Has Medicare Part D ‘doughnut hole’ closed or not?

Before Medicare Part D, the prescription drug coverage for Medicare beneficiaries, was established, those on Medicare did not have any coverage for prescription drugs except when hospitalized. However, the muchawaited prescription drug coverage came with a price, that is the infamous “doughnut hole” or coverage gap. Congress had a self-imposed budget target, and this was purportedly designed to provide “low deductible, catastrophic coverage and protection for those with low incomes.” The Affordable Care Act began an effort over the next 10 years to close the gap. Beneficiaries looked forward to January, 2020 when the coverage gap was scheduled to close. Or did it? The New York Times published an article on January 17, 2020 entitled “Medicare’s Part D Doughnut Holes Has Closed! Mostly.

Sorta.” https://www.nytimes.com/2020/01/17/ health/medicare-drugcosts.html. The subtitle is “The drug coverage gap was widely loathed, but the new scheme may still leave some older Americans holding the bag.”

The question the article author poses is what other kind of insurance works like that? Jack Hoadley, a veteran drug policy researcher at Georgetown University, describes the coverage gap as “You had coverage up to a certain dollar threshold, and then you didn’t. People like to believe that once they have coverage, it continues.” In 2011, federal rules started lowering costs for beneficiaries and also increasing the discounts required from drug companies, which gradually reduced what beneficiaries paid in the “hole.” Now supposedly there is no “hole.” Dr. Tricia Neuman, who directs the Medicare policy program at the Kaiser Family Foundation, is happy that the doughnut hole is closing but “people will continue to be exposed to very high drug costs without Congressional action.”

Premiums for Part D have remained relatively stable. But this year, after meeting the $435 deductible, a flat price is charged for each covered drug during the “initial coverage period.” Different plans assign drugs to different tiers where the consumer is charged specified amounts (this is the reason that it is very important to review Part D plans in light of current medications taken each year). However, once the total expenditures hit $4,020, the consumer is responsible for 25 percent of the plan’s negotiated cost per drug, not exactly a gap but a shift. If you were paying $45 for a $200 prescription, your share is now $50, not a big jump. But for a $500 drug, you owe $125 until you reach the catastrophic threshold. Then it will take longer to climb out of the “not-exactly-a-hole.” The catastrophic threshold limit was $5,100; this year it is $6,350, which is much higher. When in the catastrophic level, the co-payment is a flat number or five

percent of the drug cost, whichever is higher. Part D has never capped out-ofpocket drug costs, and that trend continues.

Last year, Kaiser Foundation surveys showed that nearly a quarter of people

over age 65 years struggled to pay for prescription medications by not taking drugs as directed, skipping doses, reducing doses, even not filling the prescriptions. Part of the issue is rising drug costs, and many have called for Congressional action to curb this trend.

Besides carefully examining the formularies on

Part D plans each year during open enrollment, looking for assistance through PACE and PACENET, and speaking with your physician about affording prescribed drugs, consumers are encouraged to contact their Congress persons about legislation to curb drug costs. Your health could depend on it. The legal advice in this column is general in nature, Consult your attorney for advice to fit your particular situation. Kathleen Martin, Esquire is licensed to practice in the Commonwealth of Pennsylvania and is certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court. She is a principal of the law firm of O’Donnell, Weiss & Mattei, P.C., 41 High Street, Pottstown, and 347 Bridge Street, Phoenixville,610-323-2800, www. owmlaw.com. You can reach Mrs. Martin at kmartin@owmlaw.com