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New Medicare Drug Coverage Proposals and How They Will Affect You

The end of 2018 saw the Trump administration’s release of a proposed amendment to Medicare’s prescription drug program that, on the one hand, could help lower out-of-pocket costs for some patients, but on the other hand, could restrict medication options or even eliminate coverage of certain medications altogether. To achieve that end, the new proposal uses a mixed bag of strategies including “improved competition, better negotiation, incentives for lower prices, and reducing out-of-pocket costs”. If enacted, the new rules would have uneven consequences for the American public: some people may find themselves in a better position, while others may be significantly worse off.

The regulations recommended by the Centers for Medicare and Medicaid Services (CMS) would only take effect in 2020 if approved. For the next few weeks up until January 25, the current iteration of the proposal is open for public comment, so now is the time to ask yourself: how will the new Medicare drug coverage proposals affect you? Take some time to review the key changes listed below to determine how they may impact your personal health situation and that of your family.

  1. The “protected classes”. Currently, insurance plans are required to cover “all or substantially all” of the medications in the six “protected classes” (antidepressants, antipsychotics, anticonvulsants, immunosuppressants, antiretrovirals, and antineoplastics) used to treat common illnesses like depression, psychosis, HIV, seizure disorders and cancer. The new rules would give insurers more latitude to exclude protected drugs from coverage if they feel they are too expensive. In this way, insurers would gain considerable bargaining power to negotiate lower drug prices with pharmaceutical companies; however, beneficiaries could consequently lose access to critical and often lifesaving treatments.
  2. “Step therapy”. Another provision would allow Medicare Advantage insurance plans to institute “step therapy” for medications administered in a clinic or doctor’s office, meaning that beneficiaries would be obliged to try lower-cost drugs first. While this strategy could reduce drug spending, there is a real concern that it could also limit the use of required medications, most notably cancer drugs.
  3. Rebates. The proposed rule change also includes a plan to pass on a portion of rebates to beneficiaries, as opposed to drug companies, when prescription medications are picked up at the pharmacy. While this approach could offer financial benefits to some patients and drug makers, it would also trigger higher costs for taxpayers as well as surging premiums for Medicare enrollees.
  4. E-prescribing. The CMS proposal also suggests updating requirements for e-prescribing to create a more transparent environment to empower patients to make more informed health care decisions. With the benefit of real-time prescription benefit tools, both doctors and patients would gain access to accurate information about drug prices and cost sharing at the very moment that the drug is prescribed.
  5. Gag clauses in pharmacy contracts. The proposal also seeks to end the longstanding practice by insurers of preventing or penalizing pharmacies from disclosing the availability of lower cash prices for medications. This provision would likely not be very popular with pharmaceutical lobbying groups and drug makers, but being informed of cheaper, alternative drugs would be invaluable to help reduce out-of-pocket health care expenses for Medicare recipients.