The merged Senate health reform bill includes a new provision that would narrow the Medicare Part D coverage gap by $500 in 2010.
Unveiled by Senate leadership Nov. 18, the Patient Protection and Affordable Care Act is a combination of the health reform bills reported out of the Senate Finance Committee and Health, Education, Labor and Pensions Committee. Read on....
The merged Senate health reform bill includes a new provision that would narrow the Medicare Part D coverage gap by $500 in 2010.
Unveiled by Senate leadership Nov. 18, the Patient Protection and Affordable Care Act is a combination of the health reform bills reported out of the Senate Finance Committee and Health, Education, Labor and Pensions Committee.
The new coverage gap provision is a notable change among the pharma-related provisions of the bill. The provision would raise the initial coverage level (the point where the coverage gap is triggered) under Part D by $500 for beneficiaries.
That means that in 2010, beneficiaries would enter the gap when total drug spending reaches $3,330, rather than the $2,830 threshold set by CMS for next year. Beneficiaries will exit the gap and enter the catastrophic care level of coverage - when Medicare picks up the majority of drug spending - when their out-of-pocket spending reaches $4,550.
Medicare would reimburse Part D plans for the expenses due to the higher limit, which would be available to beneficiaries on top of the 50 percent brand drug and biologic discount for certain low- to middle-income seniors in the coverage gap.
The higher limit would be a one-time event, however, available only in 2010, while the 50 percent discount would continue as a stand-alone component in 2011 and beyond.
The one-year increase would add an estimated $1.8 billion in costs to the Medicare program, based on a Congressional Budget Office score of the bill. The brand drug discount program is expected to cost Medicare about $17.7 billion, mainly because it will allow more beneficiaries to reach catastrophic coverage.
Together, the two provisions will increase Medicare spending by $19.5 billion from 2010 to 2019, CBO projects.
The relatively modest $1.8 billion extra cost associated with the higher limit appears to have avoided the need for additional offsetting revenues from the pharmaceutical industry - at least for now.
The Senate bill does not require manufacturers to provide Medicaid-level rebates for drugs provided to low-income beneficiaries, as does the House health reform bill. In the House bill, the mandated rebates are posed as a means of funding the gradual elimination of the coverage gap altogether. Still in the Senate bill is a yearly $2.3 billion industry fee to be paid by drug firms based on market share beginning in 2010.
As such, it appears to maintain the general integrity of the Pharmaceutical Research and Manufacturers of America's deal for the industry to contribute $80 billion toward paying for health care reform. Whether it is viewed as offering seniors enough relief from the coverage gap remains to be seen.
AARP Still Pushing To Close Gap
In a Nov. 18 statement, AARP withheld its official endorsement of the Senate bill while recognizing the legislation's contributions to improving Part D. The seniors advocacy group urged the Senate to "go further to meet the President's pledge to completely close the doughnut hole." AARP has endorsed the House bill.
The day the Senate package was announced, some legislators expressed support for higher drug rebates under Part D, as they voiced concerns about reports of drug price hikes in anticipation of health reform's enactment.
Sens. Bill Nelson, D-Fla. and Chuck Schumer, D-N.Y., have both advocated the new rebate requirement for Part D.
Overall, the Senate legislation pays for its reforms using the framework of the Finance Committee bill while adopting the quality measures laid out in the HELP Committee legislation, staffers maintain.
The legislation includes a national public insurance plan which states could choose to opt out of, as well as funding for consumer insurance cooperatives. CBO scored the bill as costing $894 billion over 10 years while reducing the deficit by $127 billion and covering 31 million uninsured Americans over the same time.
- Ramsey Baghdadi
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