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09/23/2015

Are Medicare Prescription Benefits Too Stingy?

StingyThe bill she received in the mail revealed a staggering figure — $9,225 for one infusion of Avastin, a chemotherapy drug. And she would need many more such infusions. Fortunately, the dollar amount is what medical experts call a “charge,” which in normal marketplaces refers to the amount a provider expects for the good or service in question, but in healthcare means: the amount the provider reports billing to the payer, which has almost nothing to do with what we expect the payer to pay.

Phew! She scanned the bill more closely. The $9,000+ figure was followed by several other figures – the amount the insurance allows the doctors to charge, for example, plus (most importantly) the amount she was expected to pay out-of-pocket. As it turns out, for most Americans with private insurance, that out-of-pocket value will be quite reasonable. For Avastin, privately insured patients pay an average of $228 per treatment. That still is a lot of money for most people, but it is mere fraction of the overall cost. Insurance companies, in fact, pay an average of $4,461 for each Avastin treatment, based on data from 2012.

But there’s a very important third party payer that is not so generous, a payer that more than 55 million Americans count on for help with medical bills. That payer, of course, is Medicare. (To read the rest of this article, please visit Forbes.)

 

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