Time to Fill the Doughnut Hole

Rebate checks are being mailed to Medicare beneficiaries who reach the prescription drug coverage gap, known as the doughnut hole, and provisions in the recently passed national healthcare laws are intended to eliminate the coverage gap entirely. The Centers for Medicare & Medicaid Services (CMS) has provided Medicare Part D sponsors with guidance on providing discounted drugs to beneficiaries in the coverage gap starting next year, and the US Department of Health and Human Services says the doughnut hole will be filled by 2020. For beneficiaries enrolled in Medicare Part D, most drug plans have a temporary limit on coverage between enrollees’ initially covered prescription drug spending and the threshold at which catastrophic coverage resumes payment for the majority of a beneficiary’s costs. The coverage gap is the period in the prescription drug benefit in which beneficiaries generally pay 100% of the cost of their drugs, rather than the relatively small copayments usually required for covered drugs, until they hit the catastrophic coverage. For 2010, the point at which initial coverage runs out is $2830, and catastrophic coverage kicks in at a spending threshold of $4550. President Barack Obama has called this gap in Part D prescription drug coverage a “continuing injustice that has placed a great burden on many seniors.” Medicare Part D beneficiaries who enter the coverage gap this year will receive a one-time, $250 rebate check. The $250 checks began mailing in mid-June and will continue monthly throughout the year as individual beneficiaries enter the coverage gap. The rebate does not apply to low-income beneficiaries already participating in Medicare’s Extra Help program for seniors with incomes <$16,245 per year (or $21,855 for married couples) and with resources limited to $12,510 (or $25,010 for married couples). Beneficiaries who qualify for Medicare Extra Help do not have a coverage gap. Beginning in 2011, Part D beneficiaries who exceed their initial prescription drug coverage will receive a 50% discount when buying branded prescription drugs covered by Part D. CMS recently issued new guidance to Part D plan sponsors clarifying how the 50% discount program will be implemented. “The documents we are releasing…facilitate the implementation of the Affordable Care Act’s provisions to help Medicare beneficiaries with the high costs of their prescription medicines,” said CMS Deputy Administrator and Director of the Center for Medicare Jonathan Blum. CMS held a public meeting on June 1 to provide a forum for discussion and feedback about the draft manufacturer agreement as well as the final Part D guidance. As part of the meeting, CMS is encouraged drug manufacturers, Part D plan sponsors, and representatives from the beneficiary advocacy community to provide input and comments. The Part D plan guidance was finalized after receiving comments on draft guidance issued on April 30. CMS will coordinate the manufacturers’ reimbursement for discount payments that Part D sponsors provide on their behalf to applicable beneficiaries under this program through a third-party administrative contractor. The third-party administrator will also help to verify the accuracy of the manufacturer discounts reported by Part D sponsors. To show their support for national healthcare reform, Pharmaceutical Research and Manufacturers of America (Parma) manufacturers pledged last year to provide the 50% discount on brand-name drugs purchased by seniors in the coverage gap. Ken Johnson, senior vice president of PhRMA, issued a statement expressing support for the discount program. “America’s pharmaceutical research and biotechnology companies firmly support the Part D coverage gap discount program and are committed to working with CMS to ensure the program begins in 2011, as set forth in the new healthcare reform law.” Mr. Johnson said the discount program will provide access to needed medicines by reducing out-of-pocket costs for eligible Medicare beneficiaries in the coverage gap. He added that successful and timely implementation of the program is extremely important. “PhRMA will continue to consult with CMS, as expressly contemplated in the healthcare reform law, to identify and address any potential obstacles to timely implementation of the discount program." PhRMA’s proposal called for the entire negotiated price of brand name drugs covered by Part D and purchased in the coverage gap to count toward beneficiaries’ out-of-pocket costs, thus lowering their total out-of-pocket spending. In a notice in the Federal Register, CMS issued the draft model agreement that drug manufacturers of applicable Part D drugs will sign to participate in the discount program. Discounts will apply when the beneficiary reaches the coverage gap. Eligible beneficiaries will see the discount when they buy their drugs at the pharmacy. In addition to advertising the $250 rebate checks, a mass mailing titled “Medicare and the New Health Law-What it Means to You” is being sent out by CMS to inform beneficiaries about some of the ways they will be affected by the recently passed Patient Protection and Affordable Care Act (HR 3590) that was signed in March. Medicare mails the Medicare & You handbook to all beneficiary households every fall to inform beneficiaries about changes in Medicare. These annual mailings are sometimes supplemented with additional mailings that inform beneficiaries about major changes in the law that significantly affect Medicare. “It’s important that our Medicare beneficiaries get facts about this important new law timely so they can learn what stays the same and what will change and improve in terms of their benefits,” said Marilyn Tavenner, acting CMS administrator. “We believe that this information will help to inform them about the Affordable Care Act and remind them to be on the alert for any scams asking for personal information. CMS has learned from implementing previous major pieces of health reform legislation like Medicare Part D that unfortunately new opportunities for Medicare beneficiaries also bring new opportunities for scam artists to try and defraud seniors.” In addition to the rebate check, the new mailing to beneficiaries outlines other benefits available under HR 3590. Beginning next year, the new law mandates that Medicare beneficiaries be provided with preventive care services without cost sharing, in addition to an annual wellness visit.—Charles Boersig