Highlights from MedPAC’s Spring 2021 Report – Healthcare Economist

by akoloy


Here are a number of spotlight’s from the March 2021 report on Medicare Payment Policy from the Medicare Payment Advisory Commission (MedPAC).

Leading causes of demise

The main reason for demise are coronary heart illness, most cancers, and respiratory illness. Note that these figures are from 2018. MedPAC notes that the third main reason for demise in 2020 was COVID-19.

Coverage (Supplemental and Part D)

Also, most people with Medicare have further protection for price sharing both by enrolling in a Medicare Supplemental Plan, protection from their employer, or being included in a Medicare Advantage plan with much less price sharing.

Medicare beneficiaries obtain drug protection by Medicare Medicare Part D (except for physician-administered medication that are lined by Medicare Part B. Medicare Part D’s recognition has grown over time. In 2007, solely 54% of Medicare beneficiaries had been enrolled in Medicare Part D, however by 2020 that determine had elevated to 75%.

Part D profit construction

Medicare Part D has a complicated profit construction. It begins off with a deductible, then Part D plans pay for 75% of medicine whereas enrollees (for normal Part D plans) or Medicare (for enrollees within the low-income subsidy section) pay the remaining 25%. Next comes the protection hole or donut gap. Here, plans pay 5%, enrollees 25% and producers pay 70% by discounted drug costs; within the LIS case, Medicare pays for every part. Once the out-of-pocket most is reached, enrollees solely pay 5% of further drug prices, plans pay 15% and Medicare pays 80%. MedPAC has a pleasant determine exhibiting this profit design graphically.

Note, nonetheless, that this customary profit design will not be truly used regularly in apply.

In apply, the outlined customary profit is used primarily to set the typical worth of primary advantages that plan sponsors should supply beneath various profit designs. Most sponsors construction their primary advantages in ways in which differ from the outlined customary profit, similar to setting the deductible decrease than $445 or utilizing tiered copayments slightly than coinsurance. Some plans additionally encourage use of decrease price medicines by not making use of a deductible when a prescription is stuffed with sure most well-liked generics.

Drug costs

Overall, on the drug worth entrance, we see two competing tendencies. On the one hand, some new branded medication have gotten more and more costly (at gross drug costs previous to rebates). This signifies that Medicare is bearing extra drug price since these excessive price medication transfer individuals rapidly to the catastrophic protection zone.

We estimate that between 2007 and 2017, amongst enrollees with out the LIS, the share of mixture primary profit prices for which plan sponsors had been accountable declined from 53 p.c to 29 p.c (Medicare Payment Advisory Commission 2020c). For LIS enrollees, plan legal responsibility decreased from 30 p.c to 19 p.c .

On the opposite hand, rebates are rising and there’s elevated use of generic medication. In 2007, rebates and reductions offset solely about 20% of Part D plan legal responsibility; by 2018, now greater than half (53%) of plan legal responsibility is offset by drug rebates and reductions.

Further, generic utilization is rising. The MedPAC report states that “nearly 90% of the prescriptions filled” are for generic medication.

Taking under consideration each tendencies, MedPAC estimated that drug costs for Medicare Part D beneficiaries truly declined between 2018 and 2019 by 2.1%.

The MedPAC report has tons extra attention-grabbing statistics and findings and (though it is available in at a whopping 500 pages) it has a lot of attention-grabbing findings.



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