term, the Inflation Reduction Act (IRA) may help curb costs.

CBO and other reportsopens in a new tab or window suggest that semaglutide is likely to be selected by CMS for drug price negotiation opens in a new tab or window under the IRA within the next few years. If chosen in 2025, a negotiated Medicare price would be available by 2027. Successful CMS price negotiation is likely to address some of the cost concerns.

The IRA also has other mechanisms that may help address the high costs. The IRA’s rebate program, for example, ensures cost containment by requiring manufacturers of drugs that don’t have competitors to pay rebates to HHS if the prices of those drugs increase faster than the inflation rate. The IRA also caps out-of-pocket spending for prescription drugs at $2,000 starting in 2025opens in a new tab or window. (Although a $2,000 cap helps limit costs, spending that amount of money is still burdensome, especially for people of low socioeconomic status who are disproportionately impacted by obesity.)

In short, the IRA may alleviate, but not eliminate, Medicare spending concerns. The IRA’s ability to address the cost concerns of AOM coverage depends on various factors, and it is likely that those cost containment measures will take many years to materialize. As AOMs continue to be approved for new uses, the intense demand for these drugs coupled with their high costs are likely to place pressures on Medicare spending for years to come.

Takeaways

CMS has made clear that Medicare should cover semaglutide or other AOMs only when needed to avert cardiovascular or other serious diseases. This rule will have to be rigorously enforced and monitored.

Savvy Medicare enrollees could try to game the system, using medications primarily for weight loss purposes — which would be inconsistent with CMS’s approval. Some physicians might also engage in dishonest prescribing. Also, given the racial and ethnic disparities in access to obesity treatment, marginalized groups are unlikely to reap equal benefit from AOMs. For those reasons, robust and thoughtful strategies are needed to ensure that coverage for such drugs is not exploited. Without clear limits on the use of AOMs, Medicare could be overwhelmed with costs.

Beyond Medicare spending, there are wider equity concerns about access to drugs that treat medical conditions associated with obesity. Even if marginalized individuals can gain access to the medication, obtaining optimal health benefits of AOMs is likely to remain a challenge. FDA notes that semaglutide is most effective when it is taken together with other lifestyle or behavioral changesopens in a new tab or window, such as diet and exercise. Because healthy lifestyles and behaviors are mostly influenced by broader social and commercial determinants, the full health benefits of AOMs may elude those most at risk. To harness the public health benefits, AOMs must be seen as part of a broader approach to address health risks associated with obesity; they should not detract from the interventions targeted at socio-structural determinants of health that shape individual and population health outcomes.

To some, semaglutide and other AOMs are a miracle of modern science. Yet, we should entertain some skepticism about miracle solutions to deeply complex health threats. Medicare should extend coverage for AOMs under criteria that meaningfully considers the competing concerns and tradeoffs. Meanwhile, public health professionals and clinicians should continue to use all the tools at our disposal to reduce the burdens of disease caused by overweight and obesity, while also fighting against the stigma, shaming, and discrimination that are widely prevalent in our society.

CMS Medicare Advantage Final Rules: Why 2025 will be Significantly Different for Plans, Enrollees and Providers

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Medicare Part D, MedPAC, Program of All-Inclusive Care for the Elderly (“PACE”) • Leave a comment
CMS Medicare Advantage Final Rules: Why 2025 will be Significantly Different for Plans, Enrollees and Providers

Last Monday, CMS announced the base payment rate it will pay Medicare Advantage plans in 2025: plans will see an average 3.7%, or $16 billion, increase in payments once risk scores are factored in but a cut to base payments of 0.16% since 2025 risk scores were expected to be 3.86%. That’s the math.

It came as a surprise to insurers and investors who had imagined CMS would modify its November proposed rule to increase payments as has been the precedent in prior years. Per Bloomberg:

“Only once in the past 10 years have final rates not improved from regulators’ initial proposals…The tougher stance in the face of lobbying signals another hurdle for insurers that already face faster-than-expected increases in medical costs. Humana Inc., which is the most exposed to Medicare among large insurance companies, fell 9.2% in premarket trading. UnitedHealth Group Inc., the largest US health insurer, dropped 4.3%, while CVS Health Corp. declined 5.2%. Stocks including Elevance Health Inc. and Centene Corp. retreated in post-market trading after the announcement.”

Then on Wednesday, CMS released a 1327-page final rule with sweeping directives about how Medicare Advantage plans should operate starting next year: 

“This final rule will revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.”

When first proposed in November, insurers pushed back. In response, most of the 3463 comment letters received by CMS said they needed more time to modify their plans. CMS replied: “We appreciate the commenter’s concern regarding the plans having enough time to understand the impact of finalized regulations. We will take their recommendation into consideration for future rulemaking.” P20). Accordingly, all MA plans must get approvals from CMS reflecting these changes on or before June 3, 2024.

Arguably, CMS took this hardline approach because bona fide studies by MedPAC, USC Shaeffer and others found widespread risk-score upcoding by Medicare Advantage plans that resulted in 6%-20% annual overpayments by Medicare.

Recent high-profile missteps by two of the biggest and most profitable MA players no doubt reinforced CMS’ get tougher posture: UnitedHealth Group’s Change Healthcare cybersecurity breech and Cigna’s $172 million Fraud and Abuse penalty for inflating its MA risk coding.

So, the transition from Medicare Advantage circa 2024 to Medicare Advantage 2025 will be its most significant since Medicare Choice was included in the Balanced Budget Act of 1997. In 2024, Medicare Advantage experienced enrollment growth and profitability to which its players were accustomed despite a late-year spike in utilization:

  • 33.8 million Medicare enrollees (or 51% of total Medicare enrollment) get their coverage from Medicare Advantage plans—up 6.4% from 2023.
  • The average Medicare beneficiary has access to 43 Medicare Advantage plans in 2024, the same as in 2023, but more than double the number of plans offered in 2018. The majority of options do not require an extra payment above what Medicare pays private issuers on their behalf and the majority offer supplemental benefits including dental, eyecare, wellness et al.
  • And Medicare Advantage insurers entered the year on solid financial footing: the biggest issuers posted strong profits in 2023 i.e. UnitedHealth Group: $22.4 billion, CVS (Aetna) Health: $8.3 billion, Elevance Health: $6 billion, Cigna Group: $5.2 billion, Centene: $2.7 billion, Humana: $2.5 billion
  • In 4Q 2023, pent-up demand for services by Medicare Advantage enrollees pushed utilization of doctors, hospitals and other providers up 8.1% above prior year levels including 4Q 2023 increases for outpatient surgery 14.4%, outpatient visits excluding ER and surgery 8.7%, physician visits 6.0%, inpatient adult care 5.3%, Part B drugs 5% and ER visits 4%.

But 2025 will be different. The 4Q spike in utilization and impact of the new rules will have profound impact on Medicare Advantage: the biggest players like United and Humana will adapt and be OK, but others downstream will be disrupted or impaired:

  • Smaller MA plan sponsors and their lobbyists: AHIP, ACHP, BCBSA, Better Medicare Alliance and the army of lobbyists deployed to defeat these rules took a hit. Members pay dues for results. These rules were disappointing (though it could have been worse).
  • MA brokers, agents and marketing organizations: The limits on compensation, constraints on MA marketing tactics and enrollee protections around transparency may reduce revenues for many third-party marketing organizations that sell their services to the plans. A shakeout is likely.
  • Supplemental services providers: lower payments by CMS will force some to reduce/eliminate supplemental benefits that are valued less by enrollees. Dental and prescription drug benefits appear safe but others (i.e. fitness programs) might be cut by some.
  • Hospitals and physicians: Cuts by CMS to MA plans will trickle-down as reimbursement cuts to direct providers of care. Hardest hit will be smaller and rural providers in communities with large MA enrollment.
  • MA enrollees: Though the rule adds behavioral health benefits, data privacy protections and equity considerations in utilization management decisions by the plans, the likely impact of the rate cut is fewer plan options for enrollees and higher premiums. Margin compression for MA plans will hurt bigger plans who will adapt but incapacitate smaller plans unable to survive.
  • The Presidential campaigns: MA sponsors must submit their proposed 2025 plans to CMS on or before June 3, 2024—in the midst of Campaign 2024. And open enrollment will begin in October as MA plans launch marketing for their newly-revised offerings. No doubt, the Campaigns will opine to Medicare security in their closing rhetoric recognizing MA covers more than half its enrollees.

My take:

These rules are a big deal. CMS appears poised to challenge the industry’s formidable strengths and force changes.

Together, these rules will disrupt day to day operations in every MA plan, intensify friction with providers over network design, coverage and reimbursement negotiations and confuse enrollees who might have to pay more or change plans.

Medicare Advantage remains a work-in-process.  Stay tuned.

The Potential for SHIPs to Combat Medicare Misinformation and Deceptive Marketing

Posted on by • Posted in Health Insurance Coverage Adequacy, Marketing, Marketing Deceptive, Medicare, Medicare Advantage, Medicare Enrollment, Medicare Part D, Misinformation, Mislead, Misleading, Out of Network, Out of Pocket Expenses, Out-of-Network, State Health Insurance Assistance Program (SHIP) • Leave a comment
The Potential for SHIPs to Combat Medicare Misinformation and Deceptive Marketing

With Medicare’s Annual Election Period (also known as Open Enrollment) beginning on October 15th, over 65 million adults across the United States will have until December 7th to decide whether they plan to renew or change their Medicare coverage. Beneficiaries choose between Traditional Medicare (TM) and a variety of Medicare Advantage (MA) plans and prescription drug coverage.

For this enrollment cycle, it is estimated that the average beneficiary will have over 40 plans to choose from, leading to complexity. For those who are dually eligible for both Medicare and Medicaid benefits, there is an even greater number of options for them to consider, especially if they live in areas where integrated options such as dual-eligible special needs plans and Medicare-Medicaid plans are available.

As the US population continues to age and the number of Medicare enrollees grow, it is important to understand how beneficiaries make their coverage decisions and ensure they are protected from any misinformation in the process.

Though already complex, the plan selection process for older adults is further complicated by the deceptive marketing tactics that brokers, agents, and third-party marketing organizations (TPMOs) have employed in recent years. In a recent study, the Commonwealth Fund identified how some of these practices are driven by the financial incentives associated with enrolling beneficiaries in particular MA plans.

Between robocalls and misleading television advertisements, many beneficiaries across the country have found themselves enrolled in MA plans they did not intend to enroll in, or that did not cover services or in-network providers that they were initially marketed. In a sweeping review of Medicare Open Enrollment-related television ads, Kaiser Family Foundation found that the majority of Open Enrollment-related advertisements last year promoted the Medicare logo and privately-operated hotlines, misleading beneficiaries into believing these were government sponsored ads and helplines.

Acknowledging the growing concerns and complaints among beneficiaries, the Centers for Medicare and Medicaid Services (CMS) announced that starting in 2024, Medicare-related television ads must be approved in advance of airing and cannot contain plan names or Medicare logos and images that misrepresent their organization or agency. Additional consumer protections included in the 2024 MA and Part D Final Rule will hold brokers, agents, and other TPMOs to higher standards of providing transparent, quality information. These activities include monitoring TPMO behavior, regulating how and when they market to beneficiaries, ensuring brokers review the full list of options and choices available to a beneficiary, and going through a detailed, standardized set of pre-enrollment questions. There is also an increased effort in getting beneficiaries to use some of the federally funded tools and resources available to assist in their coverage decisions.

Some of these tools include the Medicare.gov website, the CMS Medicare Plan Compare tool, and a 1-800-MEDICARE hotline to help inform beneficiaries about their benefits. However, a study by Hernandez et al. revealed that very few Medicare beneficiaries utilized these tools and often felt more comfortable discussing their options in-person with brokers or family members and friends, even though these sources may be biased or potentially inaccurate.  Additionally, it is important to recognize that navigating these tools requires some degree of health literacy and technological proficiency, which may disproportionately affect those who are low-income, have lower levels of education, or are non-native English speakers.

The State Health Insurance Assistance Program (SHIP), however, is a free and unbiased resource for Medicare counseling that few beneficiaries are aware of. In 1990, the federal government implemented SHIPs to help support Medicare beneficiaries with free, one-to-one health insurance counseling and education within their communities. It is currently run by the Administration for Community Living (ACL). The ACL administers grants to states, who in turn provide funding to community-level subgrantees to maintain various networks of full-time, part-time, and/or volunteer counselors. The latest available data suggests that SHIPs provided assistance to 2.7 million Medicare beneficiaries from April 2018 through March 2019—just 4.5% of the eligible Medicare population.

While some states had greater success, serving over 10% of their eligible population, others were only able to reach as few as 2%. A 2018 evaluation of California’s SHIP, called HICAP (Health Insurance Counseling & Advocacy Program), highlighted the strengths of this community-based counseling system. HICAP reported high rates of engagement, citing their ability to deliver uniquely tailored counseling to beneficiaries in their native languages and through in-person or hybrid settings depending on the beneficiary’s condition or preferences. Moreover, strong marketing efforts via Spanish radio shows and mailing postcards were particularly effective in reaching “hard-to-locate” populations. However, the program did experience challenges given the variation in operations across locations, citing concerns over the recruitment, training and retention of volunteers and paid staff.

In recognition of SHIP’s potential to provide an unbiased alternative to brokers and combat misinformation, CMS finalized a requirement in the 2024 MA and Part D rule that TPMOs are to provide a disclaimer citing SHIP as an option for beneficiaries to obtain additional help (42 CFR § 422.2267(e )(41)). But despite SHIP’s promise, some beneficiary advocates have worried that the multi-tiered, volunteer, and part-time driven delivery model that characterizes most SHIPs leads to access and quality gaps. This is especially a concern among vulnerable beneficiaries who may live in low-income neighborhoods, have disabilities, or limited English proficiency. Given their historically low utilization rates and limited visibility, others have expressed concern that SHIPs may be ill-equipped to handle an increased demand for services in the coming year, due to more Medicare beneficiaries being advised of their existence through TPMO disclaimers. With the limited evidence about SHIP’s performance and outreach nationally, given the diffuse nature of the program, it will be important to understand some of the barriers and facilitators they face to delivering timely and accurate Medicare counseling.

The free and unbiased nature of the SHIP program presents a promising alternative to helping beneficiaries navigate complex plan choices for Open Enrollment. As MA enrollment increases and as plan choices become more complex, the SHIP program should be monitored for potential inequities in access to and quality of services based on area income.

For more information about your state’s SHIP program and to find a local Medicare counselor, please visit https://www.shiphelp.org/.

The Glaring Disconnect between the Fed and CMS

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Federal Reserve, Fee for Service Reimbursement, Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Inflation, Medicaid, Medicare, Medicare Advantage, Medicare Part D, Physician, Population Distribution, Population Growth, Prescription Drugs, Price Transparency, Value-Based Healthcare • Leave a comment
The Glaring Disconnect between the Fed and CMS

Two important reports released last Wednesday point to a disconnect in how policymakers are managing the U.S. economy and how the health economy fits.

Report One: The Federal Reserve Open Market Meeting

At its meeting last week, the Governors of the Federal Open Market Committee (FOMC) voted unanimously to keep the target range for the federal funds rate at 5% to 5.25%–the first time since last March that the Fed has concluded a policy meeting without raising interest rates.

In its statement by Chairman Powell, the central bank left open the possibility of additional rate hikes this year which means interest rates could hit 5.6% before trending slightly lower in 2024.

In conjunction with the (FOMC) meeting, meeting participants submitted projections of the most likely outcomes for each year from 2023 to 2025 and over the longer run:

Median202320242025Longer RunLonger Run Range
% Change in GDP1.11.11.81.81.6-2.5
Unemployment rate &4.14.54.54.03.6-4.4
PCE Inflation rate3.22.52.12.02.0
Core PCE Inflation3.92.62.2**

*Longer-run projections for core PCE inflation are not collected.

Notes re: the Fed’s projections based on these indicators:

  • The GDP (a measure of economic growth) is expected to increase 1% more this year than anticipated in its March 2023 analysis while estimates for 2024 were lowered just slightly by 0.1%. Economic growth will continue but at a slower pace.
  • The unemployment rate is expected to increase to 4.1% by the end of 2023, a smaller rise in joblessness than the previous estimate of 4.5%. (As of May, the unemployment rate was 3.7%). Unemployment is returning to normalcy impacting the labor supply and wages.
  • inflation: as measured by the Personal Consumption Expenditures index, will be 3.2% at the end of 2023 vs. 3.3% they previously projected. By the end of 2024, it expects inflation will be 2.5% reaching 2.1% at the end of 2025. Its 2.0% target is within reach on or after 2025 barring unforeseen circumstances.
  • Core inflation projections, which excludes energy and food prices, increased: the Fed now anticipates 3.9% by the end of 2023–0.3% above the March estimate. Price concerns will continue among consumers.

Based on these projections, two conclusions about nation’s monetary policy may be deduced the Fed’s report and discussion:

  • The Fed is cautiously optimistic about the U.S. economy in for the near term (through 2025) while acknowledging uncertainty exists.
  • Interest rates will continue to increase but at a slower rate than 2022 making borrowing and operating costs higher and creditworthiness might also be under more pressure.

Report Two: CMS

On the same day as the Fed meeting, the actuaries at the Centers for Medicare and Medicaid Services (CMS) released their projections for overall U.S. national healthcare spending for the next several years:

“CMS projects that over 2022-2031, average annual growth in NHE (5.4%) will outpace average annual growth in gross domestic product (GDP) (4.6%), resulting in an increase in the health spending share of GDP from 18.3% in 2021 to 19.6% in 2031. The insured percentage of the population is projected to have reached a historic high of 92.3% in 2022 (due to high Medicaid enrollment and gains in Marketplace coverage). It is expected to remain at that rate through 2023. Given the expiration of the Medicaid continuous enrollment condition on March 31, 2023 and the resumption of Medicaid redeterminations, Medicaid enrollment is projected to fall over 2023-2025, most notably in 2024, with an expected net loss in enrollment of 8 million beneficiaries. If current law provisions in the Affordable Care Act are allowed to expire at the end of 2025, the insured share of the population is projected to be 91.2%.  In 2031, the insured share of the population is projected to be 90.5%, similar to pre-pandemic levels.”

The report includes CMS’ assumptions for 4 major payer categories:

  • Medicare Part D: Several provisions from the Inflation Reduction Act (IRA) are expected to result in out-of-pocket savings for individuals enrolled in Medicare Part D. These provisions have notable effects on the growth rates for total out-of-pocket spending for prescription drugs, which are projected to decline by 5.9% in 2024, 4.2% in 2025, and 0.2% in 2026.
  • Medicare: Average annual expenditure growth of 7.5% is projected for Medicare over 2022-2031. In 2022, the combination of fee-for-service beneficiaries utilizing emergent hospital care at lower rates and the reinstatement of payment rate cuts associated with the Medicare Sequester Relief Act of 2022 resulted in slower Medicare spending growth of 4.8% (down from 8.4% in 2021).
  • Medicaid: On average, over 2022-2031, Medicaid expenditures are projected to grow by 5.0%. With the end of the continuous enrollment condition in 2023, Medicaid enrollment is projected to decline over 2023-2025, with most of the net loss in enrollment (8 million) occurring in 2024 as states resume annual Medicaid redeterminations. Medicaid enrollment is expected to increase and average less than 1% through 2031, with average expenditure growth of 5.6% over 2025-2031.
  • Private Health Insurance: Over 2022-2031, private health insurance spending growth is projected to average 5.4%. Despite faster growth in private health insurance enrollment in 2022 (led by increases in Marketplace enrollment related to the American Rescue Plan Act’s subsidies), private health insurance expenditures are expected to have risen 3.0% (compared to 5.8% in 2021) due to lower utilization growth, especially for hospital services.

And for the 3 major recipient/payee categories:

  • Hospitals: Over 2022-2031, hospital spending growth is expected to average 5.8% annually. In 2023, faster growth in hospital utilization rates and accelerating growth in hospital prices (related to economy wide inflation and rising labor costs) are expected to lead to faster hospital spending growth of 9.3%.  For 2025-2031, hospital spending trends are expected to normalize (with projected average annual growth of 6.1%) as there is a transition away from pandemic public health emergency funding impacts on spending.
  • Physicians and Clinical Services: Growth in physician and clinical services spending is projected to average 5.3% over 2022-2031. An expected deceleration in growth in 2022, to 2.4% from 5.6% in 2021, reflects slowing growth in the use of services following the pandemic-driven rebound in use in 2021. For 2025-2031, average spending growth for physician and clinical services is projected to be 5.7%, with an expectation that average Medicare spending growth (8.1%) for these services will exceed that of average Private Health Insurance growth (4.6%) partly as a result of comparatively faster growth in Medicare enrollment.
  • Prescription Drugs: Total expenditures for retail prescription drugs are projected to grow at an average annual rate of 4.6% over 2022-2031. For 2025-2031, total spending growth on prescription drugs is projected to average 4.8%, reflecting the net effects of key IRA provisions: Part D benefit enhancements (putting upward pressure on Medicare spending growth) and price negotiations/inflation rebates (putting downward pressure on Medicare and out-of-pocket spending growth).

Thus, CMS Actuaries believe spending for healthcare will be considerably higher than the growth of the overall economy (GDP) and inflation and become 19.6% of the total US economy in 2031. And it also projects that the economy will absorb annual spending increases for hospitals (5.8%) physician and clinical services (5.3%) and prescription drugs (4.6%).

My take:

Side-by-side, these reports present a curious projection for the U.S. economy through 2031: the overall economy will return to a slightly lower-level pre-pandemic normalcy and the healthcare industry will play a bigger role despite pushback from budget hawks preferring lower government spending and employers and consumers frustrated by high health prices today.

They also point to two obvious near-term problems:

1-The Federal Reserve pays inadequate attention to the healthcare economy. In Chairman Powell’s press conference following release of the FOMC report, there was no comment relating healthcare demand or spending to the broader economy nor a question from any of the 20 press corps relating healthcare to the overall economy. In his opening statement (below), Chairman Powell reiterated the Fed’s focus on prices and called out food, housing and transportation specifically but no mention of healthcare prices and costs which are equivalent or more stressful to household financial security:

“Good afternoon. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people…My colleagues and I are acutely aware that high inflation imposes hardship as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing, and transportation. We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our 2% objective.”

2-Congress is reticent to make substantive changes in Medicare and other healthcare programs despite its significance in the U.S. economy. It’s politically risky. In the June 2 Congressional standoff to lift the $31.4 debt ceiling, cuts to Medicare and Social Security were specifically EXCLUDED. Medicare is 12% of mandated spending in the 2022 federal budget and is expected to grow from a rate of 4.8% in 2022 to 8% in 2023—good news for investors in Medicare Advantage but concerning to consumers and employers facing higher prices as a result.

Even simplifying the Medicare program to replace its complicated Parts A, B, C, and D programs or addressing over-payments to Medicare Advantage plans (in 2022, $25 billion per MedPAC and $75 billion per USC) is politically tricky. It’s safer for elected officials to support price transparency (hospitals, drugs & insurers) and espouse replacing fee for service payments with “value” than step back and address the bigger issue: how should the health system be structured and financed to achieve lower costs and better health…not just for seniors or other groups but everyone.

These two realities contribute to the disconnect between the Fed and CMS. Looking back 20 years across 4 Presidencies, two economic downturns and the pandemic, it’s also clear the health economy’s emergence did not occur overnight as the Fed navigated its monetary policy. Consider:

  • National health expenditures were $1.366 trillion (13.3% of GDP) in 2000 and $4.255 billion in 2021 (18.3% of the GDP). This represents 210% increase in nominal spending and a 37.5% increase in the relative percentage of the nation’s GDP devoted to healthcare. No other sector in the economy has increased as much.
  • In the same period, the population increased 17% from 282 million to 334 million while per capita healthcare spending increased 166% from $4,845 to $12,914. This disproportionate disconnect between population and health spending growth is attributed by economists to escalating unit costs increases for the pills, facilities, technologies and specialty-provider services we use—their underlying cost escalation notably higher than other industries.
  • There were notable changes in where dollars were spent: hospitals were unchanged (from $415 billion/30.4% of total spending to $1.323 trillion/31.4% of total spending), physician services shrank (from $288.2 billion/21.1% of total spending to 664.6 billion/15.6% pf total spending), prescription drugs were unchanged (from $122.3 billion/8.95% to $378 billion/8.88% of total spending) and public health increased slightly (from $43 billion/$3.2% of total spending to $187.6 billion/4.4% of total spending).
  • And striking differences in sources of funding: out of pocket spending shrank from $193.6/14.2% of payments to $433 billion/10.2% % of payments; private insurance shrank from $441 billion/32.3% of payments to $1.21 trillion/28.4% of total payments; Medicare grew from $224.8 billion/16.5% of payments to $900.8 billion/21.2% of payments; Medicaid + CHIP grew from $203.4 billion/14.9% to $756.2 billion/17.8% of payments; and Veterans Health grew from $19.1 billion/1.4% of payments to $106.0 billion/2.5% of payments.

Thus, if these trends continue…

  • Aggregate payments to providers from government programs will play a bigger role and payments from privately insured individuals and companies will play a lesser role.
  • Hospital price increases will exceed price increases for physician services and prescription drugs.
  • Spending for healthcare will (continue to) exceed overall economic growth requiring additional funding from taxpayers, employers and consumers AND/OR increased dependence on private investments that require shareholder return AND/OR a massive restructure of the entire system to address its structure and financing.

What’s clear from these reports is the enormity of the health economy today and tomorrow, the lack of adequate attention and Congressional Action to address its sustainability and the range of unintended, negative consequences on households and every other industry if left unattended. It’s illustrative of the disconnect between the Fed and CMS: one assumes it controls the money supply while delegating to the other spending and policies independent of broader societal issues and concerns.

The health economy needs fresh attention from inside and outside the industry. Its impact includes not only the wellbeing of its workforce and services provided its users. It includes its direct impact on household financial security, community health and the economic potential of other industries who get less because healthcare gets more.

Securing the long-term sustainability of the U.S. economy and its role in world affairs cannot be appropriately addressed unless its health economy is more directly integrated and scrutinized. That might be uncomfortable for insiders but necessary for the greater good. Recognition of the disconnect between the Fed and CMS is a start!

MedPAC recommendations on 2024 payment rates get mixed reaction

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Health System, Hospital, Hospital Industry, Long Term Care Hospital, Medicare, Medicare Advantage, Medicare Disproportionate Share Reimbursement, Medicare Fee Schedule, Medicare Part D, Medicare Payment Advisory Commission (MedPAC), MedPAC, Physician, Physician Reimbursement • Leave a comment

https://www.healthcarefinancenews.com/news/medpac-recommendations-2024-payment-rates-get-mixed-reaction?mkt_tok=NDIwLVlOQS0yOTIAAAGKp7vNV3A6CzC0o2XF8C2hS5N1Kk9ACTtp30hGJo7LueVqxb66DEIO2wT7o9fvX7ugB5ZV9-5x5SflPXw0J1OOEXxbSDHlRc2CuGYvl9wz

The Medicare Advisory Payment Commission recommends a higher-than-current-law fee-for-service payment update in 2024 for acute care hospitals and positive payment updates for clinicians paid under the physician fee schedule. It recommends reductions in base payment rates for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

MedPAC gave Congress recommendations on payment rates in both traditional fee-for-service and Medicare Advantage for 2024, satisfying a legislative mandate comparing per enrollee spending in both programs.

MedPAC estimates that Medicare spends 6% more for MA enrollees than it would spend if those enrollees remained in fee-for-service Medicare.

In their March 2023 Report to the Congress: Medicare Payment Policy, commissioners said they were acutely aware of how providers’ financial status and patterns of Medicare spending varied in 2020 and 2021 due to COVID-19 and were also aware of higher and more volatile cost increases.

However, they’re statutorily charged to evaluate available data to assess whether Medicare payments are sufficient to support the efficient delivery of care and ensure access to care for Medicare’s beneficiaries, commissioners said. 

FEE-FOR-SERVICE RATE RECOMMENDATIONS 

MedPAC’s payment update recommendations are based on an assessment of payment adequacy, beneficiaries’ access to and use of care, the quality of the care, the supply of providers, and their access to capital, the report said. As well as higher payments for acute care hospitals and clinicians, MedPAC recommends positive rates for outpatient dialysis facilities.

It recommends providing additional resources to acute care hospitals and clinicians who furnish care to Medicare beneficiaries with low incomes. It also recommends a positive payment update in 2024 for hospice providers concurrent with wage adjusting and reducing the hospice aggregate Medicare payment cap by 20%.

It recommends negative updates, which are reductions in base payment rates, for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

Acute care

For acute care hospitals paid under the inpatient prospective payment system, commissioners recommend adding $2 billion to current disproportionate share and uncompensated care payments and distributing the entire amount using a commission-developed “Medicare SafetyNet Index” to direct funding to those hospitals that provide care to large shares of low-income Medicare beneficiaries.

This recommendation got pushback from America’s Essential Hospitals.

“We appreciate the Medicare Payment Advisory Commission’s desire to define safety net hospitals for targeted support, but the commission’s Medicare safety net index (MSNI) could have the perverse effect of shifting resources away from hospitals that need support the most,” said SVP of Policy and Advocacy Beth Feldpush. “The MSNI methodology fails to account for all the nation’s safety net hospitals by overlooking uncompensated care and care provided to non-Medicare, low-income patients – especially Medicaid beneficiaries. Any practical definition of a safety net provider must consider the care of Medicaid and uninsured patients, yet the MSNI misses on both counts.”

Feldpush urged policymakers to develop a federal designation of safety net hospitals and to reject the MSNI.

“Further, policymaking for these hospitals should supplement, rather than redistribute, existing Medicare DSH funding, which reflects a congressionally sanctioned, well-established methodology,” she said.

Physicians and clinicians

For clinicians, the commission recommends that Medicare make targeted add-on payments of 15% to primary care clinicians and 5% to all other clinicians for physician fee schedule services provided to low-income Medicare beneficiaries. 

The American Medical Association commended MedPAC, but also said that an update tied to just 50% of the Medicare Economic Index would cause physician payment to chronically fall even further behind increases in the cost of providing care. AMA president Dr. Jack Resneck Jr. urged Congress to pass legislation providing for an annual inflation-based payment update.

MedPAC has long championed a physician payment update tied to the Medicare Economic Index, Resneck said. Physicians have faced the cost of inflation, the COVID-19 pandemic and growing expenses to run medical practices, jeopardizing access to care, particularly in rural and underserved areas.

“Not only have Medicare payments failed to respond adequately, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment,” Resneck said. “As one of the only Medicare providers without an inflationary payment update, physicians have waited a long time for this change. When adjusted for inflation, Medicare physician payment has effectively declined 26% from 2001 to 2023. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities. Our workforce is at risk just when the health of the nation depends on preserving access to care.”

The AMA and 134 other health organizations wrote to congressional leaders urging for a full inflation-based update to the Medicare Physician Fee Schedule.

MGMA’s SVP of Government Affairs Anders Gilberg said, “Today’s MedPAC report recommends Congress provide an inflationary update to the Medicare base payment rate for physician and other health professional services of 50% of the Medicare Economic Index (MEI), an estimated annual increase of 1.45% for 2024. In the best of times such a nominal increase would not cover annual medical practice cost increases. In the current inflationary environment, it is grossly insufficient.”

MGMA urged Congress to pass legislation to provide an annual inflationary update based on the full MEI.

Ambulatory surgical centers and long-term care hospitals

Previously, the commission considered an annual update recommendation for ambulatory surgical centers (ASCs). However, because Medicare does not require ASCs to submit data on the cost of treating beneficiaries, the commissioners said they had no new significant data to inform an ASC update recommendation for 2024.

Commissioners also previously considered an annual update recommendation for long-term care hospitals (LTCHs). But as the number of cases that qualify for payment under Medicare’s prospective payment system for LTCHs has fallen, they said they have become increasingly concerned about small sample sizes in the analyses of this sector.

“As a result, we will no longer provide an annual payment adequacy analysis for LTCHs but will continue to monitor that sector and provide periodic status reports,” they said in the report. 

MEDICARE ADVANTAGE

Commissioners said that overall, indicators point to an increasingly robust MA program. In 2022, the MA program included over 5,200 plan options, enrolled about 29 million Medicare beneficiaries (49% of eligible beneficiaries), and paid MA plans $403 billion (not including Part D drug plan payments). 

In 2023, the average Medicare beneficiary has a choice of 41 plans offered by an average of eight organizations. Further, the level of rebates that fund extra benefits reached a record high of about $2,350 per enrollee, on average.

Medicare payments for these extra benefits – which are not covered for beneficiaries in FFS – have more than doubled since 2018. For 2023, the average MA plan bid to provide Medicare Part A and Part B benefits was 17% less than FFS Medicare would be projected to spend for those enrollees. 

However, the benefits from MA’s lower cost relative to FFS spending are shared exclusively by the companies sponsoring MA plans and MA enrollees (in the form of extra benefits). The taxpayers and FFS Medicare beneficiaries (who help fund the MA program through Part B premiums) do not realize any savings from MA plan efficiencies. 

Medicare should not continue to overpay MA plans, MedPAC said. Over the past few years, the commission has made recommendations to address coding intensity, replace the quality bonus program and establish more equitable benchmarks, which are used to set plan payments, the report said. All of these would stem Medicare’s excess payments to MA plans, helping to preserve Medicare’s solvency and sustainability while maintaining beneficiary access to MA plans and the extra benefits they can provide. 

PART D

Medicare’s cost-based reinsurance continues to be the largest and fastest growing component of Part D spending, totaling $52.4 billion, or about 55% of the total, according to the report. 

As a result, the financial risk that plans bear, as well as their incentives to control costs, has declined markedly. The value of the average basic benefit that is paid to plans through the capitated direct subsidy has plummeted in recent years. 

In 2023, direct subsidy payments averaged less than $2 per member per month, compared with payments of nearly $94 per member, per month, for reinsurance. To help address these issues, in 2020 the commission recommended substantial changes to Part D’s benefit design to limit enrollee out-of-pocket spending; realign plan and manufacturer incentives to help restore the role of risk-based, capitated payments; and eliminate features of the current program that distort market incentives.

In 2022, Congress passed the Inflation Reduction Act, which included numerous policies related to prescription drugs. One such provision is a redesign of the Part D benefit with many similarities to the commission’s recommended changes. 

The changes adopted in the IRA will be implemented over the next several years, and are likely to alter the drug-pricing landscape, commissioners said.

Prior authorization found to reduce healthcare spending efficiently

Posted on by • Posted in Administrative Burden, Administrative Costs, Medicare Part D, National Bureau of Economic Research, Physician, Prior Authorization • Leave a comment

https://mailchi.mp/8f3f698b8612/the-weekly-gist-january-27-2023?e=d1e747d2d8

A working paper published this week by the National Bureau of Economic Research found that prior authorization requirements reduced drug spending far more than they increased physicians’ administrative costs. 

Using a random assignment of plans within Medicare Part D’s low-income subsidy program, the study determined that a prior authorization requirement decreased a drug’s utilization by just over 25 percent, with around half of denied beneficiaries opting for a comparable alternative and the other half receiving no drug at all. This generated $96 in per-beneficiary-per-year savings, which the authors estimate to be around 10 times greater than the administrative costs incurred.  

The Gist: Physician groups have long despised prior authorization processes, listing it as their most burdensome regulatory issue. While studies like this are useful for demonstrating the returns from these processes and putting the tradeoffs in perspective, they fail to account for who is bearing the burden of the time spent, and who captures the cost savings: physicians bear the administrative costs, and payers capture the returns. Not to mention that worried patients, anxious to receive treatment, are often put in the position of “quarterbacking” a convoluted and bureaucratic appeals process. 

Ongoing work should focus on streamlining authorizations, to lessen the impact on physicians’ time and satisfaction, and make navigating the process simpler for patients. An increasing array of technology options aims to solve this problem though automation, but the challenge remains for payers and providers to come together to deliver on that potential.

Which to Choose: Medicare or Medicare Advantage?

Posted on by • Posted in Medicare, Medicare Advantage, Medicare Part A, Medicare Part B, Medicare Part D, Medigap Policy • Leave a comment

It’s open enrollment season again. From now through Dec. 7, about 65 million Americans are facing the annual question of which Medicare options will give them the best health coverage. An onslaught of television and radio ads, emailed promotions, texts and mailers serve as reminders, though not necessarily clarifying ones.

“It’s a very consequential decision, and the most important thing is to be informed,” said Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation and a co-author of a recent literature review comparing Medicare Advantage and traditional Medicare.

If you are navigating this decision for yourself or for a loved one, here are some of the important factors to consider.

Why the marketing barrage?

Medicare — the federally funded health care program — has been in place since 1965. Since then, an expanding array of Medicare Advantage plans have become available. For 2023, the typical beneficiary can choose from 43 Advantage plans, the Kaiser Family Foundation has reported.

Medicare Advantage plans, like traditional Medicare, are funded by the federal government, but they are offered though private insurance companies, which receive a set payment for each enrollee. The idea is to help control costs by allowing these insurers, who must cover the same services as traditional Medicare, to keep some of the federal payment as profit if they can provide care less expensively.

The biggest providers of Advantage plans are Humana and United Healthcare, and they and others market aggressively to persuade seniors to sign up or switch plans. A new U.S. Senate report found that some of these Advantage plan practices are deceptive; for example, some marketing firms sent Medicare beneficiaries mailers made to look like government websites or letters. This has confused many seniors, and Medicare officials have promised to increased policing.

But the marketing has paid off for insurers. The proportion of eligible Medicare beneficiaries enrolled in Medicare Advantage plans has hit 48 percent. By next year, most beneficiaries will likely be Advantage enrollees.

Which is better: Medicare or Medicare Advantage?

The two plans operate quite differently, and the health and financial consequences can be dramatic. Each has, well, advantages — and disadvantages.

Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation, is a co-author of a recent literature review comparing Medicare Advantage and traditional Medicare. One important finding, Dr. Biniek said: “Both Medicare Advantage and traditional Medicare beneficiaries reported that they were satisfied with their care — a large majority in both groups.”

Advantage plans offer simplicity. “It’s one-stop shopping,” she added. “You get your drug plan included, and you don’t need a separate supplemental policy,” the kind that traditional Medicare beneficiaries often buy, frequently called Medigap policies.

Medicare Advantage may appear cheaper, because many plans charge low or no monthly premiums. Unlike traditional Medicare, Advantage plans also cap out-of-pocket expenses. Next year, you’ll pay no more than $8,300 in in-network expenses, excluding drugs — or $12,450 with the kind of plan that permits you to also use out-of-network providers at higher costs.

Only about one-third of Advantage plans (called P.P.O.s, or preferred provider organizations) allow that choice, however. “Most plans operate like an H.M.O. — you can only go to contracted providers,” said David Lipschutz, the associate director of the Center for Medicare Advocacy.

Advantage enrollees may also be drawn to the plan by benefits that traditional Medicare can’t offer. “Vision, dental and hearing are the most popular,” Mr. Lipschutz said, but plans may also include gym memberships or transportation.

“We caution people to look at what the scope of the benefits actually are,” he added. “They can be limited, or not available, to everyone in the plan. Dental care might cover one cleaning and that’s it, or it may be broader.” Most Advantage enrollees who use these benefits still wind up paying most dental, vision or hearing costs out of pocket.

What are the downsides to Medicare Advantage?

One big downside is that these insurers require “prior authorization,” or approval in advance, for many procedures, drugs or facilities.

“Your doctor or the facility says that you need more care” — in a hospital or nursing home, say — “but the plan says, ‘No, five days, or a week, two weeks, is fine,’” said David Lipschutz, the associate director of the Center for Medicare Advocacy. Then you must either forgo care or pay out of pocket.

Advantage participants who are denied care can appeal, and those who do so see the denials reversed 75 percent of the time, according to a 2018 report by the Department of Health and Human Services’s Office of Inspector General. But only about 1 percent of beneficiaries or providers file appeals, “which means there’s a lot of necessary care that enrollees are going without,” Mr. Lipschutz said.

Another report this spring by the inspector general’s office determined that 13 percent of services denied by Advantage plans met Medicare coverage rules and would have been approved under traditional Medicare.

Advantage plans can also be problematic if you are traveling or spending part of each year away from home. If you live in Philadelphia but get sick on vacation in Florida, all local providers may be out of network. Check to see how the plan you’re using or considering treats such situations.

So maybe I should just go with traditional Medicare?

“The big pro is that there are no networks,” Jeannie Fuglesten Biniek, a senior policy analyst at the Kaiser Family Foundation, said of traditional Medicare. “You can see any doctor that accepts Medicare,” as most do, and use any hospital or clinic. Traditional Medicare beneficiaries also largely avoid the delays and frustrations of prior authorization.

But traditional Medicare sets no cap on out-of-pocket expenses, and its 20 percent co-pay can add up quickly for hospitalizations or expensive tests and procedures. So most beneficiaries rely on supplemental insurance to cover those costs; either they buy a Medigap policy or they have supplementary coverage through an employer or Medicaid. Medigap policies are not inexpensive; a Kaiser Family Foundation survey found that they average $150 to $200 a month.

The Kaiser literature review found that traditional Medicare beneficiaries experienced fewer cost problems than Advantage beneficiaries if they had supplementary Medigap policies — but if they didn’t, they were more likely to report problems like delaying care for cost reasons or having trouble paying medical bills.

Traditional Medicare also provides somewhat better access to high-quality hospitals and nursing homes. David Meyers, a health services researcher at Brown University, and his colleagues have been tracking differences between original Medicare and Medicare Advantage for years, using data from millions of people.

The team has found that Advantage beneficiaries are 10 percent less likely to use the highest quality hospitals, four to eight percent less likely to be admitted to the highest quality nursing homes and half as likely to use the highest-rated cancer centers for complex cancer surgeries, compared to similar patients in the same counties or ZIP codes.

In general, patients with high needs — people who were frail, limited in activities of daily living or had chronic conditions — were more apt to switch to traditional Medicare than those who were not high-need.

“When you’re healthier, you may run into fewer of the limitations of networks and prior authorization,” Dr. Meyers said. “When you have more complex needs, you come up against those more frequently.”

Another downside to traditional Medicare, though, is that it does not include drug coverage. For that, you need to buy a separate Part D plan.

What should I know about drug plans?

Unlike most Medicare Advantage plans, traditional Medicare does not include drug coverage. For that, you must buy a separate Part D plan.

For 2023, beneficiaries can typically choose between 24 stand-alone Part D plans, at premiums that range from $6 to $111 a month and average $43 for policies available nationwide, said Juliette Cubanski, the deputy director of the program on Medicare policy at the Kaiser Family Foundation.

“If you’re the person who doesn’t take many medications or only uses generics, the best strategy might be to sign up for the plan with the lowest premium,” Dr. Cubanski said. “But if you take a lot of medications, the most important thing is whether the drugs you take, especially the most expensive ones, are covered by the plan.”

Different plans cover different drugs (which can change from year to year) and place them in different pricing tiers, so how much you pay for them varies. And, to make comparisons more dizzying, certain pharmacy chains are “preferred” by certain plans, so you could pay more at CVS than at Walmart for the same drug, or vice versa.

How does Part D work? First, most stand-alone plans have a deductible: $505 in 2023. You pay that amount out of pocket before coverage kicks in.

Then, a Part D plan, either stand-alone or as part of a Medicare Advantage plan, usually establishes five tiers for drugs. The cheapest two tiers, for generic drugs, could be free or run up to about $20 per prescription. Next comes a tier for preferred brand-name drugs, probably $30 to $45 per prescription in 2023.

Drugs on the next highest tier, for nonpreferred brand-name drugs, usually involve coinsurance — paying a percentage of the drug’s list price — rather than a flat co-pay. For national stand-alone plans, that ranges from 34 to 50 percent, Dr. Cubanski said.

Drugs that cost more than $830 a month are considered specialty drugs, the highest-priced tier. You only pay 25 percent of the price, but because these are so expensive, your costs rise.

Once your total drug costs reach $4,660 (for 2023), including out of pocket costs and what your plan paid, you have entered the so-called coverage gap phase and will pay 25 percent of the cost, regardless of tier.

Finally, when your costs reach $7,400 — including what you’ve paid, plus the value of manufacturer discounts — you have hit the threshold for catastrophic coverage. After that, you pay just 5 percent.

After I pick a plan, can I switch if I don’t like it?

You can, but be careful.

Switching between Medicare Advantage plans is fairly easy. But switching from traditional Medicare to an Advantage plan can cause a major problem: You relinquish your Medigap policy, if you had one. Then, if you later grow dissatisfied and want to switch back from Advantage to traditional Medicare, you may not be able to replace that policy. Medigap insurers can deny your application or charge high prices based on factors like pre-existing conditions.

(There are some exceptions. For instance, people who drop a Medigap policy to enroll in an Advantage plan for the first time can repurchase it, or buy another Medigap policy, if they switch back to traditional Medicare within a year.)

“Many people think they can try out Medicare Advantage for a while, but it’s not a two-way street,” said David Lipschutz, the associate director of the Center for Medicare Advocacy. Except in four states that guarantee Medigap coverage at set prices — New York, Massachusetts, Connecticut and Maine — “it’s one type of insurance that can discriminate against you based on your health,” he said.

The fact is, few consumers do any real comparison shopping, or shift their coverage in either direction. Dozens of lawsuits charging Medicare Advantage insurers with fraudulently inflating their profits apparently haven’t made much difference to consumers, either.

In 2020, only 3 in 10 Medicare beneficiaries compared their current plans with others, a recent Kaiser Family Foundation survey reported. Even fewer beneficiaries changed plans, which might reflect consumer satisfaction — or the daunting task of trying to evaluate the pluses and minuses.

Where can I find help with these decisions?

You will find plenty of information on the Medicare.gov website, including the Part D plan finder, where you can input the drugs you take and see which plan gives you the best and most economical coverage. The toll-free 1-800-MEDICARE number can also assist you.

Perhaps the best resources, however, are the federally funded State Health Insurance Assistance Programs, where trained volunteers can help consumers assess both Medicare and drug plans.

These programs “are unbiased and don’t have a pecuniary interest in your decision making,” said David Lipschutz, the associate director of the Center for Medicare Advocacy. But their appointments tend to fill up quickly at this time of year, and the annual open enrollment period ends on Dec. 7. Don’t delay.

7 healthcare takeaways from Senate Democrats’ newly passed $739B landmark bill

Posted on by • Posted in ACA, Health Policy, Medicare Drug Price Negotiation, Medicare Part D, Vaccination, Vaccine • 1 Comment
https://www.beckershospitalreview.com/finance/7-healthcare-takeaways-from-senate-democrats-newly-passed-739b-landmark-bill.html?utm_medium=email&utm_content=newsletter

With a 51-50 vote, Senate Democrats passed a sweeping $739 billion bill Aug. 7 that furthers some of the largest changes to healthcare in years.

Titled the Inflation Reduction Act, the bill touches energy, tax reform and healthcare. The House is expected to take it up Aug. 12, with Democrats aiming to approve it and send it to President Joe Biden’s desk.  

Here are seven healthcare takeaways from the 755-page bill: 

Drug pricing

1. For the first time, Medicare would be allowed to negotiate the price of prescription medicines with manufacturers. Negotiation powers will apply to the price of a limited number of drugs that incrementally increases over the next seven years. Ten drugs will be eligible for negotiations beginning in 2026; eligibility expands to 15 drugs in 2027 and 20 by 2029. 

2. The HHS secretary will provide manufacturers of selected drugs with a written initial offer that contains HHS’ proposal for the maximum fair price of the drug and reasoning used to calculate that offer. Manufacturers will have 30 days to either accept HHS’ offer or propose a counteroffer.  

3. Members of Medicare Part D prescription drug plan would see their out-of-pocket costs for prescription drugs capped at $2,000 per year, with the option to break that amount into monthly payments, beginning in 2025.

4. Democrats lost on a provision to place a $35 cap on insulin for Americans covered by private health plans. The provision to cap insulin at $35 dollars for Medicare enrollees passed by a of 57-43. 

5. Drug companies will be required to rebate back price differences to Medicare if they raise prices higher than the rate of inflation, coined an “inflation rebate.”

6. The legislation makes all vaccines covered under Medicare Part D free to beneficiaries with no deductibles, co-insurance or cost-sharing, starting in 2023. 

Tax subsidies 

7. The legislation extends the Affordable Care Act’s federal health insurance subsidies, now set to expire at the end of the year, through 2025. Democrats say the extension will prevent an estimated 3.4 million Americans from losing health coverage.

Democrats reach deal on healthcare and climate bill

Posted on by • Posted in ACA, Health Policy, High Drug Prices, High Premiums, Medicare Drug Price Negotiation, Medicare Part D, Out of Pocket Expenses • Leave a comment

https://mailchi.mp/ff342c47fa9e/the-weekly-gist-july-22-13699925?e=d1e747d2d8

Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) surprised everyone Wednesday night by announcing they reached a deal on a legislation package called the Inflation Reduction Act of 2022. The deal is a revival of portions of President Biden’s “Build Back Better” plan, more narrowly scoped to meet the demands of Sen. Manchin.

On the healthcare front, the bill would allow Medicare to negotiate prices for certain prescription drugs starting in 2026, and limit seniors’ annual out-of-pocket spending on Part D prescriptions to $2,000. It also includes $64B to extend the enhanced tax credits for Affordable Care Act exchange plans through 2025, avoiding health plan rate increases for millions of Americans. 

The Gist: While several Senate Democrats have announced support for the legislation, the party can’t afford any holdouts given its razor-thin majority. If all Democrats get on board, this legislation will fulfill the party’s longtime promise to lower prescription drug prices. But it stops well short of other major healthcare measures being discussed last year, including expanding Medicare coverage to include dental, vision, and hearing coverage, and closing the so-called Medicaid coverage gap. 

Congress pitches bill to warn Medicare beneficiaries of late enrollment fees

Posted on by • Posted in Health Policy, Medicare, Medicare Late Enrollment Penalties, Medicare Part B, Medicare Part D • Leave a comment
https://www.beckerspayer.com/payer/congress-pitches-bill-to-warn-medicare-beneficiaries-of-late-enrollment-fees.html?origin=PayerE&utm_source=PayerE&utm_medium=email&utm_content=newsletter

A bill introduced in Congress would require the government to warn adults 60 and older of penalties associated with late Medicare enrollment, according to a March 2 CNBC report. 

The move targets adults before they reach the Medicare-eligible age of 65, especially those who are not auto-enrolled in coverage through Social Security. The number of beneficiaries who must manually enroll in coverage at age 65 has increased 32 percentage points to 40 percent since 2008, according to CNBC. 

The bill specifically targets Medicare Part B, which hits enrollees with a penalty equal to 10 percent of the standard premium for each 12 months they should have been enrolled in. The penalties last a lifetime and adjust with premiums. 

Roughly 776,200 enrollees face penalties in 2020. Based on current premiums, monthly penalties would be about $46. 

Medicare Part D also has a penalty, but its rate is 1 percent of premiums paid, or about 33 cents based on current rates.