Insulin is a necessary expenditure each month for millions of Americans living with diabetes. As with any regular medical cost, however, the amount we pay for insulin adds up throughout the year. This week, the Centers for Medicare & Medicaid Services (CMS) announced that over 1,750 Medicare Part D and Medicare Advantage plans will be meeting a standardized payment in 2021.
On May 26, 2020, CMS announced that participating drug plans (both Part D plans and Part C plans with drug coverage) would be limiting the out-of-pocket cost for a month’s supply of insulin at a maximum of $35 for the copay. These changes will come into effect for the 2021 Medicare insurance plan year. With around a third of all Medicare beneficiaries living with diabetes, this news will bring emotional and financial relief.
This announcement should allow payments to be more consistent across the different phases of coverage in a Part D plan — from your initial deductible phase through the coverage gap and into catastrophic coverage. Previously, the costs of insulin could differ from month to month depending on which phase of coverage the beneficiary is in. Standardizing and lowering these costs removes a massive barrier to proper treatment and management of diabetes for the nearly 3.3 million Medicare beneficiaries that use insulin monthly. With the changes covering the most common forms of insulin on the market, like vial and pen dosages, insulin should be both affordable and accessible to beneficiaries who need it.
The Part D Senior Savings Model
The standardizing of out-of-pocket insulin copayments is part of the recently announced Part D Senior Savings Model. Allowing participating plans to further lower drug costs, this voluntary program is currently focusing on insulin costs for seniors with diabetes. The Part D Senior Savings Model was created to test a model moving forward to save an estimated $250 million for the federal government and an average of $446 in annual out-of-pocket costs for seniors.
The theory behind this model is that by increasing options, particularly enhanced Part D plan options, the out-of-pocket costs for beneficiaries will decrease to meet the competition. The goal outlined in the announcement of this program was for insulin to cost no more than $35 for a monthly supply. This most recent announcement shows that at the very least, the goal is being met. Further reports will be needed to see whether this in turn increases access and usage for beneficiaries or if prices drop any further.
The success or failure of this model has broader meanings for Medicare and the health care industry. Should the Part D Senior Savings Model continue to decrease prices through market competition, it’s anticipated that this approach will be adopted for other types of high-cost drugs. In a call after the most recent announcement, CMS Administrator Seema Verma told CNN, “We’re starting with insulin, but depending on the progress of this, we will consider offering this flexibility to manufacturers and plans with other drugs, depending on the results.”
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Moving forward, this could mean that many of the regular expenditures for drugs may be treated with a similar model, further increasing the potential plan options for Medicare beneficiaries. At a time when drug costs continue to grow, any decrease in the out-of-pocket expenditures for prescription medications will be met with sighs of relief — if not outright excitement — from those that need these drugs to sustain their quality of life. It’ll certainly be intriguing to see where this policy grows in the coming weeks and months.