Medicare Part D Redesign With Out-of-Pocket Caps

During the Medicare Payment Advisory Commission’s (MedPAC’s) January 16 public session, MedPAC staff continued their drumbeat for reforming the Part D benefit following recommendations previously made in their June 2016 Report to Congress. Continuing themes include eliminating the coverage gap and creating a maximum out-of-pocket cap on beneficiary spending that will be financed by a combination of plan, manufacturer and CMS payments and through greater flexibility for plans to manage formularies. More recently, a number of advocacy groups such as the American Action Forum have supported similar reforms, many of which have found their way into the proposed Senate Finance Committee Prescription Drug Pricing Act of 2019 (PDPRA).

To help understand how these reforms may impact enrollees, Part D plans and manufacturers, Manatt has built a model that can analyze the impact of legislative changes on Part D.  As a test case, Manatt ran its Part D model to simulate the potential impacts of the PDPRA. This study simulates how cost sharing for enrollees, and payments by Part D plans, manufacturers and CMS, compare under the PDPRA if it were to be fully implemented in CY 2020, relative to the current Part D standard benefit design for CY 2020, which we refer to as our baseline.

In a new white paper, Manatt Health shares the results of its simulation, comparing aggregate spending across five categories, including enrollee cost sharing, low-income subsidy (LIS) cost-sharing subsidies, plan liabilities, CMS reinsurance and manufacturer discounts. Click here to read the full white paper.



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