Keeping you updated on the latest Medicare and Part D news

MedPAC recommendations to Congress could save $10 billion

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Recommendations made to Congress in June by the Medicare Payment Advisory Commission (MedPAC) could save Medicare billions over the next five years if adopted. The proposed changes include:

  • Sharply reducing or eliminating the copayments that low-income Medicare beneficiaries pay for generic drugs to encourage the use of the lower-cost medications.
  • Creating an annual out-of-pocket spending cap for higher-income beneficiaries that is similar to one already in place for low-income beneficiaries. After beneficiaries hit the cap, Medicare would cover 100 percent of the cost of their medications.
  • Making it harder to reach the annual cap by not allowing drug discounts given by manufacturers to count towards beneficiaries’ out-of-pocket maximum.
  • Requiring insurers to pay 80 percent of drug costs, after beneficiaries hit the out-of-pocket maximum.

MedPAC’s recommendations received mixed reviews from insurers and the pharmaceutical drug industry; who both stand to be affected by the recommended policy changes. Consumer groups also noted that some beneficiaries’ out-of-pocket spending would increase because drug discounts would no longer be taken into account.

MedPAC June 2016 Report to the Congress

Chapter 6: Improving Medicare Part D


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