The Medicare Prescription Drug Benefit Program (Part D) offers outpatient prescription drug coverage to Medicare beneficiaries. To address the high and increasing costs of prescription drugs, the Center for Medicare & Medicaid Innovation implemented the Part D Senior Savings (PDSS) Model test beginning in 2021. PDSS is designed to assess the effects of lower, fixed cost sharing for a specified set of Model drugs on beneficiary out-of-pocket costs, medication adherence, and Medicare spending. Insulins are the Model drugs for the first two years of the PDSS Model test.

The PDSS Model allows participating parent organizations (POs), which are private insurers offering Part D coverage to beneficiaries, to offer in eligible enhanced Part D plans fixed copayments of no more than $35 per one-month supply per Model drug through the deductible, initial coverage, and coverage gap phases of the benefit. Enhanced Part D plans offer supplemental benefits in addition to those provided as part of the standard Part D benefit. To enable Part D plans to offer these lower copayments, prescription drug manufacturers agree to participate in the Model test and to provide the same discount that they normally pay in the coverage gap phase for brand name drugs (70 percent) before the application of supplemental benefits. Participating POs enter eligible enhanced Part D plans into the Model and negotiate with manufacturers for inclusion of Model drugs on their formularies.

The Model also includes two optional components: (1) an optional narrower first risk corridor available during the first two years (2021 and 2022), which is designed to protect qualifying participating plans from unforeseen financial losses associated with the Model test; and (2) a Rewards and Incentives (R&I) program, which allows participating plans to offer beneficiaries with diabetes or pre-diabetes incentives to participate in medication therapy management (MTM), comprehensive medication review (CMR), or for maintaining a minimum medication adherence threshold.

A separate Model overview summarizes the main report and describes the Model and its key stakeholders, the scope of PDSS participation, and the Model elements offered by participants in 2021 and 2022.

Research conducted by

This report is part of the RAND external publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.