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Leslie M. Greenwald, Ph.D. Principal Scientist RTI, International. Variation in Medicare Part D Prescription Drug Plan Benefits, 2006. RTI co-authors for this work John Kautter Nathan West Gregory Pope. Purpose.
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Leslie M. Greenwald, Ph.D. Principal Scientist RTI, International Variation in Medicare Part D Prescription Drug Plan Benefits, 2006
RTI co-authors for this work • John Kautter • Nathan West • Gregory Pope
Purpose • To understand how the multitude of Medicare Part D benefits and premiums differ on key elements. • Compare Part D options available through stand alone prescription drug plans (PDPs) and Medicare Advantage plans (MA-PDs).
Methods • Compared premiums and selected benefits of stand alone prescription drug plans (PDPs) and Medicare Advantage plans (MA-PDs) • Used data available on the CMS Website and Health Plan Management System (HPMS) for 2006
Methods • Part D plan types examined: • Basic Plans (Defined Standard, Actuarial Equivalent and Basic Alternative) • Enhanced Plans (Non-Demonstration Enhanced, Flexible Capitation Demonstration Enhanced, and Fixed Captiation Demonstration Enhanced) • Demonstration = plans offered under the Medicare Part D Reinsurance Demonstration which capitated reinsurance payments to participating plans offering enhanced benefits. • MA-PD plan types examined: • HMOs and HMO/POS • Local PPOs • Regional PPOs • Private FFS
Average Monthly Part D Premiums, 2006 • Monthly premiums are a key benefit element used by beneficiaries to choose among plan options. • Obtaining coverage through a Medicare Advantage plan, on average, is the least expensive option for obtaining Part D coverage. • MA-PD enrollees are often able to obtain enhanced Part D coverage for about the same (or lower) monthly premiums than basic coverage offered by stand alone PDPs. • But this choice comes only with enrollment in an MA plan, a decision that has implications beyond Part D. • Use of Medicare Part C “rebates” are commonly used by MA plans to reduce monthly premiums, an option not available to stand alone PDPs.
Average Monthly Part D Premiums by MA Plan Type, 2006 • Regional PPOs offered the lowest Part D premiums for Basic Alternative plans ($16.79), followed closely by HMO plans ($17.74). Premiums for basic alternative options offered by PFFS plans were much more costly (at $29.56). • Among non-demonstration enhanced plans, HMOs ($12.44) and Regional PPOs ($13.69) offered the lowest premiums. Premiums for PFFS plans ($26.51) were again the highest. • Among demonstration enhanced plans, Local PPO Part D premiums were the highest. • There is wide variation among MA plans geographically for Part C and D premiums. This variation is dependent on the level of market competition among plans and Medicare county payment rates.
Percentage of Plans Applying Co-Payments Through Drug Tiers, 2006
Percentage of Plans Applying Co-payments Through Drug Tiers, 2006 • Tiers are used by plans to define categories of drugs with different cost sharing amounts. Plans apply different out-of-pocket costs to different tiers of drugs to encourage the use of either generic or other preferred products. • Use of of only co-payments (as opposed to co-insurance) generally translates to lower costs for beneficiaries. • All plan types favored co-payments over coinsurance in applying cost sharing to their drug tiers. No clear pattern of difference between PDPs and MA-PDs. • Among most prevalent plan type (basic alternative and non-demonstration enhanced plans) MA-PD plans were more likely than PDPs to apply co-payments rather than co-insurance.
Coverage of Drugs in the “Donut Hole” Gap, 2006 • Availability of coverage in the “donut hole” gap is a key source of difference among Part D plan benefit options. • By definition, only enhanced plan offer coverage in the gap. • Among non-demonstration enhanced plans, MA-PDs are more likely to offer either generic, or generic and brand, coverage in the coverage gap. MA-PDs may use Part C rebate funds to support gap coverage. • Among the flexible capitation demonstration plans, PDPs are more likely to offer gap coverage. • The percentage of demonstration plans offering gap coverage is generally higher compared to non-demonstration plans. The capitated reinsurance dollars available under the demonstration may be a factor in supporting gap coverage.
Other Benefit Comparisons, 2006 • For both basic and enhanced products, MA-PDs divided their covered drugs into a larger number of drug tiers than PDPs. • PDPs tend to have slightly large pharmacy networks, though network size is generally very large among all plans and is therefore not a likely source of meaningful differences among plans. • Regarding formularies, MA-PDs report more extensive coverage of drugs compared to PDPs. • MA-PDs were less likely than PDPs to apply common formulary management techniques (such as prior authorization, step therapy and quantity limits).
Discussion and Conclusions • MA-PDs often subsidize Part D benefits using Part C rebates – an option not available to PDPs. As a result, Medicare Advantage drug benefits can be less costly for somewhat better benefits. • But there are significant variations geographically. Benefits available to beneficiaries through MA-PDs are highly sensitive to the competitiveness of the market and Part C payment rates. • Medicare Advantage plans have the ability to influence and manage all health care services for beneficiaries, including physician prescribing patterns – an option not available to PDPs. This may also influence the richness of benefits offered. • MA-PDs on average are more likely to offer enhanced benefits than PDPs, and often at a lower price. But enrollment in an MA-PD, even open network options such as Private Fee For Service plans, is a major decision for beneficiaries.
