Part D Senior Savings Model | CMS Innovation Center

Part D Senior Savings Model | CMS Innovation Center

CMS NEWS

FOR IMMEDIATE RELEASE
July 29, 2020

Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries

 Trump Administration Continues to Keep Out-of-Pocket Drug Costs Low for Seniors

Today, the Centers for Medicare & Medicaid Services (CMS) announced the average basic premium for Medicare Part D prescription drug plans, which cover prescription drugs that beneficiaries pick up at a pharmacy. Under the leadership of President Trump, for the first time seniors that use insulin will be able to choose a prescription drug plan in their area that offers a broad set of insulins for no more than $35 per month per prescription.

The average basic Part D premium will be $30.50 in 2021. The 2021 and 2020 average basic premiums are the second lowest and lowest, respectively, average basic premiums in Part D since 2013. This trend of lower Part D premiums, which have decreased by 12 percent since 2017, means that beneficiaries have saved nearly $1.9 billion in premium costs over that time. Further, Part D continues to be an extremely popular program, with enrollment increasing by 16.7 percent since 2017.

“At every turn, the Trump Administration has prioritized policies that introduce choice and competition in Part D,” said CMS Administrator Seema Verma. “The result is lower prices for life-saving drugs like insulin, which will be available to Medicare beneficiaries at this fall’s Open Enrollment for no more than $35 a month. In short, Part D premiums continue to stay at their lowest levels in years even as beneficiaries enjoy a more robust set of options from which to choose a plan that meets their needs.”

In addition to the $1.9 billion in premium savings for beneficiaries since 2017, the Trump Administration has produced substantial Part D program savings for taxpayers. With about 200 additional standalone prescription drug plans and 1,500 additional Medicare Advantage plans with prescription drug coverage joining the program between 2017 and 2020, and that trend expected to continue in 2021, increased market competition has led to lower costs and lower Medicare premium subsidies, which has saved taxpayers approximately $8.5 billion over the past four years.

Earlier this year, CMS launched the Part D Senior Savings Model, which will allow Medicare beneficiaries to choose a plan that provides access to a broad set of insulins at a maximum $35 copay for a month’s supply. Starting January 1, 2021, beneficiaries who select these plans will save, on average, $446 per year, or 66 percent, on their out-of-pocket costs for insulin. Beneficiaries will be able to choose from more than 1,600 participating standalone Medicare Part D prescription drug plans and Medicare Advantage plans with prescription drug coverage, all across the country this open enrollment period, which runs from October 15^th through December 7^th. And because the majority of participating Medicare Advantage plans with prescription drug coverage do not charge a Part D premium, beneficiaries who enroll in those plans will save on insulin and not pay any extra premiums.

In January 2020, CMS, through the Part D Payment Modernization Model, offered an innovative new opportunity for Part D plan sponsors to lower costs for beneficiaries, while improving care quality. Under this model, Part D sponsors can better manage prescription drug costs through all phases of the Part D benefit, including the catastrophic phase. Through the use of better tools and program flexibilities, sponsors are better able to negotiate on high cost drugs and design plans that increase access and lower out-of-pocket costs for beneficiaries. For CY 2021, there will be nine plan options in Utah, New Mexico, Idaho and Pennsylvania that participate in this model.

In Medicare Part D, beneficiaries choose the prescription drug plan that best meets their needs, and plans have to improve quality and lower costs to attract beneficiaries. This competitive dynamic sets up clear incentives that drive towards value. CMS has taken steps to modernize the Part D program by providing beneficiaries the opportunity to choose among plans with greater negotiating tools that have been developed in the private market and by providing patients with more transparency on drug prices. Improvements to the Medicare Part D program that CMS has made to date include:

• Beginning in 2021, providing more information on out-of-pocket costs for prescription drugs to beneficiaries by requiring Part D plans to provide a real time benefit tool to clinicians with information that they can discuss with patients on out-of-pocket drug costs at the time a prescription is written.
• Implementing Part D legislation signed by President Trump to prohibit “gag clauses,” which keep pharmacists from telling patients about lower-cost ways to obtain prescription drugs.
• Beginning in 2021, requiring the Explanation of Benefits document that Part D beneficiaries receive each month to include information on drug price increases and lower-cost therapeutic alternatives.
• Providing beneficiaries with more drug choices and empowering beneficiaries to select a plan that meets their needs by allowing plans to cover different prescription drugs for different indications, an approach used in the private sector.
• Reducing the maximum amount that low-income beneficiaries pay for certain innovative medicines known as “biosimilars,” which will lower the out-of-pocket cost of these innovative medicines for these beneficiaries.
• Empowering Medicare Advantage to negotiate lower costs for physician-administered prescription drugs for seniors for the first time, as well allowing Part D plans to substitute certain generic drugs to onto plan formularies more quickly during the year, so beneficiaries immediately have access to the generic, which typically has lower cost sharing than the brand.
• Increasing competition among plans by removing the requirement that certain Part D plans have to “meaningfully differ” from each other, making more plan options available for beneficiaries.

More information on the Part D Senior Savings Model can be viewed at: https://innovation.cms.gov/initiatives/part-d-savings-model

To view the 2021 Part D base beneficiary premium, the Part D national average monthly bid amount, the Part D regional low-income premium subsidy amounts, the de minimis amount, the Medicare Advantage employer group waiver plan regional payment rates, and the Medicare Advantage regional PPO benchmarks, visit: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Ratebooks-and-Supporting-Data.html and select “2021.”