Top Trends in Medicare Part D

Now in its ninth year of operation, the Medicare Part D program has had consistently high levels of plan participation, offering dozens of plan choices for beneficiaries in each region and broad access to generic and brand name drugs. But there are some sobering trends beneath the surface, according to a report by the Kaiser Family Foundation. Cost and access trends could pose challenges for Part D enrollees. Although premiums have been flat for several years, average premiums have increased nearly 50% from 2006 to 2014. Median cost sharing for brand-name drugs has also increased. Finally, many low-income beneficiaries are paying steadily higher premiums for coverage when they could be enrolled in premium-free plans.

Sixty-two percent of Part D enrollees are in PDPs, but enrollment in MA-PD plans is growing faster, representing half of the net increase in enrollment from 2013 to 2014. About 6.5 million Medicare beneficiaries with drug coverage from their former employers now get that coverage through a Part D plan designed for that firm’s retirees. Enrollment in employer plans has quadrupled since 2006, partly due to changes in law that took effect in 2013.

In 2014, three Part D sponsors account for half of all Part D PDP and MA-PD enrollees. UnitedHealthCare, Humana, and CVS Caremark have enrolled half of all participants in Part D, which is relatively unchanged from 2006. UnitedHealthCare and Humana have held the highest shares of enrollment since the program began while enrollment in CVS Caremark has grown through the acquisition of other plan sponsors. UnitedHealthCare has maintained the top position for all nine years of the program, and provides coverage to more than one in five PDP and MA-PD enrollees in 2014.

Average monthly PDP premiums have been flat since 2010; premiums for some of the most popular plans increased for 2014; and premiums for other popular plans fell. On average, PDP enrollees pay premiums of $37.75 per month in 2014. However, PDP premiums vary widely even for plans with equivalent benefits. Premiums range from $12.80 to $111.40 a month for plans offering the basic Part D benefit. UnitedHealthCare’s AARP MedicareRx Saver Plus PDP, which was new in 2013, raised its premiums by 54% in 2014 (an average increase of about $8 per month). In contrast, WellCare’s Classic PDP lowered its premium by 38% (an average decrease of about $13 per month) in 2014.

Part D enrollees in MA-PD plans pay lower premiums on average ($14.70) than those in PDPs. Cost sharing for brand-name drugs has been relatively stable in recent years, but has risen substantially since the start of Part D.  MA-PD plan enrollees generally have somewhat higher cost sharing than do PDP enrollees. Cost sharing for brands increased by about 50% from 2006 to 2014 for beneficiaries in PDPs and about 70% for those in MA-PD plans.

Median cost sharing in a MA-PD is $45 for preferred brands and $95 for non-preferred brands plans. Median cost sharing in a PDP is $40 for preferred brands and $85 for non-preferred brands. Seventy-six percent of PDPs and 75% of MA-PDs use five cost-sharing tiers including preferred and non-preferred tiers for generic drugs, preferred and non-preferred tiers for brand drugs, and a tier for specialty drugs. Four-tier arrangements were most common until 2012 when plans began shifting toward the five-tier cost-sharing design.

Part D plans typically use specialty tiers for high-cost drugs and charge coinsurance of from 25% to 33% during the benefit’s initial coverage period, as in previous years. These initial high out-of-pocket costs may create a financial barrier to starting use of specialty drugs, which are expected to be a significant cost driver for Medicare. Users are likely to reach the benefit’s catastrophic threshold in a short period, and see their coinsurance reduced to 5%.

The number of Part D stand-alone drug plans with a preferred pharmacy network grew from 7% in 2011 to 72% in 2014. Enrollees have lower cost sharing with preferred pharmacies. However, in some plans, there is no preferred pharmacy within a reasonable travel distance, which could make it hard for enrollees to take advantage of the lower cost sharing.

Only 5% of PDP enrollees are in plans with the highest star ratings (four stars or more out of five). More than half are in plans with 3.5 stars. Nearly one-fourth of are in plans with fewer than three stars; plans at this level for three years in a row can be removed from the program. For more information, visitwww.kff.org.

Last Updated 10/21/2020

Arch Apple Financial Services | Individual & Family Health Plans, Affordable Care California, Group Medical Insurance, California Health Insurance Exchange Marketplace, Medicare Supplements, HMO & PPO Health Care Plans, Long Term Care & Disability Insurance, Life Insurance, Dental Insurance, Vision Insurance, Employee Benefits, Affordable Care Act Assistance, Health Benefits Exchange, Buy Health Insurance, Health Care Reform Plans, Insurance Agency, Westminster, Costa Mesa, Huntington Beach, Fountain Valley, Irvine, Santa Ana, Tustin, Aliso Viejo, Laguna Hills, Laguna Beach, Laguna Woods, Long Beach, Orange, Tustin Foothills, Seal Beach, Anaheim, Newport Beach, Yorba Linda, Placentia, Brea, La Habra, Orange County CA

12312 Pentagon Street - Garden Grove, CA 92841-3327 - Tel: 714.638.0853 - 800.731.2590
Email:
Jay@ArchApple.com
Copyright @ 2015 - Website Design and Search Engine Optimization by Blitz Mogul