Newsletter

CMS STATEMENT ON LOWERING THE COST OF PRESCRIPTION DRUGS

CMS Centers for Medicare and Medicaid Services) issued this statemen on January 29:

“Lowering the cost of prescription drugs for Americans is a top priority of President Trump and his Administration. In accordance with the statutory requirements of the Inflation Reduction Act, the Centers for Medicare and Medicaid Services (CMS) released the list of 15 drugs selected for the second cycle of the Medicare Drug Price Negotiation Program on January 17, 2025. As the second cycle begins under the Trump Administration, CMS is committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the Negotiation Program. CMS intends to provide opportunities for stakeholders to provide specific ideas to improve the Negotiation Program, consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation.”

The 15 selected drugs were used by 5.3 million Medicare Part D beneficiaries over the relevant spending window (November 2023 to October 2024) and represent nearly $41 billion in total Part D gross covered prescription drug costs, or about 14% of total program spending:

CLL/SLL: Chronic lymphocytic leukemia/small lymphocytic lymphoma; COPD: Chronic obstructive pulmonary disease; CVD: Cardiovascular disease; IBS-C: Irritable bowel syndrome with constipation; IBS-D: Irritable bowel syndrome with diarrhea

Click here for key insights from the above drug list.

KAISER FOUNDATION STUDY OF PRIOR AUTHORIZATION DETERMINATIONS

Kaiser Family Foundation published an article by Julie F. Biniek, Nolan Srocynski, Meredith Freed, and Tricia Neuman on January 28. Liz Freeman summarized the report’s results for Florida in an article written for the USA Today Network that appeared on February 8.

Virtually all enrollees in Medicare Advantage (99%) are required to obtain prior authorization for some services – most commonly, higher cost services, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy. This contrasts with traditional Medicare, where only a limited set of services, including certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment, require prior authorization.

Prior authorization requirements are intended to ensure that health care services are medically necessary by requiring approval before a service or other benefit will be covered. Medicare Advantage insurers typically use prior authorization, along with other tools, such as provider networks, to manage utilization and lower costs. This may contribute to their ability to offer extra benefits and reduced cost sharing, typically for no additional premium, while maintaining strong financial performance. At the same time, prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care.

Kaiser Family Foundation examined trends in the number of requests for prior authorization determinations, denials, and appeals for 2019 through 2023, as well as differences between Medicare Advantage insurers.

Key takeaways are as follows (read the entire article for further details):

• Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023. Just under 400,000 prior authorizations were made for traditional (Original) Medicare, though the number of people enrolled in Medicare Advantage and Original Medicare were substantially similar in fiscal year 2023.

• In 2023 there were 1.8 prior authorization determinations per Medicare Advantage enrollee vs. a rate of .01 per person in traditional Medicare. This reflects the limited set of services subject to prior authorization in traditional Medicare.

These figures apply to Medicare Advantage insurers for fiscal year 2023:

• Insurers denied 3.2 million prior authorization requests (6.4%). 

•  A small share of denied prior authorization requests (11.7%) was appealed.

• Although a small share of prior authorization denials were appealed, most appeals (81.7%) were fully or partially overturned.

• Results differed substantially between carriers. Prior authorization determinations varied between .5/enrollee to 3.1/enrollee. Adverse and partially favorable determinations as a share of all prior authorization determinations varied between 3.5% and 13.6%.

• Across most carriers, at least two-thirds of appeals were successful.



• Across most carriers, at least two-thirds of prior authorization request denials that were appealed were overturned.

BRIDGING THE MEDICARE COST GAP: KNOWING YOUR OPTIONS

This excellent article that appeared in the February 15, 2025 issue of the New York Times provides an excellent analysis of the difference between the three basic Medicare options: Medicare Supplement (with Original Medicare), Medicare Advantage and Original Medicare only.

About Paul Cholak

Paul is a licensed, independent health and life insurance agent and has over forty years of benefits experience and specializes in helping Medicare beneficiaries obtain health insurance. However, he offers a complete array of life and health insurance products to individuals of all ages.

He guides Medicare beneficiaries through the steps of getting insurance and is available to help clients both BEFORE and AFTER they've made their purchase decision.

Disclaimer for Part C and D plans: "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY: 1-877-2048) to get information on all your options."

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