The Medicare Part D Senior Savings Model

Lowering drug prices has been a lot like Charles Warner’s quote, “Everybody complains about the weather, but nobody does anything about it”. Doing anything about drug prices has been as difficult as changing the weather, primarily because it is complicated. I have always been a champion of the free market, it was this market competition that has kept Medicare’s drug insurance costs low. But, as always is the case in healthcare matters, there must be regulations and guard rails established that will ensure safety and access. Part D, Medicare’s drug insurance program, is a government program and the government, through legislation, regulation and rulemaking, is responsible for maintaining the safeguards and guard rails in Part D. Access, as it pertains to prescription drugs, has often been impacted by the out-of-pocket costs paid by the consumer. It was this out-of-pocket cost that caused the consumer to walk away from the drug store counter without their prescription drugs.

Often the drug price rhetoric focuses on a drug’s list price, or the rebates paid by different entities in the supply line, or what percentage of the cost that manufacturers and insurance companies pay during the different phases of Medicare Part D . . . but my focus, as it always will be on Seniors Speak Out, is on you, the patient. What will any proposed change do to the amount of money you spend on your healthcare. There is such a change that has been proposed that will address the out-of-pocket costs paid by consumers for insulin, it is the Medicare Part D Senior Savings Model.

This Savings Model addresses a problem with the rapidly escalating consumer cost of insulin. These rising costs have forced patients to make difficult decisions on what to eliminate from their life to pay for their insulin or, in some cases, forced them to ration or curtail their insulin use. Controlling diabetes is essential for the overall health of those with this disease. Uncontrolled diabetes threatens every other aspect of a patient’s health. Ensuring a diabetic had access to his/her required insulin will have a huge effect on their overall health and save money in the long run. It made sense to attack these suddenly skyrocketing costs quickly.

CMS, the Centers for Medicare and Medicaid Services, proposed the Savings Model as a test of a change to the pricing of insulin that would lower the cost to the patient. It would cap the out-of-pocket costs for insulin to $35 per month, regardless of which phase of Part D coverage the patient is in and is predicted to save $446 dollars a year. This is significant and especially important given the fluctuations in cost that patients have seen depending on which phase of coverage they are in. The chart below shows that a patient may see big out-of-pocket costs early in their year of coverage. This front loading in cost would be the logical point where insulin use would be rationed or stopped. This interruption could have long range effects on health that might not be alleviated later in the year when the costs would come down and usage would return to normal. The long-term damage to the patient’s health would have already occurred. The proposed model would smooth the costs into a predictable, affordable, monthly outlay that could be budgeted.

There has been widespread acceptance of this model. As of now, an estimated 58% of people currently enrolled in Medicare Part D are covered by plans that will institute the Senior Savings Model. The model is scheduled to be implemented starting January 1,  2021, which means it will be important for those who use insulin to review their coverage during this year’s open enrollment or sign-up period (October 15 to December 7, 2020) and ensure they enroll in a Part D plan that is participating in the Senior Savings Model.

While this model will test that the desired outcomes are realized, it is important that significant information is gathered so that changes can be made and opportunities for increased efficiencies recognized when the final policy is implemented.

I hope that those of you who use insulin will see your costs reduced, smoothed out and predictable as this model is implemented next year.

Thair