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.
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.
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.
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.
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.
The agency’s end goal for Medicare Advantage is to match CMS’ vision for its programs as a whole, with an emphasis on health equity.
On Wednesday, the Centers for Medicare and Medicaid Services released proposed payment policy changes for Medicare Advantage and Part D drug programs in 2023 that are meant to create more choices and provide affordable options for consumers.
The Calendar Year 2023 Advance Notice for Medicare Advantage and Part D plans is open to public comment for 30 days. This year, CMS is soliciting input through a health equity lens on the approach to some future potential changes.
The agency’s end goal for Medicare Advantage is to match CMS’ vision for its programs as a whole, which Administrator Chiquita Brooks-LaSure said is “to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program.”
CMS is proposing an effective growth rate of 4.75% and an overall expected average change in revenue of 7.98%, following a 4.08% revenue increase planned for 2022.
WHAT’S THE IMPACT?
CMS is requesting input on a potential change to the MA and Part D Star Ratings that would take into account how well each plan advances health equity.
The agency is also requesting comment on including a quality measure in MA and Part D Star Ratings that would assess how often plans are screening for common health-related social needs, such as food insecurity, housing insecurity and transportation problems.
The Health Equity Index has been tasked with creating more transparency on how MA plans care for disadvantaged beneficiaries.
Additionally, CMS is requesting input on considerations for assessing the impact of using sub-state geographic levels of rate setting for enrollees with end-stage renal disease, particularly input regarding the impact of MA payment on care provided to rural and urban underserved populations and how such payment changes may impact health equity.
Other areas in which CMS is soliciting input include a variety of payment updates, a new measure concept to assess whether and how MA plans are transforming care by engaging in value-based models with providers’ and updates to risk-adjustment models to continue to pay appropriately for people enrolled in MA and Part D plans.
Public comments on the Advance Notice must be submitted by March 4. The Medicare Advantage and Part D payment policies for 2023 will be finalized in the 2023 Rate Announcement, which will be published no later than April 4.
The proposed rule has already elicited reaction from various organizations, including Better Medicare Alliance.
“As we continue to review the Advance Notice in further detail, we appreciate that CMS has offered a thoughtful proposal that will help ensure stability for the millions of diverse seniors and individuals with disabilities who count on Medicare Advantage,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, said, adding that the proposal furthers the shared goal of improving health equity.
“Medicare Advantage has proven its worth for seniors and taxpayers – providing lower costs, meaningful benefits that address social determinants of health, better outcomes and greater efficiencies for the Medicare dollar,” she said. “A stable rate for 2023 ensures this work can continue. On behalf of our 170 Ally organizations and over 600,000 beneficiary advocates, we applaud CMS for putting seniors first by issuing an Advance Notice that protects coverage choices, advances health equity and preserves affordability for beneficiaries.”
AHIP also responded, with President and CEO Matt Eyles pointing out that for 2022 the average Medicare Advantage monthly premium dropped to $19, down more than 10% since 2021.
“We agree that MA plans play an essential role in improving health equity and addressing the social determinants of health that impact millions of seniors and people with disabilities,” he said. “We support CMS soliciting input on ways to advance these important goals.
“Medicare Advantage enjoys strong bipartisan support because it provides America’s seniors and people with disabilities with access to affordable, high-quality healthcare services,” said Eyles. “We will continue to review the 2023 rate notice and look forward to providing constructive feedback to CMS during the comment period.”
THE LARGER TREND
CMS’ Advance Notice follows a recent congressional letter in which 346 bipartisan members of Congress declared support for Medicare Advantage and urged the agency “to provide a stable rate and policy environment” for the program in 2023.
A December 2021 Morning Consult poll showed that 94% of Medicare Advantage beneficiaries are satisfied with their coverage, while 93% believe that protecting MA should be a priority of the Biden administration.
Net prices of brand-name drugs have increased significantly over the last decade. But savings from generics have driven average prescription prices down in Medicare and Medicaid, Axios’ Caitlin Owens writes about a new analysis by the Congressional Budget Office.
Why it matters: The analysis reiterates that the generic market is largely working as it’s intended to.
By the numbers: The average net price of a prescription fell from $57 in 2009 to $50 in 2018 in Medicare Part D, and from $63 to $48 in Medicaid.
The drop is largely attributable to the growing use of generics, which jumped from 75% to 90% of all prescriptions nationally during that time frame. The average price for a generic prescription also fell in both programs.
But the average net brand-name prescription price more than doubled in Part D and increased by 50% in Medicaid, per the analysis. These increases were driven by higher launch prices for new drugs and price increases for drugs already on the market.
Enrollment in Medicare Advantage plans is increasing rapidly, and many insurers are expanding their MA offerings in a bid to grab larger portions of the market share. Medicare Advantage touts itself as having certain advantages over traditional Medicare, such as fitness benefits, coverage for hearing aids and eyeglasses, and limits on out-of-pocket spending.
This begs the question: Are enrollees in the two versions of Medicare fundamentally different, and what are their experiences like in terms of satisfaction?
New analysis from the Commonwealth Fund found that Medicare Advantage enrollees do not differ significantly from beneficiaries in traditional Medicare in terms of their age, race, income, chronic conditions, satisfaction with care, or access to care, after excluding Special Needs Plan (SNP) enrollees.
Both groups reported waiting more than a month for physician office visits, while similar shares of Medicare Advantage and traditional Medicare enrollees report that their out-of-pocket costs make it difficult to obtain care.
Ultimately, MA and traditional Medicare are serving similar populations, with beneficiaries having comparable healthcare experiences. The care management services provided by Medicare Advantage plans appear to neither impede access to care nor reduce concerns about costs.
WHAT’S THE IMPACT?
Beneficiaries weigh a number of trade-offs when deciding whether to enroll in Medicare Advantage plans or traditional Medicare. Unlike the latter, MA plans are required to place limits on enrollees’ out-of-pocket spending and to maintain provider networks. The plans also can provide benefits not covered by traditional Medicare, such as eyeglasses, fitness benefits and hearing aids.
Medicare Advantage plans are intended to manage and coordinate beneficiaries’ care. Some MA plans specialize in care for people with diabetes and other common chronic conditions, including Special Needs Plans. SNPs also focus on people who are eligible for both Medicare and Medicaid and on those who require an institutional level of care.
Traditional Medicare and MA enrollees have historically had different characteristics, with MA enrollees somewhat healthier. Black and Hispanic beneficiaries and those with lower incomes have tended to enroll in MA plans at higher rates than others, while traditional Medicare has historically performed better on beneficiary-reported metrics, such as provider access, ease of getting needed care, and overall care experience.
The Commonwealth Fund found that, after excluding beneficiaries in SNPs, beneficiaries enrolled in traditional Medicare do not differ significantly from MA enrollees on age, income, or receipt of a Part D low-income subsidy (LIS), which helps low-income individuals pay for prescription drugs. But beneficiaries in traditional Medicare are significantly more likely than MA enrollees to reside in a metropolitan area and more likely to live in a long-term-care or residential facility.
Beneficiaries in SNPs are different. Given the eligibility criteria for these plans, it’s not surprising that enrollees tend to have significantly lower incomes and a greater likelihood of receiving Medicaid benefits or LIS than other Medicare beneficiaries.
Enrollment in SNPs for people who require an institutional level of care has been growing rapidly, leading to a similar share of SNP enrollees and beneficiaries in traditional Medicare living in a long-term-care facility.
There are some areas in which Medicare Advantage plans appear to perform better than traditional Medicare. In particular, MA enrollees are more likely than those in traditional Medicare to have a treatment plan, to have someone who reviews their prescriptions, to have someone they can contact for help, and to receive a response to a health query relatively quickly.
By providing this additional help, Medicare Advantage plans are making it easier for enrollees to get the help they need to manage their healthcare conditions, the report found. Medicare experts have suggested providing a similar service to beneficiaries in traditional Medicare through care coordinators.
The results also raise questions about whether Medicare Advantage plans are receiving appropriate payments. MedPAC estimates that plans are paid 4% more than it would cost to cover similar people in traditional Medicare.
On the one hand, Medicare Advantage plans seem to be providing services that help their enrollees manage their care, and this added care management could be of significant value to both plan enrollees and the Medicare program. On the other hand, rates of hospitalizations and emergency room visits are similar for beneficiaries in Medicare Advantage plans and traditional Medicare. This calls into question the impact of the added services on healthcare use, spending and outcomes.
THE LARGER TREND
Insurers are expanding their Medicare Advantage offerings at a decent clip, with Humana announcing last week it would debut a new Medicare Advantage PPO plan in 37 rural counties in North Carolina in response to market demand in the eastern part of the state.
Just last week, UnitedHealthcare, which already has significant market control with its MA plans, said it will strengthen its foothold in the space by expanding its MA plans in 2022, adding a potential 3.1 million members and reaching 94% of Medicare-eligible consumers in the U.S.
And for the third straight year, health insurer Cigna is expanding its Medicare Advantage plans, growing into 108 new counties and three new states – Connecticut, Oregon and Washington – which will increase its geographic presence by nearly 30%.
Centene is also getting in on the act, expanding MA into 327 new counties and three new states: Massachusetts, Nebraska and Oklahoma. In all, this represents a 26% expansion of Centene’s MA footprint, with the offering available to a potential 48 million beneficiaries across 36 states.
Conservative and industry groups are trying to whip up opposition to President Biden’s massive social spending plan by warning it will imperil Medicare benefits, Axios has learned.
Why it matters: “Medicscare” is a well-worn political tactic precisely because it can be effective. For Democrats, there’s zero room for defections against the $3.5 trillion proposal if they want to pass the bill.
What’s happening: Senior citizens in Arizona, represented by Sen. Kyrsten Sinema (D-Ariz.), potential Democratic holdout, have started receiving large boxes labeled “Medical Shipment. Please open immediately.”
Inside, they find an empty prescription drug bottle and literature warning of Democratic plans to “ration Medicare Part D.” That’s a reference to a budget reconciliation bill provision that would allow the government to negotiate Medicare reimbursement rates for prescription drugs.
The mailers are the work of the Common Sense Leadership Fund, a Republican-aligned advocacy group. The mailers in Arizona specifically target Sen. Mark Kelly (D-Ariz.), who’s up for re-election next year.
CSLF spokesman Colin Reed told Axios the group is mailing the packages to seniors and unaffiliated voters in Arizona and New Hampshire, where the group is targeting Sen. Maggie Hassan (D-N.H.), who’s also up for re-election.
Another nonprofit advocacy group, A Healthy Future, is targeting the prescription drug portions of the bill in a digital ad campaign aimed at key Democratic votes.
The group has spent nearly $300,000 on Google, Facebook and Instagram ads aimed at Reps. Frank Pallone, Tom Malinowski and Andy Kim, all Democrats from New Jersey — where the drug industry has a huge economic footprint.
“This is a prescription for disaster,” its ads say. They urge calls to Congress to “oppose cutting Medicare to pay for the $3.5 trillion spending plan.”
It’s not clear who’s behind A Healthy Future — the group did not respond to inquiries from Axios — but its messaging on reconciliation and past policy fights track with drug industry priorities.
The big picture: Democrats have turned to drug pricing reforms to offset part of the legislation’s massive price tag, potentially paying for as much as $600 billion in new spending.
Yes, but: The Mediscare tactic is larger than just the drug pricing fight. Americans for Prosperity, the Koch-backed conservative advocacy group, is running its own ads warning of much larger impending Medicare cuts.
Why it matters:Democrats may be positioning themselves to push policy measures that assign value to drugs and then price them accordingly — a huge potential blow to the pharmaceutical industry.
To truly address its launch price, policymakers have to grapple with big questions the U.S. system currently avoids: How should we determine the value of a drug, and who gets to make that decision?
President Biden proposed giving an independent review board the power to determine the Medicare rate for new drugs that don’t have any competition.
Democrats’ most prominent drug legislation is a House bill that gives Medicare the power to negotiate drug prices.
Sen. Ron Wyden, the chairman of the Senate Finance Committee, recently called out Aduhelm by name in a document outlining the principles that will guide the Senate’s drug pricing bill, a hint that the Senate’s legislation will take a different direction than the House’s.
The bottom line:“Any kind of process for valuing new drugs like Aduhelm take you immediately into the controversial quagmire of how to quantify improvements in quality of life for people,” said KFF’s Larry Levitt.