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Medicare News

Seniors Must Shop to Avoid Big Hikes in Top Medicare Drug Plans: Avalere

Average increase may be moderate in 2013, but varies widely; 7 of top 10 plans have double digit premium jumps

Sept. 26, 2012 - The announcement by Medicare HHS Sec. Kathleen Sebelius in August that the average basic premium for Medicare drug plans is expected to "remain constant in 2013" needed more explanation, according to an analysis by Avarlee Health. The advisory firm says seniors in some of the top plans will need to shop around to avoid double digit increases, but can find big savings through careful shopping.

Sebelius said the estimated basic Medicare prescription drug plan premium is projected to be $30 in 2013, about the same as this year. Avalere, however, projects an average increase of 6 percent, although says it is hard to predict due to seniors shifting around among plans.

 

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The key point in the Avalere analysis is that seniors should not be confused about the average increase and need to look specifically at their current plan and other options in 2013 that my meet their needs at less cost.

This new analysis of the Centers for Medicare and Medicaid Services (CMS) Part D Landscape Files shows that seniors in some of the top plans are the ones that will most likely need to shop around, if they want to avoid double digit premium increases in 2013.

Humana Walmart's Preferred Rx Plan, for example, raised its premium on its popular low-cost plan by 23 percent to $18.50 per month.

Medicare 2013 Open Enrollment

Oct. 15 – Dec. 7

To find Medicare tools and information, and compare the cost or benefits of 2013 Medicare health plans in your area, Click Here.

First Health Part D Premier, First Health Part D Value Plus and Cigna Medicare Rx Plan each raised premiums by more than 15 percent. Overall, seven of the current top 10 prescription drug plans (PDPs) have double digit increases in premiums.

But there are alternatives for cost conscious seniors. UnitedHealth's new Medicare Rx Saver Plus PDP is offering premiums averageing just $15 a month, the lowest available in many markets.

In past years, low-cost entrants have captured significant market share, and Humana Walmart began the trend with its offering in 2011.

Last year, First Health's low-cost offering enrolled 450,000 patients in its first year of operation. Also, Coventry and CVS Caremark have fielded very competitively priced enhanced plans - with premiums below $30 that are likely to attract interest from seniors who are looking for a low premium, but would prefer a more comprehensive benefit plan.

Interestingly, these plans are cheaper than the premiums for those sponsors' basic offerings due to their use of preferred pharmacy networks. By employing limited pharmacy networks, plan sponsors are better able to offer such low-cost plans.

"Seniors need to carefully assess their options going into this open season to ensure that they have a plan that meets their needs," said Bonnie Washington, senior vice president of Avalere Health.

Because of the premium increases, half of the top 10 PDPs will lose eligibility in select regions to retain or receive low-income subsidy (LIS) beneficiaries. The First Health Part D Premier plan will lose LIS eligibility in 10 regions, but Coventry's new basic plan, First Health Essentials, will have LIS eligibility in seven regions. Humana Walmart-Preferred Rx plans will remain LIS eligible in every region. United’s new Saver Plus plan has eligibility in all regions it's offered (30).

Other key findings from the Avalere analysis include:

  • Overall, average Part D premiums for current plans increased by 6 percent from 2012 to 2013.

  • As beneficiaries continue to move into UnitedHealth's new Saver Plus PDP, the overall average premiums will decline from a 6 percent increase and mirror CMS' projection that premiums will largely remain steady for 2013.

Lost-Cost Premium Plans, 2013*

2013 PDP Offering Parent Organization # of Regions 2013 Average Premium**
AARP MedicareRx
Saver Plus
UnitedHealth Group, Inc.
30
$15.00
Humana Walmart-Preferred Rx Plan
Humana Inc.
34
$18.50
SilverScript
Choice
CVS Caremark Corporation
33
$29.13
First Health Part D
Value Plus
Coventry Health Care Inc.
32
$29.75

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
Note: Includes national PDPs or close to being national PDPs. The analysis does not include plans operating in one region.
*PDPs with premiums under $30 per month.
**Enrollment weighted average premium, except for SilverScript Choice. The Choice plan is new for 2013, therefore Avalere applied a simple average.

Monthly Premiums for Top 10 PDPs in 2013

2013 PDP Offering 2013 Plan Enrollment 2012 Average Premium1 2013 Average Premium2 % Change (2012-2013)
AARP MedicareRx Preferred (PDP)
4,011,357
$39.85
$40.42
1%
SilverScript
Basic (PDP)
3,452,439
$30.27*
$32.74
8%
Humana Walmart-Preferred Rx Plan (PDP)
1,511,850
$15.10
$18.50
23%
Humana
Enhanced (PDP)
1,374,479
$39.58
$43.77
11%
First Health Part D Premier (PDP)
948,649
$32.59
$38.54
18%
WellCare Classic
(PDP)
672,796
$32.86
$33.76
3%
HealthSpring Prescription Drug Plan (PDP)
630,897
$33.72
$37.71
12%
Cigna Medicare
Rx Plan One (PDP)
592,999
$31.09
$35.78
15%
First Health Part D
Value Plus (PDP)
445,749
$25.43
$29.7
17%
Express Scripts
Medicare Value (PDP)
440,491
$34.88**
$39.42
13%
Top 3 Plans
8,975,646
$32.85
$33.78
3%
Top 10 Plans
14,081,706
$33.43
$35.38
6%
All PDPs
17,434,543
$37.89
$40.27
6%

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
1 2012 premiums are enrollment-weighted using February 2012 enrollment data.
2 2013 premiums are enrollment-weighted using September 2012 enrollment data.
*CVS Caremark Value was renamed as SilverScript Basic for the 2013 plan year. Additionally, CVS Caremark consolidated the Community CCRx Basic PDP and Health Net Orange Option 1 PDP into the new SilverScriptBasic plan for 2013.
**Due to Express Scripts' acquisition of Medco, Medco Prescription Plan – Value was renamed as Express Scripts Medicare - Value for the 2013 coverage year.

Top 10 PDPs, Number of Regions with $0 Premium Plans, 2012-2013

2013 PDP Offering 2012 # of Regions with $0 Premium for LIS Beneficiaries* 2013 # of Regions with $0 Premium for LIS Beneficiaries* Change from 2012-2013
AARP MedicareRx
Preferred (PDP)
4
0
-4
SilverScript
Basic (PDP)
28**
30
2
Humana Walmart
Preferred Rx Plan (PDP)
34
34
0
Humana
Enhanced (PDP)
0
0
0
First Health Part D
Premier (PDP)
23
13***
-10
WellCare
Classic (PDP)
22
19
-3
HealthSpring Prescription
Drug Plan (PDP)
23
15
-8
Cigna Medicare
Rx Plan One (PDP)
21
21
0
First Health Part D
Value Plus (PDP)
0
0
0
Express Scripts
Medicare Value (PDP)
16****
11
-5

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
*Number of regions in which beneficiaries receiving the full low-income subsidiary do not pay a premium.
**CVS Caremark Value was renamed as SilverScriptBasic for the 2013 plan year. Additionally, CVS Caremark consolidated the Community CCRx Basic PDP and Health Net Orange Option 1 PDP into the new SilverScript Basic plan for 2013.
***While the Premier plan only has eligibility in 13 regions, a new Coventry basic plan has eligibility in 7 regions, bringing the sponsor to a total of 20 LIS-eligible regions.
**** Due to Express Scripts' acquisition of Medco, Medco Prescription Plan - Value was renamed as Express Scripts Medicare - Value for the 2013 coverage year.


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.

More at www.avalerehealth.net.

 

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