Part D Catastrophic Coverage - Financial Implications Of Restructuring Liability
Our Expertise Insights Part D Catastrophic Coverage - Financial Implications Of Restructuring Liability
Oliver Wyman has evaluated the effect over a 10-year period (2021 through 2030) of restructuring the liabilities in the catastrophic phase of the Part D program as proposed by MedPAC.
As early as 2016, the Medicare Payment Advisory Commission ("MedPAC") has advocated a restructuring of the Centers for Medicare & Medicaid Services ("CMS") Federal Reinsurance payments for Medicare Part D. Under the current program parameters, the CMS covers 80% of prescription drug costs (less an adjustment for rebates and other forms of Direct and Indirect Renumeration ("DIR")) above a certain threshold, known as the True Out of Pocket cost ("TrOOP"). Claims above the TrOOP are commonly referred to as catastrophic claims. In the catastrophic phase of the Part D benefit, the member is liable for 5% of costs and the health plan covers the remaining 15% (plus an adjustment for DIR). MedPAC has proposed the following:
Eliminate member cost sharing above the TrOOP,
Reduce CMS coverage above the TrOOP (after adjustments for DIR) from 80% to 20%, and
Increase health plan liability to absorb the difference.
Oliver Wyman's study examines the effects of these proposed changes and our findings are presented in this report.
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