Insulin Prices for Medicare Beneficiaries are Being Slashed
CMS Announced Insulin Prices for Medicare Beneficiaries are Being Slashed
For many diabetic Medicare beneficiaries, insulin is a life-saving drug. According to the Kaiser Family Foundation (KFF), the majority of insulin products had annual price increases of more than 10% between 2013 and 2018. During the same time frame, the inflation rate was only 1.5%. Although the average annual out-of-pocket cost for a Medicare beneficiary in 2017 was $580, some paid upwards of $2,500.
With insulin prices soaring to new heights each year, Medicare beneficiaries are paying more every year on insulin than ever before. However, the Centers for Medicare and Medicaid Services (CMS) announced insulin prices for Medicare beneficiaries are being slashed come 2021. With the start of the new Part D Senior Savings Model, insulin-dependent beneficiaries will never see a copay higher than $35 a month for covered insulin.
About the Part D Senior Savings Model
The Part D Senior Savings Model is a type of Part D plan in which the plan carrier and drug manufacturers must follow specific requirements to achieve lower insulin copays for their enrollees. The Model is voluntary, so Part D plan carriers and drug manufacturers are not required to participate. However, more than 1,700 plans and all three of the top insulin drug manufacturers have joined for 2021.
Participating drug manufacturers must agree to allow all insulin products as part of the Savings Model. While Part D plan carriers still have the right to choose which insulin products they cover, the ones that are covered must come with a maximum allowed copay of $35 per month. Carriers must also offer at least one vial and pen option for each insulin they choose to cover.
The Part D Senior Savings Model is possible because the Part D plans will take on a more significant payment per insulin prescription. The drug manufacturers will continue to pay the same, and the enrollees will reap the benefits of the lower copays.
Cost examples under the Part D Senior Savings Model
Part D plan carriers have the freedom to set their plans’ deductibles, copays, coinsurance, and tier specifications, within certain limits. However, according to KFF, most covered insulin products in 2019 were considered a Tier 3 preferred drug, usually with a $47 copay during the initial coverage phase. By the start of the initial coverage phase, most insulin-dependent enrollees likely already met their plan’s deductible of up to $435.  https://www.kff.org/medicare/issue-brief/insulin-costs-and-coverage-in-medicare-part-d/
Once in the coverage gap phase, which most insulin users reach each year, the $47 copay turns into a 25% coinsurance, making the enrollee’s out-of-pocket cost around $100 or more.
However, under the Savings Model, enrollees will never pay more than $35 per month regardless of the payment phase. Instead of paying a $435 deductible for one prescription of insulin, they will pay up to $35. Instead of paying $100+ for one prescription of insulin during the coverage gap, they will pay up to $35.
Part B insulin vs. Part D insulin
Medicare Part D covers self-administered insulins. Medicare Part B covers insulin prescriptions when that beneficiary requires the use of an insulin pump. Therefore, if a beneficiary uses a Medicare-covered insulin pump, that beneficiary will have a 20% coinsurance for each insulin prescription.
Medicare Supplement plans cover the Part B 20% coinsurance, so if the beneficiary has a Medicare Supplement plan, they pay absolutely nothing for covered insulin. Because the Savings Model is for Part D-covered insulin, beneficiaries who receive their insulin under Part B won’t be affected.
Enrolling in a Part D Senior Savings Model plan
Part D Senior Savings Model plans will be available for enrollment during the next Annual Election Period. The Annual Election Period occurs between October 15th and December 7th every year. If a beneficiary uses the Annual Election Period to enroll in a Part D plan, that plan will begin on January 1st.
If a beneficiary’s Initial Election Period runs during the Annual Election Period, the Part D plan may begin sooner than January 1st. However, the Part D Senior Savings Model portion of the plan won’t take effect until the following year. This is because the benefits of a Part D plan can’t be changed mid-year.
Starting a Part D plan during one’s Initial Election Period in 2020 means they will have access to only the plan’s 2020 benefits. The Part D Senior Savings Model benefits can’t start until January 1st. Once enrolled in a Part D Senior Savings Model plan, beneficiaries will have access to insulin that costs no more than $35 a month as soon as January 1, 2021.