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No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending

This analysis uses data from a five percent sample of Medicare Part D prescription drug event (PDE) claims from the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse (CCW) for Part D enrollees between 2007 and 2015. The PDE claims data includes all prescription drug events reported by Part D plans for their enrollees in a given calendar year, and includes detailed data on spending for each event, corresponding to a single prescription drug fill, including how much was paid by plans, low-income subsidy amounts, and beneficiary out-of-pocket payments. The claims data includes spending for Part D covered drugs, but does not include spending on Part D plan premiums, Part B covered drugs (which are typically administered in providers’ offices or hospital outpatient settings), or the cost of drugs purchased outside the Part D plan. The CCW data also includes a limited number of demographic variables (gender, age, race/ethnicity) and flags for several chronic conditions (27 common chronic conditions and 35 other chronic or potentially disabling conditions).

We calculated average out-of-pocket spending and percentiles for enrollees overall and by three benefit phases: enrollees with total drug spending below the coverage gap, those with spending in the coverage gap but not above the catastrophic coverage threshold, and those with spending above the catastrophic coverage threshold. Our analysis focuses on beneficiaries enrolled in both stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans who have high out-of-pocket drug costs, which we define as enrollees who have drug spending that exceeds the catastrophic coverage threshold in a given year who do not receive low-income subsidies (LIS). The catastrophic threshold is updated annually by the annual percentage increase in average expenditures for Part D drugs per eligible beneficiary; in 2015, the threshold amount was $7,062. The 2015 PDE sample includes 2.1 million Part D enrollees (41.3 million weighted), of whom 180,982 (3.6 million weighted) had spending above the catastrophic coverage threshold, including 50,135 (1.0 million weighted) who had high out-of-pocket drug costs and did not receive the LIS. Our analysis of spending by chronic condition includes only those Part D enrollees in stand-alone PDPs because the CCW variables that identify chronic conditions are derived from information in medical claims, which are not reported by Medicare Advantage plans for their enrollees.

Our analysis of specific drugs associated with high out-of-pocket spending was limited to drugs with 100 (2,000 weighted) or more users in 2015 to avoid reporting estimates based on small sample size. There are a small number of drugs that had higher average out-of-pocket costs among Part D enrollees with high out-of-pocket spending than the top drug we report (Harvoni), but the number of users of each of those drugs in the CCW PDE for 2015 was less than 100. Because we cannot report data for these drugs, our analysis of the most expensive drugs among those with high out-of-pocket costs is conservative to the extent that it does not include those drugs with higher out-of-pocket costs but smaller (unreliable) sample sizes. For example, based on the publicly-available CMS 2015 Medicare drug spending data, the drug with the highest out-of-pocket costs among non-LIS enrollees was Cinryze, a C1 esterase inhibitor, with 104 non-LIS users and average out-of-pocket spending of $24,274 in 2015, followed by Berinert, also a C1 esterase inhibitor, with 43 non-LIS users and average out-of-pocket costs of $14,258.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.