CMS Attributes Significant Out-of-Pocket Savings for Medicare Beneficiaries to Health Care Reform Efforts

by King & Spalding
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On October 28, 2013, CMS announced that Medicare beneficiaries are realizing significant out-of-pocket savings as a result of health care reform efforts.  The savings are based on cumulative savings in the prescription drug coverage gap, known as the “donut hole,” and slow growth in Medicare Part A and B coinsurance amounts.

According to CMS, overall savings achieved from the Affordable Care Act provision closing the prescription drug coverage gap—the donut hole—amount to $8.3 billion for the 7.1 million seniors and people with disabilities who reached the donut hole.  For the first nine months of 2013, CMS reports that approximately 2.8 million people whose expenditures reached the donut hole have saved $2.3 billion, or an average of $834 per beneficiary. 

Beneficiaries are also realizing savings due to slow growth in coinsurance amounts.  Specifically, for 2014, Medicare Part B premiums will remain at $104.90, which is the same amount as in 2013.  The Part B deductible will also remain unchanged at $147.  According to CMS, the last five years have been “among the slowest periods of average Part B premium growth in the program’s history.” 

The Medicare Part A inpatient hospital deductible will increase by $32 to $1,216.  The daily coinsurance amount for 2014 will be $304 for the 61st through 90th day of hospitalization in a benefit period; $608 for lifetime reserve days; and $152 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period.  For enrollees who are 65 but not otherwise eligible for benefits under Part A, the Part A premium will drop by $15 in 2014 to $426.  Notably, most Medicare beneficiaries do not pay a Part A premium because they have at least 40 quarters of Medicare-covered employment. 

To access CMS’s press release click here . To review the associated Federal Register notices, here, here and here

Reporter, Tracy Weir, Washington, D.C., +1 202 626 2923, tweir@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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