AARP Report Reiterates Need for Fair Generic Drug Reimbursements

National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey, RPh, MBA issued the following statement in response to a new report by AARP on rising generic drug costs in 2013:

“This new report…underscores the need for action by Congress to support patient access to essential medications. Moreover, a 2015 survey of 700 community pharmacists concluded that this situation has only become worse since 2013…

Patient access to these medications is threatened by more than their rising cost. Independent community pharmacies are absorbing unsustainable losses of $100 or more on these prescriptions because insurance middlemen known as pharmacy benefit managers (PBMs) may wait months to raise reimbursement rates to pharmacies to cover the higher costs.

This buy high, sell low situation threatens the viability of independent community pharmacies, which provide care in many underserved rural and inner city areas without other convenient pharmacy options. Already some pharmacies can no longer stock certain medications for patients because the reimbursement rates are so far below the cost of acquiring and dispensing them. Because of the lack of transparency, PBMs may be profiteering during…by charging health plans much higher rates than they reimburse the pharmacies.

We encourage lawmakers to cosponsor H.R. 244. This bipartisan legislation would ensure that federal health plan intermediaries, such as PBMs, update reimbursement rates for rising generic drug costs to keep pace with market conditions. It would codify and expand upon a requirement that Medicare has adopted for the 2016 plan year.”

Five Things to Know About the CMS Part D Data Release

by Allyson Funk of the Pharmaceutical Research and Manufacturers of America

Following the release of Center for Medicaid and Medicare services data on Medicare Part D, here are five things you need to know:

  1. Part D’s competitive, market-based structure is unique among government programs. Part D is different than other parts of Medicare and other government programs because it relies on competition among private plans that submit bids to offer prescription drug benefits to enrollees. Competition and rebates have been significant in keeping Part D costs $349 billion lower than initial ten-year projections and keeping costs and premiums low for beneficiaries.
  2. The release does not reflect actual government spending on the Part D program in 2013.According to the Congressional Budget Office (CBO), actual Part D mandatory outlays were $62 billion in 2013, which was only about 10.6% of total Medicare spending that year.
  3. Significant rebates are negotiated in Part D making the actual cost of drugs lower than reported in the data. The data does not reflect the significant rebates and discounts Part D plans negotiate with pharmaceutical companies. The Medicare Trustees report reveals that many brand-name prescription drugs carry substantial rebates, often as much as 20% to 30%. On average, across all program spending, rebate levels have increased in each year of the program. In fact, actual rebates are above projected levels for each year of the program. The drug that CMS lists as number one of the 10 most expensive drugs in 2013 is actually one of the most highly rebated drugs, with rebates reportedly in excess of 60%.
  4. The list is already outdated and ignores generic competition. CMS’ list of top-10 drugs, by cost, does not reflect the fact that competition and incentives to control costs have led to high generic utilization in Part D. More than half of the medicines on the list are off-patent or are expected to lose patent protection by 2016. Innovator companies invest in pioneering research to bring new treatments to patients, and over time those medicines become available as lower-cost generic copies. Since Part D’s inception, generic utilization among seniors has increased from about 54% in 2005 to 84% in 2013.
  5. Use of medicines reduces other medical spending. In 2012, CBO announced a change to its cost-estimating methodology to reflect the fact that increases in prescription drug use could reduce spending for medical services. Enrollment in Part D has improved access to medications recommended to treat congestive heart failure for beneficiaries with limited or no prior drug coverage. An increase in drug adherence for Part D enrollees with congestive heart failure led to over $2.3 billion in annual savings to Medicare, driven by reductions in Parts A and B expenditures. Over the next 10 years, further improvement in adherence among Part D enrollees with CHF could yield an additional $22.4 billion in federal savings.

Senate Bill Would Expand Access to Pharmacies

The National Community Pharmacists Association (NCPA) strongly endorses The Ensuring Seniors Access to Local Pharmacies Act, S. 1190. The legislation would expand the number of pharmacies that can offer discounted copays for Medicare Part D prescription drugs. It was introduced by Senators Shelly Moore Capito (R-W.Va.), Joe Manchin (D-W.Va.), Tom Cotton (R-Ark.) and Sherrod Brown (D-Ohio).

Medicare beneficiaries in medically under-served areas would be able to access lower copays at any pharmacy that agrees to accept a drug plan’s preferred pharmacy terms and conditions. S. 1190 is a companion bill to H.R. 793, The Ensuring Seniors Access to Local Pharmacies Act, which has been introduced by Reps. Morgan Griffin (R-Va.) and Peter Welch (D-Vt.). NCPA CEO Douglas Hoey, RPh, MBA said, “Medicare beneficiaries should not be confronted with the Hobson’s choice of continuing to patronize their pharmacy at a higher cost or making a long trip to another pharmacy.”

The bill has been endorsed by the Alliance for Retired Americans, the Center for Medicare Advocacy, Families USA, Justice in Aging, the Medicare Rights Center, the National Consumers League, the National Rural Health Association, and the U.S. Pain Foundation. “Today many Medicare beneficiaries are effectively told by drug plan middlemen which pharmacy to use based on exclusionary arrangements among the pharmacy benefit manager (PBM) middlemen and, in most instances, large publicly traded chain pharmacies,” Hoey added. According to a recent Medicare study, in urban areas 54% of preferred pharmacy drug plans failed to meet the government’s threshold for reasonable access to pharmacies. In rural America the closest preferred pharmacy can be 20 miles away or more.

CMS Finalizes 2016 Payment and Policy Updates for Medicare Health and Drug Plans

The Centers for Medicare & Medicaid Services (CMS) released final Medicare Advantage (MA) and Part D Prescription Drug program changes for 2016 that provide fair and accurate payments to plans and encourage the delivery of high-quality care for all populations. The Rate Announcement finalizes changes in payments that will affect plans differently depending on their characteristics. On average, the expected revenue change is 1.25% without accounting for the expected growth in coding acuity that has typically added another 2%. The final revenue increase is larger than the February advance notice largely because the Medicare actuaries recently updated Medicare per capita spending estimates for 2014 and 2015. Medicare per capita spending in 2014, 2015 and 2016 is still expected to be below historical standards.
According to CMS, the changes include important improvements to the star rating system and accuracy and transparency of provider networks. To view a fact sheet on the 2016 Rate Announcement and final Call Letter, visit:

CMS Proposes Updates to Part D

The Centers for Medicare and Medicaid Services (CMS) released proposed changes to the Medicare Advantage (MA) and Part D Prescription Drug Programs. CMS says that the proposal would provide fair payments to plans while rewarding high-quality care. CMS is proposing to continue to refine the star rating system to encourage improved quality. CMS proposes to modify the system to ensure that plans are not penalized unfairly for enrolling dual eligible or low-income beneficiaries.

The proposal also enhances the value of in-home assessments to support care planning and care coordination and improve enrollee health outcomes. The Advance Rate Notice proposes changes in payments. On average, the expected revenue change would be positive growth of 1.05% when combined with expected growth in plan risk scores due to coding. Plans that have shown quality improvement and have demonstrated a focus on customer satisfaction would see additional growth. Plan payment levels will continue to be somewhat higher than the equivalent payments in fee for service.

The 2016 Draft Call Letter proposes steps to ensure that plans maintain accurate provider directories and make those directories widely available, helping enrollees better understand the providers available to them. In addition, CMS proposes to work with Part D sponsors that offer limited access to preferred cost sharing pharmacies in their networks to ensure all beneficiaries have access to affordable coverage.

CMS says that enrollment and quality in the Medicare Advantage and Part D Prescription Drug program has grown since the Affordable Care Act. Medicare Advantage has reached record high enrollment each year since 2010. That trend continues in 2015 with an increase of more than 40% since passage of the Affordable Care Act. Also, premiums have fallen nearly 6% from 2010 to 2015. More than 90% of Medicare beneficiaries have access to a $0 premium Medicare Advantage plan.

According to CMS, the continued popularity of the program reflects a clear signal that Medicare Advantage and the Prescription Drug Program are attractive to health plans and beneficiaries. In 2015, CMS estimates that 60% of Medicare Advantage enrollees will be in four- or five-star plans – an increase of 43 percent since 2009.

Medicare Advantage – A Growth Vehicle for Health Plans


Health plan executives may be missing an opportunity to capitalize on the growing demand for Medicare Advantage (MA) plans, according to a survey by KPMG. Consumer adoption of these plans is expected to grow as more Baby Boomers enter retirement years. Despite interest and growing membership in MA, the number of health plans viewing the category as a major part of their market offerings decreased to 24% in 2014 from 35% in 2011. Only 29% of health plan executives see MA as a source of market segment growth in 2015, putting that category behind individual insurance and small and large group plans.

“Health plans have been going through unprecedented transformation as a result of the Affordable Care Act…Individual insurance is expected to be a major part of health plan offerings, but there is an overlooked opportunity to engage aging Baby Boomers, who may see this as an option instead of traditional Medicare as they enter their retirement years,” said Ashraf Shehata, U.S. advisory leader for Health Plans.

Congressional Budget Office projections see MA enrollment growing to 19 million by 2017, an increase from the 16 million in these plans. Two in three people older than 64, who are open to joining MA plans, are likely to do so this year. Renewal among members is at 85%, and one in three traditional Medicare plan beneficiaries are open to changing to MA.

According to the KPMG survey, nearly half of the people covered by Medicare would be willing to absorb a premium increase of $100 per month while 38% would switch to narrower provider networks and 14% would seek plans with higher deductibles. If the monthly premium for traditional Medicare increases by $200, only 19% would be willing to absorb the premium increase. Narrower networks would be the most attractive option to Medicare beneficiaries under that scenario over higher deductibles (54% versus 27%).

Most people pay $104.90 for Medicare Part B, which covers durable medical equipment, medically necessary services and preventive care, according to CMS. Two-thirds of MA enrollees have at least one serious chronic illness, compared to 34% of enrollees in traditional Medicare. This disparity is likely to continue. More than half of those who said they were likely to enroll in MA in 2015 have a chronic condition. Seventy-seven percent of MA enrollees with chronic conditions are satisfied with their health plan, versus 66% of those with no chronic condition.

Shehata said, “Seniors are leaning toward MA plans as a better alternative to Medicare gap coverage, and people with chronic conditions tend to be sensitive to out-of pocket medical costs. Our survey also found that seniors might be inclined to switch to MA plans if vision care were covered, if their primary doctor was coordinating care or if incentives were available for managing their blood sugar and blood pressure. There are some very interesting opportunities for health plans to profitably gain new customers while delivering value to seniors.”

Medicare Drug Plans

UnitedHealthcare introduced its 2015 Medicare health and prescription drug plans with an out-of-pocket maximum. Most plans members will get their medications without paying a separate premium for a stand-alone Part D plan. For 2015, the company is increasing the number of medications on the tier 1 of the formulary for Medicare Advantage-Part D plans. Many of the medications that beneficiaries use most commonly will be available for a lower copay. For example, generic versions of Lipitor, Synthroid, Actos, Coumadin, Fosamax, Singulair and 72 other drugs will move to tier 1. UnitedHealthcare is also lowering prices through its Pharmacy Saver program in 2015, allowing Medicare Advantage members to save even more money on their medications. Members will be able to show their member ID card at participating pharmacies to get select generic medications for as low as $1.50 per 30-day prescription. UnitedHealthcare will offer a choice of Medicare Advantage plans with monthly premiums. These plans will offer additional features or lower cost-sharing. Monthly premiums in 2015 will not change for 60% of UnitedHealthcare’s Medicare Advantage members. More than 22 million Medicare beneficiaries in the company’s 2015 coverage area, including three-quarters of its Medicare Advantage members, will have access to a standard UnitedHealthcare Medicare Advantage plan with a $0 premium beyond the Medicare Part B premium. For more information,

CMS Issues Medicare Part D Final Rule

The Centers for Medicare & Medicaid Services (CMS) issued final regulations (CMS-4159-F) for the Medicare Advantage and prescription drug benefit (Part D) programs. “The policies finalized in this regulation will strengthen Medicare by providing better protections and improving health care quality for beneficiaries participating in Medicare health and drug plans. The final rule will give CMS new and enhanced tools in combating fraud and abuse in the Medicare Part D program so that we can continue to protect beneficiaries and taxpayers,” Marilyn Tavenner, CMS administrator.
The following are key final provisions:

• Requiring Part D prescribers to enroll in Medicare: CMS is requiring that physicians and eligible professionals who prescribe covered Part D drugs be enrolled in Medicare, or have a valid record of opting out of Medicare, in order for their prescriptions to be covered under Part D. Requiring prescribers to enroll in Medicare would help CMS ensure that Part D drugs are only prescribed by qualified individuals. The final rule allows more time – until June 1, 2015 – for implementation.

• Revoking Medicare enrollment for abusive prescribing practices and patterns: CMS will have the authority to revoke a physician or eligible professional’s Medicare enrollment if CMS determines that he or she has a pattern or practice of prescribing that is abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements. CMS will also be able to revoke a physician or eligible professional’s Medicare enrollment if his or her Drug Enforcement Administration (DEA) Certificate of Registration is suspended or revoked, or if the applicable licensing or administrative body for any state in which he or she practices suspends or revokes his or her ability to prescribe drugs.

• Expanding prevention and health improvement incentives: The final rule expands rewards and incentive programs that focus on encouraging participation in activities that promote improved health, efficient use of health care resources and prevent injuries and illness.

• Broadening the release of privacy-protected Part D data: CMS will expand the release of unencrypted, prescriber, plan and pharmacy identifiers contained in prescription drug event records to give the public broader access to health care data pursuant to CMS’ policies and procedures for release of such data while still preserving the privacy of Medicare beneficiaries.

To view a fact sheet on the final 2015 Part C and D rule, please visit:

Drug Costs For Seniors Vary Widely Among Medicare Part D Plans

A HealthPocket report demonstrates a compelling reason to comparison shop for Medicare Part D plans. Costs vary widely among prescription drug plans across the United States. Choosing a well-known insurance brands is no guarantee of getting low drug costs, said Kev Coleman, head of Research & Data for HealthPocket. Consumers should consider premiums and cost sharing when evaluating their Medicare Part D options. They should also consider drug restrictions, which could greatly affect their satisfaction with a drug plan.

HealthPocket examined formularies for all 2014 Medicare Part D insurance plans sold in the United States. They estimated what a beneficiary would pay for premiums and prescriptions for each of the top 50 drugs sold in the U.S. and for each Medicare Part D plan. AARP’s MedicareRx Preferred plan in Arizona had the lowest costs while the Health Alliance Medicare Prescription PlanBasic in Illinois had the highest costs. In fact, it was 155% more expensive than the AARP plan. The Humana Enhanced plan had the lowest cost in 26 states and covered 48 of the top 50 drugs. The Aetna Medicare Rx Premier plan had the highest cost in 37 states and covered 41 of the top 50 drugs. Medicare requires Part D insurance policies to cover at least two drugs in most medication categories, but which drugs are covered within each category is left to the discretion of the insurance company. Moreover the same drug covered by two different Medicare Part D plans can charge different amounts, and these differences can significantly affect the economic value of the Part D plan for beneficiaries. For more information, visit

Seniors Appreciate Part D Preferred Pharmacy Plans

Eighty-five percent of seniors say they are satisfied with Medicare Part D plans that offer preferred pharmacy networks. They cite lower costs, convenient access to pharmacies, as well as other benefits, according to a survey from Hart Research Associates by the Pharmaceutical Care Management Association (PCMA). More than 40% of Part D seniors are enrolled in plans with preferred networks. Eighty percent of those in preferred pharmacy plans say they would be very upset if their plan were no longer available.

“Seniors see Medicare Part D preferred networks as a ‘win-win’ because they offer good value without sacrificing access to convenient pharmacies,” said Geoffrey Garin, president of Hart Research Associates.

The study also reveals the following:
• The cost of premiums (50%) and copays (48%) are the most important considerations for seniors in selecting their preferred pharmacy plan.
• Seniors are very satisfied with the convenience of pharmacies (81%), the number of pharmacies in their network (74%), and the prescription medications available through their plan (75%).
• Cost is the top factor for seniors regardless of income, age, number of medications, and distance from their drugstore.
• Only 8% listed the number of pharmacies in the network as an important consideration.

For more information, visit

Last Updated 01/19/2022

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