hero image
Issue
Follow us!

Establishing an Out-of-Pocket Cap to Protect Medicare Part D Patients

The Issue
Since 2003, the Medicare Part D drug benefit has provided prescription drug coverage to more than 44 million Americans, both seniors and those with disabilities.[1] This translates into one in eight Americans who now have access to a wide range of oral and self-administered medications provided through private plans approved by the federal government. 

The good news is the Part D program is working. The program is very popular with the public and research finds Part D has prevented diseases, improved survival rates, reduced the number of hospitalizations and achieved savings for the health system.[2]

Yet, the Part D program faces a looming crisis. The reason has to do with a measure of the Affordable Care Act (ACA) that is set to expire at the end of 2019. Because the ACA provision helps patients obtain catastrophic coverage and thereby pay a small percentage of the cost of their medications faster, it is necessary for Congress to act quickly by establishing an annual out-of-pocket cap when patients reach the catastrophic coverage threshold. Without a resolution, Part D beneficiaries with significant health needs will incur significantly more in out-of-pocket expenses for their medicines, threatening their ability to afford these therapies. 

Why an Out-of-Pocket Cap Is Needed in Medicare Part D Plans
There is widespread consensus that preserving the intent of the Medicare Part D program necessitates policies that will prevent a harmful jump in out-of-pocket costs for Part D beneficiaries.  This is especially important when patients exceed Part D’s annual initial coverage limit ($3,280 in total spending in 2019 [3]), go into the coverage gap known as the “donut hole,” and must pay a large percentage of the cost of their medicines until they reach the threshold to obtain catastrophic coverage. At this point, patients will generally pay 5 percent of the plan’s costs for their medications for the rest of the year.

Complicating the situation, Part D has a unique benefit design and the amount of spending needed for beneficiaries to move into the catastrophic stage increases slightly each year. That is why the Affordable Care Act (ACA) included a measure to slow this increase in spending so enrollees can exit the donut hole faster and qualify for catastrophic coverage. The ACA accomplishes this by allowing those in the donut hole to pay a percentage of the cost of their prescription medicines instead of the full amount and by counting 95 percent of the cost of the brand name drugs, including the discount that drug manufacturers provide.[4]

The problem is that the ACA provision is set to expire at the end of 2019, creating a spike in spending for patients virtually overnight.  Unless Congress acts to address this looming “out-of-pocket cliff,” in 2020 the amount to reach catastrophic coverage will jump from $5,100 in 2019 to $6,350 in 2020 – an increase of $1,250 in just one year.[5]As a result, patients will remain in the coverage gap longer and pay substantially more for their medicines during this period. They may also be required to pay a higher percentage of the plan’s cost for medications in perpetuity once they leave the donut hole. 

Because an estimated 5.2 million Part D enrollees could be harmed by this change,[6] senior organizations and patient advocates are urging Congress to establish an annual out-of-pocket cap to protect Part D beneficiaries with costs above the catastrophic coverage threshold. This is also the recommendation of the Institute of Medicine (IOM)[7] and is backed by a 2017 Kaiser Family Foundation analysis that concluded Part D enrollees would have collectively saved $1.2 billion if the program had a hard cap on out-of-pocket spending. [8]

Our Position 
At the national level, Patients Rising NOW supports passage of federal legislation to establish an annual out-of-pocket cap that removes the cost-sharing requirement for patients who reach the catastrophic coverage limit under Part D.  We also urge Congress to take this action quickly to avert an “out-of-pocket cliff” in 2020 so patients with chronic diseases and complex conditions will not have to forgo needed medicines and experience avoidable health problems as a result. 


[1]Medicare Access for Patients Rx. Fifteen Years of Part D: Gaining Perspective on the Medicare Prescription Drug Benefit. September 2018. Accessible at: https://maprx.info/wp-content/uploads/2018/09/Fifteen-Years-of-Part-D-Gaining-Perspective-on-the-Medicare-Prescription-Drug-Benefit.pdf

[2]The Hill. Strengthening and Protecting Part D Is an Important Challenge. October 2, 2018. Accessible at: https://thehill.com/opinion/healthcare/409726-strengthening-and-protecting-part-d-is-an-important-challenge

[3]Henry J. Kaiser Family Foundation. An Overview of the Medicare Part D Prescription Drug Benefit. October 12, 2018.Accessible at:https://www.kff.org/medicare/fact-sheet/an-overview-of-the-medicare-part-d-prescription-drug-benefit/

[4]Medicareresources.org. Were there changes in the Medicare Part D prescription drug coverage for 2019?  October 12, 2018. Accessible at

https://www.medicareresources.org/faqs/are-there-changes-in-the-medicare-part-d-prescription-drug-coverage-this-year/

[5]MapRX. Fifteen Years of Part D: Gaining Perspective on the Medicare Part D. Benefit. September 2018. Accessible at:https://maprx.info/wp-content/uploads/2018/09/Fifteen-Years-of-Part-D-Gaining-Perspective-on-the-Medicare-Prescription-Drug-Benefit.pdf

[6]Henry J. Kaiser Family Foundation. Closing the Medicare Part D Coverage Gap: Trends, Recent Changes, and What’s Ahead. August 21, 2018. Accessible at: https://www.kff.org/medicare/issue-brief/closing-the-medicare-part-d-coverage-gap-trends-recent-changes-and-whats-ahead/

[7]Institute of Medicine. Making Medicines Affordable: A National Imperative. November 30, 2017.Accessible at: http://www.nationalacademies.org/hmd/Reports/2017/making-medicines-affordable-a-national-imperative.aspx

[8]Henry J. Kaiser Family Foundation. “No Limit: Medicare Part D Enrollees Exposed to High OOP Drug Costs Without a Hard Cap on Spending.” November 2017. Accessible at: http://files.kff.org/attachment/Issue-Brief-No-Limit-Medicare-Part-D-Enrollees-Exposed-to-High-OOP-Drug-Costs-Without-a-Hard-Cap-on-Spending