Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: March 11, 2020

The Part D Senior Savings Model allows Medicare Part D prescription drug plans to offer beneficiaries plan choices that provide a broad range of insulins at a $35 copay

Today, under President Trump’s leadership, the Centers for Medicare & Medicaid Services (CMS) announced the Part D Senior Savings Model, a voluntary model that enables participating Part D enhanced plans to lower Medicare beneficiaries’ out-of-pocket costs for insulin to a maximum $35 copay per thirty-day supply throughout the benefit year. Beneficiaries who take insulin and enroll in a plan participating in the model should save an average of $446 in annual out-of-pocket costs for insulin, or over 66 percent, relative to their average cost-sharing for insulin today. The Model’s initial projections assume it generates over $250 million in savings over five years for the federal government, largely due to pharmaceutical manufacturers paying additional coverage gap discounts. As 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. This Model follows on the Trump Administration’s previously announced 13.5 percent decline in the average monthly basic Part D premium since 2017 to the lowest level in 7 years.

A beneficiary’s out-of-pocket costs for insulin in Medicare’s Part D prescription drug benefit can fluctuate from one month to the next, and can be a barrier to appropriate medical treatment. This unpredictability, in part due to the complexity of the different phases of the Part D benefit, can lead to challenges for beneficiaries when budgeting for their drug costs and potentially not being able to afford their medicine or resorting to medication rationing. Medication non-adherence, due to cost or otherwise, could have devastating health consequences for seniors, ranging from nerve and vision damage to kidney and cardiovascular disease and even amputations.

This Model will test a plan design for enhanced Part D plans that ensures that beneficiaries in participating plans will have predictable copays for a broad set of formulary insulins, including rapid-acting, short-acting, intermediate-acting, and long-acting insulins, marketed by participating manufacturers from the beginning of the plan year and through the coverage gap phase. By ensuring beneficiaries have a predictable and affordable co-pay for insulin they will have greater access and adherence, leading to improved health outcomes.

“President Trump is delivering on his promise to lower the cost of prescription drugs for seniors,” said CMS Administrator Seema Verma. “The Part D Senior Savings Model provides an 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.”

The model is targeted to enhanced Part D plans that offer more generous prescription drug coverage than Part D basic benefit designs. These enhanced plans can reduce cost sharing beyond basic Part D plan types, such as fixed dollar copays instead of setting out-of-pocket costs to be a percentage of a drug’s price (i.e., coinsurance). In exchange for these additional benefits, enhanced plans have slightly higher premiums, which are paid for by beneficiaries or through other means, such as a Medicare Advantage plan. In 2020, average monthly premiums in Part D are $32.09 for a basic plan and $49.32 for an enhanced plan. Today, about 80 percent of prescription drug plans are enhanced plans with 25 million or 54 percent of beneficiaries enrolled in these plans.

Participating manufacturers will continue to contribute their 70 percent discount on the negotiated price for insulin if marketed by a participating manufacturer, throughout the year starting on January 1, 2021. CMS views this Model as an opportunity for Part D sponsors and manufacturers to partner together to put patients before profits and lower out-of-pocket costs for insulin.

As part of the Model’s announcement, CMS has released a Request for Application (RFA) for Part D sponsors and an RFA for manufacturers, and both are invited to apply. Pharmaceutical manufacturers may apply by March 18, 2020 to indicate participation in the Model. Part D sponsors must submit their application for participation by May 1, 2020. CMS will provide information on which plans are participating in the Model as part of Medicare Open Enrollment.

The Part D Senior Savings Model builds on steps the Trump Administration has already taken to strengthen Medicare and improve the quality of care for patients with diabetes. CMS has provided access to continuous glucose monitors (CGM) for patients who synchronize their insulin devices with their smartphones, when used in conjunction with a durable CGM receiver. CMS has also implemented statutory provisions that allows Medicare Advantage plans to offer a broader range of supplemental benefits, and tailor supplemental benefits to a patient’s chronic disease. For an enrollee living with diabetes for example, a plan could provide transportation to a doctor’s appointment, diabetes education programs, or time with a nutritionist.

A fact sheet about the Part D Senior Savings Model can be viewed at:  https://www.cms.gov/newsroom/fact-sheets/part-d-senior-savings-model.  

More information on the Part D Senior Savings Model, including the Requests for Applications, can be viewed at: https://innovation.cms.gov/initiatives/part-d-savings-model.

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