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Can the Gas Company’s Model Help Seniors Manage Rx Co-pays?

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Senior citizens can face crippling out-of-pocket costs for their Medicare Part D prescription drugs. But now the University of Pennsylvania’s Perelman School of Medicine has proposed an intriguing solution inspired by an unexpected source: the utility companies.

Key Findings

The problem, researchers explain, is that seniors are asked to pay not just too much for their medicine, but too much too soon.  Entitled, “Reducing Out-of-Pocket Cost Barriers to Specialty Drug Use Under Medicare Part D,” the study points out several key facts:

  • Medicare Part D does not cap annual outof-pocket prescription drug spending, leaving seniors vulnerable.
  • Patients who require specialty drugs can wind up paying several thousand dollars per year for their medicine.
  • Many seniors must pay the lion’s share of that sum in the first few months of the year due to annual deductible requirements.
  • Out-of-pocket costs can exceed seniors’ fixed monthly income.

The study’s lead author, Jalpa A. Doshi, PhD, provided a salient example.  A patient with chronic myeloid leukemia, he explained, could have annual prescription drug out-of-pocket expenses of $6,322. But to meet his or her deductible, the patient might be asked to pay $2,452 of that sum in January alone.  “That’s almost twice the average monthly Social Security benefit,” Dr. Doshi noted.

Study Details

Researchers looked at 2012 Medicare data for patients who do not qualify for low-income subsidies.  These patients’ yearly out-of-pocket costs averaged $3,949, or $5,238 for patients who required specialty drugs to treat rheumatoid arthritis or multiple sclerosis.

These costs can present significant barriers, especially given that half of Medicare recipients have annual incomes below $24,150.  And an inability to pay often results in nonadherence – patients skipping doses or days between treatments, or stopping their medication altogether.

Proposed Solution

The answer, researchers argue, is simple: Spread these expenses over the course of the year so that seniors have more manageable, predictable prescription drug costs each month.  The approach mimics utility companies’ practice of charging for a customer’s monthly average, helping those on fixed incomes avoid unmanageable bills during months of extreme weather.  Researchers also argue for monthly and annual out-of-pocket limits.

And the cost of this arrangement?  Researchers say their proposal is financially sustainable. “We found that our suggested changes could be financed by an additional cost of only $1.96 per month, or $23.55 per year, per beneficiary,” Dr. Doshi explained.

That may just be a price worth paying if it allows senior citizens with chronic or life-threatening diseases to access the medications they need.

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