By Michelle Andrews MARCH 29, 2019
Three
times a week, Tod Gervich injects himself with Copaxone, a prescription
drug that can reduce the frequency of relapses in people who have some forms of
multiple sclerosis. After more than 20 years with the disease, Gervich, 66, is
accustomed to managing his condition. What he can’t get used to is how Medicare’s
coinsurance charges drain his wallet.
Unlike
commercial plans that cap members’ out-of-pocket drug spending annually,
Medicare has no limit for prescription medications in Part D, its drug benefit.
With the cost of specialty drugs increasing, some Medicare beneficiaries
could owe thousands of dollars in
out-of-pocket drug costs every year for a single drug.
Recent proposals by the Trump
administration and Sen. Ron Wyden (D-Ore.)
would address the long-standing problem by imposing a spending cap. But it’s
unclear whether any of these proposals will gain a foothold.
The
2006 introduction of the Medicare prescription drug benefit was a boon for
seniors, but the coverage had weak spots. One was the so-called doughnut hole —
the gap beneficiaries fell into after they accumulated a few thousand dollars
in drug expenses and were on the hook for the full cost of their medications.
Another was the lack of an annual cap on drug spending.
Legislative
changes have gradually closed the doughnut hole so that, this year,
beneficiaries no longer face a coverage gap. In a standard Medicare drug plan,
beneficiaries pay 25 percent of the price of their brand-name drugs until they
reach $5,100 in out-of-pocket costs. Once patients reach that threshold, the
catastrophic portion of their coverage kicks in and their obligation drops to 5
percent. But it never disappears.
It’s
that ongoing 5 percent that hits hard for people, like Gervich, who take
expensive medications.
His
40-milligram dose of Copaxone costs about $75,000 annually, according to the
National Multiple Sclerosis Society. In January, Gervich paid $1,800 for the
drug and another $900 in February. Discounts that drug manufacturers are
required to provide to Part D enrollees also counted toward his out-of-pocket
costs. (More on that later.) By March, he hit the $5,100 threshold that pushed
him into catastrophic coverage. For the rest of the year, he’ll owe $295 a
month for this drug, until the cycle starts over again in January.
That
$295 is a far cry from the approximately $6,250 monthly Copaxone price without
insurance. But, combined with the $2,700 he already paid before his catastrophic
coverage kicked in, the additional $2,950 he’ll owe this year is no small
amount. And that assumes he needs no other medications.
“I feel like I’m being punished financially
for having a chronic disease,” he said. He has considered discontinuing
Copaxone to save money.
His
drug bill is one reason Gervich has decided not to retire yet, he said.
An
annual cap on his out-of-pocket costs “would definitely help,” said Gervich, a
self-employed certified financial planner in Mashpee, Mass.
Drugs
like Copaxone that can modify the effects of the disease have been on a steep
upward price trajectory in recent years, said Bari Talente, executive vice
president for advocacy at the National Multiple Sclerosis Society. Drugs that
used to cost $60,000 annually five years ago cost $90,000 now, she said. With
those totals, Medicare beneficiaries “are going to hit catastrophic coverage no
matter what.”
Specialty-tier
drugs for multiple sclerosis, cancer and other conditions — defined by Medicare
as those that cost more than $670 a month — account for more than 20 percent of
total spending in Part D plans, up from about 6 percent before 2010, according
to a report by the
Medicare Payment Advisory Commission, a nonpartisan agency that advises
Congress about the program.
Just
over 1 million Medicare beneficiaries in
Part D plans who did not receive low-income subsidies had drug costs that
pushed them into catastrophic coverage in 2015, more than twice as many as the
2007 total, an analysis by the Kaiser Family Foundation found. (KHN is an
editorially independent program of the foundation.)
“When
the drug benefit was created, 5 percent probably didn’t seem like that big a
deal,” said Juliette Cubanski, associate director of the Program on Medicare
Policy at the Kaiser Family Foundation. “Now we have such expensive
medications, and many of them are covered under Part D — where, before, many
expensive drugs were cancer drugs” that were administered in doctors’ offices
and covered by other parts of Medicare.
The
lack of a spending limit for the Medicare drug benefit sets it apart from other
coverage. Under the Affordable Care Act, the maximum amountsomeone
generally owes out-of-pocket for covered drugs and other medical care for this
year is $7,900. Plans typically pay 100 percent of customers’ costs after that.
The
Medicare program doesn’t have an out-of-pocket spending limit for Part A or
Part B, which cover hospital and outpatient services, respectively. But
beneficiaries can buy supplemental Medigap plans, some of
which pay coinsurance amounts and set out-of-pocket spending limits. Medigap
plans, however, don’t cover Part D prescription plans.
Counterbalancing
the administration’s proposal to impose a spending cap on prescription drugs is
another that could increase many
beneficiaries’ out-of-pocket drug costs.
(Credit: Department of
Health and Human Services)
Currently,
brand-name drugs that enrollees receive are discounted by 70 percent by
manufacturers when Medicare beneficiaries have accumulated at least $3,820 in
drug costs and until they reach $5,100 in out-of-pocket costs. Those discounts
are applied toward beneficiaries’ total out-of-pocket costs, moving them more
quickly toward catastrophic coverage. Under the administration’s proposal,
manufacturer discounts would no longer be treated this way. The administration
said this would help steer patients toward less expensive generic medications.
Still,
beneficiaries would have to pay more out-of-pocket to reach the catastrophic
spending threshold. Thus, fewer people would likely reach the catastrophic
coverage level where they could benefit from a spending cap.
“Our
concern is that some people will be paying more out-of-pocket to get to the
$5,100 threshold and the drug cap,” said Keysha Brooks-Coley, vice president of
federal affairs at the American Cancer Society Cancer Action Network.
“It’s
kind of a mixed bag,” said Cubanski of the proposed calculation change. “There
will be savings for some individuals” who reach the catastrophic phase of
coverage. “But for many there will be higher costs.”
For
some people, especially cancer patients taking chemotherapy pills, the lack of
a drug-spending cap in Part D coverage seems especially unjust.
These
cutting-edge targeted oral chemotherapy and other drugs tend to be expensive,
and Medicare beneficiaries often hit the catastrophic threshold quickly, said
Brooks-Coley.
Patty
Armstrong-Bolle, who lives in Haslett, Mich., takes Ibrance, a pill, once a day
to help keep in check the breast cancer that has spread to other parts of her
body. But while the medicine has helped send her cancer into remission, she may
never be free of a financial obligation for the pricey drug.
Armstrong-Bolle,
68, paid $2,200 in January and February for the drug last year. When she
entered the catastrophic coverage portion of her Part D plan, the cost dropped
to $584 per month. Armstrong-Bolle’s husband died last year, and she used the
money from his life insurance policy to cover her drug bills. This year, a
patient assistance program has covered the first few months of coinsurance.
That money will run out next month and she’ll owe her $584 portion again.
If she
were getting traditional drug infusions instead of taking an oral medication,
her treatment would be covered under Part B of the program and her coinsurance
payments could be covered.
“It
just doesn’t seem fair,” she said.
Michelle Andrews: andrews.khn@gmail.com, @mandrews110
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