[Skip to Content]
[Skip to Content Landing]
Original Investigation
Health Care Reform
January 14, 2019

Analysis of Proposed Medicare Part B to Part D Shift With Associated Changes in Total Spending and Patient Cost-Sharing for Prescription Drugs

Author Affiliations
  • 1Program on Regulation, Therapeutics, and Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, Harvard Medical School, Boston, Massachusetts
  • 2Faculty of Medicine, University of Zürich and University Hospital Zürich, Zürich, Switzerland
JAMA Intern Med. 2019;179(3):374-380. doi:10.1001/jamainternmed.2018.6417
Key Points

Question  What are the projected effects of the Department of Health and Human Services (HHS) proposed Medicare Part B drug pricing reform on drug spending and out-of-pocket costs?

Findings  In this analysis of 75 brand-name drugs with the highest Part B expenditures in 2016, shifting Medicare Part B drugs to Part D was estimated to decrease total drug spending by 7% to 18% after rebates. Under the standard 2018 Part D benefit, out-of-pocket costs for most drugs were projected to be lower in Part D among fee-for-service Medicare beneficiaries without Medicaid or supplemental insurance in Part B and among those who would qualify for the low-income subsidy program; however, out-of-pocket costs were estimated to increase among beneficiaries with Medicare supplement insurance and among those currently without Part D coverage.

Meaning  Although the HHS proposal may reduce total drug spending, it could increase out-of-pocket costs for some Medicare beneficiaries.

Abstract

Importance  The US Department of Health and Human Services (HHS) has proposed to reform drug pricing in Medicare Part B, which primarily covers physician-administered drugs and biologic agents. One HHS proposal would shift coverage of certain drugs from Medicare Part B to Part D, which is administered by private prescription drug plans.

Objective  To estimate the association of changes of a shift in Medicare Part B to Part D with total drug spending and patient cost-sharing.

Design, Setting, and Participants  Retrospective drug cohort study of the 75 brand-name drugs associated with the highest Part B expenditures among fee-for-service Medicare beneficiaries in 2016.

Main Outcomes and Measures  Estimated total Medicare spending in Part B and Part D; annual out-of-pocket costs in Part B and under the standard 2018 Part D benefit; and proportion of drugs in Part D’s protected drug classes (immunosuppressants for prophylaxis of organ transplant rejection, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics).

Results  At 2018 prices, total Medicare Part B spending for the 75 brand-name drugs with the highest Part B expenditures was estimated to be $21.6 billion annually. Under the proposed policy, total Part D drug spending for these drugs was estimated to range between $17.6 billion and $20.1 billion after rebates, corresponding to a 6.9% to 18.3% decrease in drug spending in Part D compared with Part B. Of the 75 drugs studied, 33 (44.0%) drugs, accounting for $9.5 billion (43.9%) in Part B spending, were in protected Part D classes where plans must cover essentially all drugs. For 67 drugs with available information, the prices for 65 (97.0%) were a median of 45.8% to 59.7% lower in comparator high-income countries than Part B drug prices. Median patient cost-sharing in Part B for all 75 brand-name drugs was $4683 (interquartile range [IQR], $1069-$9282) per year. Shifting Part B drugs to the 2018 standard Part D benefit was projected to decrease out-of-pocket costs by a median of $860 (IQR, −$3884 to $496) among Medicare beneficiaries without Medicaid or Part B supplemental insurance (Medigap). For beneficiaries who would qualify for the low-income subsidy program in Part D, cost-sharing would be lower in Part D than in Part B for all drugs. For beneficiaries with Medigap insurance, estimated Part D out-of-pocket costs exceeded average Medigap premium costs by a median of $1460 for those with Part D coverage and by a median of $1952 for those without Part D coverage.

Conclusions and Relevance  Although the HHS proposal to shift certain drugs from Medicare Part B to Part D may reduce total drug spending, it may increase out-of-pocket costs for some Medicare beneficiaries, including those with Medicare supplement insurance. The Department of Health and Human Services should ensure that the proposed reforms benefit both patients and payers.

Limit 200 characters
Limit 25 characters
Conflicts of Interest Disclosure

Identify all potential conflicts of interest that might be relevant to your comment.

Conflicts of interest comprise financial interests, activities, and relationships within the past 3 years including but not limited to employment, affiliation, grants or funding, consultancies, honoraria or payment, speaker's bureaus, stock ownership or options, expert testimony, royalties, donation of medical equipment, or patents planned, pending, or issued.

Err on the side of full disclosure.

If you have no conflicts of interest, check "No potential conflicts of interest" in the box below. The information will be posted with your response.

Not all submitted comments are published. Please see our commenting policy for details.

Limit 140 characters
Limit 3600 characters or approximately 600 words
    2 Comments for this article
    Switching Part B drugs to Part D will hurt most patients
    Gordon Banks, PhD MD | Willamette Valley Neurology
    I have very few Medicare patients who don't have both Part B supplements and Part D, except for those with Medicare Advantage.

    Most of my Part B patients with supplement have zero copays. Part D supplement copays for expensive drugs are substantial until you reach catastrophic coverage.
    CONFLICT OF INTEREST: None Reported
    Proposed Medicare Part B to Part D Shift for some prescription drugs may HELP majority (about 80%) of Medicare Beneficiaries:
    Iryna Ries, Medicare Specialist | SHIP program
    Statistics shows that less than 20% of Medicare beneficiaries have a Supplemental insurance coverage.

    Low-income and fixed SS income Medicare enrollees face bigger cost burdens because they can't afford supplemental coverage.

    Approximately 40% of Medicare beneficiaries are on Medicare Advantage plans and approx. 40% of Medicare beneficiaries are on Original Medicare without a Supplemental insurance (Medigap). Many of those beneficiaries cannot afford the supplemental insurance and many of those beneficiaries are receiving Extra Help - assistance with Medicare part D expenses (co-pays/premiums) NOT assistance with Medicare part B expenses (co-pays/premiums).
    CONFLICT OF INTEREST: None Reported
    ×