Monthly Archives: June 2019

Doughnut Hole Closed, But Many Still Struggle With Medicare Drug Costs

June 3, 2019

NAELA  News:   Three times a week, Tod Gervich injects himself with Copaxone, a prescription drug that can reduce the frequency of relapses in people who have some forms of multiple   sclerosis. After more than 20 years with the disease, Gervich, 66, is accustomed to managing his condition. What he can’t get used to is how Medicare’s coinsurance charges drain his wallet.

Unlike commercial plans that cap members’ out-of-pocket drug spending annually, Medicare has no limit for prescription medications in Part D, its drug benefit. With the cost of specialty drugs increasing, some Medicare beneficiaries could owe thousands of dollars in out-of-pocket drug costs every year for a single drug.

Recent proposals by the Trump administration and Sen. Ron Wyden (D-Ore.) would address the long-standing problem by imposing a spending cap. But it’s unclear whether any of these proposals will gain a foothold.

The 2006 introduction of the Medicare prescription drug benefit was a boon for Americans 65 and older, but the coverage had weak spots. One was the so-called doughnut hole — the gap beneficiaries fell into after they accumulated a few thousand dollars in drug expenses and were on the hook for the full cost of their medications. Another was the lack of an annual cap on drug spending.

Legislative changes have gradually closed the doughnut hole so that, this year, beneficiaries no longer face a coverage gap. In a standard Medicare drug plan, beneficiaries pay 25% of the price of their brand-name drugs until they reach $5,100 in out-of-pocket costs. Once patients reach that threshold, the catastrophic portion of their coverage kicks in and their obligation drops to 5%. But it never disappears.

5% Responsibility Adds Up Fast

It’s that ongoing 5% that hits hard for people, like Gervich, who take expensive medications.

His 40-milligram dose of Copaxone costs about $75,000 annually, according to the National Multiple Sclerosis Society. In January, Gervich paid $1,800 for the drug and another $900 in February.

Discounts that drug manufacturers are required to provide to Part D enrollees also counted toward his out-of-pocket costs. By March, he hit the $5,100 threshold that pushed him into catastrophic coverage. For the rest of the year, he’ll owe $295 a month for this drug, until the cycle starts over again in January.

That $295 is a far cry from the approximately $6,250 monthly Copaxone price without insurance. But, combined with the $2,700 he already paid before his catastrophic coverage kicked in, the additional $2,950 he’ll owe this year is no small amount. And that assumes he needs no other medications.

“I feel like I’m being punished financially for having a chronic disease,” he said. He has considered discontinuing Copaxone to save money.

His drug bill is one reason Gervich has decided not to retire yet, he said.

An annual cap on his out-of-pocket costs “would definitely help,” said Gervich, a self-employed certified financial planner in Mashpee, Mass.

More Will Reach ‘Catastrophic Coverage’ Threshold

Drugs like Copaxone that can modify the effects of the disease have been on a steep upward price trajectory in recent years, said Bari Talente, executive vice president for advocacy at the National Multiple Sclerosis Society. Drugs that used to cost $60,000 annually five years ago cost $90,000 now, she said. With those totals, Medicare beneficiaries “are going to hit catastrophic coverage no matter what.”

Specialty-tier drugs for multiple sclerosis, cancer and other conditions — defined by Medicare as those that cost more than $670 a month — account for more than 20% of total spending in Part D plans, up from about 6% before 2010, according to a report by the Medicare Payment Advisory Commission, a nonpartisan agency that advises Congress about the program.

Just over 1 million Medicare beneficiaries in Part D plans who did not receive low-income subsidies had drug costs that pushed them into catastrophic coverage in 2015, more than twice as many as the 2007 total, an analysis by the Kaiser Family Foundation found. (KHN is an editorially independent program of the foundation.)

“When the drug benefit was created, 5% probably didn’t seem like that big a deal,” said Juliette Cubanski, associate director of the Program on Medicare Policy at the Kaiser Family Foundation.

“Now we have such expensive medications, and many of them are covered under Part D — where, before, many expensive drugs were cancer drugs” that were administered in doctors’ offices and covered by other parts of Medicare.

The lack of a spending limit for the Medicare drug benefit sets it apart from other coverage. Under the Affordable Care Act, the maximum amount someone generally owes out-of-pocket for covered drugs and other medical care for this year is $7,900. Plans typically pay 100% of customers’ costs after that.

The Medicare program doesn’t have an out-of-pocket spending limit for Part A or Part B, which cover hospital and outpatient services, respectively. But beneficiaries can buy supplemental Medigap plans, some of which pay coinsurance amounts and set out-of-pocket spending limits. Medigap plans, however, don’t cover Part D prescription plans.

Plan for Spending Cap Still Leaves Problem

Counterbalancing the administration’s proposal to impose a spending cap on prescription drugs is another that could increase many beneficiaries’ out-of-pocket drug costs.

Currently, brand-name drugs that enrollees receive are discounted by 70% by manufacturers when Medicare beneficiaries have accumulated at least $3,820 in drug costs and until they reach $5,100 in out-of-pocket costs. Those discounts are applied toward beneficiaries’ total out-of-pocket costs, moving them more quickly toward catastrophic coverage. Under the administration’s proposal, manufacturer discounts would no longer be treated this way. The administration said this would help steer patients toward less expensive generic medications.

Still, beneficiaries would have to pay more out-of-pocket to reach the catastrophic spending threshold. Thus, fewer people would likely reach the catastrophic coverage level where they could benefit from a spending cap.

“Our concern is that some people will be paying more out-of-pocket to get to the $5,100 threshold and the drug cap,” said Keysha Brooks-Coley, vice president of federal affairs at the American Cancer Society Cancer Action Network.

“It’s kind of a mixed bag,” said Cubanski of the proposed calculation change. “There will be savings for some individuals” who reach the catastrophic phase of coverage. “But for many there will be higher costs.”

For some people, especially cancer patients taking chemotherapy pills, the lack of a drug-spending cap in Part D coverage seems especially unjust.

These cutting-edge targeted oral chemotherapy and other drugs tend to be expensive, and Medicare beneficiaries often hit the catastrophic threshold quickly, said Brooks-Coley.

By Michelle Andrews

In 10 Years, Half Of Middle-Income Elders Won’t Be Able To Afford Housing, Medical Care

June 3, 2019

In 10 years, more than half of middle-income Americans age 75 or older will not be able to afford to pay for yearly assisted living rent or medical expenses, according to a study published Wednesday in Health Affairs.

The researchers used demographic and income data to project estimates of a portion of the senior population, those who will be 75 or older in 2029, with a focus on those in the middle-income range — currently $25,001 to $74,298 per year for those ages 75 to 84.

And it doesn’t look good for that group because of the rising costs of housing and health care. The researchers estimated that the number of middle-income elders in the U.S. will nearly double, growing from 7.9 million to 14.4 million by 2029. They will make up the biggest share of seniors, at 43%.

By 2029, more than half of the middle-income seniors will have annual financial resources of $60,000 or less, even if the equity in their homes is included. Projections put the average annual assisted living and medical expenses cost in 10 years at $62,000, meaning that a majority of the middle-income seniors then will not be able to afford an assisted living facility.

Middle-income seniors are a group that Beth Burnham Mace, one of the study’s authors, said has been often overlooked when policymakers and legislators think about housing and care for aging Americans.

“The low-income cohort has been taken care of by tax subsidies, while the high-income cohort is largely self-sufficient. But the middle-income seniors have been ignored,” said Mace, who is chief economist at the National Investment Center for Seniors Housing and Care, a nonprofit research group.

The study’s authors said they are probably underestimating the extent of the looming problem. They projected out-of-pocket medical costs of only $5,000 a year for seniors.

Deborah Carr, chairwoman of the department of sociology at Boston University who studies aging, noted that Americans “are able to live longer today than they have in the past because of medical technology.” The downside, said Carr, who was not affiliated with the study, is “if they’re living for years with dementia or mobility issues, then they have to pay longer for medical care for the additional years they live.”

Indeed, the researchers projected that 60% of the middle-income seniors will have mobility limitations, while 20% will be considered “high needs,” meaning they have three or more chronic conditions and one or more limitations in activities of daily living, such as bathing or dressing. Eight percent will have some form of cognitive impairment.

Seniors living with mobility limitations, chronic conditions or cognitive impairment are more likely to need care and support such as that offered by an assisted living facility.

But that’s not a reality for many.

In her written response to the Health Affairs study, Jennifer Molinsky, a senior research associate at the Joint Center for Housing Studies at Harvard University, addressed the needs of seniors who decide to stay at home as they age instead of going to an assisted living facility. She said these older Americans face a different set of challenges.

“One of the challenges is that most people don’t live in cities,” Molinsky said in an interview. “And most houses in these areas are single-family detached homes. The infrastructure is not set up for safe walking, so you have to drive. People often give up driving as they age. So these locations can be difficult to provide services to people.”

Molinsky said other issues to consider are making homes more accessible by adding ramps for wheelchairs or wall handles in the shower and the cost of these changes.

The other dire warning of the study: While spouses and middle-age daughters have historically provided the bulk of elder care, that is a less likely option in the future because of changing marriage patterns, lower birth rates and the increasing number of adult children who live far from their parents. Some seniors will need to seek paid care.

The study suggests that policymakers could expand Medicare benefits to include access to a wider range of supportive services, or create a new benefit, “Medicare Part E,” that funds long-term care. However, other attempts to set up such a program have run into resistance among lawmakers because of cost.

While Medicaid is the primary payer of long-term nursing home care, right now the program is available only to low-income seniors. Seniors may become eligible if they impoverish themselves. However, lawmakers could also broaden the Medicaid income eligibility requirements or expand options to include home-based care for those with higher-end incomes.

Some seniors are already turning to creative solutions to address their growing need for affordable housing.

Carr said one innovative option she has seen is the Village to Village Network, a community program that allows seniors to stay in their homes but have access to general support services, such as home repairs, transportation, health care and even social activities.

Co-housing, where seniors share a residence, like in the classic TV show, “Golden Girls,” is another solution, Carr said.

Mace said she hopes the study will spark more conversation between public and private sectors for creative ideas to address the issue of housing the growing number of Americans who will turn 75 or older in the next decade.

Her advice to both those seniors and their children is to openly discuss the issue.

“It is a good idea to sit down and talk about what your plan may be,” said Mace. “Talk about what the financial assets are and the housing options. It’s a worthy topic to talk about, though it can be hard, because it helps to avoid putting both children and parents in difficult situations in the future.”