On February 9, the President signed the Bipartisan Budget Act of 2018 into law which includes changes to Medicare Part D coverage. Days later, Trump’s Office of Management and Budget released several budget proposals for Medicare Part D as well.
Changes in the BBA in 2018
- Coverage gap. The law will close the coverage gap in 2019 instead of 2020 and reduce beneficiary coinsurance from 30% to 25% in 2019. It will also increase manufacturer discounts of name brand drugs from 50% to 70%, and these discounts will continue to count towards out-of-pocket spending.
- Biosimilars. Biosimilar drugs, which are different from generic drugs, will be discounted 70% along with name brand drugs.
- Increase in Premiums. For individual beneficiaries with incomes $500,000 or greater and married beneficiaries with combined incomes $750,000 or greater, premiums will increase 5% under Part B and Part D.
Proposed changes to FY 2019 budget
- Rebates. Part D plans would be required to share rebates and pass them on to at least one-third of enrollees.
- Part D out-of-pocket limit. Beginning in 2019, this would establish an out-of-pocket limit for Part D and reduce coinsurance rates during the catastrophic coverage period from 5% to 0% over four years.
- Change true out-of-pocket spending. A huge hit to beneficiaries in the coverage gap period (or Medicare donut hole), manufacturer discounts would no longer count toward a beneficiary’s out-of-pocket spending.
- Retroactive Part D coverage. Part D coverage would be extended to low-income beneficiaries while their low-income subsidy (LIS) eligibility is processed.