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How Will Patient Out-of-Pocket Expenses Change in 2024?

by BillingFreedom | Feb 20, 2024

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Healthcare inflation is driving patient out-of-pocket expenses in 2024. HHS and CMS predict 7.97% inflation. This alarming figure puts a heavy financial strain on patients. Most Medicare drug plans have a “donut hole” that temporarily limits drug coverage, which helps explain the complex dynamics. Hospitals have also been criticised for overcharging medicine by 500%.

Report Analytics on Patient Out-of-Pocket Expenses

A compelling Pharma.org report reveals the shocking truth about healthcare costs. This report shows important findings:

  1. First, it shows that hospitals charge patients 500% of their average medicine costs. According to a detailed analysis of 20 medicines, hospitals charge 200% to over 700% more than the actual cost.
  2. The report also shows that commercial payers reimburse hospitals almost 200% of medicine acquisition costs. Patient cost sharing often depends on these markups, which raises medical expenses.
  3. The report estimates that 340B hospitals are reimbursed almost three times the discounted price of a medicine, even though it didn’t exclusively study them. This is significant because nearly 60% of U.S. hospitals are part of the 340B drug pricing program, and their average markup is likely even higher due to substantial discounts.

Thus, as policymakers address healthcare costs and affordability, they must consider hospitals’ growing role in raising patient and system costs. The 2024 inflation rate of 7.97% emphasizes the need to address these critical issues for patients and the healthcare system.

 

HHS And CMS – Out-of-Pocket Expense Limits Release 2024

HHS publishes certain financial numbers each year to determine healthcare costs. This document is about providing these numbers for the year 2024. The Department of Health & Human Services (HHS) in the United States discusses various financial parameters for the 2024 benefit year related to healthcare. Here’s an explanation of the key points:

    1. Premium Adjustment Percentage for 2024: This percentage (about 48.9% for 2024) adjusts the maximum amount you must pay for healthcare.
    2. Maximum Annual Limitation on Cost Sharing for 2024: This is the most you might have to pay for healthcare in a year, and it’s adjusted based on your income. For 2024, it’s about $9,450 for individuals and $18,900 for families.
    3. Reduced Maximum Annual Limitation on Cost Sharing for 2024: Some lower-income people get further reductions in their maximum healthcare costs.
    4. Required Contribution Percentage for 2024: This percentage determines whether you can get an exemption from having health insurance based on how much you’d have to pay for it compared to your income. For 2024, it’s about 7.97%.

Medicare Part B Premium Increase – Expectations

The standard monthly premium for Medicare Part B may also increase in 2024. It could go up by about $10 per month. This could lead to an increase in Medicare Part B premiums, as these premiums are a key source of funding for Medicare, covering about 25% of the program’s overall costs. The Medicare trustees projected it in March 2023, making it more expensive for beneficiaries. The premium increase for 2024 has yet to be discovered and will be determined in a few months.

New Alzheimer’s Treatment: This premium increase is linked to a new treatment called Leqembi, which was approved for Medicare coverage. This treatment is expensive, and its cost may affect Medicare Part B premiums.

If Medicare Part B premiums increase next year due to the new Alzheimer’s drug, it won’t be the first time. In the past, there was a significant 15% increase in Part B premiums between 2021 and 2022, which was much higher than usual. This increase was connected to the introducing of another Alzheimer’s treatment called Aduhelm, as stated by KFF.

Cost Impact: Leqembi and related services for Alzheimer’s may add about $5 per month, making the total premium around $179.80 per month for most beneficiaries.

Social Security Connection: The increase in Part B premiums could impact Social Security checks because Part B premiums are often deducted directly from these checks. This means that retirees may see less money in their Social Security payments.

Previous Increases: Similar premium increases happened in the past when this treatment was newly introduced, and these increases can affect retirees’ finances.

 

Factors Driving Healthcare Cost Increases

Many factors collectively contribute to the healthcare industry’s affordability and cost disruption challenges. Organizations are urged to reshape strategies, re-engineer financial and workforce models, and invest in technology to address these rising costs. Let’s explore the factors causing cost boosters in healthcare.

    1. Inflation High inflation is a significant factor contributing to the rising costs in the healthcare industry. It affects the prices of medical equipment, supplies, and services, increasing the overall expenses for both healthcare providers and patients.
    2. Rising Wages The increasing wages of healthcare professionals and staff drive healthcare costs. As wages rise, healthcare providers must allocate more of their budgets to labor expenses, affecting the cost of care.
    3. Negotiations with Health Payers Health payers like insurance companies negotiate pricing with hospitals and healthcare providers. These negotiations can result in higher service reimbursement rates, leading to increased costs for payers and, ultimately, patients.
    4. Drug Prices The cost of medications, especially specialty drugs, continues to rise. Health plans face higher median prices for new drugs and increasing prices for existing medications, contributing to the overall cost of patient care.
    5. Persistent Double-Digit Pharmacy Trends The increasing use of certain medications, such as those for treating Type 2 Diabetes or weight loss, is driving double-digit pharmacy trends. These trends can significantly impact healthcare costs as prescription drug expenses climb.
    6. Aging Technology and Infrastructure Healthcare organizations often need to work on updating technology and infrastructure. Upgrading these systems to meet the demands of modern healthcare practices requires substantial investments, adding to the overall cost of healthcare.
    7. Affordable Care Act (ACA) Marketplace The ACA marketplace substantially impacts healthcare costs. Health plans covering millions of ACA marketplace members must balance the cost of coverage with the need to provide affordable options to enrollees. 

FAQs

What happens when you reach your out-of-pocket expense?

Reaching your out-of-pocket maximum signifies that you’ve hit the highest amount you’ll have to pay for covered medical expenses in a given calendar year. Once this limit is reached, your insurance will cover 100% of eligible costs for the rest of the year. In other words, you won’t have to bear additional out-of-pocket expenses for covered medical services during that calendar year.

What Doesn’t Affect the Coverage Gap “Donut Hole”?

However, certain expenses won’t affect the coverage gap:

  • Your drug plan premium
  • Pharmacy dispensing fee
  • Costs for drugs that aren’t covered

These are outside the coverage gap and won’t count toward it.

What Goes Toward the Coverage Gap “Donut Hole”?

These expenses indeed contribute to the coverage gap:

  • Your yearly deductible
  • Coinsurance payments
  • Copayments
  • The discount you receive on brand-name drugs while in the coverage gap
  • What you pay for drugs during the coverage gap

So, regarding these costs, they play a role in reaching the coverage gap.

What could be the ways to help pay less for out-of-pocket costs?

To cut down your out-of-pocket healthcare expenses, consider these strategies:

  1. Use in-network providers: Stick to healthcare professionals within your insurance network for lower costs.
  2. Prioritize preventive care: Regular check-ups and vaccinations can prevent costly health issues, often covered by your plan.
  3. Visit convenience care clinics: Opt for affordable care at these clinics for minor ailments.
  4. Choose urgent care: Non-life-threatening problems can be handled at urgent care centers, which are usually more cost-effective than emergency rooms.
  5. Consult a nurse hotline: Many insurers offer this service for free, helping you decide if a doctor’s visit is necessary.
  6. Embrace telehealth: Access healthcare professionals from home via virtual visits, saving on travel and other expenses.
  7. Understand costs: Research procedure costs and insurance coverage details, including deductibles and copayments, to make informed decisions and manage your healthcare budget more effectively.

With BillingFreedom’s in-depth knowledge of the latest industry developments, we help you minimize out-of-pocket expenses while staying informed about emerging healthcare trends. At BillingFreedom, we empower you to take charge of your healthcare costs, make informed decisions, and access quality care without breaking the bank. Choose us as your medical billing partner and journey towards affordable and efficient healthcare management.

For more details about our exceptional medical billing services, please don’t hesitate to contact us via email at info@billingfreedom.com or call us at +1 (855) 415-3472.

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