Navigating Medicare Part D drug coverage and patient liability can be confusing at best. What happens when a patient using the Part D benefit is taking an expensive “specialty” medication? What is the patient’s financial obligation, and why?A better understanding of the CMS-defined standard benefit design will equip pharmacists with the ability to help patients navigate their drug coverage benefit and understand their financial obligation.Standard benefit model: Four phasesCMS defines the standard benefit model and cost sharing that private insurers (health plans) must adhere to as the foundation of their Medicare Part D plan offering each year. This standard model consists of four phases: deductible phase, initial coverage limit phase, coverage gap phase, and catastrophic coverage phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar (See Figure 1.)Deductible phase. The deductible limit is set each year by CMS. For 2016, patients with Part D coverage may be responsible for the first $360 of drug costs before coverage by the patient’s plan becomes effective.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarInitial coverage limit phase. Once a patient has reached $360 of drug costs, the basic plan benefit design would cover 75% of the drug cost, and the patient would be liable for the remaining 25% coinsurance cost.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Private insurers can offer enhanced plan designs that apply flat copay amounts in the initial coverage limit phase.Patients stay in this phase until their total drug spend (TDS) reaches $3,310.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Once a patient has exceeded the total drug spend, he or she will move into the coverage gap phase or “donut hole.”1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar The TDS limit is defined each year by CMS and can change from year to year. 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarCoverage gap phase. The complexity of the coverage gap phase creates confusion for everyone. In this phase, there is a temporary limit on the costs a health plan will cover for drugs. Patients receive a discount from the drug manufacturers for brand-name drugs. The manufacturer discount contribution is 50% of the cost, and the health plan pays a 5% administrative fee for brand-name drug costs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient is responsible for the remaining 45% of the brand-name drug cost.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient will pay 58% of the price for generic drugs.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarFor generic drugs, only the amount the patient pays will count toward the true out-of-pocket (TrOOP) threshold.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar For 2016, patients stay in this phase until their TrOOP costs reach $4,850.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar TrOOP accumulations include money spent by the patient in the deductible phase, cost-sharing responsibility in the initial coverage limit phase, and the coverage gap phase plus the drug manufacturer discount in the coverage gap phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google ScholarCatastrophic coverage phase. After a patient reaches the TrOOP threshold of $4,850, the catastrophic coverage phase begins.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Patients generally remain in this phase until the end of the benefit year. In this phase, patients are liable for the greater of $2.95 or 5% for generic and multisource drugs or the greater of $7.40 or 5% for other drugs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarNot that simplePretty simple, right? But consider what happens when the cost of a single specialty drug claim advances the patient from deductible phase to catastrophic coverage phase.As an example, consider a brand-name drug that costs $10,000 per prescription. The patient’s financial responsibility falls into each of the four coverage phases in the following way:■Deductible phase: patient liability = $360.■Initial phase: patient liability is 25% of the cost = $737.50.■Coverage gap phase: patient is liable for 45% of the remaining cost after manufacturer discount and plan administrative cost are applied = $1,777.50.■Catastrophic coverage phase: patient is liable for the greater of $7.40 copay or 5% coinsurance = $137.So, in the end, the patient would be liable for $3,012 of the original $10,000 drug cost. The manufacturer gap discount covered $1,975, and the plan covered $5,013.Helping patients understandPatient confusion is understandable! Thankfully, we have systems to calculate the cost share, but pharmacists’ comprehension of the defined standard benefit model is core to helping patients with Medicare Part D coverage understand their cost share at point of service.Pharmacist understanding is especially important when the medication dispensed is a specialty drug that spans every benefit phase, resulting in a substantial financial burden to the patient.View Large Image Figure ViewerDownload (PPT)As pharmacists, we are often the first point of contact who can offer insight into drug costs, provide guidance to resources for help with the financial impact, or facilitate interaction with prescribers and insurance plans. Navigating Medicare Part D drug coverage and patient liability can be confusing at best. What happens when a patient using the Part D benefit is taking an expensive “specialty” medication? What is the patient’s financial obligation, and why? A better understanding of the CMS-defined standard benefit design will equip pharmacists with the ability to help patients navigate their drug coverage benefit and understand their financial obligation. Standard benefit model: Four phasesCMS defines the standard benefit model and cost sharing that private insurers (health plans) must adhere to as the foundation of their Medicare Part D plan offering each year. This standard model consists of four phases: deductible phase, initial coverage limit phase, coverage gap phase, and catastrophic coverage phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar (See Figure 1.)Deductible phase. The deductible limit is set each year by CMS. For 2016, patients with Part D coverage may be responsible for the first $360 of drug costs before coverage by the patient’s plan becomes effective.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarInitial coverage limit phase. Once a patient has reached $360 of drug costs, the basic plan benefit design would cover 75% of the drug cost, and the patient would be liable for the remaining 25% coinsurance cost.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Private insurers can offer enhanced plan designs that apply flat copay amounts in the initial coverage limit phase.Patients stay in this phase until their total drug spend (TDS) reaches $3,310.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Once a patient has exceeded the total drug spend, he or she will move into the coverage gap phase or “donut hole.”1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar The TDS limit is defined each year by CMS and can change from year to year. 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarCoverage gap phase. The complexity of the coverage gap phase creates confusion for everyone. In this phase, there is a temporary limit on the costs a health plan will cover for drugs. Patients receive a discount from the drug manufacturers for brand-name drugs. The manufacturer discount contribution is 50% of the cost, and the health plan pays a 5% administrative fee for brand-name drug costs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient is responsible for the remaining 45% of the brand-name drug cost.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient will pay 58% of the price for generic drugs.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google ScholarFor generic drugs, only the amount the patient pays will count toward the true out-of-pocket (TrOOP) threshold.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar For 2016, patients stay in this phase until their TrOOP costs reach $4,850.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar TrOOP accumulations include money spent by the patient in the deductible phase, cost-sharing responsibility in the initial coverage limit phase, and the coverage gap phase plus the drug manufacturer discount in the coverage gap phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google ScholarCatastrophic coverage phase. After a patient reaches the TrOOP threshold of $4,850, the catastrophic coverage phase begins.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Patients generally remain in this phase until the end of the benefit year. In this phase, patients are liable for the greater of $2.95 or 5% for generic and multisource drugs or the greater of $7.40 or 5% for other drugs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar CMS defines the standard benefit model and cost sharing that private insurers (health plans) must adhere to as the foundation of their Medicare Part D plan offering each year. This standard model consists of four phases: deductible phase, initial coverage limit phase, coverage gap phase, and catastrophic coverage phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar (See Figure 1.) Deductible phase. The deductible limit is set each year by CMS. For 2016, patients with Part D coverage may be responsible for the first $360 of drug costs before coverage by the patient’s plan becomes effective.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Initial coverage limit phase. Once a patient has reached $360 of drug costs, the basic plan benefit design would cover 75% of the drug cost, and the patient would be liable for the remaining 25% coinsurance cost.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Private insurers can offer enhanced plan designs that apply flat copay amounts in the initial coverage limit phase. Patients stay in this phase until their total drug spend (TDS) reaches $3,310.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Once a patient has exceeded the total drug spend, he or she will move into the coverage gap phase or “donut hole.”1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar The TDS limit is defined each year by CMS and can change from year to year. 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Coverage gap phase. The complexity of the coverage gap phase creates confusion for everyone. In this phase, there is a temporary limit on the costs a health plan will cover for drugs. Patients receive a discount from the drug manufacturers for brand-name drugs. The manufacturer discount contribution is 50% of the cost, and the health plan pays a 5% administrative fee for brand-name drug costs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient is responsible for the remaining 45% of the brand-name drug cost.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar The patient will pay 58% of the price for generic drugs.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar For generic drugs, only the amount the patient pays will count toward the true out-of-pocket (TrOOP) threshold.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar For 2016, patients stay in this phase until their TrOOP costs reach $4,850.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar TrOOP accumulations include money spent by the patient in the deductible phase, cost-sharing responsibility in the initial coverage limit phase, and the coverage gap phase plus the drug manufacturer discount in the coverage gap phase.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar Catastrophic coverage phase. After a patient reaches the TrOOP threshold of $4,850, the catastrophic coverage phase begins.1www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html.Google Scholar, 2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Patients generally remain in this phase until the end of the benefit year. In this phase, patients are liable for the greater of $2.95 or 5% for generic and multisource drugs or the greater of $7.40 or 5% for other drugs.2www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.Google Scholar Not that simplePretty simple, right? But consider what happens when the cost of a single specialty drug claim advances the patient from deductible phase to catastrophic coverage phase.As an example, consider a brand-name drug that costs $10,000 per prescription. The patient’s financial responsibility falls into each of the four coverage phases in the following way:■Deductible phase: patient liability = $360.■Initial phase: patient liability is 25% of the cost = $737.50.■Coverage gap phase: patient is liable for 45% of the remaining cost after manufacturer discount and plan administrative cost are applied = $1,777.50.■Catastrophic coverage phase: patient is liable for the greater of $7.40 copay or 5% coinsurance = $137.So, in the end, the patient would be liable for $3,012 of the original $10,000 drug cost. The manufacturer gap discount covered $1,975, and the plan covered $5,013. Pretty simple, right? But consider what happens when the cost of a single specialty drug claim advances the patient from deductible phase to catastrophic coverage phase. As an example, consider a brand-name drug that costs $10,000 per prescription. The patient’s financial responsibility falls into each of the four coverage phases in the following way:■Deductible phase: patient liability = $360.■Initial phase: patient liability is 25% of the cost = $737.50.■Coverage gap phase: patient is liable for 45% of the remaining cost after manufacturer discount and plan administrative cost are applied = $1,777.50.■Catastrophic coverage phase: patient is liable for the greater of $7.40 copay or 5% coinsurance = $137. So, in the end, the patient would be liable for $3,012 of the original $10,000 drug cost. The manufacturer gap discount covered $1,975, and the plan covered $5,013. Helping patients understandPatient confusion is understandable! Thankfully, we have systems to calculate the cost share, but pharmacists’ comprehension of the defined standard benefit model is core to helping patients with Medicare Part D coverage understand their cost share at point of service.Pharmacist understanding is especially important when the medication dispensed is a specialty drug that spans every benefit phase, resulting in a substantial financial burden to the patient.As pharmacists, we are often the first point of contact who can offer insight into drug costs, provide guidance to resources for help with the financial impact, or facilitate interaction with prescribers and insurance plans. Patient confusion is understandable! Thankfully, we have systems to calculate the cost share, but pharmacists’ comprehension of the defined standard benefit model is core to helping patients with Medicare Part D coverage understand their cost share at point of service. Pharmacist understanding is especially important when the medication dispensed is a specialty drug that spans every benefit phase, resulting in a substantial financial burden to the patient. As pharmacists, we are often the first point of contact who can offer insight into drug costs, provide guidance to resources for help with the financial impact, or facilitate interaction with prescribers and insurance plans.