Medicare Will Offer a $35/Month Insulin-Cost Cap in 2021

Mitchel L. Zoler, PhD

May 27, 2020

U.S. Medicare beneficiaries with diabetes will be able to cap their out-of-pocket cost for insulin at no more than $35/month starting in January 2021 under a new coverage option in the Senior Savings Model, according to program details released by the Centers for Medicare & Medicaid Services on May 26.

This facet of the Senior Savings Model for Medicare drug benefits depends on voluntary participation by insurers offering Part D (drug) coverage to Medicare beneficiaries. As of May 26, 2020, 88 insurers had agreed to participate with a total of roughly 1,750 different drug-coverage plan options with this benefit starting next year, either as part of standalone Part D policies or as part of Medicare Advantage, or "enhanced" plans with drug coverage, said Seema Verma, administrator of the CMS, during a press conference.

Beneficiaries who opt for Part D coverage with this benefit will see a cap at $35 a month for their out-of-pocket insulin costs regardless of what phase of drug coverage they are in during the course of a benefit year: the 100% responsibility phase until their annual plan deductible is met, their initial coverage phase, their coverage gap phase (which kicks in after a total of $4,020 is spent on all prescription drugs), and the catastrophic coverage phase.

A recently published analysis of average, annual, out-of-pocket insulin costs for U.S. Medicare beneficiaries with "typical" Part D plans during 2019 found that, under this four-phase pricing scheme, the 1-year total cost to patients for their insulin came to just over $1,140 (N Engl J Med. 2020 May 14;382[20]:1878-80). For 2021 participants in the new model, annual out-of-pocket cost should be no greater than $420, and could possibly be less as the $35/month rate is not set but a cost ceiling.

A written statement from CMS about the new program predicted an average, estimated out-of-pocket cost savings of $446 per beneficiary. In addition to reducing overall out-of-pocket costs, another goal of the program is to give beneficiaries month-to-month consistency in their insulin costs. Under current coverage rules, costs fluctuate from month to month depending on the phase of coverage a beneficiary qualifies for at a given time.

The change to insulin copays in 2021 for beneficiaries in participating plans will cover "all common forms of insulin," said Ms. Verma during the press conference. "If it goes well, we'll extend that to other drugs," she added. "We're starting with insulin, but depending on the progress of this, we will consider offering this flexibility to manufacturers and plans with other drugs, depending on the results. We think that this creates a foundation and a platform to fix things, some of the problems that we have in the Part D plans. It's time for that program to be updated. A lot of the provisions just don't work anymore, and it's standing in the way of free-market completion and negotiation that can lower prices for seniors."

But "only 54% of all Medicare beneficiaries are enrolled in enhanced plans that are eligible to participate in the model, and only 44% of those plans have agreed to participate," according to a statement from Public Citizen, a consumer-rights group based in Washington. Furthermore, the statement's author, Peter Maybarduk, director of the organization's Access to Medicines Program, cited an analysis by Public Citizen that found that the program did nothing to prevent pharmaceutical corporations from setting exorbitant prices for insulin. He added that the plan leaves out younger patients with diabetes, many of whom have been forced to ration their insulin because of the "outrageous insulin price gouging."

CMS also recently announced on May 22 that it had finalized a rule that allows for expanded use of telehealth consultations for beneficiaries in Advantage programs. The agency said that telehealth consults had become possible for a variety of medical subspecialties, including endocrinology, dermatology, cardiology, gynecology, psychiatry, and primary care. In March, CMS announced a waiver to its prior rules on use of telehealth consults effective March 6, 2020. Kellyanne Conway, a senior counselor to President Donald Trump, said during the May 26 press conference that Medicare-covered telehealth visits rose from about 12,000 per week prior to issuance of the waiver to "well into the six figures," in recent weeks.

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