In late 2018, the Centers for Medicare & Medicaid Services (CMS) announced updates to Medicare Advantage and Medicare Part D, which are private plans that provide prescription drug coverage to Medicare beneficiaries.1 The motive behind the change was to reduce federal spending during the coverage gap, or “doughnut hole” phase. The change was also designed to curtail the advantage that insurance plans took of the coverage gap, during which time they enjoyed less responsibility for drug cost coverage.2
To understand the Plan D changes, it may help to review the current structure of Medicare Plan D. Each year, there is a Plan D deductible that a beneficiary must meet, which in 2019 has a cap of $415. Once the beneficiary meets that deductible, she enters the coverage period, wherein she makes copayments while the plan pays the remainder of the costs, capped at $3820 in total drug costs paid by the beneficiary and her plan. The beneficiary then enters the coverage gap, or infamous doughnut hole, when the plan does not cover drug costs, and the plan beneficiary can rely only on federally funded drug manufacturer discounts for drug cost relief. Finally, once the beneficiary has paid $5100 in out-of-pocket drug expenses, she enters the catastrophic phase, during which time she makes copayments with the plan.3
The changes proposed to Medicare Plan D are set to go into effect in 2020. The enrolled insurance plans will be assigned a target spending level for the catastrophic period, and if they overspend that target, they will take a monetary loss.2 To relieve patients who have Plan D, the drug manufacturer coverage of brand-name drugs will increase to 70% during the coverage gap.4 Meanwhile, because of the Patient Protection and Affordable Care Act, the coverage gap/doughnut hole is actually expected to close, and Plan D enrollees will be responsible for only 25% of brand-name and generic drug costs.4
However, Plan D changes will also entail a “rewards and incentives program” that will encourage the plan to select lower-cost drugs.2 That incentive, according to the Department of Health and Human Services, will permit some insurers to make midyear changes to cover only lower-cost drugs. Those changes would allow insurers to decline to share the coverage of drug costs with patients who choose brand-name drugs when lower-cost/generic drugs are available.2
Critics of the changes to Medicare Part D have pointed out that the changes will increase premiums and out-of-pocket expenses, which could increase by an additional $400.2 The Kaiser Family Foundation anticipates that the Part D changes amount to an increased out-of-pocket expense threshold from $5100 to $6350 prior to the catastrophic phase. Plan D enrollees’ deductibles and copayments are also expected to increase in 2020.5
Initially, the proposed changes to Plan D were set to affect the “6 protected classes” of drugs and included requirements that clinicians must select the least costly drugs first and then prove those drugs to be ineffective before proceeding up to the next cost “step” of drug. The proposal also entirely excluded drugs deemed too expensive. However, the CMS opted not to implement these proposals and not make changes to the 6 protected classes of drugs, which are the drugs used in treating chronic and/or serious diseases, including the drugs used to treat depression, psychosis, seizures, immune diseases, viral infections, and cancer.6 Therefore, while patients with cancer may experience higher Medicare costs in 2020, their access to the cancer drugs recommended by their healthcare provider should remain protected and intact.
- Centers for Medicare & Medicaid Services. CMS announces new Part D model, updates Medicare Advantage. www.cms.gov/newsroom/press-releases/cms-announces-new-model-lower-drug-prices-medicare-part-d-and-transformative-updates-existing-model. Accessed November 22, 2019.
- Firth S. CMS announces new Part D model, updates Medicare Advantage. MedPageToday. www.medpagetoday.com/primarycare/generalprimarycare/77543. Accessed November 22, 2019.
- Medicare Interactive. Phases of Part D coverage. www.medicareinteractive.org/get-answers/medicare-prescription-drug-coverage-part-d/medicare-part-d-costs/phases-of-part-d-coverage. Accessed November 22, 2019.
- Belazi D. Changes to Medicare Part D continue to evolve. PM360online. www.pm360online.com/changes-to-medicare-part-d-continue-to-evolve. Published online. August 21, 2019. Accessed November 22, 2019.
- Cubanski J, Neuman T. How will the Medicare Part D benefit change under current law and leading proposals? Kaiser Family Foundation. www.kff.org/medicare/issue-brief/how-will-the-medicare-part-d-benefit-change-under-current-law-and-leading-proposals/ Published online October 11, 2019. Accessed November 22, 2019.
- Czubaruk K. Medicare Part D cancer drugs continue to be protected. Cancer Support Community. www.cancersupportcommunity.org/blog/2019/05/medicare-part-cancer-drugs-continue-be-protected Published online May 29, 2019. Accessed November 22, 2019.