Donut hole coverage gap grows, bills aim to help seniors

December 1, 2009

Only 20% of PDPs will offer gap coverage, and even then, most are limited to generics. House and Senate bills aim to help out.

"Healthcare reform is now an ideological, politically driven effort with little evidence based upon logic or predictability," says Randy Vogenberg, principal, Institute for Integrated Healthcare, based in Sharon, Mass., and executive director of the Biologic Finance and Access Council.

CMS anticipates that premiums for stand-alone prescription drug plans (PDPs) will only rise slightly in 2010-the average monthly payment is $30, up $2 from this year-and increase 20% by 2019. However, overall prescription drug spending would fall.

Once the deductible is met, the beneficiary pays 25% of covered costs up to total prescription costs meeting the initial coverage limit. Only 45% charged a deducible in 2009.

The donut hole has grown from $2,700 in 2009 to $2,830 in 2010, boosting the out-of-pocket threshold to $4,550 from $4,350.

The total covered drug out-of-pocket threshold is $6,440, up from $6,153 in 2009. Maximum copayments up to the out-of-pocket threshold are 15% coinsurance or a copayment of $2.50 for covered generics and $6.30 for covered brand name drugs, whichever is greater. In 2009, the cost of drugs above the threshold was 15% coinsurance or $2.40 for covered generics and $6 for brands, whichever was greater.

That has risen from 2006 figures of 5% coinsurance, above an out-of-pocket threshold of $5,101, or a copayment of $2 and $5 for covered generics and brands, respectively, whichever was greater.

LEGISLATIVE CONSIDERATIONS

Two reform proposals-America's Healthy Future Act passed by the Senate Finance Committee and the House's Affordable Health Care for America Act (H.R 3962)-are under the most intense scrutiny. A number of contentious issues, including the donut hole coverage gap, subsidies and non-interference, continue to resurface during the general Part D debate.

The Pharmaceutical Research and Manufacturers of America supports legislation under which drug companies will provide a 50% discount on brand-name drugs to most beneficiaries in the donut hole and which would allow 100% of the discount amount to count toward the annual out-of-pocket threshold that determines when catastrophic coverage begins. The recommendation was included in the Senate and House bills.

Jean LeMasurier, senior vice president of public policy for the Gorman Health Group in Washington, D.C., anticipates that the 50% discount on branded drugs will be a win for drug manufacturers, who will see increased utilization.

The House bill also moves forward the effective date-from Jan. 1, 2011 to Jan. 1, 2010-for reducing the donut hole by $500 and recommends eliminating the gap by 2023.

Major differences between House and Senate bills show up in the asset limit used to determine eligibility for the Medicare Savings Programs and low-income subsidy (the Senate has no provision); Part D premium subsidy for higher income beneficiaries (no House provision); and amount of payment bonuses for evaluation and management services provided by physicians.

The outlook for low-income subsidy (LIS) beneficiaries will not be as rosy in 2010 as in past years. Compared to 2006, there will be 212 fewer plans with LIS offering a $0 premium-a 30% decrease. In addition, 40% of LIS beneficiaries are enrolled in benchmark PDPs that will no longer qualify as benchmarks in 2010.