When it comes to Medicare’s prescription drug coverage and benefits, a new debate about drug rebates in Medicare Part D has brought attention to the prices beneficiaries have to pay for their medicine. The Medicare Modernization Act of 2003 was enacted to subsidize the costs of prescription drugs and prescription drug insurance premiums for Medicare patients but complications remain, from the “donut hole” to beneficiaries having the income to cover the rising costs of prescription drugs.
Fortunately, a new study published in JAMA Internal Medicine is shedding some light on this issue. And Medicare World spoke with the lead author of the study, Dr. Stacie B. Dusetzina of the UNC Eshelman School of Pharmacy.
Pharmacist’s Study on Prescription Drug Rebates
When asked if prescription drug rebates would make a significant difference in the wallets of Medicare beneficiaries, Dusetzina replied, “Yes – in our paper we provide one example of how this works for someone who wanted to take a new treatment for Hepatitis C. Both treatments in our example cost about $50,000 to the health plan but the drug with a higher price and a big rebate costs $2,000 more for a Medicare beneficiary to fill it.”
“One reason we see this happening is because many drugs on Medicare Part D have deductibles and coinsurance,” she continued. “A deductible is where you pay all of the cost of the drug until you hit a dollar limit. Many Part D plans have a deductible of $400 now. A co-insurance is where you pay a percentage of the drug’s price when you fill it, instead of paying a flat dollar amount. For example, if your co-insurance is 25% and the drug price is $100 then you pay $25.”
How Prescription Drug Rebates Work
“Rebates are provided to plans after sales are made so they don’t get shared with Medicare beneficiaries when they are paying for their drugs at the pharmacy counter,” she said. “Let’s assume your plan has negotiated a 50% rebate on a $100 drug. You have a 25% co-insurance for that drug. With a rebate, you still pay $25 because your costs are based on a percentage of the original price before the rebate, even though your plan may only have to pay $50 for that same drug.”
With the back-and-forth over prescription drug rebates in Medicare Part D just beginning, it will likely be awhile until Medicare beneficiaries will be fully aware of what the next step is in Medicare prescription drug benefit plans. But that doesn’t mean there aren’t steps they can take on their own to seek paying less for their medicine.
“If you cannot afford your medications, talk to your doctor and your pharmacist about options,” Dr. Dusetzina said. “There may be less expensive drugs that you could take instead. You could also check with your insurer to see if there are less expensive treatments that they cover at lower costs to you. If there aren’t less expensive options, your doctor or pharmacist may be able to point you to foundations or companies that can help you to pay for your out-of-pocket costs.”
However, when it comes to supplemental insurance plans such as Medicare Advantage or Medigap, there is not as much wiggle room as one may hope. “Unfortunately there are few plans that can really help with Part D out-of-pocket costs so supplemental insurance coverage may not help in this case,” Dr. Dusetzina said. “Those typically cover drugs provided in the doctor’s office and not those provided in the pharmacy.”
Medicare doesn’t cover everything. Luckily, those on Medicare can now start saving on out of pocket expenses like prescription drugs, dental, vision, hearing, and more. Over 1 million people have already received their free Medicare Plus Card.