New report outlines how Congress’s proposed prescription drug reforms could impact Colorado Medicare beneficiaries


Boram Kim


According to a new report from the Kaiser Family Foundation (KFF), more than 113,000 Medicare beneficiaries in Colorado could benefit from lower costs to Part D prescription drugs if provisions in the US Senate’s draft legislation are passed. 


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The Senate Finance Committee recently published legislative text in a forthcoming reconciliation bill that aims to lower prescription drug costs for people with Medicare and private insurance, and reduce federal drug spending. 

Provisions in the Senate Finance Committee’s proposals would reduce out-of-pocket spending for Medicare beneficiaries by: 

  • Eliminating the requirement that beneficiaries pay 5% coinsurance for their medications after they’ve reached their catastrophic coverage limit, beginning in 2024
  • Adding a $2,000 cap on Part D out-of-pocket spending, beginning in 2025
  • Eliminating cost sharing for adult vaccines that are covered under Medicare Part D as of 2023, and improves access to adult vaccines under Medicaid and CHIP, beginning in 2023
  • Expanding eligibility for full Part D Low-Income Subsidies (LIS), beginning in 2024
  • Allowing the US government to negotiate Medicare prescription drug prices with pharmaceutical companies

The Medicare catastrophic coverage threshold is set at $7,050 in out-of-pocket drug costs in 2022, which includes the amount beneficiaries are responsible for and the manufacturer discount on the price of the drugs in the coverage gap. Beneficiaries typically spend around $3,000 of their own out of pocket money before qualifying for catastrophic coverage. Once this coverage kicks in, patients are required to pay 5% of the drug’s cost while the insurance company pays the rest.


SOURCE: KFF analysis of 2020 prescription drug event claims data from a 20% sample of Medicare beneficiaries from the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse.


KFF estimates 16,000 Medicare Part D enrollees without LIS in Colorado had spending above the catastrophic coverage threshold in 2020, which was $6,350 that year, and would benefit from eliminating the 5% coinsurance requirement above the catastrophic threshold. 

Nearly 19,000 Medicare Part D enrollees without LIS had annual out-of-pocket drug spending of $2,000 or more in 2020. The proposed $2,000 hard cap on out-of-pocket drug spending would benefit this group, which includes enrollees without LIS who spend above the catastrophic threshold. 

Nearly 725,000 Medicare beneficiaries in Colorado received a vaccine covered under Part D in 2020, including those who received the vaccine to prevent shingles, and would benefit from eliminating cost sharing for vaccines. 

The expanded eligibility for Part D LIS would repeal the partial LIS benefits currently in place for individuals with incomes between 135% and 150% of poverty and cover Medicare beneficiaries under 150% of the federal poverty level with full LIS benefits. Some 6,100 Coloradan Medicare beneficiaries received partial LIS benefits in 2020 and residents could potentially benefit from the expansion of the income eligibility for full LIS benefits. 


Source: KFF


The Congressional Budget Office estimates annual out-of-pocket costs for these beneficiaries could fall by close to $300, on average, based on the difference between average out-of-pocket drug costs for LIS enrollees receiving full benefits versus partial benefits in 2020. 

CBO estimates that all of these provisions would reduce the federal deficit by $288 billion over the next 10 years. Under the proposed legislation’s timeline, the federal government would repeal the Trump Administration’s drug rebate ruleset to take effect in 2027and initiate drug price negotiations in 2026 that would incrementally reduce the price of high-cost drugs under Medicare Parts D and B. This effort aims to reduce the price of 60 prescription medicines by 2029.