Moving Medicare Coverage

By Jennifer Snow, MPH |

An executive Q&A with Jennifer Snow, Vice President of Reimbursement and Policy Insights at Xcenda and Editor-in-Chief of Health Policy Weekly, on the impact of shifting coverage for some drugs from Part B to Part D.

Executive Q&A

Moving Medicare Coverage

Shifting coverage for some drugs from Medicare Part B to Medicare Part D is perhaps one of the most talked-about proposals within the Trump administration’s blueprint for lowering drug costs.1 Xcenda's Jennifer Snow shares what healthcare stakeholders need to know about the potential impact of this change.
Q: What are we starting to hear about the potential cost impact of shifting coverage for some products from Medicare Part B to Medicare Part D?

Jennifer Snow: Researchers from Brigham and Women’s Hospital and Harvard Med School recently looked at this exact issue. What they found was very compelling: while costs for some beneficiaries would go down if products are moved from Part B to Part D, the numbers certainly are not consistent. In fact, many beneficiaries would incur increased out-of-pocket costs—for example, those with Medicare supplemental coverage (also known as Medigap). The study found that while total spending could decrease, out-of-pocket cost would increase by at least 10% for 22 to 29 of the 75 products studied.2 I think the concern there is that not only will it be more expensive for those beneficiaries, but also that Part D is a very different animal than Part B.

"Moving products from Part B to Part D increased out-of-pocket costs by at least 10% for 22 to 29 of 75 products studied."

Q: What are some of the differences between the two programs? How could that impact patients and providers?

JS: Under Medicare Part B, providers and patients have access to a lot of products. Most importantly, providers have the ability to make choices and decisions about the appropriate therapies for their patients. That autonomy results in faster access to therapy, whereas with Medicare Part D it's a much more managed environment. There are formulary tier considerations, which can determine whether a drug is even covered, or if a beneficiary can afford the out-of-pocket expense. Part D also allows utilization management tools, such as prior authorization or step therapy. So, if prescription drug coverage under Part B moves to Part D, not only do you potentially have increased cost sharing for the majority of people who do have supplemental coverage, you have a more restrictive environment.

Q: What’s driving this proposed shift?

JS: To some extent, I think the administration is stuck on the assumption that providers under Medicare Part B are prescribing based on their financial interests rather than the interest of the patient. And because the current payment system is based on ASP plus 4.3%, they believe providers are administering more expensive drugs to make more money. Our research found that's not true—that there is no correlation between payment and utilization. To imply otherwise is to imply that providers aren’t doing what's in the best interest of their patients, which is ridiculous and insulting to these extremely committed and passionate individuals.

Q: With no evidence that financial incentives encourage physicians to prescribe more expensive drugs, and new evidence that shifting coverage from Part B to Part D could increase out-of-pocket costs for some beneficiaries, is there a strong case for not making such a change? Are there elements of each plan that make them more effective as is?

JS: In reality, Part B is something of a marvel in that it has managed costs as well as it has while enabling provider choice and patient access. What we’re starting to see with the potential shift to Part D is that we’d be moving these drugs to a much more managed environment while barely keeping the costs in check—not the best tradeoff.

Part D is good but not perfect. It’s a benefit that needs to be right-sized—in terms of looking at the out-of-pocket costs for beneficiaries, particularly in catastrophic coverage and how patients face utilization management tools, whether there's prior authorization or step therapy. And under Medicare Part B, we're starting to see more of that. In August, Medicare Advantage plans were given the opportunity, if you will, to start incorporating step therapy into Medicare Advantage Part B benefits. That was a really big deal. I think the administration is trying to introduce more management under Medicare Part B, but that would take away some of what makes Medicare Part B work so well, which is that provider-first approach.

Q: On the product side of things, what can manufacturers be doing to either brace for impact or influence decision-making around these policy changes?

JS: What we see manufacturers doing right now is really collecting the evidence, collecting the stories, having the data that helps them present a value story for providers and payers. They’re working with us at Xcenda to look at how people get coverage, what that looks like, understanding the environment and the beneficiary experience under the different plans to understand where they can influence access and affordability. It’s important to understand the patient journey and the pros and cons to all approaches.

For example, one area we’re diving into for some products is the Medigap-Medicare supplemental coverage landscape—what supplemental coverage looks like, how many people have it and how it does protect a lot of Medicare beneficiaries from high out-of-pocket costs for prescription drugs in the Medicare Part B environment. Where it looks like it'd be zero, Part D is in an ideal environment to shift drugs into, but the fact is that the cost sharing under Part D is significant for many.

Ultimately, manufacturers will want to be able to digest everything that’s happening with these potential policy changes so that they are prepared to help patients navigate access and affordability if needed.

1. American Patients First. The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. May 2018. Available online at https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf
2. Davio, Kelly. Shifting Medicare Part B to Part D Could Increase Out-of-Pocket Spending for Patients, Study Finds. The Center for Biosimilars. 14 January 2019. Available online at https://www.centerforbiosimilars.com/news/shifting-medicare-part-b-to-part-d-could-increase-outofpocket-spending-for-patients-study-finds

Learn more

Read Xcenda's suggestions for addressing Part D challenges in a new report for MAPRx.

Read the full report

About the Author

Jennifer Snow, MPH

Vice President, Reimbursement & Policy Insights
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