Medicare Part D is Prescription Drug Coverage for those that qualify for Medicare. Listen to the interesting history behind how the program got started.

MEDICARE PART D PRESCRIPTION DRUG HISTORY
7-15-23

Welcome back to the Medicare EZ as pie show. I am your host, Stephanie Garcia Hagen. I am the co-owner of Mesa Benefits, and we are your guide through the Medicare insurance process.

Here on the Medicare EZ as pie show, we break down the very complex Medicare system and the insurance that compliments it into easy to digest slices of pie.

Today’s slices of pie dig into the history of Medicare Part D prescription drug coverage.

I absolutely love doing my research for this show. There are nuances to the Medicare system that I find absolutely fascinating. The history of the programs that we have in place today is one of the most interesting things to me. When I was in school, I wasn’t particularly interested in government or the studying around laws and how they became enacted. As I get older and witness the government and its laws in action in our society, I am more so interested in the ways that legislation shapes our everyday lives. On a side note, I homeschooled my daughter and I loved getting into all of the corners of learning and she thought I was just a bored homeschool mom that didn’t know what to teach so I got tangled in the weeds. I believe that the weeds are where the learning happens. I still believe that today.

Let’s dig in to slice of the pie #1 – when did Medicare Part D begin?

January 1st, 2006 was the first day that Medicare Part D outpatient prescription drug plans were offered to Medicare beneficiaries. The benefit was authorized by congress under the “Medicare prescription drug, improvement, and modernization act of 2003.” This act is generally known as the “MMA.” The MMA was the largest change to the Medicare system in 38 years. It was actually started in 2003 with the invention of Part C where private health plans approved by Medicare became the Medicare advantage plan.

Today’s 2nd slice of the pie will detail how plans and prescriptions get paid for

Under the program, drug benefits are offered by private insurance companies. You cannot get Medicare Part D directly from the federal government. The only Medicare parts that come directly from the government are a and b. Private Part D insurance companies collect premiums from Medicare beneficiaries and from the government. Part D plans pay the majority of the cost of the prescribed drugs. They do get reimbursements from drug manufacturers as well. Then Medicare beneficiaries who enroll in plans pay a share of the cost associated with the prescribed drugs as well. They do this through cost sharing measures that include deductibles in some cases, copay amounts and co-insurance in some instances. The costs depend on the retail cost of the drug itself and the rules of the plan. There are cost saving programs available through the federal government as well.

The program has undergone several revisions. One of them was in 2010. Prior to 2010, beneficiaries were required to pay 100% of the cost of their prescription drugs in the coverage gap which is also known as the donut hole. Subsequent legislation which includes the affordable care act closed the donut hole and were able to accomplish that goal largely because of manufacturer discount programs. That legislation along with the manufacturer discounts reduced the payment requirement in the coverage gap to 25% of the cost of generic and brand name drugs until a certain beneficiary out of pocket threshold is met.

Slice of the pie #3 – how do Part D plans get administered?

Beneficiaries can access Part D coverage through either a stand-alone Part D prescription drug plan or through a Medicare advantage prescription drug plan. Stand-alone plans are meant to compliment Medicare part a and b when someone decided not to add supplemental insurance to those programs. Adding Part D coverage allows a beneficiary to have coverage for prescription drugs without paying late enrollment penalties. Stand-alone prescription drug plans are also added when a beneficiary does choose to add Medicare supplement or medigap plans to their Medicare Parts A and B. The result is the same as if someone didn’t have supplemental insurance where they enjoy coverage for outpatient prescription drugs along with the peace of mind knowing that they won’t have late enrollment penalties. The other way to access Part D prescription drug coverage is through a part c Medicare advantage prescription drug plan. The Part D plan is imbedded in the part c plan and can have different rules associated with them than stand-alone plans. An example is that there may be a $0 premium for the MAPD plan where there is always a premium for the stand-alone prescription drug plan.

Slice of the pie #4 is all about the current legislative changes.

The inflation reduction act was signed into law by president joseph Biden on august 16, 2022. It includes several provisions to lower prescription drug cost for people with Medicare. It also reduced spending for prescription drugs by the federal government. The prescription drug provisions included in the inflation reduction act will:

Require the federal government to negotiate prices for some of the highest total spend drugs covered under Medicare parts b and d beginning in 2026.
Require drug companies to pay rebates to Medicare if the prices rise faster than inflation for drugs used by Medicare beneficiaries starting in 2023.

Cap out of pocket spending for Medicare Part D enrollees and make changes to the part b benefit design starting in 2024.

Limit monthly cost sharing for insulin to $35 for people with Medicare starting in 2023.

Eliminate cost sharing for adult vaccines covered under Medicare Part D and also improve access to adult vaccines in the Medicaid and chip programs starting in 2023.

We have seen small changes to the Part D program in 2023 and the changes for 2024 will be even greater.

I have opinions about these changes. I am a person that believes that the costs of things don’t just go up or down based on whims. There are economics involved in each adjustment. The fact that beneficiaries will pay less for their drugs, especially people who are fighting cancer and their drugs are going to be reduced in price by thousands.

I said earlier in the segment that when the affordable care act closed the donut hole, they did so with the improvement of requiring drug manufacturer discounts. Where are the cost cutting measures going to come from with the inflation reduction act provisions? I also find it interesting that there are safeguards in place that prevent the insurance premiums from drastically increasing. If the insurance companies are going to pay a larger percentage of the drug costs, will they negotiate with the manufacturers to reduce the prices? Will there be more generic drugs developed to combat these prices? Will there be further legislation to speed up the research and development process for new and improved drugs?

The implementation of the reduction in prices is a very interesting piece to how the entire pie is baked so to speak.

I am thrilled that beneficiaries will pay less for the really expensive drugs that they need to fight life altering diseases.

We are definitely making progress. We will do another segment on the show about the actual changes for 2024 after the plans become available so we can advise beneficiaries how to choose the right plan that fits their health, lifestyle, and budget.

I hope you’ve enjoyed my research project today. I just love passing my knowledge along to you. You use and benefit from these programs. Know that we at mesa benefits to our best to make the Medicare insurance process EZ as pie.

If you have questions about your coverage, please give us a call. We can be reached at 970-549-0410. You can also search us on the web at mesabenefits.com.

After the break, we are going to interview a person in our next segment that has nothing to do with Medicare, but we believe that we are a resource to you outside of your insurance needs.

This is the Medicare EZ as pie show. I am your host, Stephanie Garcia Hagen.

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