Analysis Finds Increase in Amount of Part D Enrollees Reaching Catastrophic Coverage

More Medicare Part D enrollees are reaching catastrophic coverage, according to a new analysis from Avalere Health.

The analysis included data of beneficiaries not receiving low-income subsidiaries—accounting for approximately 72% of enrollees in Part D plans. In 2016, more than 800,000 Medicare Part D enrollees without low-income subsidies reached the catastrophic coverage phase, representing a more than 50% increase from 2013, which had 515,000.

The catastrophic coverage phase is reached when enrollees’ true out-of-pocket costs exceed $5000 in 2018. These costs include actual out-of-pocket costs to a beneficiary, payments made by the drug manufacturers for the coverage discount program, and some charitable foundation contributions. On average, 60% of true out-of-pocket costs are actual out-of-pocket costs, 35% are manufacturer coverage gap discounts, and 5% are patient assistance from charities.

Once in the catastrophic phase, enrollees pay no more than 5% of the total cost of their drugs, with the government paying 80% and Part D paying 15%.

“Beneficiaries who reach the catastrophic coverage phase have spent thousands of dollars out-of-pocket on prescription drugs,” said Dan Mendelson, president, Avalere, in a statement. “Because Part D has no out-of-pocket maximum, these patients will continue to face additional costs throughout the year.”

The analysis also found that out-of-pocket costs for enrollees rose by 13% between 2013 and 2016. Drug spending increased by nearly 45%.

According to Avalere, Part D enrollee out-of-pocket costs are growing slower than their total drug costs because of closing of the coverage gap. Avalere attributed this to changes in the Affordable Care Act, as it decreased the amount out-of-pocket enrollees pay in the coverage gap in 2 ways: drug manufacturers now pay 50% of the cost of brand name drugs in the coverage gap through the coverage gap discount program, and plans gradually increase the amount they contribute to the cost of beneficiaries’ drugs during that time.

“The closing of the coverage gap has helped control beneficiary out-of-pocket costs,” said Richard Kane, senior director, Avalere, in a statement. “However, beneficiary costs are expected to grow and further protections may be needed to ensure Part D enrollees can afford their medications.”