"If your Medicare Part D plan offers 60% coverage on brand-name drugs in the coverage gap (you pay 40% co-insurance) and you purchase a brand-name formulary prescription that has a retail price of $100, the cost of your prescription after your plan’s savings is $40.(Source: https://www.medicare.gov/ Pubs/pdf/11493.pdf - "Closing the Coverage Gap - Medicare Prescription Drugs Are Becoming More Affordable")
The 70% pharmaceutical manufacturer discount is then applied to your $40 portion so that you only pay $12. [Please notice that only the pharmaceutical industry's portion of the Donut Hole Discount is applied since the Medicare Part D plan is already providing additional Gap coverage.]
However, the entire $40 co-insurance paid by you and the pharmaceutical manufacturer will count toward your total out-of-pocket spending (TrOOP) limit and help you get out of the Coverage Gap a little faster."
"70.1 Supplemental Coverage(Source: CMS Memo, May 21, 2010, "Medicare Coverage Gap Discount Program Beginning in 2011: Revised Part D Sponsor Guidance and Responses to Summary Public Comments on the Draft Guidance" (previous version: April 30, 2010, "Medicare Coverage Gap Discount Program beginning in 2011"), (https://www.cms.gov/ Medicare/ Prescription-Drug-Coverage/ PrescriptionDrugCovContra/ Downloads/ MedicareCoverageGap DiscountProgramGuidance.zip)(previous version: https://www.cms.gov/ Medicare/ Prescription-Drug-Coverage/ PrescriptionDrugCovContra/ downloads/ 2011CoverageGap Discount_043010v2.pdf))
Section 1860D-14A(c)(2) specifies that if a Part D sponsor offers supplemental Part D coverage [Donut Hole Coverage], the discount will not be applied until after such supplemental coverage has been applied to the applicable drug. If the supplemental coverage completely eliminates the coverage gap so that a beneficiary has no cost–sharing at all, no discount is available because the discount is only applied to the portion of the negotiated price that falls within a coverage gap. Therefore, PACE plans that have no coverage gap by statutory design are excluded from the Discount Program.
For 2011, any Part D plan that wishes to offer Part D supplemental benefits on applicable drugs covered between the plan’s initial coverage limit (ICL) and the Medicare Part D catastrophic threshold using coinsurance will use the rules described as follows:
Plan, manufacturer and beneficiary liabilities shall be determined at the claim level. The value of supplemental benefits that must be calculated first on any claim for an applicable drug will consist of the difference between the proposed supplemental coinsurance and coinsurance under the basic benefit (100% for 2011). Thus, for a brand drug supplemental benefit of 60% coinsurance, the value of the supplemental benefits that must be applied first (plan liability) would be 40% (100% - 60%) of the negotiated price of the drug. We interpret the dispensing fee for any such claim to be included in the plan liability portion of the claim. The amount of the discount would then be calculated as 50% of [the negotiated price (as defined in 42 CFR 423.100) less the supplemental benefit]. Beneficiary cost sharing will be the remainder of the negotiated price after the plan liability and discount amounts have been applied.
CMS continues to confirm how supplemental benefits using fixed copays would work with the Discount Program and will issue additional instructions along with PDE guidance.
CMS will consider additional benefits provided by EGWPs to be Part D supplemental benefits and allow EGWPs to opt in to the Discount Program if they demonstrate that that their benefit includes any cost-sharing between the ICL and the catastrophic threshold. CMS will require EGWPs to provide additional information to us regarding their 2011 benefits and will specify these requirements in future guidance.
Finally, if Medicare Part D is not the primary payer, no applicable discount is available because the beneficiary would not have a coverage gap on the initial claim to the primary payer." [emphasis added]
"Part D Supplemental Benefits(Source: CMS Memo, June 2, 2010, "Medicare Coverage Gap Discount Program Beginning in 2011: Additional Guidance Concerning Part D Supplemental Benefits, Employer Group Waiver Plans, Platino Plans, and Subrogation Claims")
CMS stated in the May 21, 2010 guidance that for 2011, any Part D plan that wishes to offer Part D supplemental benefits on applicable drugs covered between the plan’s initial coverage limit (ICL) and the Medicare Part D catastrophic threshold using coinsurance will use the rules described as follows: Plan, manufacturer and beneficiary liabilities shall be determined at the claim level.
The value of supplemental benefits that must be calculated first on any claim for an applicable drug will consist of the difference between the proposed supplemental coinsurance and coinsurance under the basic benefit (100% for 2011).
Thus, for a brand drug supplemental benefit of 60% coinsurance, the value of the supplemental benefits that must be applied first (plan liability) would be 40% (100% - 60%) of the negotiated price of the drug. The amount of the discount would then be calculated as 50% of [the negotiated price (as defined in 42 CFR 423.100) less the supplemental benefit]. Beneficiary cost sharing will be the remainder of the negotiated price after the plan liability and discount amounts have been applied.
For 2011, we have determined that the same formula will be required for Part D plans offering fixed copay supplemental gap coverage.
For example, if the negotiated price of the drug is $100 and the Part D plan’s benefit has a copay of $60 prior to application of any discount, then the value of the supplemental benefit that must be applied first would be $40 ($100-$60). The amount of the discount would then be calculated as 50% of ($100- $40) or $30.
In other words, the plan may offer an actuarial equivalent copay prior to the application of the coverage gap discount.
To be clear, for 2011 Part D plan benefit packages may not incorporate the coverage gap discount into their benefit design and establish copays that apply after the discount amount. Thus, in the case of either a coinsurance or copay design, the amount the beneficiary pays at point-of-sale would generally be approximately 50% of their expected cost sharing under the plan’s benefit package.
Using either coinsurance or copay designs, when supplemental benefits apply, the dispensing fee is to be included in the plan liability portion of the claim to the extent that such liability is equal to or greater than the dispensing fee." [emphasis added]
"SECTION 6 During the Coverage Gap Stage, the plan provides some drug coverage
Section 6.1 You stay in the Coverage Gap Stage until your out-of-pocket costs reach [$7,400 in 2023 and $8,000 in 2024] [TrOOP]
Our [Medicare Part D] plan provides additional coverage after you leave the Initial Coverage Stage (described above) and enter the Medicare Coverage Gap Stage. The table below shows the drugs that are covered and your costs for a one-month supply.
For brand-name drugs that aren't covered during your Coverage Gap Stage, you can get discounts from the drug makers through the Coverage Gap Discount Program. Through the program, you pay [25 percent] of the plan price for brand-name drugs [you receive a 75%]. You may also have to pay some additional charges, such as dispensing or vaccine fees. The full plan fee (both the amount you pay and the discounted amount) count toward your total out-of-pocket-costs, which helps move you through the Coverage Gap Stage.
You also receive some coverage for generic drugs that we do not cover in the Coverage Gap. You pay no more than [25] percent of the cost for generic drugs and the plan pays the rest [you receive a 75% generic drug discount]. For generic drugs, the amount paid by the plan ([75%]) does not count toward your out-of-pocket costs. Only the amount you pay counts and moves you through the coverage gap."