Medicare Part D
Background
When Medicare was created, it did not cover outpatient prescription drugs. As drugs grew to play a larger role in treatment, Congress added the Part D drug benefit, effective in 2006. Medicare Part D uses private plans to deliver outpatient prescription drug benefits. Part D plans typically manage benefits by developing formularies (the lists of drugs they cover) with tiered cost sharing to encourage enrollees to use generic drugs or preferred drugs or to fill prescriptions at preferred pharmacies. Part D plans also use tools such as prior authorization for covering certain prescriptions and negotiate with drug manufacturers for post-sale rebates. Pharmacy benefit managers (PBMs) are companies (sometimes subsidiaries of the insurer) that plans use to perform many of those functions. Today, most MA enrollees receive drug benefits through their MA plan, while beneficiaries in original Medicare must select a stand-alone Part D plan to receive drug coverage. Medicare Part D makes payments to both types of plans.
In this compendium, we grouped Part D proposals into six categories. Two relate to benefit design and types of drugs Part D covers on plan formularies. Another category includes proposals that affect drug pricing and drug price negotiations. Two categories encompass ways in which other actors in the drug supply chain—PBMs and pharmacies—operate in Part D. And one includes proposals that would affect extra help to low-income enrollees in paying for Part D premiums and cost sharing.
Using the Compendium
- Click on a button below to see a set of policy proposals to address each of these categories of issues related to the Medicare Part D program.
- Once selecting the category, the list of relevant proposals is displayed. The entry for each proposal includes a brief description, the author or organization making the proposal, anticipated cost or savings when available, and its anticipated effects on beneficiaries and other stakeholders.
- Click on the Details button for any proposal to see a longer description of the content, more detailed information on the proposal’s authors, and additional information about cost or savings, impacts on key stakeholders, and factors to which effects of the proposal may be sensitive.
- The detailed display also contains a link to original source material that presents the proposal.