What is Medicare?
Medicare is the universal health care scheme of Australia. The system was introduced on 1 February 1984, but its first iteration was launched nine years earlier, in 1975. Medicare is a public health insurance system that ensures that all Australians’ have access to a comprehensive range of health care and hospital services at minimal cost.
If an individual has a Medicare card, he/she can access several healthcare services for free or at a minimal cost. The services include:
Medicare intends to ensure that all residents have access to low-cost or free medical, midwifery, optometry, as well as hospital care, and in some particular circumstances, allied health.
The Medical Benefits Schedule (MBS) lists the healthcare services that are covered by Medicare. A team of medical specialists is there who makes sure that the list updated, safe and best practice. Moreover, the MBS has a safety net that makes sure a person pays less for services after reaching a specific amount of out of pocket costs.
Another vital component of Medicare is the Pharmaceutical Benefits Scheme (PBS), and it helps to make available prescription medicines at a low cost. Moreover, a Medicare card also provides access to the Pharmaceutical Benefits Scheme (PBS).
Medicare is the basis of Australia’s healthcare system and covers numerous healthcare costs. Most Australian residents are eligible for Medicare. A person who is living in Australia or Norfolk Island and meet some specific criteria can get a Medicare card. People visiting certain countries may also get a reciprocal Medicare card.
People have the option to choose whether they want Medicare cover only, or a combination of Medicare along with private health insurance. The Medicare system mainly comprises three parts- Hospital, Medical and Pharmaceutical.
Medicare covers the cost of seeing a healthcare specialist, tests & scans (x-rays), most surgery performed by doctors, and eye tests by optometrists.
Medicare does not cover the cost for ambulance services, most dental services, cosmetic surgery, glasses, contact lenses and hearing aids.
What is covered under hospital section?
Under Medicare, individuals can be treated as a public patient in a public hospital, without any cost, by a doctor appointed by the hospital. One person can also choose to be treated as a public patient, even if the insurance is private.
As a public patient, one person does not have the option to opt own doctor and may not have a choice about the admission to hospital because there could be a public hospital waiting list.
Medicare does not cover private patient hospital costs, medical and hospital expenses incurred overseas, medical and hospital services which are not clinically necessary, or surgery solely for cosmetic reasons, ambulance services; and emergency department administration fees.
What is covered under the Medical section?
When one person visits a physician outside a hospital, Medicare will reimburse complete (100%) of the MBS (Medicare Benefits Schedule) fee for a general practitioner and 85% of the MBS fee for service provided by a specialist. If doctor bills Medicare directly through bulk billing, in that case, Medicare cardholders will not have to pay anything.
Medicare provides benefits represented below-
Moreover, Medicare also covers diagnostic imaging services including ultrasound, X-rays, MRI scans and CT scans.
What is covered under Pharmaceutical section?
Under the Pharmaceutical Benefits Scheme (PBS), one needs to pay only part of the cost of most prescription medicines purchased at pharmacies. The remaining cost is covered by the Pharmaceutical Benefits Scheme. Individuals must show their Medicare card for availing this benefit.
The payable amount varies, and is dependent on the medicine type, up to a standard maximum. People with concession cards issued by the government have a lower maximum payment.
The Pharmaceutical Benefits Scheme, or PBS, helps to get medicines available at some lower cost. The cost of medicines would be high without PBS. In some instances, drugs would cost as much as thousands of dollars.
The Pharmaceutical Benefits Scheme contains a list of branded medicines, generics, biologics and biosimilars. There are almost 5.2k products listed on the PBS. All products are demonstrated safe and effective before being marketed across Australia. There are independent medical experts who suggest what can be added to the PBS.
If any person is enrolled in Medicare, the person needs to pay only some of the cost of most PBS medicines. The Australian government will pay the remaining cost.
If a person needs to buy lots on medicine, the PBS Safety Net helps in keeping the costs low. After reaching the Safety Net Threshold amount, the prescriptions charges will be even less for the remaining of the year.
For enrolment in Medicare, people need to fill the Medicare enrolment form and email the form with supporting documents to Medicare Enrolment Services. This enrolment form allows to enrol up to 5 people in Medicare. If there are more than five people to enrol, an additional Medicare enrolment form will be required.
One person can enrol in Medicare if he or she lives in Australia and is one of the following:
Citizens or permanent residents of Norfolk Island, Cocos (Keeling) Islands, Christmas Island and Lord Howe Island can also enrol for Medicare.
Nanny tax is a tax that is ought to be paid by the individuals who employ household help, such as a babysitter, maid, or home health aide, and pay them higher than a stipulated level amount in the course of the tax year. More generally, it is a part of Social Security and Medicare taxes paid by the employer of a nanny, gardener, or other household worker, thus enabling a household employee to receive the benefits and protections of being paid legally.
What is the Pharmaceutical Benefits Scheme? The Pharmaceutical Benefits Scheme, or PBS, is designed to offer safe and affordable medicines to all people across Australia. Under the scheme, the government subsidizes the expense of drugs for a range of diseases. The scheme is a part of the National Medicine Policy by the Australian government. As the cost of some prescription medicines is extremely high, PBS can help lower these costs and make them more affordable. The scheme was launched in 1948 as a restricted scheme, with free medicines for retirees. PBS comprised of nearly 139 life-saving & disease-preventing treatments to be offered free of cost to others in the community. Most of the PBS-listed medications are dispensed by pharmacists and used by patients at home. Pharmaceutical Benefits Scheme comprises- List of all subsidized medicines from A-Z. How to use medicines. Information related to consumers. Cost of medicine (Depending on whether an individual owns a concession card). PBS is distinct to the Medicare Benefits Schedule, which includes a list of health care facilities that can be claimed under Medicare, a universal health care insurance scheme across Australia. Who is qualified for PBS? All residents of Australia possessing a Medicare card are eligible for subsidized medicines under the Pharmaceutical Benefits Scheme. Overseas visitors from nations that have a Reciprocal Health Care Agreement with Australia are also qualified for the scheme. This implies to people from Belgium, Finland, Italy, Malta, the Netherlands, New Zealand, Norway, the Republic of Ireland, Slovenia, Sweden, and the UK. PBS medicines are available for: All citizens of Australia & concession cardholders who have a current Medicare card. Visitors from overseas nations with which Australia is having a Reciprocal Health Care Agreement (RHCA). Veterans, war widows and widowers, including dependents who are qualified under the RPBS (Repatriation Pharmaceutical Benefits Scheme). How can an individual get PBS medicines? To collect PBS medicines, a person needs to show Medicare card while filling the prescription. There will not be any discount for over the counter (OTC) medicines. If a person has a concession or a health care card, he or she may get PBS medicines at a further discount. The person needs to show Medicare card and any one of the following- What is the cost of medicine on PBS? The new drug products cost, as well as review of prices for existing products, is carried out by the PBPA (Pharmaceutical Benefits Pricing Authority). Under the Pharmaceutical Benefits Scheme, the cost is categorized based on the type of drug or medicine. The image below represents the cost for several medications- What is the PBAC? The PBAC or Pharmaceutical Benefits Advisory Committee is an independent expert organization established under the National Health Act 1953. The committee makes suggestions & advice the Minister about which drugs or medicinal preparations should be subsidized on the PBS. The PBAC deems the medical as well as cost-effectiveness of a proposed benefit compared to other alternative therapies. The committee suggests maximum quantities, repeats as well as may also recommend restrictions for medicines. When recommending listings, the advisory committee offers advice to the PBPA (Pharmaceutical Benefits Pricing Authority) regarding the comparison of alternatives with the cost-effectiveness of the medicines. The committee has three cycles in a year, each lasting almost 17 weeks. The PBAC is not a permanent unit in the Department of Health and comprises of medical specialists who meet many times in a year. How are the medicines listed on the PBS? Before a drug can be added on the PBS list, it must be approved for use in Australia by the Therapeutic Goods Administration (TGA). The drug sponsor, generally a pharmaceutical company, applies to the TGA to have the drug registered in the ARTG (Australian Register of Therapeutic Goods) so that the drug can be marketed in Australia. The sponsor must give proof, for instance, clinical trials information, that the drug meets all the required standards of safety, quality and efficacy for the intended use. In PBS, medicines are listed by drug substances, forms, and strength & brand names. However, it is difficult to provide a total figure for the number of medicines listed on the PBS. The Therapeutic Goods Administration (TGA) categorizes medicines in a scheduling system that determines where one can get medicines- Unscheduled- These drugs are not classified, and a person can purchase them without any restriction (for example- at a supermarket) Schedule 2 (S2): These medications can be purchased at a pharmacy. Schedule 3 (S3): These medications can only purchase from a pharmacy, where a pharmacist must personally give the medicine and an opportunity to seek advice on the medicine. Schedule 4 (S4): These medications can only purchase with a prescription; this includes most items on PBS. Schedule 8 (S8): Schedule 8 medicines are classified as drugs of addiction or dependence. Schedule S2 & S3 medicines are sometimes called OTC (over-the-counter) medicines. Schedule S8 medications are listed on the Pharmaceutical Benefits Scheme have some restrictions which are different in some States and Territories. What is a non-PBS medicine? If a drug has been approved by the TGA for sale but the government elects not to subsidize a medicine under the PBS, the drug is considered as a non-PBS drug or private prescription. The government might take this action because- An alternative drug for the same indication currently listed on the PBS and is subsidized. The drug is costly, and in the opinion of the government is unsubstantiated. The medicine does not work in a better way, or as well as an already existing medicine on the PBS, for that particular indication.
What are Pharmacy Benefit Managers? Pharmacy Benefit Managers (PBMs) are corporations that oversee prescription drug benefits for large employers, health insurers, and other payers. In other words, Pharmacy Benefit Managers can be considered as advocates in the healthcare system who work to reduce the cost of prescription medicines for patients and payers in the US. According to the PCMA (Pharmaceutical Care Management Association), Pharmacy Benefit Managers oversee prescription medicine proposals for over 270 million people in the US having health insurance from several sponsors. The sponsors include commercial health plans, union plans, self-insured employer plans, the Federal Employees Health Benefits Program (FEHBP), Medicare Part D plans, managed Medicaid plans, state government employee plans, and more. PCMA observes and advocates on several essential healthcare-related issues that allow PBMs to continue- Reducing costs of pharmacy for employers and consumers in the United States. Protecting affordability & choice in Medicare Part D. Decreasing pharmacy costs for Medicare beneficiaries. Improving safety with specialty pharmacies. What are the functions of PBMs? The two main functions of Pharmacy Benefit Managers are- To maintain drug formulary lists- The central role of a PBM to manage & maintain a healthcare payer’s formulary list. The formulary list or drug list comprises prescription medicines which are preferred under a particular health plan. The drug list is essential to understanding the benefits of healthcare, along with the type of care a beneficiary can access. Drug prices negotiation and rebates management- The other role of PBM is to negotiate the buying price from a prescription drug manufacturer or pharmaceutical company. The companies are in charge of setting a list price for their manufactured medications. In particular, Pharmacy Benefit Managers maintain relationships with three key participants in the pharmaceutical supply chain- Relationship between PBMs and drug manufacturer- The PBM negotiates the cost of a drug and rebates from the drug manufacturer. In the exchange, PBMs will put some drugs on the formulary list, ensuring that the drug manufacturer will get business. Relationship between PBM and health payer- The PBM manages drug formulary list for a payer, and in return the payer gives the PBM money for administrative services, paying for the actual drug as well as for dispensing. Relationship between PBM and the pharmacy- In some cases, a PBM sign contract with a pharmacy for directly dispensing drugs. PBMs also pay the pharmacy fee for dispensing of a drug. What is the role of a PBM? Pharmacy Benefit Managers play a crucial role in determining the cost of drugs to consumers. According to the Commonwealth Fund, PBMs operate in the middle of the distribution chain for prescription drugs. By negotiating with pharmaceutical companies and drug stores to regulate drug spending, PBMs have a significant impact in determining the total costs of a drug for insurers. The PBMs also determine how much pharmacies are paid. Role of PBMs in the Medicine Supply Chain The role of PBMs are- Pharmacy Benefit Managers are responsible for developing and maintaining a record of covered medications on behalf of health insurers. Health insurers influence which medicine should individuals use and determine out-of-pocket costs. Pharmacy Benefit Managers use their buying power for negotiating discounts from the manufacturers of drugs. PBMs enter a contract directly with individual drug stores (pharmacies) to reimburse for medicines that are dispensed to beneficiaries. How do PBMs reduce the cost of drugs? Pharmacy Benefit Managers reduce the cost of drugs by encouraging the use of generic drugs (generics), and by offering more affordable brand medicines. Generic drugs are the exact copy of branded drug but are affordable because, for the approval of generics, no preclinical or clinical trials have to be performed. The other approaches that PBMs follow are highlighted in the image below: How do PBMs work with drug companies? Pharmacy Benefit Managers are accountable for determining the affordability of medicine. They put some programs to help patients for access to medications and use the most effective treatments. Some programs include- Rebate model- Pharmacy Benefit Managers negotiate with drug manufacturers to find what rebates the Company will propose for specific medicines. These rebates are given to the PBMs. Based on the deal between the PBM and plan sponsor, the manager will pass some, all, or none of the rebates to the plan sponsor. Drug formularies- A formulary is a list of drugs, both generics and branded covered within a specific plan. Th drug formulary is determined by the managers with the support of doctors and some other clinical specialists to include the medicines that will be highly affordable as well as effective. Effective use of formularies can reduce the overall cost of drugs and improve patient to access more affordable care. Prior authorization systems- This program is a cost-saving feature that facilitates to make sure the appropriate use of prescription medicines. Prior authorizations are intended to avoid improper use or prescribing of certain medicines. The prior authorization method is meant to offer drug safety and cost benefits to patients. As the cost of healthcare and prescription medicine continues to increase, the role of Pharmacy Benefit Managers will remain crucial as they work with both drug manufacturers and payers. As a middleman, PBMs play an essential role in setting the prices for prescription drugs and have a significant role in healthcare spending.