CMS releases Part D payment model to offer lower cost-sharing on insulin

A document that reads 'Medicare Part D'
CMS released a voluntary payment model to allow Part D plans to change how they offer cost-sharing for insulin. (Getty/designer491)

The Trump administration launched a new voluntary payment model that allows Part D plans to offer Medicare beneficiaries insulin for a maximum $35 co-pay for a 30-day supply.

But the plans may have to offer higher premiums to compensate for the better cost-sharing.

The Part D Senior Savings Model released by the Centers for Medicare & Medicaid Services on Wednesday is part of a larger effort by the administration to wrangle high drug prices. The cost of insulin, which has risen by 500% in recent years, has been a major focal point of anger among policymakers.

“We call on health insurance plans and prescription drug manufacturers to take action and provide relief for America’s seniors who take insulin,” CMS Administrator Seema Verma said in a statement Wednesday.

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CMS said that the out-of-pocket costs for insulin on Part D can fluctuate from month to month.

“This unpredictability, in part due to the complexity of the different phases of the Part D benefit, can lead to challenges for beneficiaries when budgeting for their drug costs,” the agency said in a release.

The model, therefore, will test a Part D plan design that would have predictable copays for all types of insulin, whether they be short or long-acting.

A participating plan can reduce cost-sharing beyond current requirements. For example, a basic Part D plan traditionally sets out-of-pocket costs to a percentage of the drug’s price, which is called coinsurance. But plans in the insulin model can offer fixed dollar copays rather than coinsurance, CMS said.

“In exchange for these additional benefits, enhanced plans have slightly higher premiums, which are paid for by beneficiaries or through other means, such as a Medicare Advantage plan,” CMS added.

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Both Part D plans and drug manufacturers are invited to apply for the model, applications for which close on May 1. Letters of intent are due by April 10.

On or around March 20, CMS plans to release the list of drug manufacturers participating in the model that starts in 2021. Drug manufacturers will also be required to report any increases to the list price for insulins offered in the model, which CMS will post publicly.

Even though it has been on the market for decades, insulin does not have a generic version because of patent delay tactics by manufacturers.