Over 6M Seniors May Face COVID-19 Treatment Out-Of-Pocket Costs

May 13, 2020 - More than six million seniors would face COVID-19 treatment out-of-pocket healthcare spending if diagnosed with the coronavirus, a Patient Assistance Network (PAN) Foundation issue brief recently found.

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Traditional Medicare and Medicare Advantage cover nearly all of the same coronavirus-related services, including testing, in-person office visits, and telehealth visits. Traditional Medicare and Medicare Advantage will also cover the vaccine when it comes out.

But, PAN Foundation qualified, coverage does not mean that patients are free from out-of-pocket healthcare spending. For Medicare Advantage, out-of-pocket costs largely depend on private payer policies. For those with traditional Medicare, supplemental coverage would be required to cover treatment costs.

For traditional Medicare beneficiaries, testing and the future vaccine have no attached cost-sharing, but any treatment after a positive diagnosis—from telehealth visits to hospital admissions—could result in out-of-pocket costs. This includes medication that is not a vaccine, PAN Foundation added, such as anti-viral and pneumonia medications which are currently being used to treat coronavirus.

READ MORE: BCBSM, Humana Waive Medicare Advantage Costs as States Reopen

Most beneficiaries on traditional Medicare do have supplemental insurance to cover some other out-of-pocket costs related to coronavirus treatment, whether through Medicaid, Medigap, or an employer-sponsored health plan.

In the past several years, however, employers started dropping their supplemental plans, pushing seniors toward Medicaid or Medicare Advantage plans to fill gaps in coverage. In particular, middle and low income workers saw their Medicare plans stripped of supplemental benefits.

When those who turn to Medicaid and Medicare Advantage are removed from the equation, six million Americans on traditional Medicare are left behind who do not have supplemental coverage. These seniors could be exposed to higher out-of-pocket healthcare spending if they have to face coronavirus treatment.

Seniors in this category also may be low-income. Thirty-seven percent of traditional Medicare beneficiaries who are without supplemental coverage make less than $20,000 annually. These lower income individuals may struggle to afford coronavirus treatment bills.

“Even before COVID-19, low-income seniors had a heavier chronic disease burden, and they spent a greater portion of their incomes on healthcare compared to older adults with more financial resources,” the issue brief stated.

READ MORE: Cigna, Humana Eliminate Coronavirus Treatment Out-Of-Pocket Costs

“The social isolation that characterizes the COVID-19 crisis will only exacerbate these trends because seniors are no longer able to benefit from the well-recognized mental health and other benefits of social, religious, and community engagement. These challenges will become more pronounced as low- income seniors continue to bear the brunt of COVID-19 because of the vulnerability of their health status.”

To ensure that low-income seniors do not face exorbitant healthcare spending and surprise billing due to coronavirus and lack of supplemental coverage, PAN Foundation recommended that CMS move to cap out-of-pocket prescription drug costs. The organization also suggested spreading the costs across the benefit year.

This is not a new stance for the organization, nor is it alone in advocating for this strategy.

In January 2020, the PAN Foundation set forth its position as number three in its 2020 position statement.

“Medicare beneficiaries are the only group of insured people in the U.S. that is not protected by a cap on annual out-of-pocket costs, forcing many to make difficult trade-offs or to forgo treatment altogether,” the statement argued.

READ MORE: Individual Market COVID-19 Treatments May Cost Less Than Expected

The organization went on to share how a monthly cap would allow seniors to expect the bill and know how much money they would need to set aside for it.

Instead of front-loading surprise bills—draining seniors’ bank accounts of thousands of dollars in the first months of the year—seniors could pay their prescription expenses over time.

Parts of this strategy have been suggested in the Senate and by the Trump Administration. Among the prescription drug spending proposals that policymakers hammered out toward the end of 2019, the Senate Finance Committee approved one that caps beneficiary out-of-pocket healthcare spending at $3,100. The Trump Administration’s 2020 budget included an out-of-pocket spending cap on the Medicare Part D catastrophic phase.

Over 90 percent of coronavirus-related deaths in the US—as of April 30, 2020—have hit the older demographic, with 92 percent of coronavirus fatalities occurring amongst people 55 years of age and older.

Deaths also tend to be higher among minority and low-income populations. In Kansas, the African American community comprises less than ten percent of the population yet it has seen well over 30 percent of the state’s deaths. And in New York City, the neighborhoods that have been hardest hit by COVID-19 are also among the most impoverished.

Given these realities, evaluating Medicare’s ability to provide affordable coverage is critical as Medicare forms a safety net for these populations.