Unlike many other federal programs, Medicare Part D has cost less than originally projected. Still, expenses are rising, especially among beneficiaries who already generate the highest expenses.
In a new analysis, the American Action Forum (AAF) attributes this trend to rising drug prices, “perverse” financial incentives, and insurers’ formulary decisions.
The solution? Fundamental reforms that shift more cost responsibility to insurers and drug manufacturers, the advocacy group says.
Specifically, AAF suggests four policy changes: (1) capping out-of-pocket expenditures, (2) requiring manufacturers to pay rebates, (3) reducing the federal government’s reinsurance rate, and (4) increasing plans’ liability during the catastrophic phase.
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These suggestions stand in contrast to recently enacted provisions in the Bipartisan Budget Act of 2018, which will decrease insurer liability by $1 billion in 2019, the report notes.
AAF’s proposal would not pin a majority of costs on drug companies or insurers: The federal government is legally required to cover three-fourths of costs under Part D, according to Tara O’Neill Hayes, AAF's deputy director of health policy, who authored the analysis.
In fact, companies that manufacture lower-cost drugs would benefit under the plan, Hayes said. It’s ones that charge “an extreme amount” that “warrant the need for this type of solution to begin with.”
By reducing out-of-pocket expenditures, the proposed changes may improve medication adherence among beneficiaries, the report explains. While this could increase the cost of claims, it could decrease medical expenditures by keeping patients out of the hospital.
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The changes might also incentivize plans to manage patients more cost-effectively, such as through step therapy.
AAF hopes to discuss its findings with members of Congress after the summer recess.
Hayes said no solid policy solutions have come forth up to this point, and she is “a little pessimistic” that any will manifest in the near future. Still, she said, Congress and stakeholders must “restart the conversation” around this issue to achieve a solution.