Mon, Jun 15, 2020

Reducing The Cost Of Insulin And Improving Healthcare For Our Nation’s Seniors.

Under President Trump’s leadership, the Centers for Medicare & Medicaid Services is announcing that many Medicare Part D plans and Medicare Advantage plans have applied to offer lower out-of-pocket insulin costs to seniors for the 2021 plan year.

Across the nation, participating enhanced Part D plans will provide many seniors with Medicare access to a broad set of insulins at a maximum $35 copay for a month’s supply of each type of insulin. That’s a big deal for the approximately 3.3 million seniors who depend on insulin to manage their diabetes.

In 2018, Medicare Part D also started covering newer insulin delivery devices, including both mechanical and electronic insulin pumps that are not covered under Part B. Lowering out-of-pocket insulin costs will provide the many Medicare beneficiaries who rely on one or more common forms of insulin with plan options that will deliver critical relief.

According to the Centers for Medicare and Medicaid Services (CMS), the average Part D plan enrollee spends nearly $700 a year out-of-pocket on insulin costs. Data from the Kaiser Family Foundation shows that 25% of enrollees spend nearly $1,500 a year, and 5% spend $2,000 or more a year.

The new Medicare Part D Senior Savings Model for 2021

Early in 2020, CMS began tweaking the rules for the drug manufacturer discount program used during the coverage gap. The idea was to encourage Part D plans to adopt a set copayment for insulin instead of the current 25% coinsurance amount. 

The problem for Part D plan sponsors was that the discount guidelines strongly disincentivized the switch to a flat copayment. Drug manufacturers are required to pay 70% of the patient’s medication costs during the coverage gap. The plan member pays 25% and the plan pays the remaining 5%.

The manufacturer’s 70% discount is based on the amount actually billed to the patient. For example, if the pharmacy charges the plan member $500 for a vial of insulin, the drug manufacturer pays 70% of that amount or $350. The patient pays 25% or $125, and the plan pays $25.

But if the plan capped the amount the patient could be charged at $35 as the administration proposed, the manufacturer would only have to pay 70% of the $35 copayment charged to the patient, not the full cost of the insulin. In the example above, for a $500 vial of insulin, the manufacturer would be responsible for just $24.50 and the plan would have to pay $439.50 to make up the difference.

Few plans could afford to adopt the insulin copayment model under the previous rules without dramatically raising premium costs.

The Senior Savings Model takes the savings a step farther and applies the new $35 insulin copayment to every phase of Part D coverage except the catastrophic coverage phase. Under the new model, insulin-dependent diabetics pay a maximum of $35 for their insulin prescriptions even if they haven’t met their deductible. With the Senior Savings Model, insulin costs will be exactly the same no matter the coverage phase, making it easier for members to budget for their health care expenses.

CMS (The Center for Medicare Services) estimates that the average Part D plan member will save about $450 a year on insulin, a savings of 66%.

Cost Comparison with the Senior Savings Model for $500 Insulin Prescription

Current Guidelines Senior Savings Model
Member cost-sharing 25% or $125 $35 (savings of $90)
Manufacturer 70% or $350 70% or $350
Part D plan 5% or $25 $115 (increase of $90)

Source: CMS

The Senior Savings Model removes that financial disincentive by applying the 70% manufacturer contribution to the full amount of the insulin instead of the amount billed to the plan member. The plan’s costs are still higher under the new model, but not unmanageably so. It now only has to cover the $90 difference between the member’s $125 coinsurance under the old model and the $35 copayment under the Senior Savings Model.

Improving Care and Cost for Seniors

The Trump administration is working to improve the accessibility, quality, and affordability of healthcare and prescription drugs for our Nation’s seniors. The President is committed to ensuring that older Americans receive the best quality healthcare at an affordable price.

Just last year, the President signed an Executive Order to empower seniors with more choice and access in healthcare and improve the fiscal sustainability of Medicare. This order will eliminate unnecessary barriers and combat fraud, waste, and abuse in Medicare, improving the program and maximizing freedom for patients and providers.

Average basic premiums for Medicare Part D prescription drug plans are the lowest in 7 years and have fallen by 13.5 percent since 2017, saving beneficiaries $1.9 billion in premium costs. If you have a Medicare Supplement plus a Part D Prescription Drug plan, that is welcome news for seniors.

To talk to someone about which Medicare Plan or Prescription Drug plan is right for you, call Karen at FirstCommunity Medicare Supplement 256-532-2785. Karen is happy to sit down with you, answer all your questions and help you find the best plan  – no pressure, no obligation. Call today or stop by their convenient office at 699-A Gallatin Street in Huntsville, Alabama.

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