Advisory Committee Proposes Changes for Medicare Part D

The Medicare Payment Advisory Committee (MedPAC) recently proposed changes to cost-sharing requirements for patients enrolled in Medicare Part D.

According to an Avalere Health report about the April 2016 MedPAC meeting, these changes will lower the cost of generics and biosimilars for low income subsidy (LIS) beneficiaries with greater cost-sharing levels for enrollees with higher incomes. This proposal could also increase cost sharing on branded drugs, and could increase costs for non-LIS beneficiaries.

For non-LIS beneficiaries, MedPAC recommends creating a Part D out-of-pocket (OOP) maximum like many other insurers have done. The proposal would lower OOP expenses for enrollees with high cost prescriptions, since they must pay 5% of their drug costs in the catastrophic portion of the plan.

Another proposal for non-LIS beneficiaries would make it more difficult for enrollees to reach the catastrophic coverage level, making OOP costs higher. This would change the way true out-of-pocket costs are calculated.

Avalere found that this change could potentially increase spending and hinder the beneficiaries’ advancement toward the catastrophic phase.

These changes would cost beneficiaries an additional $4.1 billion from 2017 to 2020, and 715,000 (64%) fewer beneficiaries would reach the catastrophic phase, according to the report.

“While the addition of an out-of-pocket maximum in Part D will help a small number of high-spending enrollees, we anticipate that more beneficiaries will actually be worse off since they will owe more in cost sharing and may never reach the spending cap,” Director of Avalere Health Kelly Brantley said in a press release.

For LIS beneficiaries, MedPAC proposes low to no cost-sharing for generics and biosimilars in order to provide an incentive to use these drugs instead of branded drugs.

“Low-income enrollees are slightly less likely to use generic drugs than their counterparts, which could be the result of lower cost-sharing requirements or systematic differences in their health needs,” said Caroline Pearson, senior vice president at Avalere. “This proposal would reduce beneficiary costs for generic drugs, encouraging broader use of lower cost products when they are available.”

The report concluded these proposals would likely need legislative action from Congress, although it is not required, and many of these proposals are not adopted.