A ‘SAD’ Story: Patient Stuck With $176K Bill After Medicare Policy Switch

For 5 years, retiree George Beitzel went to a Sacramento-area clinic every 2 months so a nurse could give him an injection of the costly drug ustekinumab (Stelara), which his doctors prescribed for his Crohn’s disease.

To have a licensed professional give the shots was especially important for Beitzel, now 84, because he has Parkinson’s disease.

“I shake like a bug,” making it impossible to safely give himself the injections, Beitzel told MedPage Today.

Even though Stelara is among the most expensive drugs on the market, costing upwards of $40,000 per dose, Medicare had always paid for his injections under Part B, which covers drugs delivered by a doctor’s office or a clinic. With his co-payments covered by his supplemental plan, “I never had to pay a thing,” he said.

But all of that changed on October 15, 2021, unbeknownst to Beitzel and the clinic that continued administering his injections for another 7 months. That’s according to a class-action lawsuit filed last week by the non-profit Center for Medicare Advocacy (CMA) on behalf of Beitzel and another patient, in U.S. District Court, Eastern District of California, against HHS Secretary Xavier Becerra.

What CMS quietly and abruptly did that day was alter its payment policy on Stelara, said CMA’s Litigation Director Alice Bers. It decided — based on Medicare claims data whose use for this purpose is controversial — that since more than 50% of Stelara users inject the drug themselves, to reclassify the drug as a “SAD,” or a self-administered drug, for everyone, and would no longer cover it when administered in an outpatient setting.

Although he was unaware of it at the time, each injection he received at the clinic after October 15 will now cost Beitzel $43,543.47, or as much as $176,000. Medicare has told him as much in numerous letters denying his appeals.

“Some of the denial letters said Mr. Beitzel should have been aware that Stelara was not covered because he could have read it in his 2021 Medicare & You handbook,” Bers said.

“That’s ridiculous and added insult to injury,” she said. Not only did the over 100-page handbook, which came out in the fall of 2020, not mention Stelara, she said. It had buried and vague wording that did not tell him Medicare would reclassify the drug a year later: “Part B doesn’t cover other types of drugs in a hospital outpatient setting (sometimes called ‘self-administered drugs’ or drugs you’d normally take on your own).”

A CMS spokesperson said the agency does not comment on pending litigation.

Beitzel sought help from Melissa Brown, an attorney with McGeorge School of Law’s Elder Law Clinic in Sacramento, which is co-counsel in the lawsuit.

Their request for injunctive relief is Beitzel’s last effort in the year-long, paperwork- and stress-laden battle against Medicare’s multi-layered and complicated appeals process, which has been fraught with frustrating, confusing, and contradictory rulings along the way, Bers said.

Now, to get SAD drugs covered, Medicare beneficiaries — including those with frailty, movement, or seizure disorders — must get them from their Part D drug plan pharmacies, most of which require high co-pays, if they cover expensive drugs like Stelara at all. Then they must inject it themselves or find a qualified person who could safely do it for them. Otherwise, the Stelara and other SAD drugs are no longer covered outpatient benefits.

Stelara, used by 22,000 beneficiaries in the year ending May 2023, is so expensive, costing the Medicare program nearly $2.7 billion during that period, it is one of the 10 drugs earmarked in August for negotiation under the Biden Administration’s Inflation Reduction Act.

Since May 2022, Beitzel has stopped going to the clinic for injections. He pays his drug plan $1,390 in cost-sharing for every Stelara dose, and has a retired health provider friend give him the injections.

What’s perhaps equally difficult to understand, Bers said, is that the agency says its rules don’t require it or providers to give advance notice to beneficiaries that the drug is no longer covered under Part B, leaving patients to find out about the change only when the shocking bills come in the mail months later.

And because he didn’t know, and the clinic either didn’t know or didn’t understand, Beitzel continued receiving four injections at the clinic after the policy change — in October and December of 2021, and February and April of 2022.

Beitzel only learned something might be wrong when he received a Medicare Summary Notice (MSN) dated March 1 that his October and December doses were “non-covered,” and that he may be billed $43,543,47 for each of them. It didn’t say why.

“I almost fell over because I’ve been doing this for 5 years and it didn’t cost anything and nobody ever said anything,” Beitzel told MedPage Today in a call with the center’s attorneys on the line. He said the infusion center’s billing department told him it was a “paper mistake” and not to worry about it.

Months later, he received another MSN denial dated June 10. It said he owed another $89,438.28 for the third and fourth doses. The infusion center appealed but was denied, but for the first time provided a reason: “We find that the above services are deemed self-administered drugs. Therefore … no payment can be made,” the lawsuit said.

“I still feel distressed and stressful,” Beitzel told MedPage Today as he mentioned the foot-high stack of paperwork on his case. “And when you have Crohn’s, stress is not a good thing to have. Every time I read this stuff it upsets me.”

The class action also names another plaintiff, identified as K.K., a 72-year-old psoriasis patient in Darien, Connecticut with a rare form of painful arthritis that damages bones in one’s hands and feet. Since 2016, she also has received Stelara injections, every 3 months, all covered by Medicare’s Part B. That is, until October 15, 2021, when the regional Connecticut Medicare Administrative Contractor (MAC) changed the policy the same way.

Like Beitzel, she wasn’t told about the change and continued receiving injections from a nearby hospital outpatient department.

Now, in notices she received months later, Medicare says she owes more than $116,000 for two of the doses. She appealed, and during one appeal process, was told verbally by an administrative law judge that she wouldn’t be responsible for the payments. But in the ruling, the judge’s decision was reversed, saying, “I am not able to ignore Medicare policy and guidance.”

The lawsuit said “Ms. K. experienced and continues to experience distress, anxiety, and outrage about the termination of Part B coverage for Stelara without notice and Medicare’s decisions finding that she is financially liable for the cost of the injections she received at the hospital.”

The lawsuit said she had to stop taking the drug because her Part D plan requires such a high cost for it. And she suffered pain and a serious rash that “looks like a third degree burn,” and covered about “50% of her body and tormenting her with itching with no relief.” Now, she is back on the drug through the manufacturer.

In addition to asking the court to certify the case as a class action, the lawsuit wants the court to issue a permanent injunction requiring Becerra to ensure notice is provided when a drug changes status to self-administered; waive patients’ liability for the costs; and modify the program so people with medical conditions who can’t inject themselves can get them administered by a healthcare professional.

Bers said the lawsuit was filed on behalf of potentially thousands of Medicare beneficiaries who could and are finding themselves with similarly outrageous amounts of debt because of surprise SAD drug policies, and not just those taking Stelara.

Medicare contractors moved three rheumatology drugs to the SAD list a decade ago, also without warning, but efforts by the American College of Rheumatology persuaded them to move them back to Part B, the lawsuit said. But as of August, two of the three drugs, Simponi and Orencia, are back on the list.

The lawsuit also mentions that several regional MACs have proposed SAD change decisions on other drugs covered under Part B, such as the injectable biologic for psoriasis, tezepelumab-ekko (Tezspire). But efforts by the American College of Allergy, Asthma & Immunology have thwarted that.

Bers said her review of the 12 regional MAC decisions on Stelara consistently categorize it now as a SAD drug, but some appear to be inconsistent in their reasons for it.

To Beitzel, the Medicare agency’s actions are not just hurtful and heartless, they’re dangerous.

“I kept getting these letters from Medicare that I didn’t understand, and it’s just like a big bureaucracy is stepping on this little bitty hand,” Beitzel told MedPage Today.

Beitzel said he would like to ask a Medicare representative if he would let Beitzel give him an injection, if he had the chance: “He’d see me, my hand shaking, and he’d say, ‘No, I don’t want you to get even close to me.'”

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