Trump Administration Wants to Lower Drug Costs for Medicare Recipients Through Rebates

On Thursday, President Trump’s proposal to lower drug costs for people using Medicare Part D, the prescription drug benefit for Medicare recipients, was revealed to the Associated Press. The news comes a week before Trump’s 2019 budget plan’s scheduled release. The proposal allows for those using the Medicare drug benefit to get a rebate from drug companies that are usually only given to insurance companies and “middlemen” like pharmacy benefit managers who work between insurers and pharmacies.

Pharmaceutical companies give rebates to insurance companies and pharmacy benefit managers to get their drugs covered under insurance plans, ensuring more people use the drug companies’ specific drugs. Rebates to pharmacy benefit managers are thought to be a reason for high-drug prices. Insurance companies typically use the rebates to lower monthly premiums for its customers, though Medicare beneficiaries still pay thousands of dollars a year in drug costs.

Medicare recipients are those 65 and older, younger people with disabilities and those with end-stage renal disease. While Part A of Medicare covers hospital stays and nursing home facilities, Part B covers preventative care, outpatient and doctor services, as well as medical supplies. Part D covers some of the cost of prescription drugs for those with Part A, Part B or both.

This change to the Medicare prescription drug benefit comes eight days after the Centers for Medicare and Medicaid Services announced a proposal to cut down on opioid prescriptions for people using Part D.

The budget would also allow for an expansion in “catastrophic” coverage for Medicare recipients who need high-cost drugs, so they don’t have copayments. Catastrophic coverage takes effect after beneficiaries spend $5,000 in out-of-pocket expenses in 2018.

On Friday, Trump signed a bipartisan budget bill after a brief government shutdown. The new budget will help accelerate the closing of the “doughnut hole” in Medicare, which is the coverage gap between a certain amount of coverage for drugs and before a recipient gets catastrophic coverage. The closure began with the Affordable Care Act. The bill also loosened restrictions on telehealth medicine for Medicare recipients, which Sen. Brian Schatz of Hawaii detailed in a Twitter thread.

While the government expands Medicare, the administration is still making an effort to reduce the use of Medicaid by imposing work requirements and proposing lifetime limits to Medicaid coverage.

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