Eliminating out-of-pocket costs in Medicare Part D for recommended vaccines including shingles and others is bringing cost savings to consumers and is likely to increase vaccine uptake
Wednesday, March 15, 2023
Today, the U.S. Department of Health and Human Services (HHS) issued a new report showing that in 2021, 3.4 million people with Medicare paid $234 million in out-of-pocket costs for recommended vaccines covered under Medicare Part D. As of January 1, 2023, these vaccines – including for shingles, which can cost some seniors almost $200 dollars, and Tdap, are now free because of the Inflation Reduction Act – President Biden’s new law to lower prescription drug and health care costs.
The report from HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE), shows that the 3.4 million Medicare Part D enrollees who received a Part D covered vaccine in 2021 paid approximately $70 on average for these vaccines. HHS expects that even more Medicare enrollees will save money in 2023 and in future years because more people with Medicare are expected to get vaccinated when they don’t have to pay any out-of-pocket costs.
These cost-savings are in addition to the provisions in the Inflation Reduction Act that cap seniors’ out-of-pocket costs for insulin at $35 for a month’s supply. A recent report from ASPE showed that approximately 1.5 million seniors and other Medicare beneficiaries are likely to save $500 per year on insulin because of the new law. Through the Inflation Reduction Act – the most consequential health care law since the Affordable Care Act – President Biden is delivering on his promises to lower prescription drug costs, make health insurance more affordable, and make the economy work for working families.
“The Biden-Harris Administration is committed to lowering health care costs and increasing access to high-quality, affordable health care, and President Biden’s new lower-cost prescription drug law is helping us deliver,” said HHS Secretary Xavier Becerra. “Thanks to this historic law, most people with Medicare won’t have any out-of-pocket costs for many vaccines that can protect them against disease and severe illness.”
The report examines vaccine use, total vaccine spending, and out-of-pocket spending for vaccines that are covered under Medicare Part D: shingles; tetanus/diphtheria (Td); tetanus, diphtheria, and pertussis – also known as whopping cough (Tdap); hepatitis A; and hepatitis B. Medicare Part B already covers flu, pneumococcal, COVID-19, and certain other vaccines without cost-sharing for people with Medicare.
The majority of vaccinations administered and covered by Medicare Part D are for the prevention of shingles, and the shingles vaccine accounted for about 92 percent of total vaccine cost for Medicare Part D enrollees. On average, enrollees paid $77 out of pocket for the shingles vaccine – but for some seniors the vaccine can cost almost $200, $51 for the hepatitis B vaccine, and $28 for the Tdap vaccine in 2021. Out-of-pocket costs were even higher for people who did not receive the Part D Low-Income Subsidy: $95 for shingles, $81 for hepatitis B, and $73 for other vaccines. The Inflation Reduction Act wiped these costly out-of-pocket expenses for Medicare enrollees altogether starting this past January.
The new report also provides information on savings by state and by demographic characteristics, including gender, race and ethnicity, and age.
While the report estimates the potential savings based on the most recent data on vaccine use in Medicare (from 2021), the researchers suggest that removing the affordability barrier is likely to encourage even more people to get the covered vaccines in the future. Increased vaccination rates may help prevent serious complications that arise from vaccine preventable diseases – and reduce downstream health care use and costs. In addition, making the vaccines free might help address racial and ethnic disparities related to vaccine uptake.
Key points from today’s ASPE report include the following:
- The Inflation Reduction Act eliminated out-of-pocket costs for recommended vaccines covered under Medicare Part D as of January 1, 2023. Currently, about 51 million Medicare beneficiaries are enrolled in a Part D plan.
- Researchers examined vaccine use, total costs, and out-of-pocket spending for vaccines covered under Part D, including shingles (Zoster); tetanus/diphtheria (Td); tetanus/diphtheria and pertussis (Tdap); hepatitis A; and hepatitis B.
- About 3.4 million Medicare Part D enrollees (7 percent) received a Part D covered vaccine, paying a total of $234 million in out-of-pocket costs in 2021, or approximately $70 per beneficiary. The majority of enrollees who received a vaccine were immunized for shingles (82 percent), with each patient paying an average of $77 in out-of-pocket costs, followed by Tdap (21 percent). Some Medicare beneficiaries had to pay almost $200 for the shingles vaccine before the Inflation Reduction Act’s free vaccine provision went into effect.
- Enrollees without the Part D low-income subsidy (LIS) have a higher cost burden for prescription drugs, including vaccines. Non-LIS enrollees paid on average of $86 per enrollee in 2021 for Part D vaccines, driven largely by out-of-pocket spending for the shingles vaccine.
- State level estimates show that California ($20,000,000), Florida ($18,000,000), and Texas ($14,000,000) had the highest total beneficiary out-of-pocket costs for all Part D vaccines, with average enrollee savings of $51 per person in California, $79 per person in Florida, and $69 per person in Texas. In these and all other states, out-of-pocket costs for recommended Part D vaccines will be $0 in 2023 and future years under the Inflation Reduction Act.
Below includes a state-by-state breakdown of how many seniors and people with disabilities would have saved in 2021 on recommended vaccines had the Inflation Reduction Act been in effect:
Out-of-Pocket Costs for Medicare Part D Enrollees on Part D Covered Vaccines in 2021, by State
|State||Number of Enrollees||Total OOP ($)||Average OOP ($)|
|District of Columbia||5,038||$164,954||$32.74|
Source: ASPE analysis of the CMS 2021 Medicare Prescription Drug Event (PDE) and Medicare enrollment data files. Notes: Estimates are presented for enrollees who received any Part D covered vaccines. For vaccines that require multiple doses to complete the vaccination series, estimates include all doses received in 2021.
Totals include enrollees residing in U.S. territories or outside the United States.
OOP = Out-of-Pocket
The full HHS report, “Medicare Part D Enrollee Savings from Elimination of Vaccine Cost-Sharing”, is available at https://aspe.hhs.gov/reports/ira-elimination-vaccine-cost-sharing
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