Part D Event (PDE) Cost Information

Barbara Frank, M.S., M.P.H.

Director of Workshops, Outreach, & Research

University of Minnesota

Part D Event (PDE) Cost Information

Researchers cannot determine “true” costs to

Medicare or Plan for Prescription Drugs

Researchers can determine “point of sale” cost to

beneficiary

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PDE Cost Information

To protect commercially sensitive plan data, the

final rule addresses only the elements of PDE data

and does not extend to Part D plan-specific bid

data, rebates, risk-sharing, reinsurance, or

payment information collected outside of a Part D

event.

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PDE Cost Variables

Gross Drug Cost* (Total Cost of Drug) is derived

from the sum of 3 or 4 variables submitted by

Plans to CMS, but not available to researchers:

˗ Ingredient Cost Paid

˗ Dispensing Fee Paid

˗ Total Amount Attributed to Sales Tax

˗ Beginning 2010, Vaccine Administration Fee

Mean = $65.20

Median = $21.70

Gross Drug Cost

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PDE Cost Variables

Gross Drug Cost = $65.20

˗ Patient Pay Amount + $11.06

˗ Low-Income Cost-Sharing Subsidy Amt + $14.67

˗ Other True Out-of-Pocket Amount + $0.50

˗ Patient Liability Reduction due to Other Payer Amt + $0.09

˗ Covered D Plan Paid Amount + $35.32

˗ Non-Covered Plan Paid Amount $3.55

$65.20 = 11.06 + 14.67+ 0.50 + 0.09 + 35.32 + 3.55

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PDE Cost Variables

Limitation: Beginning with 2011 PDE data, the

variable gross drug cost:

˗ Continues to include full cost of the drug

˗ Does NOT reflect any Coverage Gap Discounts that may

have been applied

˗ Therefore, if the sum of the 6 variables is less than the

gross drug cost (TOT_RX_CST_AMT), and if the event

was in the coverage gap phase of the benefit, then the

difference in these amounts can be assumed to be the

gap discount amount.

Gross Drug Cost

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PDE Cost Variables

Gross Drug Cost = $65.20 (Bene in coverage gap)

˗ Patient Pay Amount + $5.53

˗ Low-Income Cost-Sharing Subsidy Amt + $14.67

˗ Other True Out-of-Pocket Amount + $0.50

˗ Patient Liability Reduction due to Other Payer Amt + $0.09

˗ Covered D Plan Paid Amount + $35.32

˗ Non-Covered Plan Paid Amount $3.55

5.53 + 14.67+ 0.50 + 0.09 + 35.32 + 3.55 = $59.67

Difference of $5.53 assumed to be the gap discount to the

beneficiary (i.e. 50% discount)

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PDE Cost Variables

Patient Pay Amount – Amount that the beneficiary

paid that is NOT reimbursed by a third party.

Amount contributes to True Out-of-Pocket amount

(TrOOP) only for covered drugs.

Drug Coverage Status Codes

˗ Covered 99.34%

˗ Enhanced 0.44%

˗ OTC 0.22%

Patient Pay Amount

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PDE Cost Variables

Total population

˗ Minimum $0.00

˗ Mean $11.06

˗ 25th Percentile is $0.00, 50% $3.10

Those with LICS Amounts

˗ Minimum $0.00

˗ Mean $1.71

˗ 25th Percentile is 0.00, 50% $1.05

Without LICS Amounts

˗ Minimum $0.00

˗ Mean $17.91

˗ 25th Percentile is $2.00, 50% $5.03

Patient Pay Amount ($)

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PDE Cost Variables

Gross Drug Cost =

˗ Patient Pay Amount +

˗ Low-Income Cost-Sharing Subsidy Amt +

˗ Other True Out-of-Pocket Amount +

˗ Patient Liability Reduction due to Other Payer Amount

+

˗ Covered D Plan Paid Amount +

˗ Non-Covered Plan Paid Amount

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PDE Cost Variables

Low Income Cost Sharing Subsidy Amount (LICS) –

Amount the Plan reduced patient liability due to a

beneficiary’s LICS status.

CMS reconciles prospective LICS payments made

to Plans with actual LICS amounts incurred by

Plan at point of sale.

Low Income Cost Sharing Subsidy Amount (LICS)

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PDE Cost Variables

Total Population

˗ Minimum $0.00

˗ Mean $14.67

˗ Median $0.00

˗ 75th percentile is $5.95

LICS amounts only

- Minimum $0.01

- Mean $34.69

- Median $8.71

- 75th percentile is $31.23

Low Income Cost Sharing Subsidy Amount (LICS)

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PDE Cost Variables

Gross Drug Cost =

˗ Patient Pay Amount +

˗ Low-Income Cost-Sharing Subsidy Amt +

˗ Other True Out-of-Pocket Amount +

˗ Patient Liability Reduction due to Other Payer Amount

+

˗ Covered D Plan Paid Amount +

˗ Non-Covered Plan Paid Amount

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PDE Cost Variables

Other TrOOP Amount – records all qualified third

party payments on behalf of beneficiary.

Does not include LICS Subsidy Amount or Patient

Pay Amount.

Examples are qualified State Pharmacy

Assistance Programs, charities, or other TrOOP-

eligible parties.

Other True Out-of-Pocket Amount

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Part D Event Variables

Total Population

Minimum $0.00

Mean $0.50

Median $0.00

95th percentile is $0.00

99th percentile $5.73

When populated Mean = $23.58

Populated records 2.14%

Other True Out-of-Pocket Amount

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PDE Cost Variables

Amount patient liability amount is reduced due to

other benefits. Examples are VA and TRICARE.

These other payers are not TrOOP-eligible and do

not participate in Medicare Part D.

Patient Liability Reduction Due to Other Payer Amount (PLRO)

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PDE Cost Variables

Minimum - negative amount??

Mean $0.09

99th Percentile $0.00

Less than 0.4 % of records have PLRO amounts

When correctly populated, Mean = $24.09

Patient Liability Reduction Due to Other Payer Amount (PLRO)

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PDE Cost Variables

Gross Drug Cost =

˗ Patient Pay Amount +

˗ Low-Income Cost-Sharing Subsidy Amt +

˗ Other True Out-of-Pocket Amount +

˗ Patient Liability Reduction due to Other Payer Amount

+

˗ Covered D Plan Paid Amount +

˗ Non-Covered Plan Paid Amount

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PDE Cost Variables

Minimum $0.00

Mean $35.32

Median $6.46

25th Percentile is $0.00

Covered D Plan Paid Amount (CPP)

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PDE Cost Variables

Gross Drug Cost =

˗ Patient Pay Amount +

˗ Low-Income Cost-Sharing Subsidy Amt +

˗ Other True Out-of-Pocket Amount +

˗ Patient Liability Reduction due to Other Payer Amount

+

˗ Covered D Plan Paid Amount +

˗ Non-Covered Plan Paid Amount

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PDE Cost Variables

Total Population

˗ Minimum Negative Amount??

˗ Mean $3.56

˗ 75th Percentile $0.00

When NPP populated

˗ Mean $11.04

˗ Median $1.37

Non-Covered Plan Paid Amount (NPP)

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PDE Cost Variables

The following patterns occur when costs are

mapped to the defined standard benefit:

˗ When the plan pays more than what is covered in a

given benefit phase under the standard benefit, the

NPP will be a positive amount.

˗ When the plan and the defined standard benefit

payment amounts are the same, the NPP is zero.

˗ When the plan pays less than what is covered in a

given phase under the defined standard benefit, the

NPP will be a negative amount.

Non-Covered Plan Paid Amount (NPP)

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Non-Covered Plan Paid Amount (NPP)

The beneficiary’s YTD total covered drug costs = $1,500. The beneficiary purchases a covered Part D drug for $100. The copay for this drug is $40.

Explanation: According to the standard benefit, the beneficiary is in the initial coverage period where the beneficiary pays 25% cost share and the plan pays 75%. In Plan B’s benefit structure, the beneficiary has a flat $40 copay, which is 40% of the total drug cost. The plan liability is $60 under Plan B’s benefit structure as compared with $75 under the standard defined benefit. The difference between the plan liability in the Plan’s benefit structure and the standard benefit plan structure is a supplemental benefit. In this case, the amount is negative because the plan paid less than under the defined standard. This amount is reported in the NPP field.

Example of Negative Amount

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Non-Covered Plan Paid Amount (NPP) Example of Negative Amount

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PDE Cost Variables

Drug costs are shared by

˗ Beneficiary Responsibility =

» Patient Pay Amount +

» LICS Amount +

» Other TrOOP Amount +

» PLRO Amount

˗ Net Amount Part D Plan paid for drug =

» Covered D Plan Paid Amount +

» Non-Covered Plan Paid Amount

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PDE Cost Variables

Please note that CMS uses only the Covered D

Plan Paid Amount in the reconciliation with the

Plan

Non-Covered Plan Paid Amount is “recouped” by

the Plan through higher premiums for the

Enhanced Benefits

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PDE Cost Variables

True Out-of-Pocket Cost (TrOOP) =

˗ Patient Pay Amount +

˗ LICS Amount +

˗ Other TrOOP Amount

MIN is $0.00 and Mean is $26.24

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PDE Cost Variables

Gross Drug Cost =

˗ Patient Pay Amount +

˗ Low-Income Cost-Sharing Subsidy Amt +

˗ Other True Out-of-Pocket Amount +

˗ Patient Liability Reduction due to Other Payer Amount +

˗ Covered D Plan Paid Amount +

˗ Non-Covered Plan Paid Amount

$65.20 = 11.06 + 14.67+ 0.50 + 0.09 + 35.32 + 3.55

TrOOP = $26.24

Covered D Plan Paid Amount = $35.32

Summary

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PDE Cost Variables

Values

A = Attachment point met on event 0.25%

C = Above attachment point

8.35%

Blank = Attachment point not met 91.40%

Catastrophic Coverage Code

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Top 10 Drugs by Cost 2009 Drug Name Drug Cost Drug Fills Drug Users

PLAVIX $2,721,330,618

15,091,816

2,308,965

LIPITOR $2,288,410,393

16,124,928

2,797,156

NEXIUM $1,676,860,707

8,186,015

1,538,131

SEROQUEL $1,647,172,156

6,117,828

778,877

ARICEPT $1,585,291,207

7,537,588

1,107,900

ADVAIR DISKUS $1,394,195,358

5,919,728

1,360,521

ZYPREXA $1,341,371,884

2,730,705

328,814

ACTOS $1,188,291,746

5,105,667

839,030

ABILIFY $1,079,251,761

2,210,032

337,862

FLOMAX $958,924,218

6,533,806

1,226,259 30