Tuesday, January 21, 2020

Medicare Part D Donut Hole-Gone or Not?

The New York Times an an article scrutinizing the status of the Part D coverage gap (a/k/a the Donut Hole), in Medicare’s Part D Doughnut Hole Has Closed! Mostly. Sorta.

The donut hole  was weird and unlike other types of insurance and as the article explains, "“designed that way because Congress had a self-imposed budget target,” said Tricia Neuman, who directs the Medicare policy program at the Kaiser Family Foundation.... In order to afford a low deductible, catastrophic coverage and protection for those with low incomes, lawmakers agreed to the doughnut hole. But what other kind of insurance works like that?"

The Affordable Care Act (ACA) contained a provision that gradually closed  the donut hole. "The final reduction, for generic drugs, slid into place on Jan. 1. Now, supposedly, there is no coverage gap. Federal regulations require that your plan (most Medicare beneficiaries can choose from nearly 30) average 25 percent cost-sharing for any drug."  But remember closing the donut hole is not the same as reducing the cost of prescription drugs.

There's still remaining weirdness with the Part D program, as the article highlights:

  • This year, after meeting the $435 deductible, you generally pay a flat price for each covered drug during the so-called initial coverage period. Different plans assign drugs to different tiers for which you pay specified amounts.

But once your total drug expenditures hit $4,020, you’re responsible for 25 percent of the plan’s negotiated cost per drug — not a gap, exactly, but a shift.

If you were paying $45 for a prescription that costs $200, your share is now $50 — not a major change. But for a $500 drug, you’ll owe $125 until you reach the catastrophic threshold.

 . .
  • It will now take longer to climb out of the not-exactly-a-hole.

Last year, you qualified for catastrophic coverage when your out-of-pocket expenditures reached $5,100.

This year, you don’t qualify until they hit $6,350, a big jump. The Affordable Care Act had maintained a lower threshold; this year, that provision ended.

Once there, your co-payment is a flat $3.60 to $8.95, or 5 percent of the drug’s cost, whichever is higher. (Not lower.)

  • Part D has never capped out-of-pocket costs, even when you reach the supposedly safe shore of catastrophic coverage. Your 5 percent co-payment lasts the rest of the year.

. . .

All of this takes place against the backdrop of rising drug prices generally. From 2015 to 2017, more than a million Medicare beneficiaries each year passed the threshold for catastrophic coverage — more than twice the number when Part D began, according to a Kaiser Family Foundation analysis.

Oh and choosing the right Part D program is complicated.  The article notes that Congressional action is needed to reduce the drug prices. And what if the ACA is repealed??


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