Medicare Advantage 101: New policy series explains Medicare Advantage and its role within the Medicare system.
A new brief from the Kaiser Family Foundation (KFF) examines the often extreme cost liability that Part B covered drugs—typically, those administered by physicians and other health care providers—can carry. The findings are clear: immediate action is needed to rein in drug prices, improve affordability, and better support people with Medicare.
As with most Part B covered services, people with traditional Medicare generally pay 20% coinsurance for Part B drugs, with no annual limit on their out-of-pocket (OOP) costs. Although many beneficiaries have supplemental coverage that helps with these expenses, such as a Medigap policy or Medicaid, nearly 6 million people do not and must pay the full 20%.
Medicare Advantage (MA) enrollees also usually face high cost-sharing for Part B drugs. Plans can set coinsurance rates at no more than 20% for Part B drugs administered in-network, but there is no similar limitation out-of-network. And while MA plans do limit total enrollee OOP costs, the current caps ($7,550 for in-network and $11,300 for in-network and out-of-network combined) are too high.
As a result, and as the report underscores, beneficiaries in both traditional Medicare and MA can face high costs for Part B drugs. Among KFF’s key findings:
Due to the lack of an OOP limit in traditional Medicare, Part B drug costs can be a significant burden for people with no or inadequate supplemental coverage. Similarly, MA’s OOP cap does not maximize enrollee affordability, and out-of-network cost sharing arrangements can also have substantial cost implications. These structural challenges leave beneficiaries far too exposed. Policymakers must address these flaws, as well as the underlying issue of high and rising drug prices. As KFF notes, the Build Back Better reconciliation bill includes proposals that would begin to do so. Specifically, that “allowing the federal government to negotiate prices for some drugs covered under Part B and Part D and by requiring inflation rebates for Medicare-covered drugs to limit annual increases in drug prices could help to address the spending burden that Medicare beneficiaries could face if they need high-cost drugs, whether covered under Part B or Part D.”
Medicare Rights continues to strongly urge lawmakers to pass these reforms, without delay.
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