The Centers for Medicare and Medicaid Services (CMS) has released
their 2017 Advance Notice and Draft Call Letter that includes a preview of the defined standard benefits for 2017 Medicare Part D prescription
drug plan coverage. These parameters will be finalized or updated in April when CMS releases their final "Announcement of Calendar Year 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies".
As reference, a chart comparing
the standard benefit parameters from
2013 through
2017 is available at:
Q1Medicare.com/2017. (And for a little history, the following link leads to a chart of the standard Medicare Part D benefit parameters from
2006 through
2017:
Q1Medicare.com/PartD-The-MedicarePartDOutlookAllYears.php.)
From the CMS Advance Notice, here is a preview of what you can expect for standard 2017 Medicare Part
D prescription drug coverage:
- The
standard Initial Deductible will increase. The 2017 standard Initial
Deductible will increase $40 to $400. The current 2016 standard Initial Deductible is
$360 and the 2015 Initial
Deductible was $320.
This means: If you enroll in a Medicare Part D prescription
drug plan with a standard initial deductible, you will pay slightly more in 2017
before your drug plan coverage begins.
- The
Initial Coverage Limit will increase. The 2017 Initial
Coverage Limit will increase to $3,700. If
finalized, Medicare beneficiaries will enter the 2017 Donut Hole or Coverage
Gap when the total negotiated retail value of their prescription drug purchases
reaches the Initial Coverage limit of $3,700, a $390 increase over the
2016 Initial Coverage Limit of $3,310. The 2015 Initial Coverage Limit was
$2,960.
This means: You will be able to buy slightly more
medications before reaching the 2017 Donut Hole or Coverage Gap. Please note, if you purchase medications with an average retail value of less than $309 per month, you will not enter the
2017 Donut Hole.
- The
Donut Hole discount will increase for generic drugs. Next year, if you reach the Donut Hole or
Coverage Gap phase of your Medicare Part D plan coverage, the 2017 generic drug
discount will increase from 42% to 49%.
This means: If you reach the 2017 Donut Hole, and
your generic medication has a retail cost of $100, you will pay $51 and the $51 that you spend will count toward your
2017 out-of-pocket
spending limit or TrOOP of $4,950.
- The
Donut Hole discount will increase for brand-name drugs. The 2017 brand-name
drug discount will increase to 60% (from the 2016 discount of 55%) and you will receive credit
for 90% of the retail drug cost toward meeting your 2017 total out-of-pocket
maximum or Donut Hole exit point (the 40% you spend plus the 50% drug
manufacturer discount).
This means: If
you reach the 2017 Donut Hole and purchase a brand-name medication with a
retail cost of $100, you will pay $40 for the medication (60% discount), and receive $90
credit toward meeting your 2017 out-of-pocket spending limit – or Donut Hole
exit point of $4,950.
- Total
Out-of-Pocket Costs or TrOOP will increase. TrOOP is the dollar figure
you must spend to get out of the Donut Hole or Coverage Gap, excluding monthly
premiums. The 2017 TrOOP threshold will
increase by $100 to $4,950 from the current 2016 value
of $4,850. The 2015 TrOOP threshold value
was $4,700. As noted above, brand-name medication purchases in the Donut
Hole are discounted by 60%, but you will receive credit of 90% of the retail
drug price toward meeting the 2017 TrOOP threshold.
This means: You will have to spend slightly more to
get out of the 2017 Donut Hole than you did in 2016.
If you purchase only generic medications while in the Donut Hole, you would be able purchase medications worth a retail cost of $7,425 before reaching your TrOOP or exiting the Donut Hole and entering Catastrophic Coverage. Based on past drug purchases, CMS estimates that most people will use a mix of 12.1% generics and 87.9% brand name drugs during the Donut Hole, and based on these estimates, you would have to purchase $8,071.16 worth of prescriptions before existing the 2017 Donut Hole. So, on average, if a person purchases medications with a total retail cost of over $673 per month, they will exit the Donut Hole and enter the Catastrophic Coverage phase of their Medicare Part D plan.
- The minimum cost-sharing in the Catastrophic Coverage phase will increase slightly. Once someone has exceeded their TrOOP, they will enter the 2017 Catastrophic Coverage phase and pay $3.30 (up from $2.95) for generics (or a preferred drug that is a multi-source drug) and $8.25 (up from $7.40) for all other drugs - or 5% of the retail drug cost, whichever is higher.
- No
2017 Medicare Advantage plan can have an in-network Maximum Out-of-Pocket
(MOOP) spending limit over $6,700. CMS sets a limit on
how high a Medicare Advantage plan can set their Medicare Part A and Medicare Part B Maximum Out-of-Pocket limit
(MOOP) and, as in 2016 and 2015, no Medicare Advantage plan can have a MOOP
higher than $6,700 for in-network eligible medical cost-sharing.
The 2017 CMS Advance Notice notes: "The mandatory MOOP amount represented approximately the 95th percentile of projected beneficiary out-of-pocket spending. Stated differently, five percent of Original Medicare beneficiaries are expected to incur approximately $6,700 or more in Parts A and B deductibles, copayments and coinsurance. The voluntary MOOP amount of $3,400 represents approximately the 85th percentile of projected Original Medicare out-of-pocket costs."
This means: Although your Medicare Advantage plan
can raise your maximum out-of-pocket spending limit (MOOP)
in 2017, you can expect that your Medicare Advantage plan covered
healthcare expenses will not exceed $6,700 for in-network cost-sharing. (Key Point: Be prepared to read your October 2016 Annual Notice of Change Letter to see if your MOOP increased - this may help you determine how much you need to budget in 2017 for in-network Medicare Part A and Medicare Part B coverage.)
Source as of 02/19/2016: (https://www.cms.gov/ Medicare/ Health-Plans/ MedicareAdvtgSpecRateStats/ Downloads/ Advance2017.pdf)
In the February 19, 2016 Press Release announcing the 2017 Advance Notice and Draft Call Letter, CMS also adds:
"Enrollment and quality have grown in Medicare Advantage and Part D since enactment of the Affordable Care Act:
- Medicare Advantage has reached record high enrollment each year
since 2010, a trend continuing in 2016 with a cumulative increase of 50
percent to an all-time high of more than 17.1 million beneficiaries.
- Nearly 32 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan.
- Average Medicare Advantage premiums have fallen by nearly 10 percent from 2010 to 2016.
- The percentage of Medicare Advantage enrollees in four or five star contracts has almost quadrupled since 2009 to 71 percent.
- About one-third of prescription drug plan enrollees are in Part D
plans with four or more stars, compared to 27 percent of enrollees in
such plans in 2009.
The average number of Medicare plan choices remains
consistent in
2016 as compared to 2015, and access to supplemental benefits, such as
dental and vision benefits, is growing. The proposed policies in the
Advance Notice and Draft Call Letter continue to strengthen and improve
the Medicare Advantage program for current and future generations,
including the program’s ability to serve Medicare beneficiaries with
diverse needs."
(source: https://www.cms.gov/ Newsroom/ MediaReleaseDatabase/ Press-releases/ 2016-Press-releases-items/ 2016-02-19.html) [highlighting added]
For more information on the statistics related to 2016 Medicare Part D plans, please see our 2016 PDP Facts at
PDP-Facts.com.