Medicare Advantage, Part D premiums remain relatively stable for 2017

In 2017, Medicare Advantage (MA) premiums will remain stable, and enrollment is projected to increase to an all-time high, according to CMS. Additionally, as a result of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), millions of seniors and people with disabilities enrolled in Medicare will continue to benefit from prescription drug discounts and affordable benefits.

Growth of Medicare Advantage

The MA monthly premium will decrease by $1.19 in 2017, from an average of $32.59 to $31.40. The lower premium is 13 percent less than the average MA premium prior to the passage of the ACA. For 67 percent of MA enrollees, premiums will not increase, and more than 94 percent of Medicare beneficiaries will have access to a $0 premium MA plan. MA plans will also offer enrollees more supplemental benefits, such as dental, vision, and hearing. MA enrollment will increase by more than 60 percent, for a record high of 18.5 million beneficiaries, representing 32 percent of Medicare beneficiaries. Access to the MA will remain nearly universal, with 99 percent of Medicare beneficiaries having access to an MA health plan in their area.

Part D access

The Medicare Part D prescription drug benefit will continue to provide beneficiaries to affordable drug coverage, with the average premium for 2017 remaining relatively stable at an average of $34 per month. This represents an increase of approximately $1.50 from the average Part D premium for 2016. From the enactment of the ACA through July 2016, more abilities benefitted from savings and discounts in the coverage gap, or donut hole, of more than $23.5 billion on prescription drugs—an average of $2,127 per beneficiary.

Mylan CEO highlights EpiPen® access improvement efforts before House committee

Mylan CEO Heather Bresch attempted to deflect the conversation away from the EpiPen® price hike before the House Committee on Oversight and Government Reform by emphasizing Mylan’s efforts to improve access to the device. Dr. Douglas Throckmorton, Deputy Director for Regulatory Programs for the FDA’s Center for Drug Evaluation and Research, also testified about the FDA’s efforts to support the development of new auto-injector products to compete with the EpiPen.

Price hike

When Mylan first purchased the EpiPen from Merck in 2007, the list price for the device was about $57. Today, a 2-Pak is listed at $608. These numbers gained national attention, resulting in outcry from consumers, government scrutiny, and falling stock prices. In response, Mylan doubled eligibility for the patient assistance program allowing consumers to use a savings card when purchasing the EpiPen. Consumers and the press found this action insufficient, especially considering that those without insurance and patients enrolled in federal health care programs are not eligible to use the savings card (see Mylan attempts to mitigate EpiPen® cost hike controversy, Health Law Daily, August 25, 2016).


Throckmorton noted that four epinephrine auto-injectors have been granted FDA approval, but only two are on the market. Amedra’s brand name Adrenaclick® is not currently marketed, but the company is marketing its own generic version. Its Twinject® product was discontinued. Kaleo purchased Auvi-Q® from Sanofi after it was recalled and has not yet returned the product to market. According to Throckmorton’s testimony, the FDA is willing to provide one-on-one guidance for products like an auto-injector that combines drug and device components and is working to assist manufacturers in bringing generic drugs to market.

Bresch believes that the issue of access to the EpiPen is equally critical as the pricing aspect. She testified that in 2007, fewer than one million out of the 43 million consumers at risk for anaphylaxis had access to an auto-injector. Since then, about 80 percent more patients have been reached and 85 percent who obtain the EpiPen pay less than $100 for the 2-Pak. Mylan has also provided 700,000 free EpiPens to schools.

Turning to price, she clarified that Mylan does not receive $600 in profits per 2-Pak sold. Although the wholesale acquisition cost (WAC) is $608, Mylan receives $274 after rebates and fees. After subtracting cost of goods and costs, Mylan’s profit is about $100 per 2-Pak. Bresch outlined four steps Mylan has taken to combat the pricing issue:

  • announcing a generic EpiPen to be priced at $300;
  • providing a direct ship option for the generic;
  • increasing the savings card program benefit to $300, from $100; and
  • doubling the income eligibility limit for receiving free pens.

Medicare Part D costs

The Kaiser Family Foundation (KFF) found that between 2007 and 2014, Part D spending on EpiPens increased by 1151 percent. Although the total number of EpiPen users grew from about 80,000 to 211,500 during that time frame (164 percent growth), the average total spending per prescription went from $71 to $344 (383 percent increase). Part D spent $7 million on EpiPens in 2007 and almost $88 million in 2014.

Out-of-pocket spending increased dramatically as well, even though Part D covers some of enrollees’ drug costs. The increase in users and price resulted in a jump in out-of-pocket spending from $1.6 million to $8.5 million. The report noted that the price of the EpiPen has increased by 74 percent since 2014, but Part D spending information for this time period is not yet available.

HHS uses CIAs to teach fraudulent providers a lesson

The United States reached a $28.5 million settlement with a private for-profit corporation that operates 35 skilled nursing facilities (SNF), most located in California following allegations that the corporation engaged in a scheme to submit false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services. Under the settlement, the corporation entered into a corporate integrity agreement (CIA) with the HHS Office of Inspector General (OIG). In an unrelated case, the OIG imposed a $3 million penalty—the largest penalty for CIA violations to date—on another provider that failed to correct improper billing practices during the term of its CIA.

Settlement and CIA for false claims scheme

North American Health Care Inc. (NAHC), its chairman of the board, and its senior vice president of reimbursement analysis will pay $30 million to resolve allegations that they violated the False Claims Act (31 U.S.C. §§3729–3733) by causing the submission of false claims to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to skilled nursing facility (SNF) residents. The government alleges that the senior vice president of reimbursement analysis contributed to the conduct by creating the improper billing scheme and that the chairman reinforced the scheme at NAHC facilities. As part of the settlement, NAHC entered into a five-year CIA with the OIG requiring an independent review organization to annually review therapy services billed to Medicare.

Violation of CIA

Kindred Health Care, Inc., paid a penalty of more than $3 million to the federal government for failing to comply with a CIA, marking the largest penalty for CIA violations to date. Kindred entered into a CIA with the OIG after it was discovered that Kindred billed Medicare for hospice care provided to patients who were not eligible for the services. In audits mandated by the CIA, internal auditors found that Kindred failed to correct improper billing practices in the fourth year of its five-year agreement. The OIG caught wind of the noncompliance during several unannounced visits.

“This penalty should send a signal to providers that failure to implement these requirements will have serious consequences,” said Inspector General Daniel R. Levinson. “We will continue to closely monitor Kindred’s compliance with the CIA.”

Report examines Medicare Part D trends since 2006

Seventy-one percent of Medicare beneficiaries are enrolled in Medicare Part D plans in 2016, in either stand-alone Part D plans (PDPs) (60 percent) or Medicare Advantage drug (MA-PD) plans (40 percent). A Kaiser Family Foundation (KFF) report examined trends among plans in 2016 and since 2006, analyzing areas including differences between PDP versus MA-PD plans, cost-sharing, and market share among insurers.

Enrollment and availability

In 2006, only 28 percent of beneficiaries were enrolled in MA-PD plans, increasing 12 percent by 2016. MA-PD plans sponsored by local firms play a larger role in that market segment than PDPs sponsored by local firms. At 886 in 2016, the number of available PDPs is lower than it has ever been. On average, 26 PDP plans are available to beneficiaries, compared to 55 in 2007. Sixteen MA-PD plans are available, on average.

Premiums, deductibles, and cost sharing

Premiums vary widely across plans, even among those offering an equivalent type of benefits. For example, basic benefit PDP premiums range from $11.40 to $139.70. They vary based on geography; the average basic benefit PDP monthly premium in New Mexico is $ 17.05, for example, compared to $37.13 in New Jersey. Average national monthly PDP premiums have increased by 6 percent since 2015 to $39.21, while MA-PD plan premiums have risen only modestly to $16.99.

While most PDP and MA-PD plans have five-tier formularies, tiered pharmacy networks, enhanced benefits, no additional gap coverage, and deductibles less than the standard $360 amount, more PDP enrollees are enrolled in plans with tiered pharmacy networks and more MA-PD plan enrollees are enrolled in plans with deductibles less than $360. In 2006, most enrollees were enrolled in plans with only three or four tiers, whereas in 2016, 98 percent of PDP enrollees and 96 percent of MA-PD plan enrollees participate in multi-tiered plans.

Coinsurance is becoming more common in PDPs, as 31 percent of enrollees pay coinsurance for preferred brand drugs and 96 percent pay coinsurance for non-preferred brand drugs. Still, almost all PDPs and MA-PD plans charge copayments for generic tiers. Most MA-PD plans use copayments for all tiers other than the specialty tier.

Market concentration

Market concentration has increased modestly since 2006, particularly among PDPs. UnitedHealth, Humana, and CVS Health enrolled 52 percent of all Part D participants in 2016. Should Aetna acquire Humana, the resulting company would account for 26 percent of all Part D enrollment in 2016, although it would account for 40 to 50 percent of enrollment in seven specific regions. If the both the Aetna-Humana and Anthem-Cigna mergers go through, 23 of 34 regions would be considered highly concentrated.


Some senators would like to take action to stabilize the amount of money that rural pharmacies pay for Part D prescriptions. Senators Shelley Moore Capito (R-WVa) and Jon Tester (D-Mont) noted that some Medicare Part D sponsors and pharmacy benefit managers have begun retroactively imposing fees on pharmacists weeks and months after prescriptions were filled. The Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (H.R. 5951) would prohibit such retroactive fees with respect to accurate claims.