The Part D Senior Savings Model announced Tuesday will see participating pharmaceutical manufacturers continuing to pay their current 70% discount in the coverage gap for their insulins. Based on the model’s waiver of current regulations, those manufacturer-discount payments will be calculated before the application of supplemental benefits under the model – which will reduce the out-of-pocket cost of insulin for Medicare beneficiaries, CMS said.
Beneficiaries who use insulin and join a plan participating in the model could see average out-of-pocket savings of $446, or 66%, for their insulins, funded in part by manufacturers paying an estimated additional $250 million of discounts over the five years of the model, CMS said.
The model will start in January 2021 for participating enhanced Part D prescription drug plans. Over 1,750 standalone Medicare Part D prescription drug plans and Medicare Advantage plans with prescription drug coverage have applied.
CMS said this is the first time it is enabling and encouraging Part D plans to offer fixed, predictable copays for beneficiaries rather than leaving seniors paying 25% of the drug’s cost in the coverage gap. The broad range of insulins covered include both pen and vial dosage forms for rapid-acting, short-acting, intermediate-acting and long-acting insulins.
CMS has found that $50 is the price at which seniors stop buying and taking their medication, said Kellyanne Conway, counselor to the President.
One in every three Medicare beneficiaries has diabetes.
CMS anticipates beneficiaries will have Part D plan options in all 50 states, the District of Columbia and Puerto Rico.
Beneficiaries will be able to enroll during Medicare open enrollment, which runs from October 15 through December 7, for Part D coverage that begins on January 1, 2021.
Part D sponsors that applied must submit their calendar year 2021 plan benefits to CMS by June 1 to designate their participation in the model. CMS anticipates releasing the premiums and costs for specific Medicare health and drug plans for the 2021 calendar year in September 2020, including final information on the model.
WHY THIS MATTERS
Currently, Part D sponsors may offer prescription drug plans that provide lower cost-sharing in the coverage gap referred to as the doughnut hole. However, when they do, the Part D sponsor accrues costs that pharmaceutical manufacturers would normally pay. These costs are then passed on to beneficiaries in the form of higher premiums.
The new insulin model directly addresses this disincentive by allowing manufacturers to continue paying their full coverage-gap discount for their products, even when a plan offers lower cost-sharing, and by requiring participating Part D sponsors’ plans, in part through applying manufacturer rebates, to lower cost-sharing to no more than $35 for a month’s supply for a broad set of insulins.
THE LARGER TREND
A beneficiary’s out-of-pocket costs for insulin in Medicare’s Part D prescription drug benefit can fluctuate from one month to the next, in part due to the different rules applying for each phase of the Part D benefit. This can be challenging for beneficiaries when budgeting for their drug costs.
The model aims to address this with stable, predictable costs for insulin, CMS said.
The voluntary, Part D Senior Savings Model was announced on March 11. The model follows the Trump Administration’s previously announced 13.5% decline in the average monthly basic Part D premium.
ON THE RECORD
“President Trump has forged partnerships with pharmaceutical manufacturers and plans to deliver lower priced insulin to our nation’s seniors,” said CMS Administrator Seema Verma. “This market-based solution, in which insulin manufacturers and Part D sponsors compete to provide lower costs and higher quality for patients, will allow seniors to choose a Part D plan that covers their insulin at an average 66% lower out-of-pocket cost throughout the year.”
Matt Eyles, president and CEO of America’s Health Insurance Plans said, “Innovative voluntary programs like this Part D Senior Savings Model are an excellent example of public-private partnerships where everyone wins, but especially patients. This program builds on steps the Administration has already taken to empower Medicare Advantage plans to provide additional supplemental benefits for diabetic patients.”