Happy $2,000/annual Out-Of-Pocket Cap For Medicare Beneficiaries Day
This provision of the Inflation Reduction Act kicks in today.
The Frontier Psychiatrists newsletter covers breaking news. There's a lot of breaking news in the world, much of it bad. This, however, is probably good news.
If you are in the very lucky portion of the population that does not have an illness for which a wildly expensive drug exists, enjoy this article in good health. However, catastrophic insurance coverage no longer exists to protect you against a car accident, or surgery you're gonna need for cancer, or all the things we traditionally associate with a catastrophe. Until the end of 2024, one of the largest financial catastrophes for Medicare beneficiaries was that they could be on the hook for a functionally infinite amount of money regarding their medication costs.
Medicare is broken up into four separate parts (at a very high level):
Part A covers hospital expenses, skilled nursing facilities, and hospice care.
Part B covers outpatient care, including mental health and durable medical equipment.
Part C covers Medicare Advantage Plans and combines parts A, B, and D.
Part D covers Drug Benefits.
Over time, these became much more expensive for beneficiaries because the government had been unable to negotiate previously.
Just one medicine for schizophrenia, the long-acting injectable version of paliperidone that is taken twice a year, can have an annual cost of $21,987.93 per dose, times two, and it’s honestly too complicated to explain how that breaks down to out-of-pocket cost. But it’s something like “5%” of whatever the drugs cost. The best part of this law is that Medicare Beneficiaries will now be able to remember one number—$2000 a year, which is the most they will pay. That is of course unless they happen to require a medicine that isn’t covered under medicare part D.
That is likely to become a more “hot topic” (as I covered in this prior article) because the following types of meds are not covered:
Drugs used to treat anorexia, weight loss, or weight gain
Fertility drugs
Drugs used for cosmetic purposes or hair growth
Drugs that are only for the relief of cold or cough symptoms
Drugs used to treat erectile dysfunction
Prescription vitamins and minerals (except prenatal vitamins and fluoride preparations)
Non-prescription drugs (over-the-counter drugs)
And that, of course, includes blockbuster GLP-1s now. Thus, the rush on the part of Lily and Novo to get all these remarkable trials done that prove their effectiveness in other indications— beyond weight loss—so that Medicare can cover them.
This is good news for seniors and other individuals on Medicare, such as those with psychiatric or other disability, but it will put pressure on federal budgets and premiums.