HealthTech Has Solutions
As we approach 2025, the predictions for Medicare spending are causing panic-level responses. The Inflation Reduction Act (IRA) offered welcome relief to Medicare beneficiaries with the $2000 out-of-pocket cap for covered Part D drugs, but the price of medications did not drop, so Medicare payers are looking for ways to plug the fiscal gaps. Additionally, the IRA isn’t a panacea for high drug costs, and seniors with chronic conditions like asthma, COPD, and diabetes are seeing their costs inflate beyond fixed incomes. For seniors, these rising out-of-pocket costs are not just numbers—they represent difficult choices, like skipping medications or cutting back on essentials. The healthcare cost squeeze has attracted the attention of HealthTech companies, like RazorMetrics, that use data and technology to find innovative cost-cutting opportunities not yet seen by government or large market players.
What’s behind the increase in Medicare spending
Predicted increases in Medicare spending next year are due to a combination of factors. Costs for the federal government and beneficiaries’ out-of-pocket expenses are both impacted by the following major drivers:
- Aging Population
More people are aging into Medicare eligibility, creating a higher demand for healthcare services, especially for the highest cost disease states: chronic conditions and long-term care needs. Medicare spending goes up because there are more enrollees who are ramping up their use of services.
- Rising Prescription Drug Costs
Specialty medications are responsible for most of the cost growth in pharmacy. These include drugs like biologics used to treat cancer, autoimmune diseases, and rare genetic disorders. Medicare Part D (prescription drug coverage) and Medicare Advantage plans are trying to balance the high costs while maintaining access to new treatments. Beneficiaries will likely have to pay higher premiums, deductibles, and out-of-pocket expenses.
- Chronic Disease
Chronic conditions, like diabetes, heart disease, and hypertension, require consistent management, which means more doctor visits, medications, hospitalizations, and long-term care. Effective management of these conditions could help contain costs, such as a Polypharmacy Management program.
- MedTech Advancements
New medical technologies, treatments, and diagnostic tools are impressive, but expensive. Demand for the best, new thing is high.
- Post-Pandemic Surge in Utilization
COVID-19 impacts are still rippling through our healthcare system. Utilization is up for two reasons: 1. There are a higher number of enrollees than pre-pandemic levels despite rolling people off, and 2. People are catching up on deferred care and are looking for treatments they postponed.
- Medicare Advantage Growth
Medicare Advantage (MA) plans have increased enrollment in recent years. While these plans offer additional benefits and care coordination, they also increase costs for the government due to risk adjustments and bonus payments to private insurers. As more beneficiaries choose MA plans over traditional Medicare, the government may face higher per-person costs.
- Providers Are Charging More
Costs are going up at hospitals, physician offices, and other healthcare facilities for both the prices for services and the volume of services delivered. Consolidation of health systems and worker shortages are making salaries more competitive.
Our healthcare system is stuck between a rock and a hard place, having to control costs while also keeping pace with better, more expensive treatments.
HealthTech Innovations
Without immediate action, rising healthcare costs will force more seniors to choose between vital medications and other essentials. HealthTech solutions like RazorMetrics offer the opportunity to address these challenges now, before they spiral even further.
RazorMetrics helps healthcare providers and patients make more informed choices about medications. Here’s a small sample of how our programs work:
Cost Optimization: RazorMetrics’ Intervention Codex offers better medication options, helping seniors and their providers select equally effective but lower-cost drugs. The approach reduces out-of-pocket spending and supports medication adherence rates. A real-world example, RazorMetrics identified an equally effective but lower-cost alternative and helped a patient save $3500 per year on their diabetes medication.
Polypharmacy Management: Medicare beneficiaries with multiple chronic conditions often are prescribed five or medications to manage the disease, and then to manage the side effects of primary medications. RazorMetrics’ polypharmacy management program adds a critical layer of protection by giving providers full visibility into their patient’s prescriptions, regardless of the provider’s network. When providers have a complete medication list, they are better equipped to avoid unnecessary or harmful drug combinations. Polypharmacy patients are much more likely to have an adverse drug reaction, which cause 1.3 million emergency department visits each year and about 350,000 hospitalizations.
As 2025 approaches, Medicare is facing unprecedented fiscal pressures. Now is the time for payers and employers to embrace innovative solutions. RazorMetrics offers a clear and frictionless solution to seniors and their providers so they can make more informed, cost-effective decisions.
