On April 2, 2018, the Centers for Medicare and
Medicaid Services (CMS) released
the 2019 Rate Announcement and Call Letter that includes the finalized defined
standard benefits for 2019 Medicare Part D prescription drug plan coverage.
The final 2019 Call Letter was updated to include changes brought about by the Bipartisan Budget Act of 2018 (Pub.L. 115-123) (BBA) that President
Trump signed into law on Friday, February 9, 2018.
For an overview of how Medicare Part D plan coverage has changed over the years, you can
click
here for a chart comparing Medicare Part D standard benefit parameters from
the 2006 start of the Medicare Part D program through 2019.
How the Bipartisan Budget Act of 2018 may help you exit the Donut Hole sooner.
The Bipartisan Budget Act of 2018 (BBA) accelerates the
"closing" of the Donut Hole by reducing the cost of brand-name Donut Hole drug purchases to 25% of retail in 2019 (instead of 30% as planned) - and just as importantly, the BBA shifts more of the
Donut Hole discount onto the pharmaceutical suppliers (instead of the Medicare Part D plans) and this, in turn, will effectively move people with higher drug costs (over $678 retail per month) through the Donut Hole at a faster rate - and into
Catastrophic Coverage.
As noted below, the Estimated Retail Drug Cost needed to
exit the 2019 Donut Hole (or meet the 2019
TrOOP limit) was estimated on
February 1, 2018 as $8,906.55 - that was before the BBA was enacted - and now the Estimated Retail Drug Cost needed to
exit the 2019 Donut Hole is $8,139.54 based on the BBA.
The 2019 Donut Hole after the BBA
The 2019 Donut Hole discount for brand-name
medications is now 75% (and more importantly, with 70% of the discount paid by the pharmaceutical suppliers and 5% paid by your Medicare Part D plan) - this means that, during the 2019 Donut Hole, you will pay 25% of retail brand-name drug costs and received 95% of the retail drug cost as credit toward
meeting your total out-of-pocket costs (
TrOOP of $5,100 in 2019) - meaning you may get out of the Donut Hole sooner.
The 2019 generic Donut Hole discount
is not affected by the Bipartisan Budget Act of 2018. In 2019, you will
receive a 63% discount on generic drug purchased in the Donut Hole and
pay 37% of the retail generic drug costs - the 37% you pay will count toward
your 2019 TrOOP of $5,100 or Donut Hole exit point.
As reference, the following graph shows the
proposed 2019 Medicare Part D
plan parameters released on February 1, 2018 and shows how the how the
Estimated Retail Drug Cost needed to meet the 2019 TrOOP was calculated
using the previous Donut Hole discount that was then changed by the Bipartisan Budget Act of 2018.
The 2019 Donut Hole before the BBA
The above graph show the proposed Standard Medicare Part D parameters,
previous to the enactment of the BBA,
the 2019 Donut Hole discount for brand-name medications was expected to
be 70% (with
50% of the discount paid by the Pharmaceutical Industry and 20% paid by
the Medicare Part D plan) - this meant
that, during the Donut Hole, you paid 30% of retail drug costs and
received 80% of the retail drug cost credited toward meeting your total
out-of-pocket costs (TrOOP of $5,100 in 2019) or Donut Hole exit point.
As noted, the generic Donut Hole discount was not affected by the BBA
and in 2019, you receive a 63% discount on generic drugs purchased
during the
Donut Hole and pay 37% of retail generic drug costs - the 37% that you
pay will count toward your 2019 TrOOP limit or Donut Hole exit point.
And 2019 standard Medicare Part D plan changes in more detail . . .
Based on the updated CMS information, here are a few changes
to the standard 2019 Medicare Part D prescription drug coverage:
- The standard Initial Deductible will increase slightly.
The 2019
standard Initial Deductible will increase by $10 to $415 from the current 2018 standard Initial Deductible
of $405. As reference, the 2017 standard Initial Deductible
was $400, the 2016
standard Initial Deductible was $360, and the 2015 Initial Deductible was
$320.
Important: The
Initial Deductible will not
affect when you enter the
Donut Hole or Coverage Gap, but will impact when you leave the Donut Hole and enter Catastrophic Coverage. In other words, your initial deductible is counted toward out-of-pocket threshold or TrOOP (see below for more about TrOOP).
This means: The Initial Deductible is the
amount that you pay before your Medicare Part D plan begins to
share in the cost of coverage (100% of retail). If you enroll in
a Medicare Part D prescription drug plan with a standard Initial Deductible,
you will spend slightly more out-of-pocket in 2019 before your plan
coverage begins. As a note, the majority of 2018 Medicare Part D plans have an initial deductible. But, as we see in
2018, many popular Medicare Part D plans exclude lower-costing Tier 1 and
Tier 2 drugs from the deductible, providing immediate coverage for some
lower-costing medications.
- The
Initial Coverage Limit will increase.
The 2019 Initial
Coverage Limit (ICL) will increase $70 to $3,820
from the current 2018 ICL of $3,750. The Initial Coverage Limit marks
the Donut Hole entry point. Medicare beneficiaries enter the Donut
Hole or Coverage Gap when the total negotiated retail value of
their
prescription drug purchases exceeds their plan’s Initial Coverage
limit. As reference, the 2017 Initial Coverage
Limit was $3,700, the 2016 Initial Coverage
Limit was $3,310, and the 2015 Initial Coverage Limit was $2,960.
This means: You will be able
to buy slightly more medications before reaching the 2019 Donut Hole or
Coverage Gap. Please note, if you
purchase medications with an average retail value of less than $318
per month, you will not enter
the 2019 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
2018 generic drug discount will increase from 56% to 63%. (So your generic drug costs in the Gap will be 37% of retail prices.)
This means: If you are in the 2019 Donut Hole and your generic
medication has a retail cost of $100, you will pay $37. And the $37 that you spend for a formulary drug will count
toward your 2019 out-of-pocket spending limit or TrOOP.
- The
Donut Hole discount will increase for brand-name drugs.
As noted in more detail above President
Trump signed the Bipartisan Budget Act of 2018 (Pub.L. 115-123) on Friday, February 9, 2018,
effectively "closing" the Coverage Gap with the brand-name Donut
Hole discount increasing to 75% of retail in 2019 (you pay 25% of retail costs). According to the new law, the
pharmaceutical industry will be responsible for 70% of the cost of
brand-name medications in the Coverage Gap, therefore you will receive credit
for 95% of the retail drug cost toward meeting your 2019 total
out-of-pocket maximum or Donut Hole exit point (the 25% of retail
costs you
pay plus the 70% drug manufacturer discount).
This means: If you reach the 2019 Donut Hole and purchase a
brand-name medication with a retail cost of $100, you will pay $25 for the
formulary medication, and receive $95 credit toward meeting your 2019 out-of-pocket
spending limit – or Donut Hole exit point.
- The Total
Out-of-Pocket Cost (TrOOP) threshold will increase.
The
2019 TrOOP threshold will increase by $100 to $5,100 from the current 2018 TrOOP limit of $5,000. TrOOP is the dollar figure you must spend (or someone else spends on your behalf) to
get out of the Donut Hole or Coverage Gap and into the Catastrophic
Coverage phase of your Medicare Part D plan. As
noted above, brand-name medication purchases in the 2019 Donut Hole are
discounted by 75% (you pay 25%), but you will receive credit of 95% of the
retail drug price toward meeting the 2019 TrOOP threshold. Remember that TrOOP does not include monthly
premiums or non-formulary purchases. As reference, the 2017 TrOOP
limit was $4,950, the 2016 TrOOP
limit was $4,850, and the 2015 TrOOP threshold value was $4,700.
This means: You will have to spend just slightly more to get out of the 2019
Donut Hole as compared to 2018.
Not sure how the 2019 Donut Hole
or Coverage Gap functions?
To help you visualize how your current drug spending relates to your Medicare
Part D plan coverage, we have our updated 2019 Donut Hole calculator found
at PDP-Planner.com/2019.
Our Donut Hole calculator helps you estimate
what you can expect to pay throughout the different phases of your
2019
Medicare Part D plan coverage. We have several options for you to
choose the percentage of generic and brand-name drugs you use and you
can even change your
mix of prescriptions to be 100% generic or 100% brand. To get you
started, you can click
here to see an example of the 2019 Medicare prescription drug plan
phases for someone with $800 per month brand drug retail cost.
- The estimated retail value of drug purchases needed to exit the Donut Hole will increase.
CMS estimates that a person will use a mix of 89.31% brand drugs and 10.69%
generic drugs while in the 2019 Donut Hole. As a result, CMS
calculates that a person will be able to purchase drugs with an
approximate retail value of $8,139.54 before meeting the out-of-pocket
threshold (TrOOP) and exiting the 2019 Donut Hole.
As reference, in 2018, the CMS drug-cost estimate was calculated using the mix of 87.9% brand drugs and 12.1%
generic drugs and the estimated retail cost to meet 2018 TrOOP and exit the 2018 Donut Hole is $8,417.60.
This means: Based on CMS
drug purchase estimates, if your monthly retail costs are more than $678 per month, you will exit
the 2019 Donut Hole and enter Catastrophic Coverage portion of your
Medicare Part D plan.
- Catastrophic Coverage
costs will change slightly.
The Catastrophic Coverage portion of your
Medicare Part D plan begins when you leave the Coverage Gap or Donut
Hole. In the 2019 Catastrophic
Coverage phase, you pay a minimum of $8.50 for brand drugs or $3.40 for
generics (or 5% of retail costs, whichever is higher). In the 2018 Catastrophic
Coverage phase, you pay a minimum of $8.35 for brand drugs or $3.35 for
generics (or 5%, whichever is higher). In 2017 Catastrophic Coverage you paid a minimum of $8.25 for brand
drugs or $3.30 for generics.
This means: If you purchase a brand-name medication with a
retail price of over $170 or a generic medication with a retail price
of over $68, you will pay 5% of retail or more than the minimum $8.50
for brand drugs or $3.40 for generics. For example, if you are using
the expensive generic medication IMATINIB MESYLATE 400 MG TABLET [a generic for Gleevec (r)] (30 EA ) (NDC: 47335047583), your monthly retail drug costs may be $8,792.38, so your catastrophic coverage cost would be $439.62 since this 5% of retail cost is more than the minimum $3.40 generic catastrophic coverage cost.
As background, CMS released the 2019 Advance Notice and Draft Call Letter on February 1, 2018 that included
proposed defined
standard benefits for 2019 Medicare Part D prescription drug plan coverage.