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The Centers for Medicare and Medicaid Services announced on Wednesday that 27 drugs had large price hikes like the rheumatoid-arthritis treatment Humira from AbbVie. These drug companies will all face price-increase penalties from the government. The money taken back will go into the hospital Medicare Trust Fund, which is facing a shortfall.
President Joe Biden is about to release a budget proposal which would extend the solvency of a key Medicare trust fund by at least 25 years. This would be funded by raising the Medicare tax on people earning more than $400K per year from 3.8% to 5.0%. The tax would not only apply to earnings, it would be taxed on business income, self-employment income and investment income. President Biden also said he would divert some taxes from the government’s general fund to a Medicare fund. Reserves for Medicare’s hospital-insurance fund are only sufficient to fund it through 2028, at which point it would only cover 90% of hospital coverage.
A battle is brewing between the Centers for Medicare and Medicaid and major insurance companies as Medicare Advantage plans could receive reduced payments next year. Such a move could cut into profit margins unless insurers cut back on benefits to Medicare Advantage plan holders. The proposal would change the way Medicare pays insurers. A “risk adjustment†would give insurers more money for those who are sicker as they will generate higher expenses. However, the new proposal would either eliminate or reduce payments for some conditions such as atherosclerosis (plaque build up) and a specific type of malnutrition. The government says this will result in more money for insurance companies but Medicare Advantage plans think differently
The giant drugstore chain CVS Health Corp. is nearing an agreement to acquire Oak Street Health Inc., which would rapidly expand the company’s footprint of primary-care doctors. This deal would balloon  its network of medical facilities specializing in senior health. The deal is massive at roughly $10.5 billion and could be announced as early as next week. The transaction would follow CVS’s $8 billion agreement to acquire home-care provider Signify Health Inc. Oak Street has 160 centers across 21 states, focused on the care of patients enrolled in Medicare.
Drug companies raised list prices of 983 prescription drugs by an average of 5.6% in January, lower than inflation and lower than it has raised them in prior years. A report put out by 46brooklyn Research, a nonprofit drug-price analytics group, said that Pfizer Inc., Novartis AG and Eli Lilly & Company are among the companies that took the price increases. After several years of taking double digit prices on many drugs, the companies have moderated price increases, in part due to pressure from the government. “The industry doesn’t want to stick its neck out and make itself a target of politicians, particularly given the lessened support in the Republican Party for the industry compared to 5 or 10 years ago,†David Risinger, an SVB Securities analyst, told the Wall Street Journal.
A number of changes have been made to Medicare which hopefully will save you money! For instance, as of January 1, the Shingrix vaccine to prevent shingles is free for those with a Part D prescription drug plan, a significant relief since it cost almost $200 last year. If you are diabetic, your copay for a 30-day supply of insulin for Part D enrollees is capped at $35. During the pandemic, the cost for a month’s supply was hundreds of dollars. Public awareness of many of these changes are low because they were passed as part of a massive legislation. However, you will definitely notice it at your pharmacy’s cash register!
My local Safeway pharmacy began closing for lunch between 1:00 and 2:00 every day more than a year ago. I find this annoying as many times I have forgotten that they would be closed and have shown up at 1:00 just as they are closing. Even more annoying is coming back at 2:00 as there is always a long line of people who have been waiting around since 1:00 or 1:30. The Wall Street Journal reported today that this is a phenomenon all across the country as there is a shortage of pharmacists. CVS has announced that starting in March it will cut or shift hours at about two-thirds of its 9,000 U.S. locations. Walmart also announced it will close at 7:00 p.m. rather than 9:00 p.m. at most of its 4,600 stores starting in March. Walgreens Boots Alliance Inc. recently stated it was operating thousands of stores on reduced hours because of staffing shortages. Some customers have complained that pharmacies are cutting hours sporadically.  An online community message board for Holliston, Massachusetts—a small town about 30 miles from Boston—was flooded with messages from frustrated customers of the Holliston CVS. “I would go in and there was a note on the door saying, ‘Sorry, pharmacy closed,’†Audra Friend told The Wall Street Journal. She said it would be better to have consistently shorter hours if that means fewer unexpected closures. “At least that way we’re not just showing up at CVS to find out the pharmacist isn’t there. “
Amazon.com Inc. is launching a new subscription service called RxPass on Tuesday. It’s available only to Prime members and offers unlimited access to commonly prescribed generic medications, including high-blood pressure and anxiety drugs, for only $5/month. John Love, the VP of Amazon Pharmacy, said the service will save the average Prime member around $100/year on prescription costs. “We think even if we can just make things a little bit better for a whole lot of people, that’s going to have a resounding impact on health,†Love told The Wall Street Journal. Amazon started selling prescription medicines in 2020, two years after its acquisition of online pharmacy PillPack Inc.
A new internal report revealed that new channels of Medicare fraud opened up during the COVID pandemic. This was due in large part to meet newly emerging health care needs of older Americans which left the program vulnerable to falsified billings. In just one example, the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services released a study in September that said it had already detected potentially fraudulent billings related to telehealth from more than 1,700 health care providers. This translated to a loss to the government of $128 million. In California, a federal jury convicted Mark Schena, the president of a Silicon Valley medical technology company, of a conspiracy to bilk Medicare and private insurers out of $77 million. They marketed a COVID test not approved by the Food and Drug Administration (FDA) and paired it with other expensive tests. Also in our state, health-testing laboratory owners Imran Shams and Lourdes Navarro face charges of defrauding Medicare out of $214 million. They used COVID testing as a pretext to add on expensive and unnecessary respiratory pathogen tests while paying illegal bribes to medical marketers for directing doctor’s orders to their labs.
Medicare Advantage Plan members have more than doubled since 2007 according to a study done by the Kaiser Family Foundation. However, they are not always the great deal as they seem on the surface. The Wall Street Journal recently profiled Bob Miller who had surgery on one eye but just a few weeks later when he was scheduled to have surgery on the other eye, he was informed the night before that the surgery was canceled because his Medicare Advantage plan refused to cover it. Unfortunately, you will not be able to figure out if some plans are covering your planned medical care until you fill out the medical preauthorization form and send it in. Miller eventually got the cataract surgery but had to wait several weeks. “Prior authorization policy when levelled in such a heavy handed and irrational way is an undeniable power grab by insurers to really put profits over patients,†said Alice Epitropoulos, the ophthalmologist who performed the surgery on Miller.