Kevin L. Hagan and Amy Niles, PAN Foundation

Left: Kevin L. Hagan, president and CEO, PAN Foundation

Right: Amy Niles, chief advocacy and engagement officer, PAN Foundation

Effective Jan. 1, 2024, individuals with Medicare Part D coverage may start to see their out-of-pocket (OOP) costs for prescription medications decline. This is a result of a Medicare reform, enacted through the Inflation Reduction Act, that eliminates 5% cost-sharing in the catastrophic phase of one’s benefit. With this reform, OOP costs should be limited to about $3,250 for the calendar year. Further patient-centric reforms take place Jan. 1, 2025, when a $2,000 Part D cap on OOP costs for prescription medications will go into effect, coupled with the opportunity to enroll in the “Medicare Prescription Payment Plan” that will enable these costs to be distributed across the calendar year.

In late 2022, the PAN Foundation commissioned research by Avalere, a healthcare consulting firm, to examine the projected beneficiary utilization and spending by Medicare Part D beneficiaries under the new reforms. The analysis found:

More than 2.6 million non-low-income subsidy Medicare Part D beneficiaries will have OOP spending high enough to reach the new $2,000 annual OOP cap on prescription drugs in 2025.

Additionally, about 800,000 beneficiaries in 2024 and more than 200,000 in 2025 will spend more than 10% of their income on Rx each year.

A higher share of beneficiaries who qualify for Medicare based on disability, as well as greater shares of Hispanic and Black beneficiaries, will have high spending levels early in the calendar year. Building upon this research, a new study from Avalere explores the potential impact these reforms could have on non-low-income subsidy patients taking drugs within eight therapeutic areas (TAs). These include autoimmune diseases, HIV, and multiple sclerosis (MS). Avalere assumed conservative or low-level estimates of beneficiary utilization and plan formulary management responses. Select findings are presented here:

More patients will be able to start and stay on prescription drugs.

Following implementation of the Medicare reforms, Avalere projects that the number of 30-day prescriptions for drugs within the TAs studied to increase between 1% and 10%.

Patients in TAs studied will reach the annual cap of $2,000 in a conservative scenario.

While the Medicare reforms are expected to lower OOP costs for Rx for non-low-income subsidiary beneficiaries across the TAs, most patients taking medications for an autoimmune condition, HIV, and MS will have spending of more than $1,750 in 2025. In a situation where beneficiary use and plan formulary management responses are increased, OOP costs may increase for beneficiaries.

About 135,000 patients across the eight TAs analyzed will spend more than 10% of their income on OOP costs, leaving them underinsured. 

These individuals will be at increased risk of delaying or forgoing treatment. In a medium-response scenario, this number could increase to 365,000 beneficiaries. These affordability challenges are estimated to disproportionately affect patients with incomes between 150% and 300% of the federal poverty level.

The analysis illustrates that in particular, individuals living with autoimmune conditions, HIV, and MS are projected to spend more than 10% of their income on drugs. For those on autoimmune therapy, the analysis points to the outsized affordability challenges that historically marginalized and underserved patient populations will continue to face.

Affordability challenges will continue to be faced by those with high OOP costs late in the calendar year.

These individuals will not fully benefit from the Medicare Prescription Payment Plan, as they will be unable to spread their costs across a large number of months.

Plan formulary response will impact patient behaviors.

It is not clear how plans will respond and adjust their formularies over time. Should plans implement higher response scenarios through formulary management, patients will be impacted more when it comes to access, affordability, and medication uptake and adherence.

Kevin L. Hagan is president and CEO and Amy Niles is chief advocacy and engagement officer, both at PAN Foundation.

Articles

Will result from Medicare reforms, despite increased drug uptake.

Continued Affordability Challenges in the Offing

People living with life threatening, chronic, and rare diseases are often prescribed medications with high out-of-pocket costs. Due to these high costs, many patients turn to third-party financial assistance programs to help afford their medications. Unfortunately for patients who are enrolled in private health insurance plans with copay accumulator programs, the value of these third-party contributions—such as the value of manufacturer coupons—does not count toward patients’ deductibles or annual out-of-pocket limits. Copay accumulator programs are harmful to patients and in our opinion, must be banned. 

To better understand how these programs harm patients, let’s consider a patient named Mary, who is living with a chronic illness. She has an annual deductible of $2,500 and a $500 manufacturer copay coupon for her medication.

If Mary’s plan does not have a copay accumulator program in place, the $500 coupon will count toward her annual deductible, leaving her responsible for $2,000 before reaching her annual limit.

If Mary’s plan does have a copay accumulator program in place, the $500 coupon will not count toward her annual deductible, and she is asked to pay the full $2,500 before satisfying her annual deductible.

Most notably, copay accumulator programs:

Expose patients to large, unexpected costs, and disproportionately impact patients living with chronic conditions, especially individuals with low income and people from marginalized communities.

May push more patients into medical debt.

Interrupt needed treatment due to affordability issues, which drives down medication adherence and results in more costly health issues.

Undermine patient protections in the Affordable Care Act (ACA) related to high out-of-pocket costs, particularly for those with pre-existing conditions.

Despite ongoing efforts from the patient advocacy community—including the All Copays Count Coalition—to encourage the US Department of Health and Human Services to ban copay accumulator programs through their Notice of Benefit and Payment Parameters (NBPP) rule, action has not been taken. And while 19 states, the District of Columbia, and Puerto Rico currently have legislation banning copay accumulator programs, these state-level policies do not apply to self-funded employer plans or large group plans. They also don’t stop plans from determining that items and services, like specialty medications, are non-essential health benefits. 

This is why federal legislation is needed. We recommend Congress act sooner rather than later to pass the Help Ensure Lower Patient Copays Act, or the HELP Copays Act (H.R.
830 and S. 1375). The bill is a two-part federal solution that will:

Update the ACA’s definition of cost-sharing to require that all out-of pocket payments be made by or on behalf of a patient count toward their deductible and out-of-pocket limit. This would end copay accumulator programs in marketplace exchange insurance plans.

Stipulate that any item or service covered by an employer health plan is part of the essential health benefits (EHB) package, and therefore, the plan must count any cost sharing toward patients’ annual limits. This would end the ACA’s EHB loophole that allows plans to deem certain categories of drugs as non-essential.

A bipartisan group of members introduced H.R. 830 in February, with its companion Senate bill, S. 1375, introduced in April. Most recently, the bill has been offered and withdrawn as an amendment in markups in the Senate HELP and House Energy and Commerce Committees. With about
150 patient and provider organizations supporting the bill, the time is right to pass the HELP Copays Act. This legislation makes good on Congress’ commitment to lowering costs and improving drug access. While Congress considers pharmacy benefit manager reform this year, we urge them to include this bill in a final package.

Kevin L. Hagan is President and CEO and Amy Niles is chief advocacy and engagement officer, both at PAN Foundation. 

These programs can negatively impact patients trying to reach their deductible.

Time to Ax Copay Accumulators?

Alternative funding programs (AFPs) are being used by health plan sponsors to lower their costs, but they are hurting the very patients they should be serving. By forcing the search for funding of specialty drugs elsewhere, patients often must delay treatment that should be covered by their health plan. They also put additional strain on a limited safety net of patient assistance programs that qualifying patients deserve.

With AFPs, health plan sponsors exclude some or all specialty medications from coverage, labeling them as non-essential health benefits (EHBs). This happens despite prescription drugs being one of 10 EHB categories included in the Affordable Care Act (ACA). Without coverage, a patient’s out-of-pocket spending on these drugs no longer counts toward the deductible or out-of-pocket maximum.

Instead, the plans direct patients to separate non-health insurance companies or vendors, that then attempt to connect patients with financial assistance from a pharma manufacturer or charitable assistance foundation. At times, they direct patients to illegally import medications from outside the US.

Patients are told drugs are non-essential

Although specialty medications are FDA-approved drugs, and, therefore, should be covered by all health plans under the ACA, some health plan sponsors deem them non-essential to help reduce their own healthcare-related costs. What one plan deems to be “non-essential,” another plan may not.

Patients required to provide personal info

Vendors require patients to provide details such as household size and annual income to help determine the type of third-party financial assistance they may be eligible for. If patients refuse, the vendors will not help them, leaving patients on the hook for cost.

Patients encouraged to disguise themselves

Vendors help patients disguise themselves as uninsured so that they can apply for patient assistance programs to cover the cost of the prescriptions. No patient should ever be forced to do this, nor should a vendor disguise themselves as a patient.

AFPs tap into limited resources needed by the most vulnerable

Manufacturer and charitable assistance programs are intended for individuals who are uninsured or underinsured, not for individuals who have health insurance that should cover their needed medications. AFPs threaten the sustainability of safety net programs intended for patients most in need by jeopardizing the availability of limited funds.

Patients may incur significant drug costs

Once referred to a vendor, patients have a choice to work with them, or not. If the patient works with the vendor but they are unable to secure funding for them, then the patient may be faced with having to self-pay for the prescribed medication. If the patient chooses not to work with the vendor, they will be responsible for 100% of the drug cost. In each of these scenarios, the cost paid by the patient will not count toward their deductible or out-of-pocket maximum.

Patients may experience delays in treatment

If the vendor determines that the patient is not eligible for assistance from a pharma company or charitable foundation, the patient can ask the health plan for an exception to cover their drug. However, weeks may pass, resulting in a delay in initiation or continuation of treatment, with no guarantee of coverage. Unfortunately, there is no proposed regulation or legislation to ban AFPs. The most important thing patient advocates can do is to make sure elected officials are aware of AFPs and their impact on patients. We encourage patients to be mindful of the language used to describe covered benefits in their plans. We
must work together to ensure that all patients can access and afford their prescribed medications, specialty or otherwise.

Kevin L. Hagan is president and CEO and Amy Niles is chief advocacy and engagement officer; both at PAN Foundation.

While an option for financial assistance, patients should consider the challenges.

AFP Caution Flag for Patients

Several important and historic reforms to the Medicare program are in sight, thanks to the passage of the Inflation Reduction Act (IRA) in August 2022. For the millions of patients living with life-threatening, chronic, and rare diseases, these reforms can’t come soon enough. But we also know, for far too many, challenges in affording their out-of-pocket prescription medication costs will continue.

As a result of the IRA, patients’ liability for 5% of the cost of their medication in the catastrophic phase of their Medicare Part D benefit will be removed beginning in 2024, resulting in an annual Part D cap at the catastrophic threshold, equal to about $3,250 in out-of-pocket costs. In 2025, this cap is lowered to $2,000. Additionally, in 2025, health plans will be required to offer individuals the opportunity to opt-in to a “smoothing program,” enabling them to spread their out-of-pocket costs over the course of the year. The impact of these reforms on patients’ ability to afford their treatments will be significant and should be celebrated.

However, we hear every day from patients about how these reforms are critical steps toward improving access. Many also share that the cap at catastrophic in 2024 and the $2,000 cap in 2025 will continue to present affordability challenges for them and others. That’s why, in the months following the passage of the IRA, the PAN Foundation conducted a national poll to hear directly from patients about the potential impact the reforms will have on them.

According to our poll, about 75% of adults said that it would be difficult to afford $2,000 in out-of-pocket prescription costs each year. Concerns were especially high among Black and Hispanic adults, adults with incomes of less than $50,000, and adults with chronic or rare diseases. For many, these continued affordability challenges may result in having to make difficult decisions—such as choosing between taking their medications as prescribed or buying less food for their families.

In addition to hearing directly from patients, we also wanted to better understand the potential impact of these new reforms based on existing data. That’s why PAN commissioned research by Avalere Health to examine the projected beneficiary utilization and spending by Medicare Part D beneficiaries under the new reforms. The Avalere analysis found:

More than 2.6 million non-low-income subsidy Medicare Part D beneficiaries will have out-of-pocket spending high enough to reach the new $2,000 annual out-of-pocket cap on prescription drugs in 2025, the year it goes into effect.

Additionally, about 800,000 beneficiaries in 2024 and more than 200,000 beneficiaries in 2025 will spend more than 10% of their income on prescription medications each year.

A higher share of beneficiaries who qualify for Medicare based on disability, as well as greater shares of Hispanic and Black beneficiaries, will have high spending levels early in the calendar year.

Paired with our national polling, these findings confirm what we already suspected—even with the Medicare reforms in place, many patients will still face real challenges affording their out-of-pocket Rx costs. To further illustrate this point, we want to introduce you to a real-life patient facing affordability challenges, George Valentine (view more here: https://bit.ly/42T5qky).

George is a retired, 71-year-old Medicare beneficiary living with chronic lymphocytic leukemia. While he acknowledges that the impending $2,000 annual cap will be helpful, he knows it will still be a significant burden for those living on a fixed income, like himself. He reminds us that patients are facing a whole host of other healthcare-related costs. For George, last year, this included the cost-sharing requirements associated with his 60+ physician office visits and the 150+ labs and diagnostic tests he underwent.

As we reflect on the millions of patients across the country like George, we must recognize the critical role charitable patient assistance foundations will continue to play. Because until everyone can get the healthcare they need and deserve, our work is not done.

1. PAN Foundation, “National Poll: Many Adults Will Struggle to Afford Medications Even with Medicare Reforms,” 

https://www.panfoundation.org/national-poll-many-adults-will-struggle-to-afford-medications-even-with-medicare-reforms

2. PAN Foundation, “Despite Historic Medicare Reforms, Charitable Assistance Programs Still Critical for Many,” 

https://www.panfoundation.org/despite-historic-medicare-reforms-charitable-assistance-programs-still-critical-for-many

3. PAN Foundation, “George Valentine: The Need for Predictable Out-of-pocket Costs,” 

https://www.panfoundation.org/georges-story

Kevin L. Hagan is President and CEO and Amy Niles is chief advocacy and engagement officer; both at PAN Foundation.

The Medicare Part D cap in 2025 won’t solve patients’ need for financial assistance.