Medicare recently announced that its Part B outpatient premium will increase by $21.60 per month in 2022. The increase marks one of Medicare’s largest premium jumps on record – but, interestingly enough, one drug is responsible for about half of that cost increase: an Alzheimer’s disease (AD) drug called Aduhelm™. What is the connection between rising Medicare premiums and novel AD drugs? Read on to find out what the experts have to say.
How Does Medicare Work?
To understand the connection between rising premiums and novel AD drugs, it’s important to understand the different components of Medicare. Medicare is the federal health insurance program for people who are 65 or older, certain younger individuals with disabilities, and people with end-stage kidney disease. Medicare is divided into different parts. Medicare Part A covers inpatient stays in a hospital or a skilled nursing facility, as well as hospice care and some home health care. Medicare Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services. Finally, Medicare Part D helps cover the cost of prescription drugs. Individuals usually don’t pay a monthly premium for Part A; participants do, however, pay a premium for Part B. That premium is standardized nationwide. The new Part B premium will be $170.10 a month starting in 2022.
How Do Novel AD Drugs Affect Medicare Premiums?
As mentioned above, officials have noted that the cost of a single novel AD drug – Aduhelm™ – is largely responsible for the rising Medicare premiums. Aduhelm™ is the first Alzheimer’s medication to be approved in nearly 20 years, and it is incredibly expensive, costing around $56,000 a year. With this in mind, Medicare officials are still uncertain as to whether or not the drug will be covered. In fact, the Centers for Medicare and Medicaid Services (CMS) began a National Coverage Determination analysis process in July 2021, the goal of which was to determine whether and how Medicare will cover drugs like Aduhelm™. That analysis is still underway; however, the increased premiums are a certainty, as they reflect a contingency plan. The rising premiums are in place in case Medicare ultimately has to cover Aduhelm™. That cost will be spread across all Medicare participants – not just those with AD.
Concerns Over Novel AD Drug Aduhelm™
Consumer cost is the primary concern over novel AD drugs like Aduhelm™. However, some officials have noted that novel AD drugs could threaten the sustainability of Medicare as a whole. “The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program,” said Medicare chief Chiquita Brooks-LaSure in a statement to the Associated Press. It is worth noting that the rising premiums are not solely because of the drug; officials noted that rising costs are also due to what the Associated Press calls “natural growth of the program and adjustments made by Congress last year as the coronavirus pandemic hit.” However, as premiums rise, many Medicare participants may ask themselves: How much is too much?
As Medicare customers prepare for higher premiums than ever before, novel AD drugs like Aduhelm™ are under scrutiny. This conversation represents an ongoing struggle between medical innovation and sustainable healthcare costs.
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