In just a few weeks, open enrollment begins for the more than 63 million people enrolled in Medicare programs in the US. During this time, many will evaluate and select a Part D plan that best meets their health needs. It is also a time when those enrolled in Medicare will learn more about two important changes to the Medicare Part D program taking effect Jan. 1, 2025:
- Medicare Part D cap. People enrolled in Part D plans (both traditional and Medicare Advantage) will not pay more than $2,000 in 2025 in out-of-pocket (OOP) costs for their prescription medications.
- Medicare prescription payment plan (now commonly referred to as M3P). Plans will offer enrollees the opportunity to opt-in to an interest-free payment plan allowing them to pay OOP drug costs monthly.
Recently, several colleagues and patient advocates have reached out to me asking questions about these reforms and their impact on patient assistance foundations, such the PAN Foundation. Ahead are some of those questions, along with my responses and perspective.
How will the Part D cap impact Medicare beneficiaries’ need to receive patient assistance from charitable foundations?
Medicare beneficiaries will continue to need patient assistance from charitable foundations, even with the Part D cap of $2,000 in place come 2025. Because those with federal insurance, such as Medicare, cannot benefit from pharma company assistance, the assistance provided by charitable foundations will continue to serve as an important, if not critical, safety net for many people on Medicare. Without this safety net, thousands of individuals living with serious illness would have no place to turn for assistance, and many would likely abandon treatment.
Recent in-depth research by Avalere and our own national polling from the PAN Foundation’s Center for Patient Research found that despite the new reforms leading to more patients being able to start and stay on their prescription drugs, many people will continue to face affordability challenges. This is especially true among those within certain therapeutic areas—such as autoimmune conditions, multiple sclerosis, and HIV—and the most marginalized and underserved communities (e.g., lower-income, Black, and Native American patients). In fact, Avalere projects that more than 2.6 million adults enrolled in Medicare Part D will have OOP spending high enough to reach the new $2,000 annual cap when it comes into effect in 2025.1
And when looking at beneficiaries within only eight key therapeutic areas, Avalere projects anywhere from about 182,000 to 410,000 people will likely spend more than 10% of their estimated annual income on OOP costs for prescription medications each year.2 This leaves them effectively underinsured and at increased risk of delaying or forgoing treatment.
Doesn’t the $2,000 Medicare Part D cap make OOP prescription drugs affordable for everyone?
For some, perhaps. But for most people seeking assistance from charitable foundations, many of whom are living on fixed incomes between 150% and 300% of the federal poverty level and living with serious illnesses, the answer is no.
Our national polling found about 75% of adults said it would be difficult to afford $2,000 in OOP prescription costs each year.3 Affordability concerns were especially high among Black and Hispanic adults, adults with incomes under $50,000, and adults with chronic or rare diseases.
In addition, for the more than 50 million adults enrolled in Medicare Part D, their OOP Rx costs are just one part of their overall cost of care. This doesn’t account for their other healthcare costs (e.g., insurance premiums, doctors’ office copays, lab tests, etc.) or living expenses, such as housing/rent, food, utilities, clothing, or transportation. In fact, about 60% of respondents whose current prescription drug costs don’t exceed $2,000 said they would cut back on food-related expenses if they were faced with that total, while others reported they would cut back on utilities or other medical expenses.
Is the M3P a good payment option for all beneficiaries enrolled in Medicare Part D plans?
When M3P goes into effect in 2025, ultimately, it will be up to the Medicare beneficiary to decide if this payment option is best for them. Someone enrolled in Medicare Part D should consider opting into the program if they:
- Have difficulty paying for their OOP drug costs all at once.
- Have experienced more than $2,000 in OOP drug costs in the prior year.
- Have experienced a single prescription cost of at least $600.
- Want to budget and spread their OOP drug costs throughout the year.
- Are not eligible for financial assistance from programs such as the Extra Help Program, State Pharmaceutical Assistance Programs, Medicare Savings Programs, AIDS Drug Assistance Program, or charitable assistance foundations, like the PAN Foundation.
As the Medicare program undergoes significant transformation for the first time in many years, what do donors to charitable foundations need to know?
The generosity of donors makes it possible for charitable foundations to provide financial assistance directly to patients. This financial assistance is often the difference between being able to receive treatment, or not—especially for those living with life-threatening, chronic, or rare diseases.
It’s clear that while these reforms are an important step in the right direction, many will continue to struggle. And since individuals enrolled in Medicare Part D, and other federally funded insurance programs, are unable to use manufacturer assistance, they must rely on organizations such as the PAN Foundation to serve as a safety net when they can’t afford their medications.
Sustained funding to foundations in 2025 and beyond will provide continuity of care for people who have relied on foundation support for years. And it will continue to minimize disparities in access to care while helping us serve even more people who need our help.
About the Author
Amy Niles is chief mission officer at PAN Foundation.
References
1. Despite Historic Medicare Reforms, Charitable Assistance Programs Still Critical for Many. PAN Foundation. January 23, 2023. https://www.panfoundation.org/despite-historic-medicare-reforms-charitable-assistance-programs-still-critical-for-many/
2. New Analysis: Medicare Reforms Will Lead to Continued Affordability Challenges, Despite Increased Medication Uptake and Adherence. PAN Foundation. October 18, 2023. https://www.panfoundation.org/new-analysis-medicare-reforms-will-lead-to-continued-affordability-challenges/
3. National Poll: Many Adults will Struggle to Afford Medications Even with Medicare Reforms. PAN Foundation. November 15, 2022. https://www.panfoundation.org/national-poll-many-adults-will-struggle-to-afford-medications-even-with-medicare-reforms/