Part D Coverage Gap Proposal Won’t Reduce Spending
It turns out that the Medicare Part D proposal will no longer reduce drug spending as it currently does. The manufacturers' plan would push those costs onto beneficiaries and the government. Drug companies are asking Congress to decrease their contributions to the Medicare prescription drug program. This new proposal will increase taxpayer and beneficiary spending under the government healthcare program for senior citizens.
The Medicare Part D program works with private insurance companies to provide low-cost prescription drug plans to older Americans. Medicare used to pay various amounts in the four phases of prescription drug coverage. It started during the deductible period and lasted through the catastrophic coverage.
Medicare Part D coverage gap is a time period in which beneficiaries experience higher than usual out-of-pocket costs. Drug companies usually offer discounts that reduce beneficiary spending. That all changed this year when Congress stated that the discount would increase from 50% to 70% by January 1, 2019.
Drug manufacturers asked to reduce the discount from 70% to 63%, passing on the remaining 7% to beneficiaries and the Medicare prescription drug plans. This also requires an additional $4 billion from the government through the year 2017, which would be owed by taxpayers. Since Medicare pays three-quarters of Part D drug costs, beneficiaries would spend $1.3 billion during that time period. They will see higher premiums and higher out-of-pocket costs.
What Is the Coverage Gap?
The Medicare Part D coverage gap is when you agree on a certain amount for covered prescription drugs with your drug plan. You may have to pay more for your prescription drugs due to this gap. Starting in 2018, once you and your plan pay a certain amount on these covered drugs, you're now in the donut hole. This amount changes every year for most members.
Each month that you fill a prescription, you will receive an Explanation of Benefits (EOB) in the mail. This will tell you how much you spent on prescription drugs so far and if you reached the coverage gap.
Who Saves Money In The Coverage Gap?
Beneficiaries enrolled in a Medicare Part D coverage gap or the Medicare Advantage plan such as an HMO or PPO that includes prescription drug coverage. Members must not get extra help outside of their plan. There's a Medicare program that helps low-income individuals by providing resources and paying for Medicare prescription drug costs. Members can also get in on the savings if they already reached the donut hole in their plans.
How The Coverage Gap Worked On Brand Name Drugs
Manufacturers that make brand-name prescription drugs have to sign an agreement with Medicare to join the Medicare Part D coverage gap. This program allows manufacturers to offer discounts on brand-name prescription drugs to only members who reached the Donut Hole. Once an individual has reached the coverage gap, that person will pay 35% of the price of brand-name prescription drugs.
Members can get in on these savings if they purchase their prescription drugs at a drugstore or pharmacy or order them through the mail. The discount is off the price that the prescription drug plans agreed on with the pharmacies for certain drugs. They'll also only pay a percentage of the price for brand-name prescription drugs.
The entire amount will count towards catastrophic coverage. If a member qualifies for catastrophic coverage, members will only pay coinsurance or copay for the rest of the year. Your EOB will list any discounts that the drug manufacturers paid.
Are Medicare-Covered Brand-Name Drugs Discounted?
Drug manufacturers who signed an agreement to participate in the Medicare Part D coverage plan, all of the brand-name prescription drugs they make are covered on the donut hole for the calendar year. This includes the list of approved prescription drugs on the list of covered drugs and those covered through the appeal. Drug manufacturers that make over 99% over the brand-name prescription drugs used by Medicare members also participate in this program.
What Happens When Prescription Drugs Aren't Discounted?
If a member hit the coverage gap and hasn't received a discount on a brand-name prescription drug, they should review their Explanation of Benefits. If the discount isn't included on the Estimate of Benefits, the member should contact their prescription drug plan to verify their information. Members can also file an appeal through their State Health Insurance Assistance (SHIP) or by contacting Medicare. The Medicare & You Handbook has more information on contacting Medicare or SHIP.
Higher Out-of-Pocket Costs and Higher Plan Spending
Reducing the discount that drug manufacturers pay would shift the costs onto beneficiaries and Medicare. Beneficiaries can't leave the coverage gap phase until their out-of-pocket costs reach $5,100 within the calendar year. This reduction in drug manufacturer discounts means beneficiaries will have to pay the remaining costs for prescription drugs.
This new plan will do nothing to reduce the cost of brand-name prescription drugs. Instead, it'll increase beneficiary and government spending. Medicare will need more money to help pay the higher premiums. Lawmakers are currently making changes to outweigh the risks of reducing drug manufactures contributions.