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MedPAC Discusses Restructuring Medicare Part D Prescription Drug Benefit

April 10, 2020

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Andrew Amari, Hospital Policy and Regulatory Specialist

The Medicare Payment Advisory Commission (MedPAC) met April 2 to review and vote on draft recommendations to modify the Medicare prescription drug program (Part D), and discuss other issues. MedPAC staff presented three draft recommendations to commissioners that would restructure Part D’s current prescription drug benefit design and also provide flexibility for health plans through a four-year transition plan to the new benefit. The Congressional Budget Office estimates that the three draft recommendations together would reduce federal Medicare spending by roughly $2 billion over one year and $10 billion over five years.

The draft recommendations would modify the current benefit by eliminating the existing coverage gap discount and the initial coverage limit, instead requiring plans to cover 75% of spending between the deductible and the out-of-pocket threshold. The recommendations would also eliminate cost sharing for non-low-income-subsidy enrollees, providing them with complete financial protection, and shift insurance risk in the catastrophic benefit from Medicare to both plan sponsors and pharmaceutical manufacturers. Concurrently, the draft recommendations would provide additional tools and flexibility for plan sponsors through a four-year transition period as the benefit changes.

Sixteen commissioners voted to approve the three recommendations for inclusion in MedPAC’s June 2020 Report to the Congress, with one commissioner abstaining from all three votes.

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