Medicare starts closing Part D "doughnut hole"

Agency finalizes guidelines for the drug industry to start offering brand-name discounts to Part D beneficiaries.

By Chris Silva — Posted June 7, 2010

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The federal government has released guidance for the insurance industry to follow to be compliant with a provision in the health system reform bill that phases in an end to the Medicare drug benefit coverage gap.

Closing the gap in Part D coverage, also known as the "doughnut hole," is an important part of the national health reform law, according to the Centers for Medicare & Medicaid Services, which issued the guidance May 21. The statute provides a one-time check for $250 in 2010 for seniors who reach the gap between when initial coverage runs out and when catastrophic benefits kick in, and who are not eligible for low-income assistance. The gap will gradually close in future years and will disappear entirely by 2020.

The CMS guidance is designed to help drug plan sponsors navigate the reform provision that calls for beneficiaries to receive 50% savings on brand-name and some authorized generic drugs after they hit the gap in 2011. The agency also issued the draft model agreement that manufacturers of applicable Part D drugs will sign in order to participate in the discount program.

The Part D plan guidance was finalized by CMS after receiving comments on draft guidance issued April 30.

Among the organizations that commented on the draft guidance was AARP, which has been a strong proponent of ensuring Part D enrollees benefit from the mandated coverage gap discounts. The seniors group commended CMS for highlighting applicable discounts that manufacturers provide. But AARP said it's concerned the agency left open the possibility that some brand-name drug manufacturers will not be providing 50% discounts in 2011.

CMS held a public meeting June 1 to discuss and collect feedback about the final Part D guidance.

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