Closing the Part D Coverage Gap: Changes from 2011 to 2020

St. Louis—The Patient Protection and Affordable Care Act includes several provisions that affect the Medicare Part D drug benefit. At a contemporary issues presentation at the AMCP meeting, attendees were given an overview of the 10-year program designed to close the coverage gap in Part D drug coverage. One of the most significant changes is the reduction of Part D enrollees’ out-of-pocket liability when they reach the coverage gap—the doughnut hole. In 2010, enrollees who reach the gap will receive a rebate of $250. Beginning in 2011, enrollees who reach the gap will receive up to a 50% discount from pharmaceutical manufacturers on the total cost of brand-name drugs. Beginning in 2013, Medicare will phase in additional subsidies in the coverage gap for brand-name drugs. Subsidies for generic drugs for enrollees in the coverage gap will begin in 2011. By 2020, the enrollee coinsurance in the coverage gap will be reduced from 100% to 25%. At the session titled Future Program Changes for Medicare Part D—2011 and Beyond, Babette Edgar, PharmD, MBA, president of Edgar Consulting Group, gave an overview of prescription drug plans (PDPs) in 2011, when there will be 1008 PDPs in the United States. Every state plus the District of Columbia will have at least 1 PDP with a premium <$30. The Humana-Walmart PDP is offered in every state plus the District of Columbia for a $14.80 premium. Hawaii has the fewest plans, with 25, while West Virginia has the most, with 35. In a slide titled Highlights of 2011 PDP Sponsors, attendees learned that the majority (67%) of Part D plans offer no gap coverage, monthly average premiums for PDPs offering gap coverage are double those offering basic coverage with no gap coverage ($83.46 vs $42.13), gap coverage offered in 2011 is primarily restricted to generic drugs, only 72 PDPs offer limited coverage of a few brand-name drugs in the gap, and among plans offering generic drug gap coverage, most only offer coverage of many (still limited) generic drugs. By 2011, the average monthly PDP premiums for plans offering coverage of all generics will be $94.83; for plans covering few generics, $57.33; for plans covering many generics, $77.33; for plans covering many generics and some brand-name drugs, $108.16; for plans with no gap coverage, $42.13; for plans covering some generics, $72.41; and for plans covering some generics and some brand-name drugs, $90.71. The second portion of the session was led by Cynthia Tudor, PhD, director of the Medicare Drug Benefit and C&D Data group at the Centers for Medicare & Medicaid Services (CMS). Dr. Tudor spoke on the Affordable Care Act: Closing the Medicare Coverage Gap. She outlined the 3 phases of the requirements in the reform legislation to close the coverage gap: beneficiary rebates in 2010, point-of-sale discounts beginning in 2011, and further reduction of the gap between 2010 and 2020. The 2010 rebate checks will be based on prescription drug event data produced by plan sponsors and sent to CMS. Payments are issued within 30 days of receipt of data, and a letter from the secretary of the Department of Health and Human Services explaining the benefit is included with the check. Dr. Tudor said that as of September 30, 2010, 1.2 million checks have been mailed, and CMS estimates that a total of 4 million payments will be made during the rebate program period. Phase 2 of the plan to close the coverage gap will begin in January 2011, when non–low- income subsidy beneficiaries who reach the coverage gap will receive up to a 50% discount on brand-name drugs. The dollar value of the manufacturer discount is applied toward the beneficiary’s out-of-pocket costs. Dr. Tudor noted that the point-of-sale discounts have inherent complexity and will require real-time adjudication of claims, assessing eligibility, the cost of the drugs, formulary status, benefit stage, cost-sharing, and the portion of the cost that falls in the coverage gap. The discounts apply only to applicable drugs, defined by CMS as Part D drugs approved under a new drug application or licensed under a biologic licensed application. Exclusions include dispensing fees, vaccine administration fees, Part D compounds, and supplies associated with injection of insulin. The agreement deadline for 2011 participation in the discount program was September 1, 2010. Only those Part D drugs whose manufacturer signed discount agreements will be covered in 2011. CMS received agreements from >200 manufacturers covering all necessary Part D applicable drugs. The final phase of the plan to close the coverage gap calls for Medicare Part D beneficiaries to receive additional savings on brand-name and generic drugs until the gap is closed in 2020. By the end of phase 3 of the program, beneficiaries will be responsible for only 25% coinsurance payments, rather than the 100% of the cost prior to the reform.—Tori Socha