2014 Medicare Drug Plan Consumers Face Restrictions
Drug Plan Formularies and Purchase Hoops Factor into Plan Selection
In August HealthPocket published an InfoStat that reviewed restrictions built into drug plans that are purchased by Medicare consumers either through a stand alone prescription drug plan (“PDP”) or a Medicare Advantage plan with an embedded prescription drug benefit (“MAPD”.) With the recent release of 2014 drug plan formulary data, an update to that report shows fewer drugs on average within MAPD formularies and the continuation of one MAPD provider, Kaiser, as an outlier in a positive way by having a relatively large number of drugs available with extremely few restrictions.
Major plan restrictions on drug purchases affecting consumers are:
- The drug may not be on the plan’s formulary or it may be on a tier that requires significant cost sharing.
- The plan may limit the quantity of the drug.
- The plan may require that it authorize a drug before it can be purchased.
- The plan may require that an enrollee try a less expensive drug and only if he or she has no success will that person be allowed to purchase a more expensive drug.
As the prior InfoStat explained, Medicare requires that at least two drug options be available to consumers in each of 48 drug categories, and nearly all drugs in six classes, including antidepressants and antipsychotics, have to be covered.1 Health plans do not take a uniform approach to this requirement. The lowest number of drugs on a plan’s formulary for 2014 MAPD plans is 956 and the highest is 2334. The average for all MAPD plans is 1492. For PDP plans the lowest number of drugs on a plan’s formulary is 995 and the highest is 2333. The average for PDP plans is 1456. The chart below shows the drug formulary figures for 2014.
Trends toward narrow provider networks are becoming evident for Obamacare compliant health plans,2 and they have also been observed through pricing arrangements for preferential pharmacies within drug benefit networks.3 Recent reports have indicated this trend may move to provider networks for Medicare Advantage plans.4 HealthPocket reviewed the data published to date to determine if this trend can be seen in terms of a reduction in approved drugs on Medicare plans’ formularies. MAPD plans had larger formularies than PDP’s on average. 2014 saw a movement toward equalizing the size of those formularies. As a result, PDP formularies went up on average slightly from 1,431 to 1,456 drugs. However, MAPD formularies declined by 3 percent, from 1,542 in 2013 to 1,492 in 2014, as shown in the chart below.
Consumers also must be aware of the other restrictions for those drugs on a plan’s formulary. Here too, plans have differing strategies. For MAPD plans quantity limits ranged from none to 32 percent of drugs on a formulary, prior authorization ranged from 3 percent to 37 percent and step therapy ranged from none to 11 percent. For PDP plans quantity limits ranged from 1 to 31 percent, prior authorization ranged from 7 to 32 percent and step therapy ranged from none to 9 percent. The chart below shows the average percentage of drugs subject to quantity limits, prior authorization or step therapy.
In reviewing specific plan data, one MAPD plan stands out as a positive example that takes a different approach. The Kaiser MAPD plan has 2320 drugs on its formulary, close to the industry maximum. However, it also imposes quantity limits and step therapy on none of its drug purchases and only imposes prior authorization on 66 drugs, which constitute 3 percent of all drugs on its formulary.
IMPLICATIONS FOR CONSUMERS
It is especially important that every drug someone takes is on a plan formulary. If it is not, the enrollee will have to pay the full cost out-of-pocket and the amount paid will not be part of the calculation for when a plan’s coverage gap (also known as “donut hole”) ends. HealthPocket helps consumers in this process by providing a free Medicare comparison tool so they can input their drug information and price and compare options.
As the ranges of plan restrictions show, some plans put up more hurdles to drug purchasing than others. What is unreasonable is a judgment call for consumers to make. Medicare also has an appeal process if a consumer believes that an exception to the restriction is needed because of their specific circumstance.5
Consumers and their advocates will need to be alert to trends that can affect the Medicare drug benefit. The first is the reduction of choice similar to the narrower physician networks and preferred pharmacies. The data does not indicate that this trend has made it to the quantity of drugs on plan formularies yet. A factor that suggests the future could see fewer restrictions is the ability of Kaiser, a MAPD plan that receives very high Medicare quality ratings,6 to manage the care of its enrollees with a large pool of drugs that are available with hardly any restrictions.
Drug information was taken from the Medicare public use file that includes the number of drugs on each plan’s formulary as well as restrictions, including quantity limits, prior authorization and step therapy. Medicare Part D prescription drug plans and Medicare Advantage with prescription drug plans were considered separately. MAPD plans included Medicare Advantage special needs plans. The formulary filings of the health plans could include more than one of their plans. The data were not adjusted for market share.
All analysis assumes the accuracy of the underlying government data. While every effort was made towards a comprehensive collection of plans, HealthPocket makes no representation that every plan within the market or in an individual state was included in this study. Percentages are rounded according to standard industry practices.
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Steve Zaleznick, Executive Director for Consumer Strategy and Development at HealthPocket.com, authored this survey analysis. Correspondence regarding this study can be directed to Mr. Zaleznick at firstname.lastname@example.org. Feedback and questions are welcome but, given the volume of email, personal responses may not be feasible.
Feedback and questions are welcome but, given the volume of email, personal responses may not be feasible.Google+
1 Government source documents cited in the prior InfoStat.2 See, for example: http://www.nationaljournal.com/innovations-in-health/narrow-network-health-plans-expected-to-proliferate-under-obamacare-20131009.3 See, for example: http://www.theihcc.com/en/communities/pharmacy_benefit_management/express-scripts-walgreen-flap-opens-door-for-narro_h4g1v5e3.html.￼￼￼￼￼￼4 Reports such as this one from Tampa Bay, FL indicate that UnitedHealthcare is cutting its MA network: http://www.tampabay.com/news/health/patients-scramble-after-aarp-medicare-advantage-plans-drop-providers/2148424.5 See appeal process description: http://www.medicareinteractive.org/page2.php?topic=counselor&page=script&slide_id=1580.6 See: https://medicare.kaiserpermanente.org/wps/portal/medicare/plans/explore/whyjoinkp.