CMS Insulin Savings Model Shows Early Success

A CMS plan designed to encourage Medicare Part D sponsors to lower insulin co-pays for beneficiaries in the coverage gap appears to be working, officials said yesterday, noting that 88 health payers representing over 1750 individual Medicare Part D and Medicare Advantage plans have applied to offer the Part D Senior Savings Model for insulin products in 2021.

Officials said the model will cap the out-of-pocket monthly expense for insulin at $35 for participating beneficiaries, representing average annual per-beneficiary savings of $446. The program changes the incentives that have previously prevented plan sponsors from lowering the cost of insulin by increasing manufacturer discounts applied during the coverage gap. Manufacturers will pay an additional $250 million in discounts over the 5 years of the model.

“This market-based solution, in which insulin manufacturers and Part D sponsors compete to provide lower costs and higher quality for patients, will allow seniors to choose a Part D plan that covers their insulin at an average 66% lower out-of-pocket cost throughout the year,” said CMS Administrator Seema Verma.

Verma added that participation in the model is open to biosimilar manufacturers, although there are currently no biosimilar insulins on the market. Separately, the FDA has sought to lower insulin costs by making it possible for insulin producers to apply for product approvals through a new regulatory pathway. This change is recent and its potential for success is a subject of much debate.

The Part D Senior Savings Model was announced in March 2020 and is a voluntary model that would allow participating plans to offer lower out-of-pocket costs for a broad range of insulin products. The model comes after the administration previously announced a 13.5% decline in the average monthly basic Part D premium since 2017 to the lowest level in 7 years.

High Costs and Many Users

According to a CMS statement, 1 in 3 Medicare beneficiaries has diabetes and more than 3.3 million Medicare beneficiaries use 1 or more of the common forms of insulin. High costs can be a major barrier to patients seeking treatment, and gaps in insulin access can increase the risk of complications such as vision loss, kidney failure, foot ulcers, and heart attacks.

Additionally, budgeting can be a challenge as out-of-pocket expenses can vary from month to month, in part due to the different rules that apply during each phase of the Part D benefit.

Currently, Part D sponsors can offer prescription drug plans that provide cost sharing in the coverage gap; however, Part D sponsors who do will accrue costs normally paid by drug manufacturers, which are then passed down to beneficiaries in the form of higher premiums.

The new model addresses that issue by allowing manufacturers to continue paying their full coverage gap discount and requires participating Part D sponsors’ plans to lower cost sharing.

Under the model, participating Part D manufacturers will continue to pay their current 70% discount in the coverage gap for their insulins that are included. Discounts will be calculated before the application of supplemental benefits under the model and will reduce out-of-pocket costs of insulin for Medicare beneficiaries.

CMS also predicts that beneficiaries will have plan options in all 50 states, the District of Columbia, and Puerto Rico through either a stand-alone prescription drug plan or Medicare Advantage Plan with prescription drug coverage that can be found through the Medicare Plan Finder on the Medicare.gov website.

Other Efforts to Improve Access

Prior to the enrollment period, CMS plans to enhance the Medicare Plan Finder to include a filter to identify plans that offer capped out-of-pocket costs for insulin for easy searching for beneficiaries. Enrollment for beneficiaries will last from October 15, 2020, through December 7, 2020, for coverage beginning on January 1, 2021.

The Part D Senior Savings Model builds on other actions taken by the CMS to strengthen Medicare including providing coverage for therapeutic continuous glucose monitors for patients who synchronize their insulin devices with their smartphones and allowing Medicare Advantage plans to offer a broader range of supplemental benefits tailored to a patient’s chronic disease.

In addition, CMS has responded to the coronavirus disease 2019 pandemic to ensure diabetic treatments are available for beneficiaries by allowing enrollees to fill or refill Part D—covered drugs for up to 3-month supplies, allowing mail or home deliveries of treatments through retail pharmacies, and expanding telehealth options.

CMS also expanded access to therapeutic continuous glucose monitors for patients with diabetes in response to the crisis. Previously, patients had to meet criteria to qualify for coverage of monitors under Medicare.