Medicare Modernization Act


From Rx-wiki

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA), also called Medicare Part D, is a law that was enacted in 2003, and became effective January 1, 2006. It produced the largest overhaul of Medicare in its 38-year history.

The MMA provides prescription drug coverage to patients eligible for Medicare benefits. This is a voluntary insurance program, not an automatic government benefit. This program provides some drug coverage, especially for those patients with economic hardships or those on high-cost medications. Patients are required to pay an extra premium (with their Medicare insurance) and are subject to a deductible before benefits are realized. Patients may be penalized if they elect not to join when they are healthy and are taking no or few medications.

For patients on high-cost medications, a pharmacist may provide (and get reimbursed for) medication management therapy services (MMTS) or an annual in-depth review of the patient's medication profile. This review is to add a safety feature to prevent adverse reactions and drug interactions and to look at ways to reduce the patient cost.

Medicare coverage for the current year

The numbers change annually, the following numbers are for 2016:

Total Drug Spend TrOOP Out of Pocket Cost Portion Covered by Medicare
$0-$360 $0-$360 Deductible is out of pocket No Medicare coverage of costs
$360-$3,310 $360-$1,097.50 25% out-of-pocket 75% Covered by plan
$3310.00-$7,515.00 (estimated) $1097.50-$3,284.00 (estimated) For generic medications the enrollee pays 58%. For brand name medications the enrollee pays 45%. Plan pays 42% for generics, and 5% (not counted towards the 'gap') for brand name drugs. Additionally the wholesaler provides a 50% manufacturer discount on brand name drugs.
Over $7,515 (estimated) Over $3,284 (estimated) Enrollee pays either 5% of the drug cost or $2.95/generic and $7.40/brand, whichever is less. In Catastrophic Coverage the plan pays 15% and Medicare pays 80%.
  • The Total Drug Spend represents the actual cost of the drugs purchased, factoring in any Medicare discounts.
  • The TrOOP (True Out Of Pocket Costs) represents the amount of their own money that the patient has paid.
  • The Donut Hole is shown in italics.
  • The expenses outlined above only include the cost of prescription medications. It does not include the monthly premium that you pay to the prescription drug plan.

Health Reform and Medicare Part D

The Affordable Care Act signed into law on March 23, 2010 makes several changes to Medicare Part D to reduce your out-of-pocket costs when you reach the donut hole phased in over several years, including:

  • In 2010 only, if you had expenses in the coverage gap, you should have received a $250 rebate from Medicare.
  • Beginning in 2011, if you reach the donut hole, you will be given a 50% discount on the total cost of brand name drugs while in the gap.
  • Beginning in 2013, if you reach the donut hole, you will be given a 52.5% discount on brand name drugs and a 21% discount on generic drugs while in the gap.
  • Beginning in 2014, if you reach the donut hole, you will be given a 52.5% discount on brand name drugs and a 28% discount on generic drugs while in the gap.
  • Beginning in 2016, if you reach the donut hole, you will be given a 55% discount on brand name drugs and a 42% discount on generic drugs while in the gap.
  • Medicare will phase in additional discounts on the cost of both brand name and generic drugs.

By 2020, these changes will effectively close the coverage gap and rather than paying 100% of the costs, the patient's responsibility will be 25% of the costs.

Example Medicare Part D patient

Let's look at a faux patient named John Smith. We'll say he has the early signs of Alzhiemer's, high cholesterol, hypertension, fluid retention, arthritis pain, and a history of stomach ulcers (a fairly typical profile for our aging population). His PCP prescribes the following regimen of drugs:

  • donepezil 10 mg = $8.35
  • Crestor (rosuvastatin) 40 mg = $276.97
  • digoxin 250 mcg = $10.57
  • furosemide 20 mg = $8.31
  • celecoxib 200 mg = $92.18
  • Nexium (esomeprazole) 40 mg = $229.18

This totals $625.56/month. Let's do the math for his prescription drug coverage under Medicare part D if he has a plan with the typical $41.46/month premium

Month Premium Deductible CoPay Not enrollee's responsibility Spent in the Gap that month
Jan $41.46 $360.00 $66.39 $199.17
Feb $41.46 $156.39 $469.17
Mar $41.46 $156.39 $469.17
Apr $41.46 $156.39 $469.17
May $41.46 $156.39 $469.17
Jun $41.46 $45.55 $349.46 $230.55 spent in gap
Jul $41.46 $328.53 $297.03 spent in gap
Aug $41.46 $328.53 $297.03 spent in gap
Sep $41.46 $328.53 $297.03 spent in gap
Oct $41.46 $328.53 $297.03 spent in gap
Nov $41.46 $328.53 $297.03 spent in gap
Dec $41.46 $328.53 $297.03 spent in gap

So the patient spent a total of $3,604.15 in the course of a year to receive $7,506.72 worth of medications and the patient never emerged from the Medicare Gap

See also

Federal pharmacy law
Patient Protection and Affordable Care Act


  1. Understanding the Medicare Part D Donut Hole,, Michael Bihari, MD, November 23, 2010,
  2. Medicare Part D Prescription Drug Plans, WebMD, 2011,
  3. Wikipedia, Patient Protection and Affordable Care Act,
  5. Families USA, Welcome to the Medicare Prescription Drug Benefit for 2013, Sept 2012,
  6. Drug Price Search,
  7. The Medicare Part D Prescription Drug Benefit, Henry J Kaiser Family Foundation, October 13, 2015,