Drug Cost Hikes Outpace Rise in Other Medical Costs

By Emily P. Walker, Washington Correspondent, MedPage Today

Prices for prescription drugs have risen faster than the cost of other medical goods and services since 2006, according to a new government report.

The prices for 100 commonly used drugs -- which included 55 brand-name drugs and 45 generics -- increased at an average annual rate of 6.6% from 2006 through early 2010, compared with a 3.8% average annual increase for other consumer medical goods and services.

Prices for brand-name drugs increased by an annual average rate of 8.3%, while prices for generics fell by 2.6% annually, according to the report prepared by the Government Accountability Office (GAO) and requested by five Democratic lawmakers.

Prescription drug spending totaled about $250 billion in 2009.

One of the biggest price increases in brand-name drugs was seen in tamsulosin (Flomax), a drug made by Boehringer Ingelheim to treat the symptoms of an enlarged prostate. From 2006-2007, the "usual and customary" price for Flomax increased by 9.8%, but from 2009-2010, it increased nearly 30%.
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Time to Fill the Doughnuts — Health Care Reform and Medicare Part D | Health Policy and Reform

By William H. Shrank, M.D., M.S.H.S., and Niteesh K. Choudhry, M.D., Ph.D.

The passage of the Affordable Care Act (ACA) in March 2010 promised to put an end to the “doughnut hole,” the gap in prescription-drug coverage that is the most controversial component of the Medicare Part D benefit.¹ Several months ago, seniors who had reached the spending threshold that marked the beginning of their doughnut hole began to receive their $250 rebate checks. Incrementally between now and 2020, the coverage gap will be filled with subsidies from manufacturers of brand-name drugs and from the federal government. Thus, the ACA, like Part D itself, has expanded coverage for prescription medications — but it has done so in a complex manner that owes more to political wrangling than to any straightforward effort to promote health and cost-effective medication use. The plan for filling in the doughnut hole will most likely confuse many beneficiaries and, at least temporarily, work against cost consciousness, and providers and payers will need to assist patients in navigating the benefit and identifying affordable medications in the years leading up to 2020.
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Early BP Lowering No Help in Acute Stroke

By Crystal Phend, Senior Staff Writer, MedPage Today

Lowering blood pressure early during acute stroke did nothing to improve outcomes and may actually impair patients' ability to live independently later on, researchers affirmed in a randomized trial.

Candesartan (Atacand) started within 30 hours of stroke onset and given over seven days did not affect the combined six-month rate of death from vascular causes, myocardial infarction, or stroke compared with placebo (11.7% versus 11.3%, adjusted hazard ratio 1.09, P=0.52), Eivind Berge, MD, of Oslo University Hospital Ullevål, and colleagues found.

Functional disability was 17% more common with the drug (P=0.048), the group reported here at the American Stroke Association's International Stroke Conference and simultaneously online in The Lancet.
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Cost Keeps Stroke Meds Out of Reach for Some

By Todd Neale, Staff Writer, MedPage Today

Some stroke survivors skip prescribed medications because the cost is too high -- a situation that may be worsening, particularly among young and uninsured patients, researchers found.
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Clinical Trials Fail to Sufficiently Represent Older Adults | Aging In Action

by John Davy

Older adults use the highest proportion of medical and pharmaceutical treatment, but are vastly underrepresented in clinical trial research. A recent review of publications based on randomized control trials (Zulman et al 2011) shows that this is not only a product of the under-recruitment of older adults. In addition to the use of age limits and other exclusion criteria that tend to preclude older individuals, most clinical research fails to look at outcomes of particular relevance to older adults. Further, many published studies employ statistical methods that may misrepresent the significance of age in their findings.

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AHRQ News And Numbers: Approximately Five Percent Of Seniors Report One Or More Cognitive Disorders

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Slightly over over 5 percent of the nearly 39 million Americans age 65 and older in 2007 reported one or more cognitive disorders, such as senility or dementia, according to the latest News and Numbers from the Agency for Healthcare Research and Quality.

Seniors age 85 and older were the most likely to have reported one or more cognitive disorders (18.4 percent), compared to seniors ages 75 to 84 (6 percent) and seniors ages 65 to 74 (1.1 percent).

AHRQ found that for elderly Americans age 65 and older in 2007:

- Seniors with less than a high school education were more likely to have reported one or more cognitive disorders than seniors that were high school graduates (8.6 percent and 4.9 percent, respectively) or seniors with more than a high school education (2.7 percent ).

- Nearly 8 percent of poor seniors reported one or more cognitive disorders compared to 4.1 percent of middle and high income seniors reporting such a condition.

- Nearly 11 percent of seniors who had both Medicare and another type of supplemental public insurance reported one or more cognitive disorders, compared to 5 percent of seniors with Medicare only and 4.1 percent of seniors with Medicare and supplemental private insurance.

- Average annual health care expense for seniors reporting one or more cognitive disorders totaled $15,549 a year, compared to $9,019 for seniors not reporting any cognitive disorders.

AHRQ, which is part of the U.S. Department of Health and Human Services, improves the quality, safety, efficiency, and effectiveness of health care for all Americans. The data in this AHRQ News and Numbers summary are taken from the Medical Expenditure Panel Survey (MEPS), a detailed source of information on the health services used by Americans, the frequency with which they are used, the cost of those services, and how they are paid. For more information, go to: Person Characteristics of the Elderly Reporting One or More Cognitive Disorders, 2007 .

Source:
AHRQ News and Numbers

Sebelius Announces Three Million Medicare Beneficiaries Have Received Prescription Drug Cost Relief Under the Affordable Care Act

Implementation of the Affordable Care Act making Medicare stronger for beneficiaries

U.S. Department of Health and Human Services Secretary Kathleen Sebelius today announced that three million Medicare beneficiaries nationwide have received prescription drug cost relief through the Affordable Care Act. To date, three million eligible beneficiaries who fell into the drug coverage gap known as the donut hole during 2010 have been mailed a one-time, tax-free $250 rebate check.

 “For too long, many seniors and people with disabilities have been forced to make impossible choices between paying for needed prescription medication and necessities like food and rent,” said Secretary Sebelius. “The Affordable Care Act offers long overdue relief by lowering prescription drug costs each year until the donut hole is closed.”

Eligible beneficiaries who fell into the coverage gap during 2010 are continuing to automatically receive rebate checks.  These checks are only the first step in how the Affordable Care Act will reduce prescription drug costs for beneficiaries in the donut hole each year until it is closed in 2020. Starting this year, eligible beneficiaries in the coverage gap will receive a 50-percent discount on covered brand name medications while in the donut hole.  In addition, in 2011 Medicare will begin paying 7-percent of the price for generic drugs during the coverage gap.

Also today, Secretary Sebelius released a new video message on the new benefits the Affordable Care Act provides in 2011 for people on Medicare. You can watch the video message here.

The closing of the donut hole is just one of the ways seniors benefit from the Affordable Care Act. In addition to savings on prescription drugs, the law provides new benefits to Medicare beneficiaries when they visit their doctor starting this year:

• As of January 1, 2011,  Original Medicare no longer charges out-of-pocket costs for the “Welcome to Medicare” physical exam and, for the first time since the Medicare program was created in 1965, Original Medicare now covers an annual wellness visit with a participating doctor, also at no cost.

• In addition to these annual wellness visits, most people with Medicare can now receive critical preventive services, including certain cancer screenings such as mammograms and colonoscopies, for free.

• Also this year, the Affordable Care Act will provide qualifying doctors and other health care professionals providing primary care to people on Medicare a 10-percent bonus for primary care services.  This will help ensure that those primary care providers can continue to be there for Medicare patients.

People with Medicare can learn more about these new benefits, search for participating doctors in their area, and find other helpful information by contacting a trained customer service representative toll-free at 1-800-MEDICARE (1-800-633-4227) or visiting www.Medicare.gov.

Additionally, the Affordable Care Act makes Medicare stronger and more secure for all beneficiaries. These provisions under the new law increase benefits to beneficiaries and help to extend the life of the Medicare Trust Fund by 12 years.

• An analysis issued by the Department of Health and Human Services estimates that under the Affordable Care Act, average savings for those enrolled in traditional Medicare will amount to more than $3,500 over the next 10 years.  Savings will be even higher – as much as $12,300 over the next 10 years – for seniors and people with disabilities who have high prescription drug costs. Total savings per beneficiary enrolled in traditional Medicare are estimated to be $86 in 2011, rising to $649 in 2020.  For a beneficiary in the donut hole, estimated total savings increase from $553 in 2011 to $2,217 in 2020.

• The Affordable Care Act establishes a new Innovation Center that will research, develop, test, and expand innovative payment and delivery arrangements to improve the quality and reduce the cost of care provided to patient with Medicare, Medicaid or Children’s Health Insurance Program (CHIP) coverage. Innovations that are found to work can be rapidly expanded and applied more broadly—helping to transform the health care system into one that provides better care at lower cost. 

·         The Affordable Care Act contains important new tools to help crack down on criminals seeking to scam seniors and steal taxpayer dollars. The law strengthens the screenings for health care providers who want to participate in Medicare, Medicaid, or CHIP, enables enforcement officials to see health care claims data from around the country in a searchable database, and strengthens the penalties for criminal wrongdoing. The reduction in waste, fraud, and abuse returns savings to the Medicare Trust Fund to strengthen the program into the future. Seniors are encouraged to contact 1-800-MEDICARE to report any solicitations of personal information or suspected fraud, waste, or abuse, or go to www.StopMedicareFraud.gov.

For more information on how the Affordable Care Act benefits seniors, visit www.HealthCare.gov.

Popular Sleep Medicine Puts Older Adults At Risk For Falls, Cognitive Impairment

Adults who take one of the world's most commonly prescribed sleep medications are significantly more at risk for nighttime falls and potential injury, according to a new study by the University of Colorado at Boulder.

The study, which involved 25 healthy adults, showed 58 percent of the older adults and 27 percent of the young adults who took a hypnotic, sleep-inducing drug called zolpidem showed a significant loss of balance when awakened two hours after sleep. The findings are important because falls are the leading cause of injury in older adults, and 30 percent of adults 65 and older who fall require hospitalization each year, said CU-Boulder Associate Professor Kenneth Wright, lead study author.

Source: Kenneth Wright - University of Colorado at Boulder

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Prescription Drug Containers May Get Simpler Labels... American Medical News

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By Kevin B. O'Reilly, amednews staff

Nearly half of patients misunderstand dosage instructions on prescription container labels, and more than half do not comprehend the warnings on those labels, according to different studies. For years, medical experts have advocated for simpler labels to help patients take their medications as intended.

Labeling standards proposed in January by the influential U.S. Pharmacopeial Convention could make those recommendations a reality.

USP's proposal says that, when creating prescription labels, pharmacies should:

• Emphasize the most important information at the top, such as the patient's name, drug name, drug strength and instructions.
• Steer clear of Latin terms; use simple, concise language; and make instructions more explicit. For example, labels should say "Take 2 tablets in the morning and in the evening," instead of "Take two tablets twice daily."
• Format labels with a large font size, the equivalent of 12-point Times New Roman or bigger, and use black print on a white background.
• Use normal punctuation, provide enough white space between lines of text and have text run only horizontally on the label.

In addition, the proposed standards say pharmacies should include the medication's purpose, with patient permission, using familiar terms -- "for high blood pressure," not "for hypertension." Labeling should be provided in the patient's preferred language when possible, using high-quality translation tools.
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Inverse Benefits Due to Drug Marketing Undermine Patient Safety and Public Health, Study Finds

ScienceDaily (2011-01-13) -- Drugs that pharmaceutical companies market most aggressively to physicians and patients tend to offer less benefit and more harm to most patients -- a phenomenon described as the "inverse benefit law," according to new research.

Comparison of Medications for Heart Failure Finds Difference in Risk of Death

ScienceDaily (2011-01-13) -- In a comparison of the angiotensin II receptor blockers candesartan and losartan, used by patients with heart failure, candesartan was associated with a lower risk of death at 1 and 5 years, according to a new study.

Anti-epileptic drugs associated with increased risk of fracture in older adults

ScienceDaily (2011-01-10) -- Most anti-epileptic drugs are associated with an increased risk of non-traumatic fracture in individuals 50 years of age and older, according to a new study.

Drug Study Reveals Tablet Splitting To Be A Highly Inaccurate And Potentially Dangerous Practice

Medical experts have issued a warning about the common practice of tablet splitting, after a study found that nearly a third of the split fragments deviated from recommended dosages by 15 per cent or more.

Their study, published in the January issue of the Journal of Advanced Nursing, points out that the practice could have serious clinical consequences for tablets that have a narrow margin between therapeutic and toxic doses.

And they are calling on manufacturers to produce greater dose options and liquid alternatives to make the practice unnecessary.

Researchers from the Faculty of Pharmaceutical Sciences at Ghent University, Belgium, asked five volunteers to split eight different-sized tablets using three techniques commonly used in nursing homes.

They found that 31 per cent of the tablet fragments deviated from their theoretical weight by more than 15 per cent and that 14 per cent deviated by more than 25 per cent. Even the most accurate method produced error margins of 21 per cent and eight per cent respectively.

"Tablet-splitting is widespread in all healthcare sectors and a primary care study in Germany found that just under a quarter of all drugs were split" says study lead Dr Charlotte Verrue.

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Italy Plans Pharmaceutical Reforms for Baby Boomers

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from AARP Global Network

With countries around the world recovering from the recession, many have resorted to austerity measures to keep their economies afloat. Some also face unprecedented issues due to aging baby boomers, who will require more resources from national healthcare systems.

Italy, the country with Europe's oldest population, is just now enacting sweeping reforms that have cut the costs of healthcare, according to InPharm.com. Some of the spotlight has been on the pharmaceutical industry, where the government has announced there will be 17.156 billion euro worth of cuts in 2011.

One way that the Italian Ministry of Health is strategically planning for baby boomers is by reducing the price of generic drugs by 12.5 percent so that they cost around the same as those in other European countries. The organization also hopes to tighten control on hospital spending.

While some predict that the savings can be contributed to the development of new medications, many others are skeptical of the effectiveness of these initiatives.

"The Italian national health service might be able to save a certain amount on the reimbursement of generics, and this might free up funds for the purchase of more expensive drugs," IHS Global Insight analyst Brendan Melck told the news source. "But, considering the huge debts in the Italian regional healthcare authorities, this would be only a small contribution."

Still, Melck added that the plan may help with this boomer trend because it will encourage doctors to prescribe more affordable generic drugs instead of brand-name alternatives. In fact, the new measures restrict the reimbursement of prescription medication to the cheapest option, the news source reports.

In addition, if pills have not visibly improved a patient after six weeks, the pharmaceutical company will have to pay back 50 percent of the reimbursement cost. This may prove extremely helpful when it comes to finding the best way to aid boomers with chronic conditions, but many in the industry suggest that it will stifle innovation and experimentation.

This pay-for-performance system was initially launched in 2007, but its effects are just starting to emerge. One study found that the new regulations encourage the development of new drugs, because pharmaceutical companies greatly benefit if the medication proves to be beneficial.

Dr. Onofrio Lamanna, the chief medical director of a recent hospital built near Venice, applauds the overall approach, despite some reservations.

"All of the austerity measures are useful and bound to generate substantial benefits for patients, doctors and hospitals," he told the news provider.

Pharmaceutical industries across Europe have been affected by similar austerity measures as countries have tried to create more sustainable models for pharmaceuticals.

In the Netherlands, the aging population seems to be at least partially responsible for significant growth in healthcare spending - in 2009, the total expenditure rose by 7 percent, costing 57.69 billion euro. There is also worry that, as boomers retire, there will be fewer workers to contribute to social services.

These facts have pushed the Dutch government to propose a spending cut of 3.2 billion euro, partially by making taxes higher on tobacco and reducing medical benefits.

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How Pharmaceutical Innovation Is Affected By Data Exclusivity Periods

Pharmaceutical companies and generic drug manufacturers have long been at odds over regulations about "data exclusivity," the period of time before generic manufacturers can make use of valuable clinical trial data.

A new study in the January 2011 issue of Health Affairs is the first to calculate the financial and social costs of limiting access to trial data - and finds that extending the term of exclusive access will lead to higher drug costs in the short term but also to more than 200 extra drug approvals and to greater life expectancy in the next several decades.

"Elected officials are unlikely to embrace legislation that would result in higher drug prices, but our research suggests that legislation to extend data exclusivity would spur innovation that would benefit future generations," explained Dana Goldman, lead author, director of the Schaeffer Center for Health Policy and Economics at USC and Norman Topping Chair in Medicine and Public Policy at USC.
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Health Spending Slows, Recession to Blame

By Emily P. Walker, Washington Correspondent, MedPage Today

Spending on healthcare grew at its slowest rate in 50 years, mostly because of recession-fueled cutbacks by businesses, governments, and households, according to a Centers for Medicare and Medicaid Services report.

The growth in healthcare spending has slowed every year since 2002, but 2009's was particularly pronounced -- growing at a rate of 4%, down from 4.7% in 2008, according to the authors of the agency's annual health spending report, published in Health Affairs.

Economic recessions do not always lead to a slowdown in healthcare spending, Anne Martin, a CMS economist and lead author told reporters at a press briefing.

Despite the slowdown in the growth rate, the U.S. still spends $2.5 trillion on healthcare, or $8,086 per person.

And if the rate of growth in spending has slowed, healthcare's share of the nation's gross domestic product (GDP) -- 17.6% -- took its largest one-year increase in the five-decade history of the CMS report.

The largest chunks of the $2.5 trillion spent on healthcare in 2009 went toward hospital care, followed by physician services, then prescription drugs.

One-sixth of the nation's financial resources went to pay for healthcare, and more than half of all taxes collected paid for healthcare, said Martin.
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New Disenrollment Period Offers Some Medicare Consumers One More Chance To Change Their Health Coverage

-- Consumers Should Carefully Review Their Options Before Making a Change --

New York, NY—Medicare consumers who are enrolled in Medicare private health plans, commonly known as Medicare Advantage plans, and who become dissatisfied with their choice, can disenroll during the Medicare Advantage Disenrollment Period (MADP), which runs from January 1 to February 14. Consumers who disenroll from their private plan can switch only to Original Medicare—the traditional Medicare program administered by the federal government. Most people who switch to Original Medicare can also change their Medicare prescription drug coverage. The MADP replaces the Open Enrollment Period, which ran from January 1 to March 31 in past years.

“People with Medicare who become unhappy with their Medicare Advantage plan have one more opportunity to change their coverage before being locked in until next fall,” said Joe Baker, president of the Medicare Rights Center. “Because the window is shorter than in past years, consumers should review their coverage options carefully and consider all of the implications of making a change before doing so.”

What are my options during the Medicare Advantage Disenrollment Period? If you have: A Medicare Advantage private health plan with prescription drug coverage, you can switch to Original Medicare plus a prescription drug plan OR Original Medicare without a prescription drug plan A Medicare Advantage Private Fee-For-Service (PFFS) plan that does not include prescription drug coverage and a stand-alone prescription drug plan, you can switch to Original Medicare, but you must keep your current prescription drug plan Original Medicare or Original Medicare and a prescription drug plan, you cannot make any changes during this time

Although Original Medicare covers most necessary services and is accepted by most doctors and facilities across the country, it does not cover the full cost of care. Many consumers who enroll in Original Medicare choose to purchase supplemental coverage to help pay for out-of-pocket costs such as deductibles and coinsurance.

However, people who disenroll from their Medicare private health plan may have limited ability to buy supplemental coverage. State laws vary on when consumers can purchase Medicare supplemental policies, also known as Medigaps. Call your State Health Insurance Assistance Program (SHIP) to find out if and when you can enroll in a Medigap plan in your state. You can find the number for your local SHIP by visiting www.shiptalk.org or calling 800-MEDICARE.

Consumers who disenroll from their private plan should be aware that they may need to join a stand-alone Medicare prescription drug plan in order to maintain drug coverage. Medicare Rights advises consumers who are choosing a plan to consider not only premium and copayment costs, but also whether the drugs they take are on the plan’s formulary (list of covered drugs). Consumers should also check to see whether the plan places any restrictions on the drugs they take. Restrictions can take the form of quantity limits, prior authorization, and step therapy. To learn more about choosing a Medicare prescription drug plan that best meets your needs, visit Medicare Interactive.

Medicare Rights advises consumers who wish to change their health coverage to do so by calling 800-MEDICARE rather than their plan. If you need to keep or add Medicare prescription drug coverage, it is best to make your coverage change by enrolling in a stand-alone drug plan. When you enroll in a drug plan, you will automatically be enrolled in Original Medicare. Changes made during the MADP are effective the first of the following month.

Learn more about changing your Medicare private health plan on Medicare Interactive.

Resources

• Find the number for your local State Health Insurance Assistance Program (SHIP) at www.shiptalk.org.
• 800-MEDICARE
• Medicare Interactive (www.medicareinteractive.org), the Medicare Rights Center’s free web-based counseling tool, can help you evaluate your coverage options.

Nine Ways The New Health Law May Affect You in 2011 - Kaiser Health News

By KHN Staff

Opponents of the new health care overhaul law are threatening to repeal, defund and kill it in court, but that isn't stopping Washington from implementing a number of important provisions in 2011. While many people will welcome the new benefits, some will face higher costs as a result of the law.

Seniors are affected by several of the provisions. They will get big discounts on prescription drugs and free preventive care, but some in Medicare Advantage plans may lose coveted extra benefits such as vision and dental coverage. Everyone will be able to count calories when dining at chain restaurants or sidling up to vending machines. But forget about using pre-tax income in popular flexible spending accounts to pay for over-the-counter medications, unless you get a prescription.

These changes follow a handful of early benefits that debuted in 2010. Already, adult children are allowed to remain on their parents' policies until the age of 26, for example, and insurers can no longer cancel coverage when people get sick (except in cases of fraud).

The following are nine health law changes to take note of this year.

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U.S. GAO - Medicaid Outpatient Prescription Drugs: Estimated Changes to Federal Upper Limits Using the Formula under the Patient Protection and Affordable Care Act

GAO-11-141R December 15, 2010 Full Report (PDF, 15 pages)

Spending on prescription drugs in Medicaid--the joint federal-state program that finances medical services for certain low-income adults and children--totaled $15.2 billion in fiscal year 2008. State Medicaid programs do not directly purchase prescription drugs; instead, they reimburse retail pharmacies for covered prescription drugs dispensed to Medicaid beneficiaries. The federal government provides matching funds to state Medicaid programs to help cover a portion of the cost of these reimbursements. For certain outpatient prescription drugs for which there are three or more therapeutically equivalent versions, state Medicaid programs may only receive federal matching funds for reimbursements up to a maximum amount, which is known as a federal upper limit (FUL). FULs were designed as a cost-containment strategy and have historically been calculated as 150 percent of the lowest published price for the therapeutically equivalent versions of a given drug from among the prices published nationally in three drug pricing compendia. The prices from these compendia are list prices suggested by drug manufacturers and do not reflect actual transaction prices. State Medicaid programs have the authority to determine their own reimbursement amounts to retail pharmacies for covered prescription drugs. However, for drugs subject to a FUL, the federal government will only provide matching funds to the extent that a state's annual reimbursements do not exceed the sum of the FULs for all such drugs. Concerns have been raised about FULs calculated based on compendia prices. For example, a 2005 report by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) found that FULs calculated in this manner were ineffective at controlling spending on these drugs. The 2005 OIG report found that the prices in the three price compendia used to set FULs often greatly exceeded prices in the marketplace. The Deficit Reduction Act of 2005 (DRA) established a FUL formula based on average manufacturer price (AMP) rather than compendia prices. In contrast to compendia prices, AMP represents the average of actual transaction prices paid to manufacturers for a given drug and is typically less than any of a drug's published compendium prices. Drug manufacturers are required to report AMPs to the Centers for Medicare and Medicaid Services (CMS) on a monthly basis. DRA also expanded the list of drugs subject to a FUL from those with three or more therapeutically equivalent versions to include drugs with two or more therapeutically equivalent versions. Congressional interest in controlling prescription drug costs using AMP-based FULs continues. The Patient Protection and Affordable Care Act (PPACA) established a new AMP-based formula for calculating FULs and changed the definition of AMP.8 Under PPACA, FULs are to be calculated as no less than 175 percent of the utilization-weighted average of the most recently reported monthly AMPs for the pharmaceutically and therapeutically equivalent versions of a drug. Congress expressed interest in an early indication of the potential effects of PPACA on FULs and asked us to examine the likely effects of PPACA's AMP-based formula by drawing upon data from 2008 that we gathered for our November 2009 report, including 2008 AMPs that pre-date PPACA's changes to the definition of AMP. This report examines how, for selected drugs, estimated FULs using PPACA's AMP-based formula and 2008 data compare to pre-PPACA FULs and to average retail pharmacy acquisition costs.

We found that for most of the drugs in our sample, using AMP and other data from 2008, FULs based on PPACA's formula were lower than pre-PPACA FULs and higher than average retail pharmacy acquisition costs.
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More Details on Doughnut Hole, Income-Related Part D Premiums

In just a few short weeks, the doughnut hole will begin to close in earnest. Until now, consumers who reached the doughnut hole—the coverage gap in Medicare’s prescription drug benefit—have been responsible for paying the full cost of their drugs. But starting next year, these consumers will receive a discount on drugs they purchase while in the gap. This change to the Medicare drug benefit, also known as Part D, is the result of the Affordable Care Act (ACA), which gradually phases out the doughnut hole through the year 2020, when it will be completely eliminated. In 2011, people who enter the gap will receive a 50 percent discount on brand-name drugs and a 7 percent discount on both generic drugs and drugs compounded at the pharmacy. Furthermore, the 50 percent discount will count toward consumers’ out-of-pocket limit, which is used to determine when they get out of the doughnut hole and enter catastrophic coverage. This means Medicare consumers will spend less while in the doughnut hole.

Also as a result of the ACA, the Social Security Administration (SSA) published an interim final rule regarding the assessment of higher Part D premiums for higher-income Medicare consumers beginning next year. From 2011 through 2019 individuals who have modified adjusted gross income (MAGI) at or above $85,000 per year and couples whose MAGI is at or above 170,000 per year will be subject to additional premiums for Part D. The premiums will be assessed on a sliding scale that is pegged to income levels. The extra amount will, in most cases, be directly deducted from the individual’s Social Security check. While the income thresholds of $85,000 and $170,000 will be frozen through 2019, SSA may change them after that year.  

The formula used to calculate MAGI is based on federal taxes filed two years prior to the year when the income-related premium assessment takes place. As under Part B, the rule states that individuals may request that SSA use more current tax data to calculate MAGI if they have experienced a major life-changing event, as defined by the regulations, or may appeal the misapplication of an income-related premium expense. 

Read the Medicare Rights Center’s fact sheet: Health Reform and Medicare: The Doughnut Hole in 2011.

Read more about income-related Part D premiums.

Read the interim final rule on income-related Part D premiums.