The Affordable Care Act (ACA) includes provisions to reduce Medicare beneficiaries’ out-of-pocket spending for prescription drugs by gradually closing the coverage gap between the initial coverage limit and the catastrophic coverage threshold (known as the “doughnut hole”) beginning in 2011. However, Medicare beneficiaries who take specialty pharmaceuticals might still face a large out-of-pocket burden because of uncapped cost sharing in the catastrophic coverage phase. Using 2008–12 pharmacy claims data from a 20 percent sample of Medicare beneficiaries, we analyzed trends in total spending and out-of-pocket spending among Medicare beneficiaries who take at least one high-cost specialty drug from the top eight specialty drug classes in terms of spending. Annual total drug spending per specialty drug user studied increased considerably during the study period, from $18,335 to $33,301, and the proportion of expenditures incurred while in the catastrophic coverage phase increased from 70 percent to 80 percent. We observed a 26 percent decrease in mean annual out-of-pocket expenditures incurred below the catastrophic coverage threshold, likely attributable to the ACA’s doughnut-hole cost-sharing reductions, but increases in mean annual out-of-pocket expenditures incurred while in the catastrophic coverage phase almost entirely offset these reductions. Policy makers should consider implementing limits on patients’ out-of-pocket burden.

Medicare Part D has no cap on beneficiaries' out-of-pocket spending for outpatient prescription drugs, and, unlike Medicare Parts A and B, beneficiaries are prohibited from purchasing supplemental insurance that could provide such a cap. Historically, most beneficiaries whose annual Part D spending reached the catastrophic level were protected from unlimited personal liability by the Low-Income Subsidy (LIS). However, we found that the proportion of beneficiaries whose spending reached that level but did not qualify for the subsidy-and therefore remained liable for coinsurance-increased rapidly, from 18 percent in 2007 to 28 percent in 2015. Moreover, average total per person per year spending grew much more rapidly for those who did not qualify for the LIS than for those who did, primarily because of differences in price and utilization trends for the drugs that represented disproportionately large shares of their spending. We estimated that a cap for all Part D enrollees in 2015 would have raised monthly premiums by only $0.40-$1.31 per member.

As Medicare Advantage (MA) plans enroll an increasingly large share of Medicare beneficiaries, how much providers charge MA plans relative to Traditional Medicare (TM) has important policy implications. We used new price transparency data from hospitals—which contain the most up-to-date negotiated prices—to evaluate whether and how MA prices differed from TM for hospital outpatient services. We found that among the 1,135 hospitals in our sample, MA prices were close to TM at about half of them, but the other half reported MA prices that deviated considerably from TM, predominantly in the direction of higher rather than lower, and rural hospitals were more likely than urban ones to charge high MA markups. Our findings also suggest that hospital price transparency data hold promise for promoting price shopping among MA beneficiaries. But greater hospital compliance and more standardized reporting are necessary for the data to be a more useful tool.

Background: The Medicare Advantage program provides care to nearly half of Medicare beneficiaries, including a rapidly growing population of cancer survivors. Despite its increased adoption, it is still unknown whether or not the program improves healthcare access, outcomes, and affordability for cancer survivors. Methods: We performed a cross-sectional study of Medicare beneficiaries aged ≥ 65 years with a self-reported history of cancer from the 2019 National Health Interview Survey. We used multivariable logistic regression to evaluate the association between Medicare program type (Medicare Advantage vs. traditional Medicare) and measures of healthcare access, acute care utilization, and affordability. Results: We identified 4451 beneficiaries with a history of cancer, corresponding to 26.6 million weighted cancer survivors in 2019. Of the beneficiaries, 35.8% were enrolled in Medicare Advantage, whereas 64.2% were enrolled in traditional Medicare. The age, sex, racial and ethnic composition, household income, primary site of cancer, and comorbidity burden of Medicare Advantage and traditional Medicare beneficiaries were similar. In the adjusted analysis, there were no differences in healthcare access or acute care utilization between traditional Medicare and Medicare Advantage beneficiaries. However, cancer survivors enrolled in Medicare Advantage were more likely to worry about (34.3% vs. 29.4%; aOR, 1.3 (95% CI, 1.1–1.5)) or have problems paying (13.6% vs. 11.1%; aOR, 1.4 (95% CI, 1.1–1.8)) medical bills. Conclusions: We found no evidence that Medicare Advantage beneficiaries with cancer had better healthcare access, affordability, or acute care utilization than traditional Medicare beneficiaries did. Furthermore, Medicare Advantage beneficiaries were more likely to report financial strain and have difficulty paying for their medical bills than were those with traditional Medicare. Despite the generous benefits and attractive incentives, Medicare Advantage plans may not be more cost-effective than traditional Medicare is for cancer survivors. Our study informs ongoing congressional deliberations to re-evaluate the role of Medicare Advantage in promoting equity among beneficiaries with cancer.

Beginning with the 2018 benefit year, the Centers for Medicare and Medicaid Services started incorporating select prescription drug utilization information into the Marketplace risk adjustment model. There has been little evidence about the impact of this change on payment accuracy and the mechanisms through which it may occur. Using commercial claims in 2017 from a large national health insurer, we find that the policy change improves payment accuracy in our sample and would help mitigate insurers’ selection incentives for some enrollees through two channels: imputing missing diagnoses and varying risk scores to better capture the heterogeneity in expenditures among patients with certain health conditions. However, while improving payment accuracy overall, there are potential perverse incentives that could distort treatment choice for marginal patients. Additionally, overcompensation and undercompensation persists for certain patient subgroups, suggesting an opportunity to further refine and improve the model.