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Medicare Drug Program News

Number of Medicare Part D Drugs Covered by Prescription Drug Plans Varies Widely

Better check your plan now - Patient cost sharing grows as increasing number of plans offer five-tier formularies

Nov. 17, 2011 Senior citizens who have not taken advantage of the annual window Medicare Open Enrollment when Medicare allows seniors to change health and drug plans just got a new incentive to compare plans before the December 7 deadline. A new study by Avalere Health finds the number of drugs covered by plans varies widely and more costs are being pushed to seniors.


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Avalere Health says not only is there a big difference in the number of Medicare Part D drugs covered by prescription drug plans (PDPs), there are also clear implications for patients in selecting plans that cover their specific medication needs, rather than searching only for the lowest premiums.

The analysis shows that many patients with serious illness cancer, multiple sclerosis and rheumatoid arthritis could see higher prescription costs in 2012.

The Avalere analysis shows that the percentage of drugs covered among the top 10 standalone prescription drug plans by enrollment varies widely for 2012, with Humana Enhanced covering 79 percent of Part D covered drugs, while WellCare Classic will cover only 47 percent.

The percentage of covered drugs among six of the top 10 PDPs will decrease, although many only slightly. Overall, a total of 2,306 drugs will appear on at least one formulary in 2012.

While Humana Enhanced, as the only enhanced plan in the top 10, has the highest percentage of drugs covered among the top 10 PDPs, its percentage of drugs covered will decline from 84 percent in 2011 to 79 percent in 2012.

Description: http://www.avalerehealth.net/news/2011-11-16_Medicare_Part_D/01.png

Moreover, the number of plans offering five-tier or more formularies continues to increase in 2012. Nearly 60 percent of plan offerings will have five or more tiers, up from 41 percent in 2011 and 30 percent in 2010.

The overwhelming majority of PDPs, 87 percent, will continue to use specialty tiers, which are tiers covering high cost biologics and drugs for diseases such as multiple sclerosis, cancer, and rheumatoid arthritis.

The typical tier structure for five-tier formularies in 2012 is: Tier One: preferred generics; Tier Two: non-preferred generics; Tier Three: preferred brands; Tier Four: non-preferred brands; and Tier Five: specialty/injectable drugs.

Additionally, use of prior authorization and quantity limits will increase from 2011 to 2012 from 16.7 to 17.5 percent and from 15.3 percent to 17 percent, respectively. While the use of prior authorization and quantity limits will increase slightly in 2012, the use of step therapy will remain low at 1.6 percent.

An earlier Avalere Health analysis shows that on average, premiums are declining for 2012, and coverage options remain very robust as a result of CMS oversight and strong competition from plans.

"While the Part D program overall looks quite stable, choice of drugs is increasingly being shifted away from physicians, and towards cost-conscious patients," said Dan Mendelson, CEO and founder of Avalere Health.

"The 2012 Medicare drug program will result in higher cost-sharing for many patients with serious illnesses like cancer, multiple sclerosis, and rheumatoid arthritis. In assessing Part D plans, Medicare beneficiaries need to look beyond premiums to really understand which drugs are offered, and how much of the cost will actually be covered at the pharmacy counter."

Cost-sharing for brand and specialty drug tiers, on average, will increase in five-tier PDPs in 2012. (Unlike the 2011 plan year, five-tier PDPs using two coinsurance tiers will see a variation in average coinsurance amounts between tiers 4 and 5). Specifically, in tier four of five tier PDPs using one coinsurance tier, there is an increase of more than $20 from 2011 to 2012 and an increase of more than $11 increase in tier 3. Meanwhile, average cost-sharing for generic tiers in five-tier formularies will fall in 2012.

Description: http://www.avalerehealth.net/news/2011-11-16_Medicare_Part_D/02.png

Methodology: The analysis was conducted using Avalere Health's DataFrame database, a proprietary database of all stand-alone PDPs and Medicare Advantage Prescription Drug plans. The database uses the Centers for Medicare and Medicaid Services data on Medicare Part D plan and formulary design and includes additional proprietary and public data sets.

Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 125 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.

Learn more at www.avalerehealth.net.

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