Lawmakers pitch cap on Medicare beneficiary out-of-pocket costs
Democratic senators introduced legislation June 25 that would cap out-of-pocket costs for traditional Medicare beneficiaries.
The Medicare Cost Cap Act would install a $5,000 annual cap for Parts A and B cost-sharing — including deductibles, copays and coinsurance — beginning in 2028. Once the cap is hit, Medicare would pay 100% of covered costs for the rest of the year. The cap would change each year based on per capita Medicare spending growth.
The bill would also expand the low-income subsidy and Medicare savings programs. Beginning that same year, the bill would align the income eligibility threshold for these programs at 200% of the federal poverty level. The bill would cut a resource ceiling that may disqualify some beneficiaries. A two-way automatic eligibility recognition would also go into effect for the programs.
A June 25 Senate Finance Committee news release said, over a decade, more than 52% of beneficiaries are anticipated to surpass the $5,000 cap at least once. The bill would save enrollees $1,024 on average per year. In 2028, 3.2 million Medicare beneficiaries are projected to directly benefit from the cap, according to the release.
The bill did not outline a funding mechanism, but Medicare’s Hospital Insurance Trust Fund, which finances Part A, is expected to face a funding cliff by 2033. KFF reported Andrew Ryan, PhD, of the Providence, R.I.-based Brown University School of Public Health said, with the proposed cap, analysts estimate potential costs of at least $50 billion per year.
Earlier this year, a $2,100 annual cap on out-of-pocket prescription drug costs for Medicare beneficiaries with Part D coverage went into effect. There was a $2,000 limit set for 2025, and, like the bill proposes, that cap can be adjusted each year based on drug spending trends.
Medicare Advantage plans currently have an out-of-pocket limit of up to $9,250 for in-network services, but plans themselves can lower that cap, according to KFF.
Elevance Health paid CMS $342 million following a Medicare Advantage sanction notice alleging the insurer did not properly address overpayments for years.
June 22 filings in a New York federal court included an email from an Elevance vice president to CMS, confirming the payment was a “remittance of the total overpayment amount” related to the Risk Adjustment Overpayment Reporting module. Elevance conducted the wire transfer May 27, and CMS confirmed receipt the next day.
On May 29, a separate CMS letter informed Elevance that it had received the company’s attestation, but it did not specify the payment amount at the time. That step, along with initial submissions to the appropriate electronic systems, temporarily staved off intermediate sanctions. However, CMS said the insurer has until the end of June and July to complete further tasks — such as resolving issues across other risk-adjustment modules and addressing additional overpayment issues — before sanctions kick in.
The most recent filings also included a June 22 letter from the U.S. attorney’s office to the judge, challenging Elevance’s desire for additional discovery regarding the sanction notice.
“To the extent Anthem [now Elevance] wishes to challenge CMS’ administrative action, this is not the appropriate forum to do so,” the letter said.
CMS told Elevance in February that it would impose sanctions affecting MA prescription drug plan enrollment and communications due to a lack of compliance with risk-adjustment data submission requirements, interfering with the return of overpayments.
Elevance CFO Mark Kaye previously said the company had set aside $935 million to address the dispute. As of February, Elevance had about 2 million MA members.
This case is not the only source of tension between Elevance and the federal government right now. A Justice Department lawsuit first filed in 2020 alleges False Claims Act violations.
“Elevance Health continues to engage in constructive dialogue with the Centers for Medicare & Medicaid Services,” an Elevance spokesperson told Becker’s June 26. “We remain optimistic that a resolution can be reached and value our longstanding relationship with CMS.”
