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Studies eye Medicare Rx coverage gap.

MENLO PARK, Calif. -- A new report from the Kaiser Family Foundation reviews how the coverage gap in Medicare's drug benefit known as the doughnut hole is working by examining the availability of gap coverage in the private Medicare Part D drug plans offered to beneficiaries this year (the first year of the phaseout of the gap), as required under the 2010 health reform law.

The changes for 2011 include a 50% discount on brand name drugs purchased during the gap in coverage, reducing an enrollee's potential out-of-pocket costs in the gap from about $3,600 to $1,800.

A separate report analyzes actual drug claims data from 2008 and 2009 and finds that most Part D enrollees with high drug costs who fall in the gap one year are likely to do so in future years. Enrollees who take drugs for certain conditions, including breast cancer and Alzheimer's disease, are more likely to reach the gap than other beneficiaries.

The report, Understanding the Effects of the Medicare Part D Coverage Gap in 2008 and 2009, analyzes retail pharmacy claims data compiled by IMS Health and was conducted by researchers at Georgetown University, NORC at the University of Chicago and the Kaiser Family Foundation.

"As originally designed, the Medicare Part D benefit included a coverage gap that is starting to phase out, beginning in 2011. This unique feature of the Medicare drug benefit represents a gap in coverage where Part D enrollees, other than those qualifying for the benefit's Low-Income Subsidy [LIS], have been required to pay the full cost of their drugs," says the study.

"The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 included a phaseout of this coverage gap that will be complete in 2020. The future of these changes to the Part D benefit remains uncertain."

Key findings include that nearly one of every five Part D non-LIS enrollees reached the coverage gap in 2009 and that among Part D non-LIS enrollees who filled one or more prescriptions in 2009 about one in five had spending high enough to reach the coverage gap.

In addition, the analysis suggests that more than 3.4 million beneficiaries reached the coverage gap and faced the full cost of their prescriptions in 2009. Most people who reached the gap did not have high enough drug spending to receive catastrophic coverage before the end of the year, the study finds.

The study suggests that, as the health reform law is challenged in Congress and in the courts, some have proposed maintaining the coverage gap rather than gradually closing it as part of a broader effort to slow the growth in Medicare spending to reduce the federal deficit.

"The new policy and the fact that a partial gap in coverage will remain in place until 2020 make it an important time to understand the implications of the policy for the 29 million people on Medicare currently enrolled in Part D. In a previous report using 2007 data we found that many people--26% of Part D non-LIS enrollees, or 15% of Part D enrollees overall--reached the coverage gap," explains the study.

"Those that reached the gap appeared to modify their drug use by stopping or reducing their use of certain medications. Since that report was released, other studies have presented similar findings."

This latest report updates previous results and follows beneficiaries across multiple years and compares Part D enrollees to other groups that do not face a coverage gap. According to Kaiser, the study is the first to examine encounters with the coverage gap in 2009 and experiences with the gap across multiple years.

"In 2009, the last year covered by this study, the coverage gap began when a beneficiary incurred $2,700 in total drug spending and ended after that beneficiary had incurred $4,350 in out-of-pocket costs (equivalent to $6,135 in total drug spending under the standard benefit design)," says the study.

"Once through the gap, beneficiaries become eligible for catastrophic coverage, where about 95% of the costs of non-formulary drugs are covered. In 2010, Part D enrollees who reached the gap received a $250 check to help compensate them for their expenses. Starting in 2011, beneficiaries reaching the gap pay 50% less for the brand name drugs they buy while in the gap, and 7% less for generics."
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Title Annotation:RX/Government
Publication:Chain Drug Review
Date:Sep 26, 2011
Words:728
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