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Medicare Updates Rules for Drug Negotiations

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The United States Medicare program has released updated regulations for its second round of drug price negotiations. The new rules aim to provide clearer guidelines and improve the process of negotiating prices with pharmaceutical companies. This is to ensure more affordable medication for beneficiaries.

The update is a big step in the government’s efforts to control healthcare costs, especially the expenses related to prescription drugs. This round of negotiations will focus on drugs that are among the most expensive for Medicare and its beneficiaries. The updated regulations come after talking with industry stakeholders.

They aim to address concerns raised during the first round of negotiations. The Centers for Medicare and Medicaid Services (CMS) is expected to begin discussions with drug manufacturers soon. There will be an emphasis on transparency and fairness in the negotiation process.

The goal is to reduce out-of-pocket expenses for Medicare beneficiaries. At the same time, it aims to maintain the financial sustainability of the Medicare program. The revised rules stress the need for pharmaceutical companies to justify their pricing.

They must provide evidence-based data to support their costs. This move aligns with broader healthcare policy initiatives under the current administration. The focus has been on reducing drug prices and making healthcare more accessible and affordable for all Americans.

The Education Department’s protections for student loan borrowers who have missed payments end today. Since the Education Department ended the pause on student loan payments last year, several procedures were turned off temporarily. These include late fees, defaults, negative items on personal credit reports, and collections actions.

This “on-ramp” was designed to give more than 30 million borrowers flexibility with resuming payments after a three-year forbearance period during the pandemic. But starting today, those procedures come back. If borrowers miss payments, they can be hit with penalties.

If they miss multiple payments, they can be thrown into default and face extreme efforts to collect the debt. While the worst impacts would happen after several missed payments, an unknown number of borrowers who were in default prior to the pandemic pause could see immediate consequences. Despite the political calendar and efforts to prevent bad headlines for seniors, the administration let this happen entirely on its own.

Nearly 30 percent of borrowers in the student loan system were past due on their payments as of January 2024. “I think we’re going to look back on the decisions in the spring and early summer of 2023 as obvious and predictable unforced errors,” said Mike Pierce of the Student Borrower Protection Center. For all student loan borrowers, missed payments in October will lead to late fees.

With multiple missed payments, they tend to compound along with interest.

Medicare revises drug price guidelines

Any missed payment will be reported to the national credit reporting bureaus, leading to a reduced credit score and higher borrowing costs for other loans.

The Missouri Higher Education Loan Authority (MOHELA), one of the nation’s biggest private loan servicers, recently claimed it was immune from prosecution because it is “an arm of the state of Missouri and thus enjoys sovereign immunity.” With this posture, MOHELA may not take the kind of care borrowers expect from an entity holding their financial futures. Collections actions typically do not take effect until a borrower is more than 120 days past due, and full default doesn’t happen until there are 270 days of missed payments. However, for borrowers who were already in default prior to the pandemic and never fixed it, collections could start right away, including wage garnishment and the interception of federal tax refunds or parts of federal benefits.

Borrowers currently in default could get themselves into good standing before penalties are reinstated through the “Fresh Start” program, which mainly involves enrolling in the Biden administration’s income-driven repayment program known as Saving on a Valuable Education (SAVE). However, legal challenges have made it difficult for some borrowers to access SAVE. Applications for SAVE and other income-driven repayment plans are delayed, and only paper applications are available, facing long processing times.

The website for Fresh Start failed over the weekend, likely due to high traffic from borrowers attempting to get out of default. The Education Department extended the Fresh Start deadline to October 2 at 3:00 a.m. Eastern time, giving borrowers an additional day to get out of default if they can afford monthly payments. Aggressive collections on student loans are at the discretion of the Federal Student Aid Office and a private contractor called Maximus that administers wage garnishment.

A student debt forgiveness program set to lower balances this fall is also tied up in the courts. While the Education Department attempted to normalize the student loan system, ongoing legal uncertainty and loan servicer issues have created chaos for millions of borrowers, adding to anxiety just 35 days before the presidential election. Two weeks ago, a coalition of 112 organizations called on the administration to extend the on-ramp period.

“No borrower should be forced into delinquency, default, or collections while they are unable to access affordable repayment options they are entitled to under the law,” the groups wrote. After Hurricane Helene devastated parts of the Southeast, the Biden administration offered relief in 17 counties in Florida and 25 in North Carolina. The HEROES Act of 2003 allows borrowers in areas under emergency conditions to receive relief from federal student loan repayment, interest accrual, and involuntary collections during the disaster period.

At the very least, North Carolina and Florida borrowers in disaster zones should be granted this relief. Federal regulators spent billions of dollars to avoid a spike in costs for older Americans that could have been politically damaging to the presidential campaign of Vice President Kamala Harris. The Biden administration announced on Friday that next year older Americans would face lower average monthly premiums for their prescription drugs.

This was achieved by pouring billions of dollars into subsidies for insurers. The move avoided a potential minefield of higher costs affecting the nation’s most stalwart voters weeks before the presidential election. In response to the specter of huge spikes in costs, administration officials decided months ago to funnel money from a Medicare trust fund to offset rate increases.

These increases could have cost millions of people hundreds of dollars more a year. Premiums would have gone up largely because of a $2,000 annual cap on out-of-pocket spending, and other changes to Medicare under President Biden’s signature legislative accomplishment, the Inflation Reduction Act. Higher premiums could have been politically damaging to the presidential campaign of Vice President Kamala Harris.

They threatened one of the Biden-Harris administration’s most important talking points — its success in lowering patients’ drug costs. But the reality is that when patients pay less at the pharmacy counter, somebody has to foot the bill. The administration’s offset plan, known as a demonstration, was announced in July.

Critics have called it a nakedly political ploy meant to sway votes, arguing that it would offer only temporary relief to older people.


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  • Reuters.”US Medicare issues updated rules for second round of drug negotiations”.
  • Prospect.”The Self-Imposed October Surprise”.
  • NYTimes.”Biden Officials Stave Off Sticker Shock on Medicare Drug Premiums”.

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