New Voluntary Medicare Part D Demo Aims to Reduce Spending on High-Cost Drugs

In January, the Centers for Medicare and Medicaid Services’ (CMS) Center for Medicare and Medicaid Innovation announced a new model to allow Medicare Part D plans to share in savings generated by reducing costs in the program’s catastrophic phase. The Part D Payment Modernization Model, part of President Trump’s Blueprint to Lower Drug Prices and Reduce Out-ofPocket Costs, aims to reduce government spending once patients have spent $5,100 in out-of-pocket drug costs. Once that level is reached, taxpayers become responsible for 80 percent of the costs, while the plans pay 15 percent. CMS believes the program will save taxpayers $2 billion per year.

Participants in the five-year model will take on a dual-sided risk. CMS will calculate a benchmark for what government spending would have been without plans taking on the additional risk, and Part D plans will share an unspecified percent of savings if they stay below the target. Plans that exceed the target will be accountable for 10 percent of the federal government’s losses. In addition, the model will provide participants with additional tools to increase engagement between plans and beneficiaries and to promote better understanding of the Part D benefit, out-of-pocket costs and clinically equivalent therapeutic options. The model also includes a Part D Rewards and Incentives program that gives plans additional flexibility to strengthen the clinical relationship between the enrollee and his or her provider and chosen Part D plan.