Part D Plans Ramp up Restrictions on Medications
The Inflation Reduction Act signed by President Biden in 2022 somewhat limits how much retirees will pay out of their own pockets for medications this year. Next year, the law imposes a hard cap of $2,000.
But while retirees are getting a reprieve from Congress, insurance companies are pushing in the opposite direction.
According to research appearing in Health Affairs, insurers are tightening retirees’ access to some medications and increasing the number that are excluded from Part D and Medicare Advantage plan coverage altogether.
Ultimately, this might either cost retirees more or, in the most extreme cases, prevent them from taking some necessary medications if they can’t afford to pay the cost themselves. The $2,000 annual cap on out-of-pocket drug costs generally does not apply to drugs that insurers exclude from coverage, though there are some exceptions, according to the nonprofit Pan Foundation.
Insurance companies have three ways of controlling their costs when covering policyholders’ medications. In 2011, 32 percent of medications fell under one of these restrictions, according to the analysis of Medicare data. By 2020, restrictions were placed on 44 percent.
The first of these restrictions, which is fairly common, is requiring physicians to get prior authorizations for expensive drugs before the insurer agrees to cover them. Second, they can require patients to try lower-cost generics before moving up to a more expensive brand name.
Finally, insurers sometimes exclude a medication from coverage altogether. In this case, if only one drug would be effective in treating a medical condition, and that drug is excluded, the retiree would have to decide whether to pay or go without. The share of medications under this restriction – the most drastic one – increased sharply, from 21 percent in 2011 to 30 percent today.
Interestingly, Medicare Advantage plans, which now dominate the market, have fewer restrictions than Part D plans. Because Advantage plans also cover medical treatments, the companies that sell them may have an interest in protecting policyholders’ health, since they face higher costs if patients are unable to take the preferred drugs their physicians have prescribed.
The researchers said exclusions typically were placed on drugs that had a generic equivalent. But that’s changing. They are “increasingly being applied to drugs for complex conditions such as cancers and autoimmune disorders,” they said.
Insurance companies’ cost-cutting moves, physicians say, “are increasingly overused, impose an administrative burden, and undermine their clinical decision making.”
Limiting physicians’ options or imposing more costs on patients can have “adverse health effects.”
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What a racket our entire healthcare system is! Can you imagine how much we’d be able to spend on actually helping people if all these intermediaries — particularly private equity entities — didn’t have their hands in the pot? But we’ve been gaslighted to believe that unfettered capitalism is good and this is the way it has to be. In the meantime, the #2 cause of personal bankruptcy in this country is medical expense.
When the $2,000 annual cap was adopted, it was clear that the cost would have to be covered somehow: new federal dollars, premium increases, co-payment increases and/or restrictions on covered drugs. The restrictions are the toughest part to take.