Donut drug coverage from CONTROL
Ophthalmologists need to understand the effect of the donut hole on dry eye care.
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“Missed it by that much.”
– Maxwell Smart
Have you ever had one of those days where something you hear all the time all of a sudden goes so far up your backside that you explode? I had one of those the other day when just one too many patients mentioned the Medicare Part D “donut hole.” Mentioned, as in, would not stop talking about it. This particular patient was one that my staff and I had worked tirelessly to find that perfect combination of treatments that was A) effective and B) covered by their insurance. It made the straw so much heavier on our camel’s back.
The folks from CONTROL almost got it right.
Are you familiar with the donut hole? Of course you are. You take care of dry eye disease patients and glaucoma patients and patients who require anti-VEGF injections. Not only that, but it turns out that those other parts of the body that exist to support our eyes (as Dr. Glaucomflecken would say), such as the lungs and the heart, also get sick. Paying for medicines drops them into the donut hole like so many crullers into coffee at Dunkin’ Donuts.
How should we as doctors, who care for a complex condition, address the donut hole? We should start with a better understanding of the issue so that we have a fighting chance to respond in a reasonable, meaningful way when a patient like mine looks not at her donut (I finally feel better) but only at the hole (now I have to pay to keep feeling better). As your humble servant scribe, I took it upon myself to get some edumacation for both of us.
Medicare Part D is the federal program through which Medicare beneficiaries are able to have insurance coverage for outpatient medications. It was proposed by the Bush 2 administration in response to horror stories of the elderly choosing between food and medicine. The “Get Smart” coalition almost got it right. Rather than address the issues of pricing (which, looking back now, seem rather quaint, don’t they?) at the producer and insurer levels, they opted to reduce “consumption” by having patients share in the cost of their medicines.
We are all familiar with this strategy, right? Variable copays/coinsurance designed to “guide” a patient to a preferred choice. Deductibles that force a patient to pay a predetermined minimum amount of money for their care. Could have been a pretty ho-hum retread that would have been easily understood, no more difficult to follow than a “regular” insurance plan. It could have been that rare beneficial program that just gave seniors something they did not have before. Sadly, the crew from CONTROL in D.C. had to get cute and come up with something new.
They were so close.
There are four stages to Medicare Part D that are pretty much the same for every commercial carrier offering it (CMS does not administer any version of Part D). Each stage produces its own special kind of pain and cruelty; the possibility for insurers and pharmacy benefit managers (PBMs) to create mischief is apparently impossible to resist.
Stage 1: The annual deductible
This begins with the first prescription of the plan year. A patient will pay the full (contracted) price of a prescription until spending equals the amount of the annual deductible (as I have noted many times before, this is not the true cost of the medicine; the insurer and PBM pocket any, ahem, rebates that the manufacturer may be paying). Typically, the deductible only applies to drugs on specific tiers. Cruelty No. 1: Payment for medications not on favored tiers does not count toward meeting the deductible. It is like financial double jeopardy. Think Xiidra (lifitegrast ophthalmic solution 5%, Novartis).
Stage 2: Initial coverage
If a plan has no deductible (like that even exists), this stage begins immediately in a plan year. Otherwise, once the deductible has been met, the insurance then pays a portion of the cost of each (covered) drug. Your patient pays the rest of the cost (determined by tier) as either a copayment (a fixed amount) or coinsurance (a percentage of the cost). Coinsurance is where the high price/get-a-rebate mischief bites your patient; their percentage is taken from the price, not the net cost. Once a limit set by CMS has been reached ($4,020 total from insurance and patient in 2020,) your patient stops eating their donut and ...
Stage 3: The donut hole
... falls into the donut hole. Even here, it is confusing and weird. I incorrectly thought that there was no payment for medications by insurance in the donut hole whatsoever. A patient pays 25% of the cost of a prescription (same as above, price, not the discounted net cost) until their out-of-pocket costs reach $6,350. This figure is the sum of that patient’s yearly deductible, coinsurance and copays, plus whatever was paid for drugs while in the donut hole. Cruelty No. 2: $4,020 to enter the donut hole includes insurance payments as well as those made by the patient; only patient payments are included in the $6,350 exit tax.
Stage 4: Purgatory
Once our patient spends $6,350 of their own money on covered prescriptions (don’t forget this little nuance), they are eligible for so-called “catastrophic coverage.” I don’t know about you, but my idea of a catastrophe is something that is not only terrible but is also a rare, surprise event. Judging by the number of conversations I have about the donut hole, every patient has an annual catastrophe. Patients pay about 5% of the cost of their covered prescriptions here for the rest of the plan year. Why call this “purgatory” when it seems like relief has arrived? Even here, only “covered” drugs are paid for. Again, think Xiidra. Or Flarex (fluorometholone acetate ophthalmic suspension, Novartis). Even Restasis (cyclosporine ophthalmic emulsion 0.05%, Allergan), which we have all been conditioned to think is covered by Medicare, is often buried on Tier 3, de facto uncovered when it comes to our four levels of coverage hell.
Got all of that? To summarize, for drugs covered by insurance, your patient will spend $6,350 of their own money before their medicines are (nearly) totally paid for. But this only applies to so-called “covered” medicines. Unfavored drugs are either on a tier too low to be considered covered or are left off the formulary entirely. No payments from insurance are forthcoming for these, and any payments made by a patient for them do not count toward the annual out-of-pocket “limit” of $6,350. Because coinsurance (the more common way to determine a patient’s cost) is driven by medication price, your patient can expect to pay hundreds of dollars for even covered drugs.
They came so close to designing a program that was just a straight-up benefit. So close. This is what happens when cloistered academics and Beltway bureaucrats sit together in their towers and create a program that “should” work. What might have been a source of comfort, a program bringing help where previously there was none, has instead created a term of derision (donut hole) and a new source of anxiety and pain for our patients. Remember, these are the folks who will determine how any “public option” to fund health care would function.
When patients and doctors complain about the donut hole, the folks from CONTROL respond: “Let them eat cake.”
- For more information:
- Darrell E. White, MD, can be reached at SkyVision Centers, 2237 Crocker Road, Suite 100, Westlake, OH 44145; email: dwhite@healio.com.
Disclosure: White reports he is a consultant to Allergan, Shire, Sun, Kala, Ocular Science, Rendia, TearLab, Eyevance and Omeros; is a speaker for Shire, Allergan, Omeros and Sun; and has an ownership interest in Ocular Science and Eyevance.