A few months ago President Trump announced a plan to lower prescription drug costs under Medicare by moving coverage of certain expensive drugs from Medicare Part B to Part D. Part B is the medical benefit that was part of the original Medicare law passed by Congress in 1965. Part D is the drug coverage plan that was added to Medicare in 2003.
The President believes costs can be reduced because under Part D the government contracts with private insurance companies to manage benefits and negotiate discounted rates with drug companies. Drugs under Part B are administered by infusions or injections that are either done in doctors’ offices or in hospital outpatient facilities. There is no negotiation of the cost of drugs covered under Part B. The idea is that if the drug costs are reduced thru negotiation under Part D then seniors save money and the government saves money. Everybody wins.
There are, however, potential problems. One is that there is generally a higher out of pocket cost for drugs under Part D than there is under Part B. Part B beneficiaries usually are required to pay 20% of the Medicare approved charge but a good Medigap policy covers that 20%. On the other hand, Part D beneficiaries pay 30% or more depending on the drug. Another problem is that not all Part B beneficiaries have Part D coverage. So what happens if a drug you had coverage for under Part B switches and you don’t have Part D? That would still have to be worked out.
Doctors who treat cancer patients are skeptical. Cancer drugs are treated as a protected class, meaning they must be covered under all Part D plans. They can cost $100,000 or more for a year of treatment. Being a protected class, that could take away any negotiating ability by the insurance companies. Additionally, cancer drugs tend not to have generic alternatives which is what helps to keep prices lower. The concern then is that moving coverage of these and other expensive drugs to Part D won’t lower the cost of the drug but instead will increase the out of pocket cost to the beneficiary, the opposite result than what is intended.
Right now the plan is just a proposal and many details would need to be worked out but it is something to pay attention to.