The Difference Between Part B and Part D Prescription Drug Coverage

If you are on Medicare, odds are you rely on a Part D plan for your prescription drug coverage. If you have certain medical conditions, you may not even be aware that some of your medications are covered by Part B. In fact, you can thank Part B for covering many of the adult vaccinations you receive.

That may be about to change. With medication costs rising every year, there is an urgent need to cut costs for the people who need these drugs. Unfortunately, Medicare Part D does not allow people to use manufacturer drug coupons to keep costs down. To that end, the Trump administration has put forth a plan called "American Patients First." Several parts of the plan will change how Medicare pays for your medications. Part of their plan is to move Part B coverage into Part D. This could save millions for the Medicare program itself but what could this mean for your future health care?

Whether you choose Original Medicare (Part A and Part B) or a Medicare Advantage (Part C) plan, you have access to medications covered by Part B. Many of these medications are limited to people with specific medical conditions. The following list is not all-inclusive but reviews all the covered Part B categories.

• Chemotherapy drugs*
• Anti-nausea medication as part of a chemotherapy regimen*
• Immunosuppressive medications for people who have had an organ transplant that was covered by Medicare
• Medications used for end-stage renal disease (ESRD)

• Antigens (e.g., allergy shots) that are prepared by a physician and administered by a trained individual
• Blood-clotting factors for people with hemophilia
• Erythropoiesis-stimulating agents for people who have ESRD or anemia related to certain medical conditions
• Intravenous Immune Globulin (IVIG) for people with a diagnosis of primary immune deficiency disease
• Osteoporosis drugs for women who have had a fracture due to post-menopausal osteoporosis
• Other injectable and infused medications administered by a licensed medical professional (e.g., biologic agents used to treat inflammatory bowel disease, psoriasis, and rheumatoid arthritis)*
• Parenteral (IV) nutrition or tube feeds for people who cannot take food by mouth or absorb nutrition in their GI tract

• Hepatitis B vaccine for people at moderate to high risk**
• Influenza vaccine ("flu shot")
• Pneumococcal vaccine ("pneumonia shot")

• Infusion pumps
• Nebulizer machines

* Oral chemotherapy and anti-nausea agents have to meet certain criteria to be covered by Part B. While the majority of injectable medications will be covered by Part B, keep in mind that some drugs may be excluded. The coverage requirements change on an annual basis.

** Hepatitis B risk factors for the purpose of Part B coverage include diabetes mellitus, ESRD, hemophilia, living with someone who has Hepatitis B, or being a healthcare worker who could be exposed to blood or other bodily fluid.

The majority of your prescription medications are covered by Medicare Part D. Some Medicare Advantage plans also include Part D coverage.

At a minimum, Part D plans are required to cover at least two medications in each therapeutic drug class. For six of those classes—antidepressants, antipsychotics, chemotherapy agents, HIV/AIDS drugs, immunosuppressants, and seizure medications—nearly all medications will be covered. 

Part D plans also cannot charge you more than 25 percent of the retail cost of those drugs. If you need a more extensive plan or a plan that covers specific medications, you may need to do some searching. It is possible that you could pay more than the basic premium which is $32.50 per month for 2019.

Medicare Parts B and D pay for medications you receive in the ambulatory setting but they won't pay towards the same prescription. You can only turn to one part of Medicare or the other. However, you may be able to use them both for drugs you receive in a hospital setting.

Medications you receive in the hospital when you are admitted as an inpatient will be covered by your Part A deductible. It is important to understand what happens when you are evaluated in the emergency room and sent home or are placed under observation, even if you stay overnight in the hospital. In this case, you can turn to Parts B and D to pay for your drugs.

When you are placed under observation, Part B will still pay for the medications reviewed above. If you receive IV medications, these will generally be covered. However, you may also receive oral medications during your observation stay that are not on the Part B list of approved medications. In this case, you will be billed for each pill administered by the hospital.

Medicare pays for medications administered in the doctor's office a bit differently than the ones you get from the pharmacy. Your doctor purchases these medications in advance. Because their office is responsible for storing these medications and preparing them for use, doctors are paid 6 percent above the wholesale acquisition cost of the drug. They are paid separately to actually administer the medication.

Concerns have been raised that some doctors may have been abusing the system, ordering the most expensive drugs in order to make a profit. Because patients are still required to pay 20 percent of the treatment cost, this also increases out-of-pocket expenses for patients.

The Centers for Medicare and Medicaid Services (CMS) wants to put an end to that. A proposal has been made for 2019 that would reduce the add-on cost to 3 percent for new prescription drugs. Medications that have been covered by CMS to date would continue to be paid at the 6 percent rate. 

Not surprisingly, many medical organizations are trying to prevent this initiative from moving forward.

The American Patients First plan considers moving Part B prescription drug coverage into Part D. Unfortunately, if you have certain medical conditions, this could actually raise how much you pay under the current system.

First, not all Medicare beneficiaries purchase Part D coverage alone or as part of a Medicare Advantage plan. As many as 27 percent of people do not. In order to gain drug coverage, this proposal would require that they purchase a Part D plan and pay monthly premiums. With basic premiums costing $32.50 per month in 2019, this would add an extra $390 per year in health care costs to people who may least be able to afford it. Keep in mind that it does not include the cost of copayments or coinsurance.

Second, it is unclear if all medications or only a select group of drugs would be included in this proposal. There could be significant implications for people who require frequent IV medications, especially biologics for autoimmune and rheumatologic conditions.

These medications may be less expensive for people under Part B, especially since Part D plans can charge expensive copayments or coinsurances for higher-tiered medications on their formulary. They may even require prior authorizations or choose to not cover certain medications at all.

The anti-kickback statute prohibits manufacturers from giving or offering to give anything of value to someone to induce the purchase of any item or service for which payment may be made by a federal health care program. This includes medications from Medicare Part B and Part D. This is the reason you cannot use coupons, rebates, or vouchers to keep your drug costs down when you are on Medicare.

Although you cannot negotiate with the pharmaceutical companies yourself, your Medicare Advantage plan may be able to do so on your behalf. Until recently, only Medicaid and the Veteran's Health Administration have been able to do so. Now CMS will allow Medicare Advantage plans to negotiate prices of medicines covered under Medicare Part B. This will take effect in 2019.

Medicare Advantage plans will do so by using step therapy to keep costs down. In this scenario, your plan may require that you try a less expensive medication before moving you up to a more expensive alternative if the first treatment is not effective. Private insurance plans that have used this model have achieved discounts of 15 to 20 percent whereas Medicare has paid full price. That is about to change.

Step therapy will also affect how much you spend on Part D drugs. This is because the less expensive medication options recommended by your plan are more likely to be on your Part D formulary. The goal is for your Medicare Advantage plan to contain costs. It will do this by shifting costs to low-cost Part D alternatives and away from more pricy physician-administered Part B drugs.

Not everyone realizes they get Medicare prescription drug coverage with both Part B and Part D. Understanding how these programs work together is helpful but it may be more important to realize what changes may be coming down the line. The federal government is looking to change how it pays doctors that administer Part B medications and to possibly consolidate Part B prescription drug coverage into Part D. It will also allow Medicare Advantage plans to negotiate the cost of Part B drugs with pharmaceutical companies. These changes could affect how much you pay out of pocket.