From Dunkin Donuts…. To Krispy Kreme: Making a Bigger, Better Donut Hole Group IV

National Mental Health Association, May 2005

Problem Statement Structure of cost sharing under Part D negatively impacts quality Dimensions of the problem –Vulnerable beneficiaries most affected –Patients less likely to fill prescriptions –Providers may not provide access to most effective drugs –Alternatively presents a moral hazard

Rationale Experience with Part D –25% of beneficiaries will experience higher costs –6.9 million projected to reach coverage gap –3.1 million will reach catastrophic coverage –Near-poor (LIS-eligible) less likely to enroll –Duals confront copays for first time –Premiums lower and coverage better than projected

Rationale Impact on Quality –Cost-related Adherence Uninsured 2.5 times more likely not to fill prescription 16.4% of Medicare recipients did not fill scripts 15.2% of insured did not fill scripts

Rationale Impact on Quality –Prescribing practices Shoot-the-Moon Under-prescribing

Stakeholders (1) Who will support this plan? –Seniors –Disease-specific interest groups Who will oppose it? –Seniors with other credible coverage –Seniors without targeted chronic diseases –Other disease-specific interest groups –Working population paying Medicare tax

Stakeholders (2) Other Supporting Stakeholders –Health care providers –AARP –PhRMA –Pharmaceutical companies –Capitated health care systems –Fiscal conservatives

Stakeholders (2) Other Opposing Stakeholders –Some specialty health care providers –Some pharmaceutical companies –Fee-for-service health systems –Pharmacies

Plan of Action Minimizing complications resulting from problematic access to drugs Preserving cost; Improving quality

Plan of Action High complication chronic diseases Highest evidence standards Long-term cost savings for Medicare Documented evidence of (examples): –Diabetes –Hypertension –Congestive Heart Failure Establish independent advisory group

Plan of Action CDZ DrugsOther Drugs DeductibleNo? CopaysNo? Coverage GapNoYes; Increased

Plan of Action NowProposed $2,250$1,750 $5,100 Expand the Donut Hole

Plan of Action High complication chronic diseases Highest evidence standards Long-term cost savings for Medicare Documented evidence of (examples): –Diabetes –Hypertension –Congestive Heart Failure Establish independent advisory group

Plan of Action Financing Campaign –Disease-specific interest groups –PhARMA –Capitated health systems Budget Impact –Initial administrative component –Cost-neutral over 5 years –Cost-saving over 10 years to Medicare