Avalere Research Shows More Part D Enrollees Reach Catastrophic Phase

From RADAR on Medicare Advantage

The Trump administration unveiled its "blueprint" for tackling soaring pharmaceutical prices, highlighting a five-part plan to modernize the Medicare Part D program that was included in the president’s proposed fiscal year 2019 budget.

Two key steps of the Trump administration plan are excluding manufacturer discounts from the calculation of beneficiary out-of-pocket (OOP) costs in the Part D coverage gap and establishing a beneficiary OOP maximum in the Part D catastrophic phase, which is being hit by more and more Part D enrollees, according to Avalere Health, LLC.

The number of beneficiaries who reach the catastrophic coverage phase of the Part D benefit has increased by more than 50% from 2013 to 2016, estimated Avalere. More than 800,000 Part D enrollees without low-income subsidies (LIS) entered the catastrophic coverage phase in 2016, compared with approximately 515,000 in 2013.

During the same period, drug spending for Part D beneficiaries rose by nearly 45% while their OOP costs grew 13%, which was largely due to closing the coverage gap. The analysis looked only at beneficiaries who do not receive LIS, which is roughly 72% of members in Part D plans, according to the latest Medicare Trustees Report.

Beneficiaries enter catastrophic coverage when their true out-of-pocket (TrOOP) costs exceed $5,000 in 2018. Avalere found that on average, about 60% of TrOOP costs are actual OOP costs, about 35% represents manufacturer coverage gap discount payments, and 5% reflects patient assistance from charities.

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