Avalere Estimates Medicare Part D 'Donut Hole' Will Be Obsolete In 2023

Main Category: Medicare / Medicaid / SCHIP
Article Date: 02 Jul 2009 - 2:00 PDT

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Today's 65 year old Medicare Part D beneficiary will be 79 when the coverage gap, or 'donut hole,' is eliminated, says a new analysis of proposed legislation from the House of Representatives released today by Avalere Health. The firm also concludes that although fewer people will fall into the gap from now until 2023, by 2020 some of the sickest Medicare beneficiaries will spend upwards of $16,000 on drugs before reaching catastrophic coverage where the government covers 95% of their drug costs.

Using language proposed in the recent House legislation and its own analytic models, Avalere researchers assessed what would happen to the coverage gap over time if the proposed House legislation on this aspect of Medicare Part D were enacted. Among their findings:

-- The gap will be eliminated over time, but it will likely take 12 years based on the current House proposal.

-- Fewer Medicare beneficiaries will fall into the gap over those 12 years, because the legislation increases the rate at which the initial benefit limit and annual out of pocket threshold grow. Those likely to benefit immediately are those who rely on multiple chronic condition medications and do not take any biologic or specialty drugs.

-- The sickest beneficiaries who rely on certain categories of high-cost drug therapies currently get through the coverage gap and into catastrophic coverage after spending approximately $3,000 (based on current thresholds); under this proposal, it may take these beneficiaries thousands of dollars more annually than they are currently spending to reach catastrophic coverage support.

"Achieving greater beneficiary protection is clearly a difficult challenge given the construct of the benefit, cost concerns, and the wide variety of patient needs," said Jennifer Snow, a senior manager at Avalere Health. "The proposal we evaluated charts a path toward ending the unpopular donut hole, but does impose burdens on many chronically ill beneficiaries."

Avalere researchers point to other areas for future research related to coverage gap policies, including the cost of the proposal to the federal government, how it will affect beneficiary and plan behavior, and profiles of certain types of patients and how they would fare under this new proposal and the use of generic medications under Medicare Part D.

Source: Avalere Health