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Here's One Way You May be Overpaying for Prescription Drugs - And How to Avoid It

Did you know that when you lay down $10, $20, or $30 for a copay at the pharmacy that you may be overpaying for the prescription itself --- and a third party may be pocketing the difference?  Or that you might save money by not going through insurance at all and paying a reduced cash price for the medication?  Such is the head-spinning – and sometimes unethical – world of prescription drug benefits in the second decade of the 21st century.

Middlemen called Pharmacy Benefit Managers (PBMs) can skim extra profit by overcharging for medications.  The PBMs’ ostensible purpose is to negotiate favorable pricing with pharmaceutical companies on behalf of insurers, including Medicare.  But sometimes, especially with cheaper generic medicines, PBMs excessively mark up those prices and keep the remainder for themselves –  causing consumers to pay more than they should. Unfortunately, this practice is especially costly for older Americans living on fixed incomes. 

Unsuspecting customers are particularly vulnerable when paying co-pays at their local pharmacy, where PBMs can “claw back” excess profits.  Here’s how it works:

 A patient goes to a pharmacy and pays a co-pay amount -- perhaps $10 -- agreed to by the pharmacy benefits manager, or PBM, and the insurers who hire it. The pharmacist gets reimbursed for the price of the drug, say $2, and possibly a small profit. Then the benefits manager “claws back” the remainder. – Bloomberg, 2/24/17

(See also the graphic at the bottom of this post for a more detailed explanation of clawbacks.)

Though most customers are unaware of this practice, Bloomberg news reports that it is disturbingly common.  More than 80% of independent pharmacists surveyed said that they have experienced clawbacks from PBMs at least 10 times a month. 

In some cases, there is a simple way for customers to protect themselves from clawbacks. They can simply ask the pharmacist for the cash price of the prescription.  If the cash price is lower than the co-pay, the customer can elect to pay it and bypass the insurance coverage for that medication.  Consumers can also use prescription drug apps to determine the cash price (and available discounts) for various medications.

Unfortunately, PBMs do what they can to keep customers ignorant of this option.  In fact, many PBMs (including one called OptumRx) contractually forbid pharmacists from educating customers about potential alternatives.  

 Pharmacists who contract with OptumRx in 2017 could be terminated for “actions detrimental to the provider network,” doing anything that “disparages” it or trying to “steer” customers to other coverage or discounted plans… - Bloomberg, 2/24/17

Some PBMs further restrict customers’ rights by mandating that enrollees in certain insurance plans use mail order and specialty pharmacies that they own, creating a conflict of interest.

Up to now, PBMs have operated with little transparency, so that no one really knows the inner workings of their deals with the drug companies or the details of their pricing structures.  But pressure has been building on Capitol Hill.  After all, the federal government is the largest health care provider in the country and is motivated to keep prescription drug costs under control.  Hence, a bipartisan bill called the Prescription Drug Price Transparency Act (H.R. 1316) seeks to strengthen oversight of PBMs in the Medicare, Medicaid, and Federal Employee Health Benefit programs.  

Three other bills – one in House and two in the Senate – have been introduced requiring greater transparency and accountability for PBMs. Meanwhile, New York State (under the leadership of Governor Andrew Cuomo) has unveiled new regulations for PBMs, and other states may do the same.

PBMs have also become the target of lawsuits (16 of them since October of last year) and have invited scrutiny from the U.S. Justice Department, which has alleged that the industry “is rife with conflicts of interests and undisclosed arrangements entered into at customers’ expense.”

Of course, the nascent clampdown on PBMs has to be seen in the context of soaring prescription drug prices overall, which are the main driver of rising medical costs.  President Trump pledged to bring down drug prices, but so far has not delivered.  Incremental measures to crack down on pricing abuses by PBMs are a good start. But until consumers receive actual deliverance from prescription price gouging, they will have to try their best to protect themselves.  

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Of Course People Will Die if Senate Health Bill Becomes Law

Two days in a row now we have seen CNN anchor Kate Bolduan react with incredulity when a Democratic member of Congress points out the obvious:  that people will die if the Senate healthcare bill becomes law.  “We’ll have to ask a Republican about that!” Bolduan breathlessly replied to one Democrat. What she – along with advocates of the bill – fails to understand or prefers to ignore is that you cannot snatch healthcare away from 22 million people without incurring casualties.  Of course people will die as a result. 

Speaking against the GOP healthcare bill last week, Senator Elizabeth Warren (D-MA) called its cuts to healthcare for older and lower-income Americans “blood money.”  She went on to say:

“Let’s be very clear.  Senate Republicans are paying for tax cuts for the wealthy with American lives.  People will die.” – Sen. Elizabeth Warren, 6/22/17

Republicans propose to pay for those tax cuts by gutting the Medicaid program – 40% of which pays for services to the elderly like nursing home care.  Some one million seniors nationwide could lose the ability to pay for the long term care they need to survive.  States facing $770 billion in federal Medicaid cuts will have no choice but to offer skimpier coverage or kick seniors off the Medicaid rolls altogether.

By law, state Medicaid programs have to cover nursing homes. If those states receive less funding from the federal government, it could increase the pressure on the operations of nursing homes, in turn possibly limiting who can qualify for care. – Yahoo Finance, 6/26/17 

We are talking about people with Alzheimer’s, cancer, diabetes, neurological disorders, and other chronic diseases.  Few seniors (or their families) can afford to pay the average cost of nursing home care (running some $80,000 a year) without government assistance. Many of these seniors were formerly in the middle class, but had to impoverish themselves to qualify for Medicaid.  If they are forced to go without skilled long term care (whether in a nursing home, in the community, or at home), the real question is not whether some of them will die, but how will they survive? 

The bill’s age rating provisions could also prove deadly for older Americans.  The Senate legislation – like the House’s – allows insurers to charge near seniors (aged 50-64) up to five times as much as younger adults, which will price many out of the market.  The rate of uninsured Americans who earn up to 200% of the federal poverty line will double if this bill becomes law.  Chronic health conditions tend to develop and intensify during this period of life.   If millions of near seniors can’t afford health insurance, they will go without the care they need – which could lead to premature death.  You don’t have to be a brain surgeon to figure that one out.

Taking away the guarantee of essential benefits coverage – which the Senate bill also threatens to do – means Americans (especially the poor and elderly) will no longer benefit from timely treatment of festering health problems.  One of those is heart disease. According to Kaiser Health News, the leading killer of men and women in the U.S. has been decreasing since Obamacare went into effect. 

“The Journal of the American Heart Association found that the rate of sudden cardiac arrest outside of a hospital dropped by 17% among people aged 45-64 after the Affordable Care Act expanded insurance coverage.” – Kaiser Health News, 6/28/17

It stands to reason that repealing the Affordable Care Act could lead to an increase in heart attacks, which could also mean an increase in fatalities. 

This is why the pleas for bipartisanship from Republicans and some of the media ring especially hollow.  We have heard pundits describe the disagreements between Republicans and Democrats on healthcare as “semantics”:  is the Senate bill a true “repeal” of Obamacare or not?  Why, oh why, can’t both sides just get along? Of course, that misses the point.  Not only does the bill roll back important protections for all Americans, it is a Trojan Horse for gutting Medicaid and giving the wealthy a $700 billion tax cut.  Congressional Democrats refuse to enable the GOP to make these drastic changes.  Seniors and their advocates must keep that issue at the forefront – and work to defeat the Senate bill while there is still time. This is not semantics. It is literally life and death. 

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Senate GOP's "Mean" Healthcare Bill Must be Defeated

Getting a look at the Senate Republican healthcare bill after weeks of secrecy is like peeking under a rock.  There’s a lot under there that you don’t really want to see – and would like to believe doesn’t really exist.  Unfortunately, the Senate version of the American Health Care Act is very real – and dangerously close to becoming law.

Prognosticators who said the House-passed bill would be “dead on arrival” in the Senate, or who predicted that the Senate would be a moderating influence on the legislation, were dead wrong.  Instead, Senate Republicans have clearly chosen to put political expediency above the health of our most vulnerable citizens.

In some ways, the Senate bill is slightly less onerous than the House version; in other ways it’s worse – especially for the old, the sick, and the poor.  In a press statement today, National Committee President Max Richtman calls the bill “unconscionably cruel.”

This is a lose-lose for seniors and the American people.  The biggest loss is that the AHCA ends the Medicaid program as we know it.  Astoundingly, the Senate bill makes even deeper cuts to Medicaid than the House did.  This is devastating news for today’s and tomorrow’s seniors suffering from Alzheimer’s, cancer, the after-effects of stroke and other serious conditions who depend on Medicaid to pay for long-term care.  Millions will lose Medicaid coverage over the next ten years.” - Max Richtman, President and CEO of NCPSSM

 

The Washington Post clearly explains why the Senate bill hurts Medicaid beneficiaries even more than the House version:

Medicaid would be funded by giving states a per capita amount or block grant, beginning in 2021. The amount would grow more slowly than in the House bill, meaning bigger spending cuts overall. - Washington Post, 6/22/17  

This is why the Senate healthcare bill is so hazardous for older Americans in several other ways:

*It still permits insurance companies to charge older Americans five times more than young adults. 

*The tax credits that replace Obamacare subsidies are still too meager to make up for net increases in older Americans’ premiums. 

*Though it forbids insurers from denying coverage for pre-existing conditions, the waivers of essential benefits mean older patients with chronic diseases like diabetes, cancer, or heart disease could see their premiums skyrocket. 

 *Like the House bill, the Senate legislation weakens Medicare by reducing the solvency of the Part A Trust Fund.

Only the young, healthy and wealthy will truly benefit from this bill, whose true purpose is not to facilitate health coverage, but to give a multi-billion dollar tax break to the rich and the pharmaceutical companies. Our family members and friends who cannot afford exorbitant premiums and out-of-pocket costs will suffer.  Some will doubtless go without healthcare altogether.  Their health will deteriorate, and when they arrive at the doorstep of Medicare, they may be in worse condition – which can increase the financial burden on Medicare, too. 

Make no mistake, if the bill passes the Senate and the House, President Trump will sign it into law. The National Committee has identified 11 GOP Senators who could be persuaded to stop the AHCA with sufficient public pressure.  As few as three Republican dissenters could kill this bill. Americans of conscience must demand that their Senators put people before party and defeat this heartless legislation before it’s too late.

 

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For the latest on Trumpcare and its devastating implications for seniors, watch “Behind the Headlines” on Facebook Live from Capitol Hill.

 

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Mitch McConnell's "Secret" Healthcare Plan... and the SeniorHeroes who could stop him

When the House passed its American Health Care Act (AHCA) last month, conventional wisdom said it was doomed in the Senate.  Moderate Republican Senators would never go along with the more harmful provisions of the House bill – or so the narrative went.  It appears those predictions were off base.  If the latest reporting from Capitol Hill is accurate, Majority Leader Mitch McConnell has put the Republican healthcare plan on a fast-track for passage in late June or early July.  A 13-member working group has been meeting in secret to craft the Senate version of the AHCA – without committee hearings.  Zero open debate.  Zero public input.  Or as the Washington Post described the process:  “sabotage, speed and secrecy.”  In order to keep pushback to a minimum, McConnell may not release the details of the bill until about 48 hours before the Senate votes on it.  That is insufficient time for Senators – and the public at large – to evaluate legislation that could dramatically affect the lives of tens of millions of Americans.

 Another false prediction from a few weeks ago said that the Senate would scrap the House bill and start from scratch. But this week Senator John Cornyn (R-TX) revealed that the Senate bill retains about 80% of what the House passed.  Since the House bill was so unequivocally bad for older Americans, hearing that the Senate version is at least 80% as bad is cold comfort. The Senate leadership will try to appease GOP moderates with the same kind of token gestures that saved the AHCA from defeat in the House.  It is vitally important that those moderates not cave like their House colleagues did.  Too much is at stake for our nation’s seniors and Americans as a whole.

 The National Committee has identified 11 moderate GOP Senators who may be persuaded to vote against the Republican health care plan – if they are willing to put their constituents’ well-being above party and political expediency.  They are:

 Sens. Lisa Murkowski and Dan Sullivan (R-AK)

Sens. John McCain and Jeff Flake (R-AZ)

Sen. Cory Gardner (R-CO)

Sen. Charles Grassley (R-IA)

Sen. Susan Collins (R-ME) 

Sen. Dean Heller (R-NV)

Sen. Rob Portman (R-OH)

Sen. Lamar Alexander (R-TN)

Sen. Shelley Moore Capito (R-WV)

 In fact, we call on these Senators to become what we call “SeniorHeroes” – real-life superheroes standing up for older Americans while the rest of their party pursues a dubious scheme.  From what we know of the Senate bill, there isn’t much in the evolving Senate bill for moderates to applaud.  Sen. Lisa Murkowski expressed those doubts publicly on Thursday.  Here are some of the key areas where the Senate version will likely fail older Americans:

 MEDICAID EXPANSION.  Senate Republicans are considering “compromises” that would phase out funding more slowly – but do not appear to be considering any approach that would maintain Medicaid expansion over the long run.  (Many of the more moderate Senators represent states which chose to expand Medicaid – and have a lot to lose.)

 PER CAPITA CAPS.  The Senate reportedly will retain the House-passed bill’s Medicaid per capita caps, which would strain state budgets and possibly force rollbacks in benefits or outright termination of coverage for millions of seniors who depend on Medicaid to pay for long-term care.  Although it’s unclear whether the Senate will keep the House bill’s $834 billion in Medicaid cuts, Medicaid still likely will be slashed by hundreds of billions of dollars. 

PRE-EXISTING CONDITIONS AND ESSENTIAL HEALTH BENEFITS.  The Senate may reject provisions in the House bill that would have allowed insurers to charge higher premiums for individuals with pre-existing conditions, but will likely allow states to waive essential benefits coverage.  This would dearly cost older Americans seeking essential benefits, such as hospitalization, ambulance services, and rehabilitation services. 

TAX CREDITS.  The House bill would drive up seniors’ out-of-pocket costs by replacing Obamacare’s income-based subsidies with tax credits based solely on age.  Older Americans could pay up to 800 percent more in net premiums under this plan.  The Senate has toyed with making these tax credits more “robust,” but the more it increases these credits, the deeper it must cut Medicaid to match the savings in the House bill. 

We do not know whether the Senate will allow insurers to charge older enrollees five times more than younger ones, as the House legislation does.  Also uncertain is whether the Senate will repeal the Medicare payroll tax on high income wage earners (as the House did), which would reduce the solvency of Medicare by three years.

It’s a safe bet that, like the House version, the Senate GOP healthcare plan will cost older Americans more, make essential health benefits harder to obtain, and cause millions who desperately need healthcare to lose coverage.  GOP moderates will be under intense political pressure to toe the line and support the party’s plan, even though the Republican bill has scant public support in even the reddest of states.  In asking GOP moderates to don their capes and become SeniorHeroes, we hope they remember who they were elected to serve.  It certainly wasn’t Mitch McConnell. 

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For more about the GOP's secret Senate healthcare plan, watch this week's "Behind the Headlines" on Facebook Live from Capitol Hill. 

 

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Still Confused about Health Reform?

Many Medicare beneficiaries are and it's no wonder given all the misinformation swirling around health reform legislation.   Today Congressional leadership and the administration have teamed up to help seniors understand how health reform will impact Medicare. 

“Older Americans are dependent on Medicare for their health coverage.  So seniors are especially susceptible to misinformation that Medicare is threatened by reforms. They are anxious and looking for information and they absolutely need a reliable place where they can get their questions answered accurately.  It’s critical that seniors get the facts about provisions that will benefit them as soon as next month.”  Barbara B. Kennelly, President/CEO
For 84-year-old Ben Williamowsky, the health care reform debate was often confusing and frustrating.  As a retired dentist, he understands our current health system well, yet was discouraged by the amount of misinformation being targeted to seniors, during the debate and even now.  Williamowsky described his frustration at a Capitol Hill news conference hosted by House Speaker, Nancy Pelosi today: 
“I’m old enough that I remember what it was like in the early days after Medicare was created – when similar scare tactics were used – threatening seniors with all sorts of bad things if Medicare was enacted.  None of them happened.  Doctors didn’t go out of business or stop seeing seniors.  In fact, life was much better for millions of seniors who desperately needed health coverage and today Medicare is a tremendous success story.  But not everyone remembers history the way I do.  That’s why we absolutely need someplace we can trust to answer our questions and dispel the false rumors about this new law. “ Dr. Ben Williamowsky, Medicare Recipient   
Health and Human Services Secretary Kathleen Sebelius described a new brochure being mailed to Medicare beneficiaries to help them sort fact from fiction, avoid scammers who want to profit from seniors’ confusion and give beneficiaries the information they need to take advantage of historic reforms in the donut hole, preventative services and more.   The National Committee to Preserve Social Security and Medicare is committed to providing America’s seniors with updated and detailed analyses of how healthcare reform legislation will affect their medical coverage in Medicare.  In our newly released web video, “Health Reform and Seniors”, we describe many of the provisions in health reform which will touch the lives of seniors, some as soon as next year.  The video is available on the National Committee’s YouTube Channel and will also be made available to seniors groups, town hall meetings, and grassroots events.  This video supplements the National Committee’s popular newsletter, Secure Retirement, which provides detailed coverage of health care reform in its spring issue.  In fact, we’ve run a second printing of this publication due to very high demand from seniors nationwide.

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