Key Changes in Medicare Part D since 2006

A report analyzing key changes in the Medicare Part D program since it began in 2006 found that there have been significant increases to premiums, cost-sharing amounts, and the use of utilization management (UM) restrictions over time. The report was prepared by the Henry J. Kaiser Family Foundation and summarizes key data and trends in drug coverage, costs, and plan availability over the past 5 years. According to the report, there were 10% more prescription drug plans (PDPs) offered in 2010 than there were in 2006; the largest increase was seen in 2007 and the number of PDPs has gradually decreased since then. The number of PDPs offered in each state varies; in 2010 at least 41 plans were offered in every state. There has also been an increase in the average PDP premium since the Medicare Part D program began, although the increase was smaller between 2009 and 2010 than it had been in previous years. Overall, the average monthly premium has increased from $25.93 in 2006 to $37.25 in 2010 (44% increase). The authors also found that, on average, Medicare Advantage (MA)-PDPs, excluding Special Needs Plans, had lower premiums than PDP plans. They also found that most beneficiaries (94% in PDPs) were in plans in 2010 that have a gap in drug coverage. During the coverage gap, participants pay 100% of their total drug costs until they reach catastrophic coverage status; the Affordable Care Act of 2010 has several measures in place to assist beneficiaries. In 2010, beneficiaries who reach the coverage gap can receive a $250 rebate, and by 2020 the coverage gap should be eliminated under the new law. Currently, most of the participants who are in plans that provide gap coverage only receive coverage for generic drugs. In terms of plan design, researchers found that the majority of plans use a tiered cost-sharing structure that encourages participants to use generic medications. Under this tiered structure, the median costsharing for a 30-day nonpreferred brand-name drug has increased from $55 to $76.50 for stand-alone PDPs, while cost-sharing for preferred brand-name drugs has also increased. The use of deductibles has also increased, and in 2010 60% of PDPs are charging deductibles, compared with 40% to 45% of plans in other years. In 2010, specialty tiers are also common for high-cost drugs. In 2010, 89% of those people in PDP plans with tiered cost-sharing and 97% of people in MA-PDPs with tiered cost-sharing were in plans that used specialty tiers. In addition, approximately half of PDP participants and three fourths of MA-PDP participants have plans that charge 33% for coinsurance of specialty drugs in the initial coverage period. Since 2006, UM restrictions have also become increasingly common for on-formulary brand-name drugs. In 2010, 28% of drugs are subject to a UM restriction. Over the past 5 years, there have been changes for Part D low-income subsidy (LIS) recipients. Although the number of benchmark plans is about the same in recent years, there has been turnover among plans. For example, of the 308 benchmark plans offering no premium that were available to LIS recipients in 2009, 97 were no longer benchmark plans in 2010. There has been little change in the key Part D plan sponsors. The top 10 largest sponsors had 72% of the enrollment share in 2006 and have 69% of the share of enrollment in 2010. The authors concluded that recent Centers for Medicare & Medicaid Services’ policies could bring even more marketplace change in 2011. Beneficiaries should continue to stay informed and compare plans each year when making coverage decisions, the authors said