WASHINGTON, D.C. 14 June 2010—Among the changes coming for participants in the Medicare Part D prescription drug benefit is the gradual closing of the much-maligned coverage gap*mdash;better known as the doughnut hole.
Under current law, most enrollees in Medicare Part D pay 25% of their initial drug costs, and the drug plan pays the remainder. Under the standard benefit for 2010, once the beneficiary`s drug costs reach $2,830, he or she is responsible for all drug costs up to a total of $6,440, when catastrophic coverage becomes available. At that point, beneficiaries are responsible for 5% of their drug costs, the drug plan pays 15%, and Medicare pays 80%.
The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act, which were signed into law in March, offer some relief for those in the coverage gap this year and eventually eliminate the gap.
The Centers for Medicare and Medicare Services (CMS) in June began issuing one-time $250 rebate checks to beneficiaries who reach the coverage gap, effectively reducing this year`s out-of-pocket drug costs for these beneficiaries. These payments were mandated under the reconciled health-reform law.
In 2011, drug manufacturers will be required to give Part D enrollees a 50% discount on the cost of covered brand-name prescription medications either at the point of sale or "as soon as practicable" afterward, according to the legislation. Drug manufacturers also will have to reimburse the dispensing pharmacy for the difference between the 50% discount cost of the brand-name drug and the price the pharmacy negotiated with the plan.
Starting in 2013, Medicare will begin subsidizing an increasing proportion of Part D drug costs in what is now the coverage gap. By 2020, participants` share in drug costs will be 25%, the same proportion enrollees now pay before they enter the gap. This mechanism will effectively eliminate the coverage gap in 2020.
CMS Deputy Administrator Jonathan Blum, during a May 7 policy briefing in Washington, D.C., acknowledged uncertainty about how health-care reform will play out under Medicare.
For example, Blum acknowledged that manufacturers could begin raising the price for brand-name drugs to compensate for the 50% discounts that will be required next year. He urged consumers and other stakeholders to pay attention to medication costs now to spot trouble ahead.
Blum said his agency is working hard to implement the required changes to Part D and other Medicare provisions affected by the health-care reform legislation.
"This is a very daunting task," Blum said. "The Affordable Care Act really transforms the Medicare program."
He said that instead of writing new regulations, CMS wants to incorporate the legislatively required changes into the agency`s traditional rule-making cycle.
For example, he said, CMS intends to implement into the upcoming physician payment update cost-sharing changes related to preventive-care benefits and the newly created annual wellness visit for Medicare beneficiaries.
Blum noted that the proposed Hospital Inpatient Prospective Payment System for 2011, which was released in April, "did not contain any of the provisions that affect the payment systems that are included in the Affordable Care Act."
CMS incorporated some changes related to the act into a supplemental publication in the June 2 Federal Register.
