The Uncertain Future of High-Need Medicare Beneficiaries

At the 2nd cost-sharing roundtable event hosted jointly by the Patient Access Network Foundation and The American Journal of Managed Care^®, in Washington DC, February 24, 2017, Tricia Neuman, senior vice president of the Henry J. Kaiser Family Foundation and director of the Foundation’s Program of Medicare Policy, provided the attendees a perspective on what the future might hold for patients enrolled in Medicare and those with substantial healthcare needs.

Neuman pointed out that many Medicare beneficiaries often suffer from functional limitations, multiple chronic conditions, and are not in the best of health. Further, financial considerations are high for these individuals, 20% of whom (per Kaiser data from 2013) were dually eligible (meaning Medicaid eligible).

“Half of all Medicare enrollees live on an annual income that does not exceed $24,000,” Neuman said, sharing the Foundation’s data from 2014, which found that one-fourth of the enrollees had an income below $14,350. She indicated that many of these enrollees may not be eligible for assistance. This could have far-reaching consequences, especially if a person with multiple conditions cannot afford 1 or more high-cost drugs.

Kaiser data from 2010 found that the average out-of-pocket (OOP) costs for Medicare beneficiaries vary depending on the disease. For example, for patients with Alzheimer’s or Parkinson’s disease, a significant proportion of their annual OOP spending (average, $9836 and $7702, respectively) was on long-term care facilities, while for patients with end-stage renal disease, services such as inpatient and outpatient hospital care, medical supplies, and prescription drugs took up a major chunk of their OOP costs (average, $6918).

But should Medicare patients be burdened with such high costs? Medicare Part D plans have no OOP limit, and no hard limit on catastrophic cost for prescriptions, Neuman explained. “So premiums are high. Plus, patients face cost sharing for the prescription drug price, along with the cost for services.” Patient burden is evident from the median OOP costs of Medicare patients in 2016 for prescription drugs: $4864 for the anti-inflammatory agent Humira and $11,538 for the anticancer agent Revlimid.

So while drug costs will have a significant impact on how much these patients end up spending from their own budget, formulary placement of these drugs will matter as well, Neuman pointed out.

Policy Predictions

With the uncertainty on how the new administration will change—or not—the provisions of the Affordable Care Act (ACA), Neuman said that House Speaker Paul Ryan’s A Better Way plan proposes repealing some, not all, of the ACA Medicare provisions. “The ACA is a carefully thought out political puzzle. But it remains unclear,” Neuman added, pointing out some of the Medicaire provisions of the act:

• Eliminated cost sharing for many preventive services and closed the Part D coverage gap
• Reduced payment updates to hospitals and other providers and payments for MEDICARE Advantage plans
• Initiated several payment and delivery system reforms, spearheaded by the Center for Medicare & Medicaid Innovation

As for the drug price debate, while President Donald Trump supports reduced drug prices, “The Congress has not taken any steps in this direction,” she said. The idea of letting the government negotiate drug prices has been floated around, and has support from a majority of the public (82%)—but will the Congress agree?

Another idea, that has not gained much public support is to have seniors contribute a premium for their Medicare healthcare coverage. As for Medicaid block grants, Neuman said that both the President and the Speaker support this idea, which can constrain federal spending and gives states flexibility to manage spending.

As of today, however, uncertainty prevails.