Proposed Medicare Part D Rule Would Increase Medicare Costs

Eliminating preferred pharmacy networks in Medicare Part D would increase premiums by about $63 annually for over 75% of Part D enrollees. It would also raise program costs by $24 billion over the next 10  years, according an actuarial study by The Pharmaceutical Care Management Association (PCMA). “CMS’ proposal to eliminate preferred pharmacy networks will make it harder and more expensive for seniors to access prescription drugs,” said PCMA president and CEO Mark Merritt.

The study examines the sections of CMS’ proposed rule on preferred pharmacy networks. More than 75% of Part D beneficiaries are enrolled in plans that feature preferred pharmacy networks.
Key findings from the study include the following:

• As of February 2014, more than 75% of prescription drug plans (PDP) enrollees are in plans with preferred pharmacy networks; these enrollees could be adversely affected by the elimination of plans utilizing preferred pharmacy networks.
• The preferred pharmacy networks provision would increase premiums for the affected population by an average of about $63 per year for the 2015 plan year.
• The rule could increase cost sharing among PDP enrollees by an average of $80 to $100 per year.
• Since the rule would inflate the national average benchmark for Part D plans, CMS would pay an additional $64 in direct subsidies per beneficiary, per year in 2015, for a total increased payment of nearly $1.5 billion in 2015 across all PDP enrollees (based on Part D enrollment of about 23 million beneficiaries).
• Over a 10-year period, the increased cost of eliminating preferred pharmacy networks is estimated to be about $990 per affected enrollee, and the cost would be about $24 billion to CMS in the form of higher direct subsidy payments.

In addition, a recent poll found that seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs and convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates. The survey found that 85% of seniors surveyed are satisfied with their preferred network plan. In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.

Last Updated 09/16/2020

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