Insurers offer more coverage to fill Part D gap

Filling the gap in coverage in which the enrollee pays 100 percent of total drug costs before catastrophic coverage begins — the so-called doughnut hole — will be a significant issue that stand-alone Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug (MA-PD) plans face in 2008. In 2008, the coverage gap totals $3,216 for plans offering the standard Medicare Part D benefit. That number is projected to exceed $6,000 by 2016, according to a report from the Henry J. Kaiser Family Foundation.

In response, 29 percent of PDPs (529 plans) will offer some type of gap coverage in 2008, up from 15 percent (220 plans) in 2006. The proportion of MA-PD plans offering some gap coverage has also grown, from 28 percent (369 plans) in 2006 to 51 percent (964 plans) in 2008.

From 2007 to 2008, generic drug coverage by PDPs will remain stable, but in 2008 “we will see some modification to the type of coverage offered,” says Juliette Cubanski, principal policy analyst at the Kaiser Family Foundation. “Plans are starting to segment their tiers for generic drugs, so it’s not just tier one, tier two, and tier three but value generics, preferred generics, and nonpreferred generics,” says Cubanski. About half of the PDPs with gap coverage in 2008 are covering only preferred brands or a subset of generics.

In 2008, there will only be one PDP in one region that is covering some brand-name drugs and generic drugs in the gap. About 300 MA-PD plans will offer limited coverage of brand-name drugs in the gap. Nearly all of the stand-alone PDPs offering gap coverage and more than half of the MA-PD plans offering gap coverage will cover generic drugs exclusively in 2008.

“There’s been a dramatic evacuation of plans from the market,” says Cubanski. “Plans are still offering gap coverage but they are limiting the scope of that coverage so that there are more restrictions on the types of drugs covered. Brand-name drugs are not as commonly covered as they were in previous years.”

*In 2008, one PDP will offer gap coverage for brand-name drugs (rounds to 0 percent).

Source: The Henry J. Kaiser Family Foundation. “Medicare Part D 2008 Data Spotlight: The Coverage Gap,” November 2007.