Many Americans are asking how the ban on gag orders will impact Medicare. In early October, President Trump put his signature two bills that prohibit “gag clauses”; gag clause prevention applies to private insurances, Medicare Part D and Medicare Advantage plans.
Previously, gag clauses prohibit pharmacists from informing customers about options to pay lower cash prices for prescriptions. Instead of paying a higher amount through the insurance.
Congress is eliminating these gag causes; this change could amount to significant savings on medications in the United States, including Medicare recipients.
How the Ban Will Impact Medicare
Medicare recipients have been heavily impacted by the gag orders. A research study found that, in 2013, Medicare Part D recipients overpaid for prescriptions by $135 million.
During 2013, Medicare Part D copays were higher than the cash price of nearly 1 in 4 medications. Medicare Part D participants overpaid by more than 33% when purchasing 12 of the 20 most common prescription drugs.
Thanks to the new bills, Medicare recipients have more information about their options when purchasing medications. Pharmacists can inform patients when it’s cheaper to pay cash.
The new bills don’t require pharmacists to mention the cheaper options, they just allow the pharmacists to disclose the pricing. So, it’s important to advocate for yourself and ask about more affordable options.
The Implications of Gag Clauses
Gag clauses have had a hold over pharmacists for years. The clauses are rules in the contract between pharmacists and Pharmacy Benefit Managers, or PBMs.
The PBMs manage most of the prescription drug programs in the country and administer benefits by Medicare Part D, health plans, and unions. These PBMs negotiate prices with drug companies for insurance companies and then communicate those prices to the pharmacies.
Len Fasano, the top Republican in Connecticut began a measure to prohibit gag clauses in the state; noting that in some cases, consumers using insurance to buy medications spent three or four times more. Because of the gag clauses, though, they had no knowledge of the option to pay significantly less for their medications.
The arrangement between PMBs and pharmacies means a lack of transparency for the consumer when it comes to drug pricing. For instance, a consumer might pay $20 for diabetes medication through their insurance, without being aware that the same medication would only cost $15 at the pharmacy with cash.
Gag clauses prohibit pharmacists from volunteering this information; if pharmacists violated the clause, the PBMs could cut the pharmacies off from their insurance networks.
The gag orders take advantage of consumers’ common sense. It doesn’t seem logical or likely that it would cost less to pay cash for medication without relying on insurance. After all, we enroll in insurance to save money and get lower prices on costly medication.
Most consumers don’t cost-compare and are therefore never aware of any more affordable cash options when buying medication.
The Ban on Gag Orders Impacts Medicare Beneficiaries
The two bills prohibit PBMs from including gag clauses in their contracts with pharmacies. The Patient Right to Know Drug Prices Act applies to insurance group plans through employers and marketplace policies.
The second bill, the Know the Lowest Price Act, applies to both Medicare Advantage and Medicare Part D plans, meaning significant savings for seniors.
The bill affecting Medicare isn’t effective until January 1, 2020. There is still an important benefit that Medicare Part D or Medicare Advantage enrollees need to know. If Medicare participants pay cash at a pharmacy that participates in their plan to get a lower price for medication, they need to submit proper documentation to the plan.
The insurer must count that purchase toward the patient’s out-of-pocket annual expenses. This has an impact on Medicare Part D enrollees since each purchase affects the coverage gap for medications.
As of 2018, the donut hole begins after a participant has purchased medications totaling a retail cost of $3,750 and lasts until the participant pays $5,000 out-of-pocket for medications.
Plus, if Medicare participants ask a pharmacist about a lower cash price for a medication, the pharmacist can answer.
If you have Medicare Part D, then be sure to advocate for yourself at the pharmacy. Ask about cheaper cash prices for medications, save all your receipts, and contact your insurer to get credit for cash payment on medications.