Earlier this month the President released his Fiscal Year 2016 budget. With respect to Medicare, it is similar to last year’s budget, with both good provisions and not-so-good provisions that shift more costs onto beneficiaries. Below are some brief highlights of both the proposals we support and those we are concerned about. For a more full analysis and overview of the President’s budget, see the Kaiser Family Foundation’s summary.
Proposals we support
- Increased Part D drug discounts and closing the Part D donut hole gap 3 years early by 2017: The proposed budget would increase manufacturer discounts for brand-name drugs in the Part D coverage gap to 75% (up from 50%), thus closing the gap for brand-name drugs by 2017. This is 3 years earlier than it’s currently scheduled to close.
- Prevent “pay to delay”: Would prohibit the common practice of brand name drug makers from paying other companies to delay introducing their generic equivalents into the marketplace, thus delaying more affordable medication options. It would also shorten the length of exclusivity for biologics from 12 years to 7 years.
- Prescription drug rebates: Would require drug manufacturers to provide rebates on behalf of beneficiaries with the Part D Extra Help (low-income subsidy) that are at least equal to Medicaid rebate levels, and to provide an additional rebate for brand-name and generic drugs whose prices grow faster than inflation, beginning in 2017.
- Elimination of 190-day cap on inpatient psychiatric care: Would eliminate the 190-day lifetime limit on inpatient psychiatric facility services.
- Extension of Qualified Individual program: Would extend the QI program to pay Part B premiums for qualified individuals (QIs) through 2017. The QI program is currently authorized through March 31, 2015.
- Expanded dialysis services: Would expand Medicare’s coverage of short-term scheduled dialysis services for those with acute kidney injury.
- Improved accuracy of payments to Medicare Advantage plans: Would improve monitoring system to prevent upcoding of making patients look more sick than they are.
Proposals we’re concerned about
- Increased income related premiums under Medicare Parts B and D: Under Medicare Parts B and D, certain beneficiaries pay higher premiums based on their higher levels of income. Beginning in 2019, this proposal would restructure income-related premiums under Medicare Parts B and D by increasing the applicable percent for calculating the lowest income related premiums by five percentage points, from 35% to 40% of program costs, and creating new tiers every 12.5 percentage points until capping the highest tier at 90%. The proposal maintains the current income thresholds associated with these premiums until 25% of beneficiaries under Parts B and D are subject to these premiums. This proposal claims it would help improve the financial stability of the Medicare program by reducing the federal subsidy of Medicare costs for those who need the subsidy the least.
- Increased Medicare costs and Part B premiums: Would introduce a Part B premium surcharge for new beneficiaries who purchase Medigap policies with particularly low cost-sharing requirements, starting in 2019. Other Medigap plans that meet minimum cost-sharing requirements would be exempt. The surcharge would be equivalent to approximately 15% of the average Medigap premium (or about 30% of the Part B premium).
- Increased Part B deductible: Would apply a $25 increase to the Part B deductible in 2019, 2021, and 2023 respectively for new beneficiaries beginning in 2019. Current beneficiaries or near retirees would not be subject to the revised deductible.
- Increased Part D copayments for some people with Part D Extra Help: Would double the copayment amounts for brand name drugs that have generic equivalents as a way to encourage the use of lower cost generic drugs. With a successful appeal, a beneficiary could get the copayment back to current amount. This policy would exclude low-income beneficiaries receiving institutional care.
- Introduction of Home Health copayments for new beneficiaries: Would create a copayment for new beneficiaries of $100 per home health episode, starting in 2019. This copayment would apply only for episodes with 5 or more visits not preceded by a hospital or inpatient post-acute stay.