Nearly three-quarters of Medicare beneficiaries are enrolled in a Part D plan. The Kaiser Family Foundation (KFF) reports that the majority of these beneficiaries are enrolled in stand-alone prescription drug plans (PDPs), but that Medicare Advantage Part D (MA-PD) plan enrollment is on the rise. In 2015, the average Part D enrollee could choose from 30 PDPs and 15 MA-PD plans.
This drug coverage became available in 2006. In addition to premiums paid by enrollees, the plans also receive government funding. Part D plans must either offer a standard benefit or a benefit that has an equal value, but they can also offer enhanced benefits. The standard benefit has a deductible, initial coverage period where the plan pays the majority of the cost, a coverage gap where the plan pays a small portion of the cost, and a catastrophic coverage limit where Medicare pays a high portion of the costs. The plans may vary in design. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has worked to improve the program in various ways, such as the ACA’s section 3301 phasing out the coverage gap by 2020.
The KFF report indicated that PDPs are more likely to have deductibles in their plans than they were in the first few years of the program, although 48 percent of enrollees are in PDP plans with no deductible. Over half of MA-PD plans have implemented a deductible lower than the maximum allowed, $320. The use of tiered pharmacy networks has grown hugely from 7 percent of PDPs in 2011 to 87 percent in 2015. Enrollees that use pharmacies with preferred cost sharing pay lower costs. The report indicated that PDP sponsors may be using this approach in an effort to match practices, while MA-PD plans remain slow to participate in this option.
Premiums and cost sharing
According to the report, PDP premiums have remained steady since 2010, but MA-PD premiums have grown slightly. However, MA-PD premiums are still less than half of PDP premiums. Humana’s Walmart Rx PDP, which was introduced in 2014, raised its premiums an average of about $3 per month in 2015 from the previous year. The SilverScript Choice PDP, on the other hand, lowered its premium an average of $6 per month in 2015. The KFF noted that premiums for plans with similar benefits can range from $12.60 to $101.40, and that premiums do vary geographically.
Most plans had preferred and non-preferred tiers for both generic and brand-name drugs, along with a specialty drug tier. Cost sharing for brand name drugs has risen greatly since Part D began, but has been more stable in the last few years. MA-PD enrollees usually have higher cost sharing than PDP enrollees. Co-insurance is becoming more popular under PDP plans. Although cost sharing is trending higher, average out-of-pocket costs have not increased because of the closing coverage gap and increased use of generic drugs.