Medicare drug plan divides up winners, losers

Health chief set to deliver rundown for Congress today

WASHINGTON — Some Medicare beneficiaries would face higher prescription drug costs under President Donald Trump’s budget while the sickest patients save thousands of dollars, in a plan that comes as the administration has made bringing down drug costs a top priority.

In budget documents, the administration said its proposals strike a balance between improving the popular “Part D” prescription benefit for the 42 million seniors enrolled, while correcting design flaws that increase program costs for taxpayers. Health and Human Services Secretary Alex Azar is scheduled to testify on the budget today in Congress.

The high cost of medicines is the leading health care concern among consumers. Yet the administration’s plan would create winners and losers.

Independent experts said the administration’s plan will help beneficiaries with the highest prescription drug costs: those whose individual bills reach a total of more than $8,418 apiece.

In 2015, about 1 million Medicare beneficiaries had costs that high, which qualified them for Medicare’s “catastrophic” coverage. Above the threshold for catastrophic coverage, patients only pay 5 percent of the cost of their medications.

That can still amount to thousands of dollars for very expensive drugs. Under the budget proposal, once seniors reach catastrophic coverage they would no longer face copayments.

Meanwhile, about 4.5 million seniors in the group just behind those with the highest drug bills could end up spending more of their own money. That’s because the budget proposes a change in how Medicare accounts for manufacturer discounts received by patients whose total bills range between $3,750 and $8,418.

They could wind up paying about $1,000 more.

A senior Senate Democrat said the Trump plan missed the mark.

“Instead of picking winners and losers and leaving big pharma unscathed, the president should follow through on his promise to lower high drug prices by getting Republicans in Congress to work with Democrats on behalf of Americans who are getting clobbered at the pharmacy counter,” Sen. Ron Wyden, D-Ore., said in a statement. Wyden is the ranking Democrat on the Finance Committee, which oversees Medicare.

“The package reduces costs for some but increases costs for others, and the effect on premiums is not clear,” said Tricia Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation.

Also unclear is how the Trump plan interacts with changes to the Medicare prescription plan enacted by Congress last week.

Medicare’s prescription drug benefit is delivered through private insurance plans. Here’s more detail on the trade-offs for beneficiaries:

While the budget eliminates cost sharing for Medicare beneficiaries who reach the program’s “catastrophic” coverage threshold, a second group just behind the sickest patients would lose ground financially.

Currently, Medicare counts manufacturer discounts received by patients in this second group to calculate total spending that determines when they qualify for catastrophic coverage. That practice would stop, meaning beneficiaries would have to spend more of their own money to reach the threshold for catastrophic coverage.

Overall, fewer beneficiaries would qualify for catastrophic coverage because of the change in how Medicare counts manufacturer discounts.

“While the new proposal caps total out-of-pocket spending, it adds potentially thousands of dollars to what patients will have to spend to get to the cap, relative to what they spend today,” said Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes.

Bach said he expects many more Medicare beneficiaries would be losers under the plan.

In other Medicare drug changes, the budget calls for requiring insurers to share manufacturer rebates with patients, and it expands coverage for medications to treat substance abuse.