Add context to CMS data on Medicare Part D about drug-spending HOT 5 OPEN

This fact sheet from the Kaiser Family Foundation (KFF) has really good information on the Part D program, which I've tried to summarize below. To answer a few of the questions you outlined above:

• Spending: The Congressional Budget Office (CBO) estimates that spending on Part D benefits will total $94 billion in 2017, representing 15.6% of net Medicare outlays in 2017 (net of offsetting receipts from premiums and state transfers). KFF projects the share of Medicare spending on Part D to increase to 17.8% by 2025. Source.

• Enrollment: About 72% (41 of 57 million) of eligible beneficiaries opted for Part D coverage.

• A significant recent event is the recent acceleration of drug spending growth: Growth in Part D costs per beneficiary has accelerated since 2013. Costs are projected to increase 5.8% per year between 2015 and 2025. Source

• Drug prices: Because Medicare can't negotiate drug prices, it is generally thought to pay more for drugs than other plans. It is hard to say exactly how much money could be saved if Medicare could negotiate drug prices, but here are a few estimates:

  • Medicare Part D “even with its rebates, spends 198%, almost twice the median of the amount paid for brand name drugs in the 31 OECD countries. And based on other analyses, even within the U.S., Medicare Part D pays on average 73% more than Medicaid and 80% more than VBA [the Veterans Affairs] for brand-name drugs.” Source

  • "If the Secretary were allowed to require brand-name drug manufacturers to lower the price of their drugs, Medicare Part D could save on average $11 billion per year, according to CBO." Source

• Premium changes: After several years of relatively low growth, average monthly PDP premiums increased by 6 percent in 2016 to $39.21 per month. See charts on page 12 of Source

Here's some additional detail detail about the Part D program, summarized from the KFF factsheet and some other sources:

Enrollment

• In 2016, about 72% of Medicare beneficiaries eligible for Part D coverage opted for it: nearly 41 million Medicare beneficiaries enrolled in Medicare Part D plans, out of a total of 57 million Medicare beneficiaries with access to Part D.

• The number of prescription drug plans (PDPs) available to Medicare beneficiaries has been halved in the last ten years (1,875 in 2007 to 746 in 2017). Still, beneficiaries in each state will continue to have at least 18 PDPs to choose from.

Premiums

• In 2017, the base beneficiary monthly premium for Part D is $35.63, but actual monthly premiums vary across plans and regions, from $14.60 to $179.

• Higher-income beneficiaries pay a premium surcharge ($13.30 - $76.20) on top of their monthly premium.

• Beneficiaries with "low incomes and modest assets" (defined in more detail in the KFF factsheet) are eligible for assistance with Part D plan premiums and cost sharing.

Benefits and Coverage

• This is very complicated, and the KFF has a nice graphic that helps to explain it.

• PDPs must offer either the defined standard benefit (outlined below) or an "actuarially equivalent" alternative, which can provide enhanced benefits as well.

• Under the standard Part D benefit:

  • beneficiaries pay a $400 deductible before insurance coverage kicks in.

  • Then, beneficiaries pay 25% of drug costs up to $3,700 through coinsurance. This equates to an additional $925 in out-of-pocket spending, if I'm understanding this correctly.

  • A coverage gap follows until catastrophic coverage kicks in (corresponding to $4,950 in "True Out-of-Pocket" spending or about $8000 for a non-low-income subsidy beneficiary). While in this coverage gap, the beneficiary pays 40% of brand-name drug costs and 51% of generic drug costs.

  • Once the catastrophic coverage threshold is reached, Medicare pays for 80% of drug costs, plans pay 15%, and beneficiaries pay 5% of total drug costs.

• "60% of Part D enrollees are in standalone PDPs, but a rising share (40 percent in 2016, up from 28 percent in 2006) are in Medicare Advantage prescription drug (MA-PD) plans." Source

from drug-spending.

Thanks so much, @seamus-mckinsey! Can't wait to dig through all this - looks like some great and helpful info!

from drug-spending.

Possible source of good contextual info - CMS Statistics Reference Booklet

from drug-spending.

@jenniferthompson Is the work for this issue complete?

from drug-spending.

@mattgawarecki I'm not sure how much has even been done, but it's pretty vague and we may need to edit/replace it.

I had in mind something like compiling a list of events/policy changes that would affect things we see in the data and that we could include in reports/visualizations to help explain what we're seeing. Like on the dashboard, if you choose a benzodiazepine, you might see an annotation on the charts where we saw that giant claims/spending spike (when Medicare started covering benzos).

from drug-spending.