INTRODUCTION HIGHLIGHTS AND KEY FINDINGS APRIL 2008

Transcription

1 MEDICARE PRESCRIPTION DRUG PLANS IN 2008 AND KEY CHANGES SINCE 2006: SUMMARY OF FINDINGS Prepared by Jack Hadley i, Elizabeth Hargrave ii, and Juliette Cubanski and Tricia Neuman iii INTRODUCTION APRIL 2008 Since 2006, Medicare beneficiaries have had access t prescriptin drug cverage ffered by private plans, either stand-alne prescriptin drug plans (PDPs) r Medicare Advantage prescriptin drug plans (MA-PD plans). Medicare drug plans (als referred t as Part D plans) receive payments frm the gvernment t prvide Medicare-subsidized drug cverage t enrlled beneficiaries. Part D plans are required t ffer either a defined standard benefit r ne that is equal in value, and may als ffer an enhanced benefit. 1 Medicare drug plans must meet defined requirements, but may vary in terms f premiums, benefit design, gap cverage, frmularies, and utilizatin management rules. Tday, mre than 2 millin Medicare beneficiaries are enrlled in Medicare drug plans, including 17.4 millin in stand-alne prescriptin drug plans and 8.0 millin in Medicare Advantage drug plans. 2 This reprt synthesizes findings frm a series f Medicare Part D 2008 Data Sptlights that dcuments the scpe and genersity f drug cverage available t Medicare beneficiaries under Part D plans, and changes in drug cverage and csts since It presents key findings related t Medicare drug plan premiums, the cverage gap, benefit design and cst sharing, the specialty tier, frmularies and utilizatin management. 3 The analysis is based n data frm the Centers fr Medicare and Medicaid Services (CMS) fr the 47 unique, natinal stand-alne PDPs ffered in 2008, representing 88 percent f all PDPs natinwide. HIGHLIGHTS AND KEY FINDINGS PLAN AVAILABILITY The number f stand-alne prescriptin drug plans available in 2008 (excluding the territries) is 1,824. Abut a quarter f all PDPs in 2008 are benchmark plans fr the lw-incme subsidy (LIS); that is, they qualify t enrll beneficiaries receiving the full LIS with n mnthly premium payment required. The number f PDPs remained relatively steady between 2007 and 2008, after a sharp increase between 2006 and 2007 (Exhibit 1). The number f PDPs available in 2008 varies acrss regins, frm a lw f 47 in Alaska t a high f 63 in the regin cvering Pennsylvania and West Virginia. The number f benchmark plans available t LIS beneficiaries is higher in 2008 than it was in 2006, althugh there has been sme turnver in the availability f these plans frm year t year, creating instability fr sme LIS beneficiaries. Beginning in 2007, CMS Distributin f Medicare Prescriptin Drug Plans, by Benchmark Plan Status, Other Plans De Minimis Plans Benchmark Plans 1,020 (71%) Exhibit 1 1,23 (66%) 1,329 (73%) 7(8%) (26%) (29%) (24%) 2006 Ttal = 1,429 PDPs 2007 Ttal = 1,87 PDPs (3%) 2008 Ttal = 1,824 PDPs NOTE: Excludes PDPs in the territries. SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. Authr affiliatins: i Gergetwn University ii NORC at the University f Chicag iii Kaiser Family Fundatin The Henry J. Kaiser Family Fundatin Headquarters: 2400 Sand Hill Rad, Menl Park, CA 9402 (60) Fax: (60) Washingtn Offices and Barbara Jrdan Cnference Center: 1330 G Street, NW, Washingtn, DC 2000 (202) Fax: (202) Website: The Kaiser Family Fundatin is a nn-prfit, private perating fundatin dedicated t prviding infrmatin and analysis n health care issues t plicymakers, the media, the health care cmmunity and the general public. The Fundatin is nt assciated with Kaiser Permanente r Kaiser Industries.

2 implemented a plicy that limited smewhat the number f LIS recipients wh wuld need t switch plans because their plan n lnger qualified as a benchmark plan. 4 Hwever, ver 2 millin beneficiaries were reassigned t new plans in The number f LIS benchmark plans varies cnsiderably acrss regins in 2008, ranging frm a lw f tw benchmark plans available in Nevada t a high f 19 benchmark plans available in Illinis. PREMIUMS Mnthly PDP premiums vary widely in 2008, as in previus years, and are substantially higher fr plans ffering sme gap cverage. On average, enrllees wh stayed with the same drug plan between 2007 and 2008 faced higher premiums in Mnthly premiums fr stand-alne Part D plans range widely, in part because different plans ffer different benefits. Yet even amng the stand-alne drug plans ffering actuarially equivalent basic benefits, premiums vary frm a lw f $9.80 per mnth t a high f $72.00 per mnth. Exhibit 2 Average Mnthly Premiums fr Stand-Alne PDPs Enrllees in stand-alne Part D plans tend t pay substantially higher premiums fr gap cverage. On average, the unweighted mnthly premium fr a stand-alne PDP ffering sme gap cverage is twice as much as the mnthly premium fr plans ffering an enhanced benefit, but n gap cverage (Exhibit 2). $40 $3 $30 $2 $ $10 Weighted Mnthly PDP Premiums, $2.93 $27.39 $31.99 Average Mnthly PDP Premiums, by Gap Cverage, 2008* $30.14 $31.97 The weighted average premium $ fr stand-alne Part D cverage rse frm $2.93 in 2006 t $0 Basic Enhanced $27.39 in 2007 (Exhibit 2). If all Benefits Benefits PDP enrllees remained in the N Gap Cverage same plan frm 2007 t 2008, rather than switch t a different drug plan, the average mnthly premium (weighted by enrllment) wuld increase frm $63.29 Enhanced Benefits with Gap Cverage NOTE: *Premiums by gap cverage are unweighted. SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. $27.39 t $31.99, a 17 percent increase, with nearly ne in five 2007 PDP enrllees experiencing an annual increase f at least $ Accrding t CMS data, the majrity f enrllees elect t keep the cverage they have frm ne year t the next rather than switch plans. 7 Actual Prjected THE COVERAGE GAP In 2008, a majrity f Part D plans have a gap in drug cverage (the s-called dughnut hle ) in which enrllees pay 100 percent f ttal drug csts befre catastrphic cverage begins. Only a relatively small share f Part D enrllees are enrlled in plans that ffer gap cverage. In 2008, the cverage gap begins after enrllees incur $2,10 in ttal drug csts. (The cverage gap des nt apply t enrllees receiving lw-incme subsidies, wh receive cverage fr drug csts in the gap regardless f whether their plan ffers it). In 2008, mre than a quarter f stand-alne Part D plans and half f Medicare Advantage plans ffer sme type f gap cverage, mainly fr generic drugs (Exhibit 3).

3 Natinwide, nly ne stand-alne PDP and 17 percent f all Medicare Advantage drug plans ffer cverage fr at least sme brand-name drugs in the gap. A relatively small share f Part D enrllees are in plans that ffer gap cverage (Exhibit 4). Frm 2006 t 2007, enrllment in PDPs with any gap cverage increased mdestly frm 6 percent t 8 percent, while enrllment in PDPs that ffered gap cverage f bth brands and generics decreased frm 3 percent t 0. percent. Amng MA-PD plans, in which nearly ne-third f all Part D beneficiaries are enrlled, enrllment in plans ffering gap cverage increased frm 27 percent t 33 percent, and the share with cverage f bth brand and generics rse slightly frm 4 percent t 6 percent. Even when Part D plans ffer sme gap cverage, that cverage tends t be limited t either generic drugs nly r t generics plus a limited set f brand-name drugs. New amng Part D plans in 2008 is the wide variatin in the scpe f benefits ffered in the gap and the mre limited scpe f gap cverage even fr generic drugs. Abut half f the PDPs with gap cverage in 2008 d nt cver all 100% 90% 80% 70% 60% 0% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 0% 40% 30% 20% 10% 0% Share f Enrllment in Medicare Part D Plans, By Type f Gap Cverage, % 92% Exhibit 4 generics, but rather describe their plans as cvering nly preferred r sme generics. The increase in the share f MA-PD plans ffering gap cverage is mainly amng plans cvering all generics and sme brand-name drugs in the cverage gap. 71% % 14% PDPs* 73% 67% 27% 23% 3% 3% 8% <1% 4% 6% PDPs Exhibit 3 Share f Medicare Prescriptin Drug Plans, By Type f Gap Cverage, 2008 N Gap Cverage Generics Only 49% 9% 2% 16% MA-PD plans Generics and Brands 1% N Gap Cverage MA-PD plans Sme Generics Only All Generics Only All Generics and Sme Brands All Brands and Generics NOTE: *In 2008, 1 PDP will ffer gap cverage fr brand-name drugs (runds t 0%). SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. NOTE: Estimates include Part D enrllees receiving lw-incme subsidies wh receive cverage fr csts in the gap regardless f whether their plan ffers it. SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. BENEFIT DESIGN AND COST SHARING Mst stand-alne plans d nt ffer the defined standard benefit, and mre PDPs have shifted t a tiered cst-sharing structure. Cst sharing fr brand-name drugs has increased since 2006, particularly fr nn-preferred brand-name drugs. In 2008, as in previus years, nly abut 10 percent f natinal PDPs ( f 47 plans) ffer the defined standard benefit, which includes 2 percent cinsurance and a deductible. Mre typically, PDPs eliminate the deductible and use tiered, flat dllar cpayments.

4 Cst sharing fr preferred and nn-preferred brand-name drugs has increased since 2006, n average. Since 2006, average cst sharing fr a 30-day supply f nn-preferred brand-name drugs increased by 29 percent, frm $.36 t $71.31, while average cst sharing fr preferred brand drugs increased by 11 percent, frm $26.87 t $29.86 (Exhibit ). Cst sharing fr generic drugs has remained fairly stable since Plans use tiered cst sharing as incentives fr enrllees t use less expensive generic and preferred brandname drugs. Medicare Part D plans charged mre in 2007, n average, fr preferred and nn-preferred brand drugs than did emplyer plans, and the financial incentives fr drug switching (frm nn-preferred t preferred drugs and frm brands t generics) appear t be strnger in PDPs than in emplyer plans (Exhibit ). Cst-sharing amunts fr cmmnly used drugs vary widely acrss Part D plans in 2008, as they have in previus years. Fr example, an individual with Alzheimer s disease culd pay fr a mnth s supply f Aricept under ne plan in 2008, but $107 per mnth under anther (Exhibit 6). Cst sharing fr Nexium ranges between and $1 in plans that cver the drug, but can cst as much as $146 per mnth in a plan that des nt cver Nexium n its frmulary. A beneficiary enrlled in a natinal PDP that des nt cver Prevacid wuld pay 1 fr a mnth s supply in 2008 ten Change in Weighted Average Cst Sharing fr Natinal and Near-Natinal PDPs, , and Emplyer-Spnsred Plans, 2007 FORMULARY TIER Generic Preferred brand Nn-preferred brand Specialty Mnthly Cst Sharing fr the Tp Ten Brand-Name Drugs in Natinal Plans, 2008 Actnel Aricept Divan Fsamax Lipitr Nexium Plavix Prevacid Prtnix Zetia $8 $70 times mre than the lwest cst-sharing amunt f ffered by a natinal PDP that cvers the drug n its frmulary. $14 $18 $ $.87 $26.87 $ % $4 $1 $1 $4 Exhibit MEDICARE PDPs Exhibit 6 $74 $80 $ $4.77 $29.36 $ % NOTES: PDP estimates weighted by enrllment; analysis based n plans with three flat dllar cpayment tiers and a specialty tier with cinsurance and includes nly plans that will be ffered in SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin; data n emplyer plans frm Kaiser/HRET Emplyer Health Benefits Survey, $80 $9 $107 $ $.32 $29.86 $ % Minimum Cst Sharing Maximum Cvered Cst Sharing Maximum Uncvered Cst $146 $146 EMPLOYER PLANS 2007 $11 $2 $43 36% 1 SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. SPECIALTY TIERS Mst natinal stand-alne drug plans use a specialty tier fr high-cst medicatins in 2008, and mre plans are pting t charge a higher cinsurance rate fr their specialty tier drugs. Specialty tiers are cmmnly used by Medicare drug plans fr relatively expensive drugs (at least $600 per mnth in 2008), and plans are able t charge mre fr specialty-tier drugs than they typically d fr preferred r nn-preferred drugs. In 2008, 41 f the 47 natinal PDPs place sme drugs n a specialty tier abut twice the number f plans that had a

5 specialty tier in 2006 (Exhibit 7). The remaining plans charge cinsurance fr brand-name drugs and d nt differentiate between specialty and nn-specialty drugs. The number f natinal PDPs charging 33 percent cinsurance fr specialty tier drugs has increased mre than five-fld since 2006, frm 4 t natinal PDPs in Cst sharing fr drugs placed n a specialty tier is generally limited t 2 percent cinsurance, althugh CMS allws plans t have higher cst sharing fr drugs n the specialty tier if ffset by a lwer deductible. 8 The placement f a drug n a specialty tier has cst implicatins fr enrllees. Fr example, if a plan cvers a brand-name drug with a ttal mnthly cst f $600, an enrllee Exhibit 7 Specialty-Tier Cinsurance Rates in Medicare Prescriptin Drug Plans, Ttal Number f Natinal PDPs Using Specialty Tiers: might face an average flat dllar mnthly cpayment f $30 if the drug is cvered as preferred, $72 if cvered as nn-preferred, r $180 per mnth if the drug is cvered n a specialty tier with a 30 percent cinsurance rate % Cinsurance 26-32% Cinsurance 2% Cinsurance f 3 40 f f 47 SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. FORMULARIES AND UTILIZATION MANAGEMENT The scpe f frmulary cverage cntinues t vary widely acrss PDPs in 2008, with the greatest differences relating t the treatment f brand-name drugs. Based n an analysis f cverage f a sample f 169 drugs, PDPs have increased the use f utilizatin management restrictins fr n-frmulary brand-name drugs. Part D plan frmularies typically include mre drugs than CMS standards require, but frmulary cverage varies cnsiderably acrss plans, particularly fr brand-name drugs. 9 While sme brands appear n all frmularies, thers are included by far fewer plans. In 2008, mst natinal PDPs (91 percent) cver a vast majrity (at least 90 percent) f the generic sample drugs, while nly 28 percent f plans cver a similarly high share f brandname sample drugs. Amng ten brand-name drugs cmmnly used by Medicare beneficiaries, frmulary cverage by natinal PDPs in 2008 varies (Exhibit 8). The majrity (8 f 10 drugs) are listed n the frmularies f all r nearly all natinal PDPs. Yet, even if a drug is listed n a plan s frmulary, utilizatin management restrictins may limit a beneficiary s access t the drug. Plans may require step therapy r prir authrizatin befre cvering a drug, r may limit the quantity cvered. Plans may als place drugs n a nnpreferred tier, assciated with higher cst sharing. Mst Exhibit 8 Number f Natinal Plans Cvering Tp Ten Brand-Name Drugs, by Preferred Status and Restrictins, 2008 Preferred, Preferred, Nn-preferred Nn-preferred, Nt with n UM with UM with UM listed Actnel Aricept Divan Fsamax Lipitr Nexium Plavix Prevacid Prtnix Zetia NOTE: UM is utilizatin management. SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin

6 natinal plans apply at least ne f these restrictins t mst f the tp ten brand-name drugs; nly tw f the ten drugs (Aricept and Plavix, which have n clear clinical alternatives) are placed n a preferred tier with n utilizatin management restrictins by mre than ne-third f the natinal plans (Exhibit 8). Utilizatin management restrictins are mre cmmn amng plans in 2008 than in 2006, with 30 percent f the 169 sample drugs subject t sme use restrictin in 2008, up frm 20 percent in 2006 (Exhibit 9). Quantity limits are applied t percent f sample drugs in 2008, n average acrss the natinal PDPs, up frm 12 percent in 2006, while use f step therapy has dubled frm 6 percent f sample drugs in 2006 t 12 percent in The average use f prir authrizatin amng natinal PDPs has remained flat since 2006, at abut percent f sample drugs. Share f Sample Drugs with Utilizatin Management Restrictins, Averaged Acrss All Natinal PDPs, Any UM Restrictin Prir Authrizatin Step Therapy Quantity Limits 20% % 6% 12% 2% Exhibit 9 6% 4% 19% 30% % 12% % SOURCE: Gergetwn/NORC analysis f data frm CMS fr the Kaiser Family Fundatin. CONCLUSION Medicare Part D plans are a relatively new and imprtant surce f prescriptin drug cverage fr a grwing number f Medicare beneficiaries. Findings frm this analysis shw relatively minimal change in PDP frmularies since 2006, but increases in cst sharing and utilizatin management restrictins that culd have imprtant implicatins fr beneficiaries access t needed medicatins and ut-f-pcket expenses. Mst Medicare drug plans d nt ffer cverage in the dughnut hle, and thse that d primarily cver generics. Sme Medicare Advantage drug plans cntinue t ffer cverage fr at least a limited number f brand-name drugs in the gap. The limited availability f cverage fr brand-name drugs in the cverage gap puts Part D enrllees at risk f incurring substantial csts, an increasing cncern as the size f the cverage gap expands each year (currently in excess f $3,000). Wide variatins acrss Part D plans, rising premiums, and changes in plan fferings, benefit design, cverage and csts that ccur frm year t year underscre the imprtance fr cnsumers t cmpare plans each year and make infrmed decisins based n the medicatins they take. Onging mnitring activities are critical fr assessing the extent t which Medicare beneficiaries have access t needed and affrdable medicatins thrugh Part D plans.

7 METHODS This reprt synthesizes findings presented in a series f Medicare Part D 2008 Data Sptlights prepared by Jack Hadley (Health Plicy Institute, Gergetwn University), Elizabeth Hargrave and Katie Merrell (NORC at the University f Chicag), and Juliette Cubanski and Tricia Neuman (Kaiser Family Fundatin). Additinal assistance was prvided by Lauren Bakis, Jennifer Thmpsn, and Laura Summer (Health Plicy Institute, Gergetwn University) and Ksali Simn (Crnell University). Sme f these findings are based n the analysis f data fr the 47 unique, natinal stand-alne PDPs ffered by rganizatins in 2008, representing 88 percent f all PDPs natinwide. The rganizatins that spnsr stand-alne prescriptin drug plans natinally in 2008 accunt fr 1,98 plans 88 percent f the 1,824 PDPs ffered natinwide. The analysis f benefit designs and frmularies excludes the remaining 28 plans (12 percent), which are mainly lcal r reginal plans ffered in 30 r fewer regins, as well as prescriptin drug plans ffered thrugh Medicare Advantage plans. Data n the characteristics f plan benefits were cllected primarily frm the CMS landscape file released in Octber 2007 and the CMS Medicare Prescriptin Drug Plan Finder website. In a few cases, these data were supplemented r verified by mre detailed infrmatin cllected directly frm plan benefit summary materials and ther dcuments n each spnsring rganizatin s website. Cmplete frmulary, cst-sharing, and pricing data fr drugs are als available n the Plan Finder, but the time demands in cllecting infrmatin frm the website made it impssible t cllect data n all FDAapprved drugs fr the analysis included in the Data Sptlight series. The analysis is based n a sample f 169 prescriptin drugs selected t include the mst cmmnly prescribed drugs and all alternative medicatins in sme f the drug classes mst cmmnly used by Medicare beneficiaries. The sample f drugs was selected with several gals in mind: 1) including drugs that are amng the mst frequently prescribed drugs used by Medicare beneficiaries; 2) including drugs that belng t certain cmmnly prescribed drug classes; and 3) including a sub-sample f high-cst drugs. Fur types f data fr each drug were cllected frm the Medicare Prescriptin Drug Plan Finder frm the Medicare.gv website: whether a drug was n plan frmularies, the cst-sharing tier fr each cvered drug, whether utilizatin management tls (prir authrizatin, quantity limits, r step therapy) were applied, and the price fr purchases at retail pharmacies. A detailed appendix describing the methdlgy used in the Medicare Part D 2008 Data Sptlight series is available at 1 In 2008, the defined standard benefit has a $27 deductible, 2 percent cinsurance up t an initial benefit limit, a $3,6 cverage gap (the dughnut hle ), and catastrphic cverage after $,726.2 in ttal Part D drug csts. 2 U.S. Department f Health and Human Services (HHS), Medicare Prescriptin Drug Benefit s Prjected Csts Cntinue t Drp, January 31, 2008 (data as f January 2008). 3 The 2008 Data Sptlight series (available at builds n tw previus reprts cmmissined by the Kaiser Family Fundatin that prvided an in-depth lk at Medicare drug plans in 2006 and See Hadley et al, An In-Depth Examinatin f Frmularies and Other Features f Medicare Drug Plans, Kaiser Family Fundatin, April 2006, available at and Hadley et al, Benefit Design and Frmularies f Medicare Drug Plans: A Cmparisn f 2006 and 2007 Offerings, Kaiser Family Fundatin, Nvember 2006, available at 4 Under the de minimis plicy, LIS beneficiaries wh are enrlled in a plan lsing benchmark status are allwed t stay in that plan and retain the full premium subsidy as lng as the new mnthly premium des nt exceed the reginal benchmark by mre than a small (de minimis) amunt ($2 in 2007 and $1 in 2008). Beneficiaries pay, n average, 2. percent f the cst fr standard drug cverage; the federal gvernment subsidizes the remaining 74. percent. In 2008, mre than 9 millin Part D enrllees are receiving Part D lw-incme subsidies and d nt pay a premium as lng as they are enrlled in a benchmark plan. 6 The weighted premium is lwer than the unweighted premium because enrllment is disprprtinately distributed, with mre enrllees in lwer-premium plans than higher-premium plans. 7 Accrding t CMS, abut 3.1 millin Part D enrllees, r 12 percent, switched plans between 2007 and Of thse wh switched, 2.1 millin were beneficiaries receiving the lw-incme subsidy wh were reassigned s they wuld nt have t pay a premium. Accrding t CMS, abut six percent f all nn-lis beneficiaries wh are enrlled in Part D made a change between 2007 and See HHS, January 31, CMS, Medicare Part D Manual, Chapter 6, Part D Drugs and Frmulary Requirements March 9, Plans must list at least tw drugs in every drug categry and class, as well as mst r all drugs in six prtected classes. See CMS, Chapter 6, Part D Drugs and Frmulary Requirements in the Medicare Part D Manual (