An introduction to the Part D Senior Savings Model

In 2019, the average Medicare Part D beneficiary with diabetes spent just over $1,140 per year on insulin–or roughly $95/month. For members who are living on a fixed income, and are likely to have other chronic conditions, these high out-of-pocket costs can pose a serious threat to their adherence and overall health.

To combat these rising prices, in March 2020, CMS introduced the Part D Senior Savings Model. Here’s what you need to know about the program:

  • What is the Part D Savings Model?
    The Part D Senior Savings Model is intended to provide Medicare patients additional choices and the ability to obtain insulin at a cost of no more than $35 for a 30 day supply, including during the coverage gap.In the past, people enrolled in Medicare Part D plans faced dramatic fluctuations in insulin cost depending on the time of year or phase of coverage. The Part D Savings Model will make insulin costs consistent and predictable.The program will offer a broad range of insulins, including both pen and vial dosage forms for rapid-acting, short-acting, intermediate-acting, and long-acting options.
  • How does it work?
    Both Part D plans and insulin manufacturers volunteer to participate in the Part D Savings Model, and agree to the pricing terms. Then, beginning January 1, 2021, beneficiaries of these plans will have the option to choose from a number of insulin options, at a fixed price.CMS predicts that members should save an average of $446 in annual out-of-pocket costs on insulin, or over 66%, relative to their average costs today. These savings are funded, in part, through manufacturer discounts.
  • What are the benefits for Medicare plans?
    The Part D Senior Savings Model aims to reduce costs for Medicare plans, while preserving or enhancing quality of care for members. By offering predictable, affordable co-pays, this program should improve medication access for members, improve health outcomes, and, consequently, improve member satisfaction and retention.CMS also estimates that this program would save the federal government more than $250 million over five years.

At Abarca, we are all in for finding new ways to provide a better experience for members and health plans. While there is still a lot to be learned about the Part D Senior Savings Model, and it may require policymakers to refine it over time, we think it is being launched with the right goals in mind.


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