Part D Senior Savings Model

The Centers for Medicare & Medicaid Services (CMS) announced a new Model for Calendar Year (CY) 2021, the Part D Senior Savings Model (or the “Model”), and the corresponding Request for Application (RFA) process for participation from eligible pharmaceutical manufacturers and Part D sponsors in all states and territories. The voluntary Model tests the impact of offering beneficiaries an increased choice of enhanced alternative Part D plan options that offer lower out-of-pocket costs for insulin.

Background

One in every three Medicare beneficiaries has diabetes, and over 3.3 million Medicare beneficiaries use one or more of the common forms of insulin. For some of these beneficiaries, access to insulin can be a critical component of their medical management, with gaps in access increasing risk of serious complications, ranging from vision loss to kidney failure to foot ulcers (potentially requiring amputation) to heart attacks. Unfortunately, sometimes the cost of insulin can be a barrier to appropriate medical management of diabetes. CMS’s Part D Senior Savings Model is designed to address President Trump’s promise to lower prescription drug costs and provide Medicare patients with new choices of Part D plans that offer insulin at an affordable and predictable cost where a month’s supply of a broad set of plan-formulary insulins costs no more than $35 each.

Model Details

CMS is testing a change to the Medicare Coverage Gap Discount Program (the “discount program”) to allow Part D sponsors, through eligible enhanced alternative plans, to offer a Part D benefit design that includes predictable copays in the deductible, initial coverage, and coverage gap phases by offering supplemental benefits that apply after manufacturers provide a discounted price for a broad range of insulins included in the Model. The Model aims to reduce Medicare expenditures while preserving or enhancing quality of care for beneficiaries, and to provide beneficiaries with additional Part D plan choices, both for beneficiaries who receive Part D coverage through standalone Prescription Drug plans (PDPs) and those who receive Part D coverage through Medicare Advantage, Prescription Drug plans (MA-PDs). These Model-participating plan benefit packages (PBPs) will provide stable, predictable copays for certain insulins that beneficiaries need throughout the different phases of the Part D benefit.

Specifically, CMS is enabling health plan innovation to offer beneficiaries lower prescription drug out-of-pocket costs by waiving a current programmatic disincentive for Part D sponsors to design prescription drug plans that offer supplemental benefits to lower beneficiary cost sharing in the coverage gap phase of the Part D benefit for insulin.

While Part D sponsors currently can offer supplemental benefits to lower beneficiary cost sharing through the coverage gap phase of the Part D benefit, they chose not to do so because under existing rules, such benefits would reduce the amount of coverage gap discounts the pharmaceutical manufacturers would normally pay. Those costs, which would accrue to the plan would then be passed on to beneficiaries in the form of higher supplemental premiums.

Because Part D sponsors compete to offer Medicare beneficiaries affordable prescription drug coverage, only a few sponsors design a benefit that has supplemental benefit coverage for brand or other applicable drugs in the coverage gap. Brand and other applicable drugs are the set of medications that often cost beneficiaries the most, and beneficiaries in the coverage gap phase pay 25 percent of the negotiated price, which may closely mirror the medication’s list price. That amount is often significantly higher than in the initial coverage phase and can represent a financial burden for Medicare beneficiaries.

Beginning January 1, 2021, CMS is testing a change where Part D sponsors that participate in the Model offer beneficiaries prescription drug plans that provide supplemental benefits for insulin in the coverage gap phase of the Part D benefit. Participating pharmaceutical manufacturers will pay the 70 percent discount in the coverage gap for the insulins that are included in the Model, but those manufacturer discount payments would now be calculated before the application of supplemental benefits under the Model.

Part D sponsors participating in the Model will offer beneficiaries plan choices that provide broad access to multiple types of insulin, marketed by Model-participating pharmaceutical manufacturers, at a maximum copay of $35 each for a month’s supply in the deductible, initial coverage, and coverage gap phases of the Part D benefit. As a result, beneficiaries who take insulin and enroll in a plan participating in the Model should save an average of $446 in annual out-of-pocket costs on insulin, or over 66 percent, relative to their average cost-sharing today. This predictable copay will provide improved access to and affordability of insulin in order to improve management of beneficiaries who require insulin as part of their care.

To encourage broad Part D sponsor participation, CMS is providing Part D sponsors the option of additional risk corridor protection for CY 2021 and CY 2022 for PBPs that have higher enrollment than average from insulin-dependent diabetic patients, when the PBP meets qualifying criteria. Through the Model, CMS is also testing how participating Part D sponsors may best encourage healthy behaviors and medication adherence through Part D Rewards and Incentives programs.

CY2021 Model Participation

CY 2021 Participating Pharmaceutical Manufacturers

Eligible pharmaceutical manufacturers had the opportunity to volunteer to participate in the Model by responding to the RFA and executing a Model-specific contract addendum to the Medicare Coverage Gap Discount Program by March 19, 2020. On March 23, 2020, CMS announced broad pharmaceutical manufacturer participation for the insulins to be offered in CY 2021.

The following pharmaceutical manufacturers are participating in the Part D Senior Savings Model for CY 2021:

  • Eli Lilly and Company
  • Novo Nordisk, Inc. and Novo Nordisk Pharma, Inc.
  • Sanofi-Aventis U.S. LLC

Please see the list of Model drugs (PDF) below for more information.

CY 2021 Participating Part D Sponsors

Part D sponsors had the opportunity to apply for CY 2021 participation by May 1, 2020. CMS received significant interest in the Model from Part D sponsors, and will have robust participation in the Model for CY 2021. Across the nation, 1,635 prescription drug plans, including both Medicare Advantage, Prescription Drug plans (MA-PDs) and standalone Prescription Drug plans (PDPs), are participating in the Part D Senior Savings Model for CY 2021. Seventy-six (76) Part D sponsors will be participating in the Model, covering an estimated 13.2 million enrollees. Seniors who use insulin in all 50 states, D.C., and Puerto Rico will have a choice of a Part D Senior Savings Model participating plan in their area.

Beneficiaries will be able to find prescription drug plans that are participating in the Part D Senior Savings Model in the 2021 plan year through the Medicare Plan Finder on Medicare.gov during the annual open enrollment period this Fall. CMS will add a new “Insulin Savings” filter to easily display plans that will offer capped out-of-pocket costs for insulin. In addition, CMS is posting a list of Part D Senior Savings Plan Model Participants at a state level (see “2021 Part D Senior Savings Model Landscape File” file below).

  • 2021 Medicare Open Enrollment Information: As part of open enrollment, CMS has created a partner toolkit with information about the Part D Senior Savings Model, including how to identify and select a participating plan. More information is available HERE.
  • 2021 Part D Senior Savings Model Landscape File

The following materials are applicable for CMS-approved Part D Sponsors participating in the Part D Senior Savings Model for CY 2021. 

For questions relating to the Part D Senior Savings Model, please email PartDSavingsModel@cms.hhs.gov.

CY 2022 Requests for Applications

CMS will be releasing further information on CY 2022 Request for Applications (RFAs) for pharmaceutical manufacturers and Part D sponsors in Fall 2020. We encourage interested organizations to continue to check the Part D Senior Savings Model webpage for updates.

Webinars

Additional Information

 

Last updated on:
09/24/2020