Proposed Part D Payment Model Falls Short

This week, the Medicare Rights Center commented on a proposal from the Centers for Medicare and Medicaid Services (CMS) to test a prescription drug payment model designed to “address the increasingly expensive cost of drugs in Medicare Part D while preserving or enhancing Medicare beneficiaries’ quality of care.”

Affordability Challenges

People with Medicare are uniquely impacted by high drug prices, partly due to utilization and health status. Over two-thirds of Medicare beneficiaries have multiple chronic conditions and Part D enrollees take four to five prescriptions per month, on average. Further, many live on fixed or limited incomes. Half of all beneficiaries, nearly 33 million people, live on $43,200 or less per year, and one quarter have less than $18,950 in savings. Health care costs comprise a large and disproportionate share of beneficiaries’ limited budgets: Nearly 30% of Medicare households spend 20% or more of their income on health care, compared to only 7% of non-Medicare households.

Nearly 30% of Medicare households spend 20% or more of their income on health care.

These pressures create impossible choices. Beneficiaries who cannot afford care may be forced to go without it; more than one-third (36%) delayed or skipped care in 2023 due to affordability concerns. In addition to leading to worse outcomes and quality of life, the cost to Medicare is also extreme, as beneficiaries who forgo treatment and experience declining health as a result may require more expensive interventions later.

The GUARD Model

Medicare Rights supports efforts to lower beneficiary costs and improve Medicare sustainability. However, we are concerned that the recent CMS proposal to do so—the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model—would fall short of these aims.

The GUARD Model is a continuation of the Trump Administration’s efforts to link international and domestic drug costs to generate savings

At its core, the GUARD Model is a continuation of the Trump Administration’s efforts to link international and domestic drug costs to generate savings. CMS wants to modify an Inflation Reduction Act (IRA) framework that requires drug manufacturers to pay a rebate to the agency when they increase certain Part D drug prices faster than the rate of inflation. The GUARD model would test whether changing the calculation of that rebate—by tying it to international rather than domestic price information—would save money.

Inadequate Safeguards

CMS estimates the Model would reduce Medicare spending by approximately $14.1 billion—but none of those savings would be directly passed through to beneficiaries at the pharmacy counter.

Medicare Rights supports the goal of enhancing Medicare sustainability, but such efforts must be paired with meaningful affordability improvements at the beneficiary level. For example, a model could explicitly require that rebate-generated savings be passed along to beneficiaries at the point of sale through lower copayments or coinsurance. Without such safeguards, any savings could be repurposed for unrelated priorities, bypassing beneficiaries entirely.

Higher Beneficiary Costs

In the regulatory text, CMS notes high drug costs can “limit access to care and treatment, which in turn, can have cascading consequences that lead to poor health for patients, increased medical spending, and potentially avoidable expenditures for all payers, including Medicare. Results from recent surveys show that many Americans, including Medicare beneficiaries, face significant financial burden of care that has resulted in skipping or rationing medication due to cost.”

It is concerning that CMS estimates the Model would increase Part D premiums and cost sharing for beneficiaries by $3.6 billion.

We appreciate this acknowledgement and agree that paying for care is challenging for many Medicare enrollees, often in ways that undermine health and financial security. It is therefore concerning that CMS estimates the Model would increase Part D premiums and cost sharing for beneficiaries by $3.6 billion over its five-year span, making coverage less affordable and more burdensome.

Conclusion

In our comments, we express disappointment that the GUARD Model would not reduce key barriers for people with Medicare. Effective models must prioritize beneficiary well-being and financial stability. GUARD does not do so. For its failure to bolster affordability and access, we urge CMS to withdraw this model in its entirety.

Read our comments here.