The difference between Part B and Part D drugs

We’ve talked about high drug prices in the past, many times actually. When most people hear the word “drugs” (not the illicit ones) they immediately think; pharmacy and prescriptions. In most cases that would be true but many drugs given in healthcare treatment are administered in an outpatient setting by healthcare professionals. What many people don’t know is that these outpatient drugs are treated completely differently by insurance companies than drugs picked up at the pharmacy. These differences are important because depending on your insurance your costs could vary dramatically. We’re going to explain the main differences between these types of drugs and some things to be aware of.

Part B Outpatient Drugs

If you’re enrolled in Medicare or gearing up to enroll, you’ve surely been bombarded by mailings and calls with information on different types of Medicare plans. While looking through the benefits you may have noticed a benefit listed as “Part B Outpatient Drugs” or something along those lines. While this is often tucked away in the last pages of a benefit booklet the implications can be huge. These “Part B Outpatient drugs” are actually important, life saving medications in most cases. On Medicare, Part B drugs refer to “...drugs you wouldn't usually give to yourself, like those you get at a doctor's office or hospital outpatient setting.” 

In the real world this refers to chemotherapy drugs, infusion therapies and certain injectables among other things. The retail price tag of some of these drugs can be upwards of $10,000. With outpatient coverage under Medicare Part B you’re responsible to pay 20% of the bill for outpatient services after a $240 deductible (2024). If we consider the cost of a Part B drug with a $10,000 price tag; that means you’re paying a $2000 bill for every single treatment of that Medication! For most people, this is unaffordable in the near and long term.

The good news is that most people pick up additional coverage to avoid having to pay these exorbitant bills for every treatment. With a Supplement Plan G for example, you would be covered 100% for the cost of Part B drugs after paying the Part B deductible ($240 in 2024). With Medicare Advantage plans your annual out of pocket costs are capped at a dollar amount specified by your plan. It’s important in these cases to compare expected out of pocket costs on a lower cost Advantage plan with the expected premium costs under a Supplement plan. In a lot of cases the out of pocket savings with a higher premium Supplement plan outweigh the monthly cost saving with a low premium Advantage plan when Part B drugs are added to the equation.

Part D drugs

Medicare Part D was created in 2006 to give Medicare beneficiaries coverage for prescription drugs. Since then, drug prices have continued to rise steadily and many are advocating for legislation to combat these rising costs. Part D drugs are drugs that are picked up at a pharmacy and self administered. These are your everyday blood pressure, high cholesterol, insulin medications etc. Part D coverage is pretty straight forward for the most part. Most Medicare Advantage plans include drug coverage and if a Supplement plan is more your style you most likely purchased a stand alone Part D plan. 

Each Part D plan has a formulary; list of the covered drugs. Each drug on the formulary is designated to a tier between 1-5 (sometimes 1-6 or 1-4 depending on the plan). Each tier will have a different price (copay) that you are responsible to pay for said drug. Every Part D plan is generally required to cover at least two drugs in every therapeutic category of drug. Seems pretty straightforward, right?

Unfortunately, this is where it can get a bit convoluted. All of these Part D plans are negotiating prices they’ll pay for drugs between the pharmacy and pharmaceutical manufacturers. A tier 1 generic on Plan 1 that costs $0 could be a Tier 3 preferred brand name drug on Plan 2 and cost $40. If you get the drug in capsule form instead of a tablet the price difference could be astounding. These are non-specific examples but, there are many variables in play with Part D so it’s important to pick a plan that will cover your medications specifically (dose, frequency and delivery method).

Some things to watch out for:

Some drugs could fall under Part B or Part D

This is something that we run into fairly often, usually in the case of specialty (Tier 5) medications. Some drugs are available both at a pharmacy to self administer and through an outpatient setting. The differences in cost depending on your coverage and where you get it could be huge. Let’s look at a specific example of an expensive drug: Fasenra. This is an injectable drug used to treat severe forms of asthma. Let’s assume the patient has a Supplement Plan G + standalone Part D plan. The retail cost of Fasenra is hefty at ~$5500 and if you’re filling this at the pharmacy under Part D you’ll be paying 25%. However, if you instead get this drug at a doctors office and the script is filled and administered by the doctor’s office, it will be covered under outpatient Part B. In this example of a patient with Supplement Plan G that means they are responsible for the first $240 of cost, then covered 100%. The difference in annual spending between these scenarios is easily over $5000 when accounting for the drug price by itself. 

There is no spending limit on Part D

Another important thing to note is that Part D does not have a spending limit. If you take several high retail cost drugs your total annual spending on drugs could add up quickly. Medicare Part D does have coverage stages where what you pay will differ. Even in the catastrophic coverage stage you’re still responsible for some costs. You can read more about the Part D coverage stages by clicking here.

Pay attention to plan changes

Medicare Advantage and Part D drug plans can change every year. It’s a good idea to review your coverage every year during open enrollment and make any changes if necessary. You may find that a drug that was low cost on your plan last year all of a sudden is much more expensive or not covered on the same plan next year. Knowing ahead of time and planning for this will save headaches and frustration down the road.

Obviously every situation is unique and something that may work for someone might not for someone else. This blog is in no way intended to recommend certain plan types over others or an advertisement for a specific plan. We do help people through these complex situations every day so if you or someone you know is going through this process and looking for some help weighing the options, share our info with them. We’re just a click or a call away from simplifying your Medicare needs. Thanks for reading!