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You are here: Home / Anderson On Health Insurance / Medicare, idiosyncracies and financial toxicity

Medicare, idiosyncracies and financial toxicity

by David Anderson|  May 5, 202211:14 am| 15 Comments

This post is in: Anderson On Health Insurance

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In this week’s New England Journal of Medicine, Dr. Stacie Dusetzina points out that the fundamental illogic of the Medicare drug benefit designs quasi-randomly exposes some people to catastrophic price shocks once they are told that they have cancer.

For people whose treatment regimens include orally administered anticancer drugs, the financial burden associated with these medications can be overwhelming. About half of anticancer drugs are orally administered. Such drugs provide distinct benefits for patients, since they can reduce the amount of time spent receiving infusions and traveling to appointments. Orally administered drugs are nearly always offered under a health plan’s prescription-drug benefit, rather than the medical benefit…

Most [MEDICARE] beneficiaries would be responsible for high (and unlimited) out-of-pocket spending for drugs filled under their pharmacy benefit (Medicare Part D). The same beneficiaries typically wouldn’t face the prospect of unlimited spending for drugs that are covered under the medical benefit (e.g., physician-administered drugs offered as part of Medicare Part B), since 90% of Medicare beneficiaries have supplemental coverage that reduces or eliminates these out-of-pocket costs…

The decision about whether to use an orally administered treatment or a physician-administered treatment is dictated nearly entirely by a patient’s cancer type or subtype and not by a preference for a more convenient treatment option. This somewhat arbitrary distinction results in some patients paying substantially more for their cancer treatment than others, despite the same goal of extending or improving their lives.

Medicare splits the drug benefit into two sections. The first chunk is for physician administered drugs. These are primarily infusions and injections. Medicare pays for these drugs via the Part B benefit. The basic Part B benefit has a small deductible ($233) and a 20% unlimited coinsurance. Most, but not all people who use traditional Medicare also buy a supplemental plan that either limits or eliminates the cost-sharing.

The other category of drugs are externally dispensed drugs. These are often taken by mouth. Medicare covers these drugs via the Part D benefit. Part D is a complicated benefit structure. There is a 5% cost-share with no cap after an individual has $10,690 in allowed prescription drug expenses.

Cancer is expensive no matter what the particular diagnosis or preferred first line treatment modality. However, the current Medicare benefit design makes the cost of cancer far higher for some individuals than others solely due to the particular diagnosis. The cost sharing has no incentive effect beyond potentially keeping people from filling their prescriptions.

Figuring out how the benefit design should work to provide reasonable protection that is diagnosis agnostic is critical to both improve health and reduce financial toxicity. This is a major policy problem that has been slowly getting worked on in DC and it is a policy problem that advocates for Medicare expansions and rebrandings need to think through as well.

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Reader Interactions

15Comments

  1. 1.

    AM in NC

    May 5, 2022 at 11:28 am

    Yep.  My mom was just on one of those drugs – it would have cost her thousands of dollars if the pharmaceutical company had not picked up the tab.  Health care should not depend upon the noblesse oblige of drug companies.

  2. 2.

    stinger

    May 5, 2022 at 11:49 am

    People who want Medicare4All don’t seem to know much about Medicare.

  3. 3.

    Ishiyama

    May 5, 2022 at 12:08 pm

    That also happened to me, but luckily I had an alternative in-patient treatment which I opted for for reasons other than cost. But nobody warned about the price difference until after I had filled my oral prescription (which I ended up not taking).

    But if I had gotten sick before I was on medicare my expenses would have been much higher for my hospitalization and in-patient treatment. Even if medicare has its flaws, it is still superior to any private insurance that I have ever had.

  4. 4.

    Ishiyama

    May 5, 2022 at 12:10 pm

    @stinger: People with gold star private health insurance don’t know much about public health benefits for the impoverished.

  5. 5.

    Ohio Mom

    May 5, 2022 at 12:33 pm

    @stinger: Agree.

    After my fabulous experience with my disabled child’s Medicaid coverage, I think the rallying cry should be MedicAID for All!

    But I think many would be insulted and repulsed by being in a “poor people” program.

  6. 6.

    WereBear

    May 5, 2022 at 12:53 pm

    @Ohio Mom:

    But I think many would be insulted and repulsed by being in a “poor people” program.

     
    Not I! Extremely grateful to my Uncle Sam for my trust fund check and my Uncle Joe for the free medical coverage. :)

  7. 7.

    StringOnAStick

    May 5, 2022 at 2:42 pm

    My husband has CLL.  We’ve been told “if you have to have cancer, that’s the one to have” by doctor after doctor.  Currently he doesn’t need any treatment and hopefully it will stay that way (he has the best possible genetic profile for that to be true), because if he needs treatment then it is incredibly expensive oral meds, taken daily.  In other words, Medicare Part D coverage, and huge copays.

  8. 8.

    Barbara

    May 5, 2022 at 2:47 pm

    This is a problem “Medicare for all” sloganeers don’t seem to have firsthand knowledge of — Medicare fragments care into three distinct parts whose interplay is complicated to understand and produces random financial pain if you cannot or do not understand how to navigate around it.

  9. 9.

    texasdoc

    May 5, 2022 at 3:01 pm

    @AM in NC: I would point out that the “noblesse oblige” from the drug companies who have such assistance programs is purely in their own self-interest.  Usually, the drug company forgives the copay, but still charges the insurance or drug benefit plan 80% of an unnecessarily high price.  The public outcry is muted–after all, “I got the drug” and they are not forced to lower prices.  For some diseases, like CML (chronic myelogenous leukemia), patients now do so well that they are on a drug such as Gleevec for many years.  The drug company has long ago covered any costs related to development and clinical trials, but the cost to the patient does not go down.  Never mind any thought of payback to taxpayers, whose money often funded the initial drug research in an NCI or NIH-funded lab.  Sorry about the soapbox, but this is one of my real hot-button issues, as the number of oral drugs for cancer continues to increase.

  10. 10.

    AM in NC

    May 5, 2022 at 3:28 pm

    @texasdoc: Oh, 100%. This isn’t just altruism on their point.   I just hate that we’re dependent on their decisions for treatment.

  11. 11.

    texasdoc

    May 5, 2022 at 4:02 pm

    @AM in NC: My proposed solution to this is that drug companies should be regulated like utilities:  show us your costs, and we will let you make a reasonable profit but not a killing (which, in the case of medicines, can be a literal not metaphorical use of the word).

  12. 12.

    pinacacci

    May 5, 2022 at 7:09 pm

    Yep my mom is in a clinical drug trial that luckily is picking up the tab for the drugs-the research drug and another normally used to treat her type of cancer.  If she weren’t in the drug trial the cost of this (non-trial) drug is $18,000 a month.  Oral tablets, 8 a day. 75 bucks a pill.  I dropped one on the floor and was like OH NO DON’T LOSE THAT PILL

    Anyway, yeah.  Glad we’re not paying for it. Yet.

  13. 13.

    sab

    May 5, 2022 at 7:21 pm

    @pinacacci: My sister works for a pharmaceutical company that does cancer research, including a lot of cancer therapy research, and also a lot of basic research long, long before there is any expectation of a market for it.

    These are top of the line researchers, extremely highly educated and rare. They are not cheap.

    And a lot of modern cancer therapies are genetically based and therefore very patient specific. So every patient has half a dozen of these expensive scientists kind of customizing the treatment therapy drugs.

    We need to find a way to pay for this beyond just leaning on the drug companies. Spread it across insurance companies. Government grants. If we leave it all to cutting corporate profits that research will simply disappear

    ETA My sister’s company is rare these days in being willing to pay for basic research, where there is no particular drug with a market in sight. Just scientists exploring.

  14. 14.

    pinacacci

    May 5, 2022 at 7:43 pm

    @sab: Yes, we are lucky to be financially secure enough to treat her cancer long enough for her tumor to be biopsied, genetically tested, and identified as a target for this highly specific trial drug.  I can understand why it would be more expensive- but 18,000 a month is a bit rich for our blood.  We’re very appreciative that the drug company is picking up the tab for now.  We’re happy to participate in the study regardless; if not now for my mom, the data will do someone some good some day

    ETA (really just wishing we’d nationalize our health care including drugs)

  15. 15.

    Parmenides

    May 5, 2022 at 10:41 pm

    @Barbara: The Medicare for all take the idea that people like Medicare and then make it something that most people can use.  Its not take the system as it exist and then open the gates, though that might be the only way we get there.

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