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November 03, 2021 at 01:40 PM
What You Need to Know
- Medicare Part D plan enrollees now have to pay 5% of amounts over a $6,550-per-year catastrophic spending threshold.
- About 3.6 million patients exceeded the threshold at least once between 2010 and 2019.
- Many patients face those bills as they are coping with cancer, kidney failure or other devastating conditions.
Negotiators in Washington are trying to set a $2,000 annual limit on what Medicare Part D prescription drug plan enrollees pay out of pocket for covered medications.
If successful, the effort to add a drug spending cap could remove a big source of uncertainty from Medicare and retirement planning clients’ spending projections.
President Joe Biden’s administration announced Tuesday that the drug spending cap is now part of the “Build Back Better” framework.
The framework is the base for an effort by the Biden administration to develop a social spending package that can win enough votes both from progressive Democrats in the House and from centrist Democrats such as Kyrsten Sinema of Arizona and Joe Manchin of West Virginia in the Senate, to get through Congress.
The Medicare Part D Plan Catastrophic Threshold
Medicare Part D drug plans now pay 95% of the cost when patients who do not qualify for the Medicare low-income enrollee subsidy go over a catastrophic drug spending threshold. This year, the catastrophic spending provision will kick in when patients spend more than $6,550 of their own cash on covered drugs.
From 2010 through 2019, Part D plan enrollees spent an average of about $2.6 billion per year on drug costs not covered by their Part D plans, according to an analysis from the Henry J. Kaiser Family Foundation.
Enrollees spent an average of about $990 million per year out of pocket on drugs for prescriptions filled after those enrollees had crossed the catastrophic drug coverage threshold.
About 3.6 million patients crossed the catastrophic threshold for at least one year between 2010 and 2019, the Kaiser analysts estimate.
Lawmakers and regulators created that patient cost-sharing structure in an effort to encourage patients to do their part to help reduce unnecessary use of expensive drugs. In practice, patients often run into the catastrophic drug spending threshold when they are coping with devastating, potentially fatal illnesses, such as hard-to-control diabetes, kidney failure or cancer.
