Hidden Speedbumps in Medicare Prescription Drug and Medicare Advantage Plans
Many of us have been caught up in the red tape of the healthcare system—HMOs requiring referrals to specialists, insurance companies requiring pre-authorization for diagnostic tests, or the stressful process of filing an appeal for surgery. It’s already difficult enough to need care, but it becomes even more stressful when you have to jump through hoops to receive proper treatment. These obstacles, often referred to as gatekeepers, make it essential to have medical professionals who can clearly communicate and address objections. I remember the stressful experience years ago when a member was denied thoracic surgery. Fortunately, the surgeon was able to lay out the benefits of the highly specialized surgery, and now, 10 years later, that member is still living an active life.

In addition, private health plans may impose quantity limits, step therapy, and prior authorization on certain prescriptions. Quantity limits might be placed on pain medications to prevent abuse or misuse. Step therapy requires using a less costly drug that achieves the same therapeutic result as a more expensive prescription. Nowadays, the high cost of GLP-1 medications and compound drugs has made prior authorization even more common. However, these disruptions can be managed through formulary exception requests and physician communication with the plan’s pharmacy management.

Starting in 2025, Medicare Prescription Drug Plan sponsors and pharmaceutical companies will be required to absorb more of the costs. Recent legislation will cap prescription costs at $2,000 annually, with insulin costs capped at $35. Plan sponsors are also required to offer at least one prescription option per therapeutic category. It’s important for patients to communicate with their physicians about formulary exceptions when needed.

Why are plan sponsors able to implement these gatekeepers and restrictions on plan members? The goal is to limit fraud, waste, and abuse. According to estimates from Forbes.com, fraud, waste, and abuse cost the Centers for Medicare and Medicaid Services (CMS) between $60-100 billion annually. Furthermore, the Government Accountability Office recognized nearly $234 billion in “improper payments” for government healthcare programs, including Medicare, Medicaid, and other federal initiatives. The system is overwhelming, considering CMS processes nearly $1 trillion in annual healthcare-related costs.

As our population ages and life expectancy increases, medical costs will continue to be a challenge. While medical professionals strive to innovate and find better ways to address health challenges, they also face the ongoing issue of reducing the costs of care. Additionally, payment for services may shift from the traditional fee-for-service model to a performance-based model in the near future.
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