Op-Ed by D. Kenton Henry Editor, agent, broker 10 May 2022
As a Medicare recipient, each fall during Medicare’s Annual Election Period (AEP) – from October 15th to December 7th – you are allowed to select a new Part D Drug Plan for the coming calendar year.
Did you research which of the approximately 30 Part D Drug Plans available to you would result in your lowest total costs in 2022? Did you select a plan because it quoted the lowest price and coinsurance for your drugs? Midyear, to your surprise, you have been informed the cost of your drug(s) is now much higher!
If you did, you are not alone. As a Medicare recipient, and an agent/broker working on behalf of Medicare clients, I am not only frustrated but somewhat embarrassed by this phenomenon. The reason for the latter is because one of the primary services I provide clients is to, during the AEP, quote the price of each of their prescription drugs and their lowest total cost drug plan for the coming new year. Clients rely on me for accurate information and base their drug plan selection on my research and quotes. When suddenly they are notified that their drugs’ actual price is higher or will be increasing midyear, it reflects poorly on me. Even though the information I provided them was accurate at the time and price discrepancies are beyond my control.
As my feature news article from Kaiser Health (below) explains, “As early as three weeks after Medicare’s drug plan enrollment period ends on December 7th, insurance plans can change what they charge members for drugs – and they can do it repeatedly.”
Please read the article for full disclosure about how this is allowed to happen. Suffice it to say, many Medicare recipients are living on a fixed income, and this practice makes it very difficult for them to budget appropriately and pay their drug and remaining bills. As a consumer, my opinion is that this practice is unconscionable and inexcusable. It seems if a pharmaceutical company wants a particular drug company to include its drug in their plan’s formulary, they should quote a price and be contractually committed to, and obligated to, providing that drug at that price for the entire coming calendar year. As with a fixed mortgage or purchase agreement, the terms should be locked in for the life of the contract. Again, in my opinion, anything less assumes the character of a “bait and switch” transaction.
Feature Article 2 highlights the pushback on brand name drug coverage by Medicare while pointing out the preferred treatment in lower drug costs for Medicaid recipients. Their savings are provided by discounts and coupons vs the drug cost for those in Medicare who do not receive those.
In terms of working with me as a professional, I will continue to provide my clients the most accurate price and dispensing information for Rx drugs and the Part D Drug plans available to them. This will be the case for purposes of the AEP; because they are new to Medicare; or because they need to change plans due to a residential move and plan availability. I do not charge a fee for this service.
In the meantime, do not hesitate to contact me with any questions or assistance you might require. Not only as they relate to Medicare but for you or family members who might not yet be eligible for Medicare. My services and terms apply to Under Age 65 health insurance, as well.
D. Kenton Henry
FOR THE LATEST IN HEALTH AND MEDICARE RELATED INSURANCE NEWS FOLLOW MY BLOG @ https://HealthandMedicareInsurance.com
FEATURE ARTICLE 1
KAISER HEALTH NEWS
Drug plan prices touted during Medicare open enrollment can rise within a month
May 3, 20225:00 AM ET
Retiree Donna Weiner shows some of the daily prescription medications for which she pays more than $6,000 per year through a Medicare prescription drug plan. She supports giving Medicare authority to negotiate drug prices.
Phelan M. Ebenhack/AP
Something strange happened between the time Linda Griffith signed up for a new Medicare prescription drug plan during last fall’s enrollment period and when she tried to fill her first prescription in January.
She picked a Humana drug plan for its low prices, with help from her longtime insurance agent and the Medicare Plan Finder, an online pricing tool for comparing a dizzying array of options. But instead of the $70.09 she expected to pay for her dextroamphetamine, used to treat attention-deficit/hyperactivity disorder, her pharmacist told her she owed $275.90.
“I didn’t pick it up because I thought something was wrong,” said Griffith, 73, a retired construction company accountant who lives in the Northern California town of Weaverville.
This story was produced in partnership with Kaiser Health News.
“To me, when you purchase a plan, you have an implied contract,” she said. “I say I will pay the premium on time for this plan. And they’re going to make sure I get the drug for a certain amount.”
But it often doesn’t work that way. As early as three weeks after Medicare’s drug plan enrollment period ends on Dec. 7, insurance plans can change what they charge members for drugs — and they can do it repeatedly. Griffith’s prescription out-of-pocket cost has varied each month, and through March, she has already paid $433 more than she expected to.
A recent analysis by AARP, which is lobbying Congress to pass legislation to control drug prices, compared drugmakers’ list prices between the end of December 2021 — shortly after the Dec. 7 sign-up deadline — and the end of January 2022, just a month after new Medicare drug plans began. Researchers found that the list prices for the 75 brand-name drugs most frequently prescribed to Medicare beneficiaries had risen as much as 8%.
Medicare officials acknowledge that manufacturers’ prices and the out-of-pocket costs charged by an insurer can fluctuate. “Your plan may raise the copayment or coinsurance you pay for a particular drug when the manufacturer raises their price, or when a plan starts to offer a generic form of a drug,” the Medicare website warns.
But no matter how high the prices go, most plan members can’t switch to cheaper plans after Jan. 1, said Fred Riccardi, president of the Medicare Rights Center, which helps seniors access Medicare benefits.
Drug manufacturers usually change the list price for drugs in January and occasionally again in July, “but they can increase prices more often,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University and a member of the Medicare Payment Advisory Commission. That’s true for any health insurance policy, not just Medicare drug plans.
Like a car’s sticker price, a drug’s list price is the starting point for negotiating discounts — in this case, between insurers or their pharmacy benefit managers and drug manufacturers. If the list price goes up, the amount the plan member pays may go up, too, she said.
The discounts that insurers or their pharmacy benefit managers receive “don’t typically translate into lower prices at the pharmacy counter,” she said. “Instead, these savings are used to reduce premiums or slow premium growth for all beneficiaries.”
Medicare’s prescription drug benefit, which began in 2006, was supposed to take the surprise out of filling a prescription. But even when seniors have insurance coverage for drugs, advocates said, many still can’t afford them.
“We hear consistently from people who just have absolute sticker shock when they see not only the full cost of the drug, but their cost sharing,” said Riccardi.
The potential for surprises is growing. More insurers have eliminated copayments — a set dollar amount for a prescription — and instead charge members a percentage of the drug price, or coinsurance, Chiquita Brooks-LaSure, the top official at the Centers for Medicare & Medicaid Services, said in a recent interview with KHN. The drug benefit is designed to give insurers the “flexibility” to make such changes. “And that is one of the reasons why we’re asking Congress to give us authority to negotiate drug prices,” she said.
CMS also is looking at ways to make drugs more affordable without waiting for Congress to act. “We are always trying to consider where it makes sense to be able to allow people to change plans,” said Dr. Meena Seshamani, CMS deputy administrator and director of the Center for Medicare, who joined Brooks-LaSure during the interview.
On April 22, CMS unveiled a proposal to streamline access to the Medicare Savings Program, which helps 10 million low-income enrollees pay Medicare premiums and reduce cost sharing. Enrollees also receive drug coverage with reduced premiums and out-of-pocket costs.
The subsidies make a difference. Low-income beneficiaries who have separate drug coverage plans and receive subsidies are nearly twice as likely to take their medications as those without financial assistance, according to a study Dusetzina co-authored for Health Affairs in April.
When CMS approves plans to be sold to beneficiaries, the only part of drug pricing it approves is the cost-sharing amount — or tier — applied to each drug. Some plans have as many as six drug tiers.
In addition to the drug tier, what patients pay can also depend on the pharmacy, their deductible, their copayment or coinsurance — and whether they opt to abandon their insurance and pay cash.
After Linda Griffith left the pharmacy without her medication, she spent a week making phone calls to her drug plan, pharmacy, Social Security and Medicare but still couldn’t find out why the cost was so high. “I finally just had to give in and pay it because I need the meds — I can’t function without them,” she said.
But she didn’t give up. She appealed to her insurance company for a tier reduction, which was denied. The plan denied two more requests for price adjustments, despite assistance from Pam Smith, program manager for five California counties served by the Health Insurance Counseling and Advocacy Program. They are now appealing directly to CMS.
“It’s important to us to work with our members who have questions about any out-of-pocket costs that are higher than the member would expect,” said Lisa Dimond, a Humana spokesperson. She could not comment about Griffith’s situation because of privacy rules.
However, Griffith said she received a call from a Humana executive who said the company had received an inquiry from the media. After they discussed the problem, Griffith said, the woman told her, “The [Medicare] Plan Finder is an outside source and therefore not reliable information,” but assured Griffith that she would find out where the Plan Finder information had come from.
She won’t have to look far: CMS requires insurers to update their prices every two weeks.
“I want my money back, and I want to be charged the amount I agreed to pay for the drug,” said Griffith. “I think this needs to be fixed because other people are going to be cheated.”
FEATURE ARTICLE 2
Brand-name drug prices weigh heavily on Part D beneficiaries
May 6, 2022
MHE Publication, MHE May 2022, Volume 32, Issue 5
Beauty may be in the eye of the beholder, but drug price trends are in the way you crunch the numbers.
Beauty may be in the eye of the beholder, but drug price trends are in the way you crunch the numbers.
In a piece posted on the Health Affairs Forefront blog last month, Anna Anderson-Cook, Ph.D., and her colleagues at Arnold Ventures argued that analyses by IQVIA and others that show relatively level or even decreased net drug prices in recent years may be misleading. Arnold Ventures, formerly The Laura and John Arnold Foundation, is a philanthropic organization that supports a variety of criminal justice, education and healthcare projects. In healthcare, it has been one of the main supporters of Civica Rx, a nonprofit drug manufacturer, and the Institute for Clinical and Economic Review, a cost-effectiveness research organization in Boston.
One of the interesting points raised by Anderson-Cook and her colleagues is that overall trends “do not apply to the commercial market or to Medicare Part D, where net prices are both significantly higher and growing more rapidly” than they are for other payers. They cite Medicaid as an example of a payer that skews overall results. Medicaid plans have considerably lower net drug costs (costs after rebates and other discounts) than Part D plans because of Medicaid-specific rebates rules that result in larger rebates for Medicaid programs.
The Arnold Ventures researchers also made the case that year-over-year comparisons of net prices for drugs that are already on the market paint an incomplete picture because of the number and expense of new drugs.
Citing a Congressional Budget Office report, Anderson-Cook and her colleagues noted that in 2017 drugs launched after 2015 cost 12 times as much as drugs already on the market in 2015. What’s more, new drugs tend to do well, sales wise, once they are approved and on the market. The Arnold Ventures researchers pointed to a Part D dashboard maintained by CMS that shows that 30 brand-name drugs launched after 2015 were top sellers in Part D by 2019.
So far the cost of these new brand-name drugs has been offset by the shift from brand-name products to generics among the older drugs. The migration to generics has kept increases in net spending per beneficiary in Part D plans on a relatively even keel, meaning it hasn’t surpassed inflation.
The researchers also noted that at 90% the generic dispensing rate may have reached its upper limit. If brand-name drug costs continue to escalate while the generic market stays at 90%, there will be upward pressure on Part D spending, notwithstanding the level-to-moderate spending in the recent past. They cited a 2021 Medicare Trustees Report that projects that the cost of the Part D program will grow by 6.1% annually over the next five years. Biosimilars to the brand-name biologics may have their intended effect, tugging down prices of the biologics, but so far they haven’t had the same effect on prices that generics have had on small-molecule drugs, say the authors.
Without comprehensive reform, Anderson-Cook and her colleagues concluded, the cost of brand-name drugs will “grow aggressively,” straining the Medicare budget and the resources of the program’s beneficiaries.