The Centers for Medicare and Medicaid Services (“CMS”) recently announced the new Part D Senior Savings Model, which is intended to lower the Medicare beneficiaries’ out-of-pocket costs for insulin to a maximum $35 copay per thirty-day supply. The Savings Model will ensure predictable monthly copays for beneficiaries and applies to a wide-variety of insulin formulations, including rapid-acting, short-acting, intermediate-acting and long-acting insulins. Participation in the Savings Model is voluntary.
The Savings Model is based on a program where CMS enables health plans to offer Medicare Part D beneficiaries lower out-of-pocket costs by waiving a current programmatic disincentive for Part D sponsors to design prescription drug plans that modify cost sharing in the coverage gap phase of the Part D benefit. The Savings Model is directed to enhanced Part D plans, which are permitted to reduce cost sharing by setting copays at a fixed dollar amount, instead of as a percentage of the drug price. Approximately 54% of Medicare beneficiaries are enrolled in these enhanced plans.
CMS estimates that the Savings Model will result in an average savings to each participating beneficiary of $446 annually, or over 66%, compared to what they are currently paying. CMS also notes that “[a]s beneficiaries have more consistent, predictable access to the prescription drugs they need, the model projects that health will improve and total cost of care will decline for our nation’s seniors.” In addition to savings for beneficiaries, CMS projects that the Savings Model will generate over $250 million over five years in savings to the federal government, largely due to manufacturers paying coverage gap discounts. To encourage sponsor participation, CMS is providing Part D sponsors additional risk corridor protection for calendar years 2021 and 2022 for plans that have higher enrollment than average from insulin-dependent diabetic patients. CMS is also testing how Part D sponsors can best encourage healthy behaviors, including medication adherence, in beneficiaries though the use of rewards or incentives programs.
CMS Administrator Seema Verma notes that the “Part D Senior Savings Model provides and innovative market-driven approach that removes barriers to lower insulin costs. We call on health insurance plans and prescription drug manufacturers to take action and provide relief for America’s seniors who take insulin.”
CMS will provide information to Medicare beneficiaries identifying which plans are participating as part of Open Enrollment.