With the commencement of the 2015 annual enrollment period, Medicare enrollees must once again re-evaluate their prescription drug insurance. Not only do Medicare drug plans differ among themselves in the specific medications they cover but they also differ in the number of drugs covered and the restrictions attached to these covered drugs. Even within the same insurance plan, drug coverage and drug restrictions can change from year to year.
In order to identify trends in Medicare drug coverage, HealthPocket examined stand-alone Medicare Part D plans and Medicare Advantage plans for 2015 and compared them to the coverage available in the prior two years.
A formulary is the list of medications that an insurance company will cover. Drugs within the list are typically assigned tiers that indicate the cost-sharing that an enrollee should expect to pay out-of-pocket when purchasing the drug. In 2015, the average number of drugs included within a Medicare Part D formulary is 1,418. In comparison, the average number of drugs included in a Medicare Advantage formulary is 1,485, 5% larger than the average Part D formulary.
For Medicare Advantage plans in 2015, the fewest number of drugs explicitly covered was 1,010 while the most drugs explicitly covered was 2,410. For Medicare Part D plans, the fewest number of drugs covered was 1,062 while the most was 2,353.
For both stand-alone Medicare Part D plans and Medicare Advantage plans, the average number of drugs covered in 2015 is down as compared to 2014. For Medicare Advantage plans, the decline is less than 1% but for Part D plans the decrease was 3%. The 2015 decline in formulary size for Medicare Advantage plans continue a trend for the past two years.1 Part D plans, in comparison, increased the average number of on-formulary drugs from 2013 to 2014 but then decreased from 2014 to 2015.2
2014-2015 Medicare Advantage Plan Comparison
|2015 Medicare Advantage Plans||2014 Medicare Advantage Plans3||% Change From 2014 to 2015|
|Number of Covered Drugs||1,485||1,492||- <1%|
|% of Covered Drugs with Restrictions*||34%||32%||+ 6%|
|Prior Authorization||21%||19%||+ 11%|
|Quantity Limits||16%||15%||+ 7%|
2014-2015 Medicare Part D Prescription Drug Plan Comparison
|2015 Medicare Part D Plans||2014 Medicare Part D Plans4||% Change From 2014 to 2015|
|Number of Covered Drugs||1,418||1,456||-3%|
|% of Covered Drugs with Restrictions*||37%||34%||+ 9%|
|Prior Authorization||22%||19%||+ 16%|
|Quantity Limits||19%||18%||+ 6%|
|Step Therapy||1%||2%||- 50%|
The inclusion of a medication within a formulary may come with restrictions or limitations. HealthPocket found that in 2015 37% of all covered drugs in stand-alone Part D prescription drug plans had restrictions placed on them and 34% of covered drugs in Medicare Advantage plans had restrictions. Drug restrictions have a variety of functions such as patient safety or controlling costs for the insurance plan. Indeed, with respect to the latter purpose, the three main categories of drug restrictions (quantity limits, prior authorization, and step therapy) are sometimes referred to as “cost utilization measures.”
Given the size of the average Medicare drug plan formulary, the percentage of drugs with restrictions represents hundreds of on-formulary drugs. Inasmuch as drug restrictions can affect both drug benefit convenience as well as access to medications, consumers should investigate if any of their drugs have cost utilization measures prior to enrollment within a plan and decide whether the particular restriction is acceptable for their medical and personal circumstances. If the restriction is not acceptable, other Medicare drug plans can be explored since drug restrictions are not uniform across Medicare drug plans. It should also be noted that the Centers for Medicare & Medicaid Services do have standards for appeals5 and exceptions6 for drug restrictions but it does require an initiative on behalf of the patient and it is not guaranteed success.
The percentage of on-formulary drugs that had restrictions varied greatly among Medicare drug plans. Kaiser Permanente had a collection of Medicare Advantage plans7 with the fewest drug restriction percentage (5%). Among Medicare Part D plans, Express Scripts Medicare - Value (PDP) had the lowest drug restriction percentage (24%).
On the other end of the spectrum, the highest drug restriction percentage for Medicare Part D plans was 45% for Blue MedicareRx Premier (PDP) offered by Anthem. The highest drug restriction percentage for Medicare Advantage plans was 38% and this percentage was shared among a variety of HealthPlus MedicarePlus plans.8
As mentioned earlier, drug restrictions come in a variety of forms. Below are explanations of the three main categories of drug restrictions and their incidence within 2015 Medicare drug plans.
Prior authorization is a requirement where a healthcare provider must contact the enrollee’s insurance plan and obtain pre-approval for prescribing a particular medication before that medication may be obtained by the enrollee. Approval of the request is not guaranteed. Prior authorization may be used in a variety of scenarios such as instances where a particular medication has a higher incidence of inappropriate use or, depending on the patient’s medical context, there is the possibility for more economical treatment.9
In 2015, an average of 21% of all drugs in a Medicare Advantage formulary have the prior authorization restriction. For 2015 Medicare Part D plans, an average of 22% of on-formulary drugs require prior authorization. For Medicare Advantage plans and Medicare Advantage plans, prior authorization requirements have increased as compared to the previous year (19% for both Part D plans and Medicare Advantage plans in 2014). In 2013, Medicare Advantage plans averaged 19% prior authorization for on-formulary drugs as well while Part D plans in 2013 had 18% of on-formulary drugs requiring prior authorization.
Quantity limits are restrictions on the units of medication prescribed for a given period of time (e.g. a maximum of 7 tablets of a given dosage during a two week period). Quantity limits may be used for a variety of reasons from preventing the abuse of opiates to curbing the cost of excessive use of a medication.
For the 2015 plan year, an average of 19% of on-formulary drugs in Medicare Part D plans have quantity limits while an average of 16% of on-formulary drugs have quantity limits in Medicare Advantage plans. For both Medicare Part D plans and Medicare Advantage plans, quantity limits increased in 2015 as compared to 2014. Compared to 2013, the percentage of drugs with quantity limits increased for Part D plans and remained the same for Medicare Advantage plans.10
Step therapy is a requirement for a patient to try one or more medications within the same therapeutic category and establish the results are unsatisfactory prior to the medication with the step therapy restriction being approved. This drug restriction is often associated with expensive medications and specialty drugs. The drugs that must be tried before hand may be less expensive and/or safer.
In contrast, Medicare Part D plans average only 1% of on-formulary medications with the step therapy restrictions, which is lower than observed for 2014 (2%) and 2013 (1.5%). Step therapy was the only one of the three main categories of drug restrictions in 2015 where Medicare Part D plans had a lower incidence of the restriction than was the case for Medicare Advantage plans.
Given that Medicare Advantage plans averaged larger formularies and fewer drug restrictions than Part D plans in 2015, it is recommended that Medicare enrollees include these plans in their shopping alongside Medicare Part D plans. However, inasmuch as Medicare Advantage plans deliver full medical benefits and not just drug coverage alone, this difference in coverage should be considered in light of the Medicare beneficiaries needs.
The data used in this analysis was obtained from the 2014 and 2015 editions of the public use files for Prescription Drug Plan Formulary, Pharmacy Network, and Pricing Information. These files are produced by the Centers for Medicare & Medicaid Services and encompass Medicare Part C (Medicare Advantage) and Medicare Part D insurance plans. Medicare Part C plans that did not include a prescription drug benefit were not included in the study. Data for the 2015 Medicare Part C and Part D plans was collected in October 2014. Data for the 2014 Medicare Part C and Part D plans was collected in October 2013. Data for the 2013 Medicare Part C and Part D plans was collected in July 2013.
All analysis assumes the accuracy of the underlying government data. Government data has the possibility of being updated after the date of collection. 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.
This analysis was written by Kev Coleman, Head of Research & Data at HealthPocket. Correspondence regarding this study can be directed to Mr. Coleman at firstname.lastname@example.org.Google+
1 In 2013, Medicare Advantage plans averaged 1,542 drugs included in its formulary. Steve Zaleznick. “Medicare Drug Plan Restrictions Impact Many Enrollees.” August 7, 2013. https://www.healthpocket.com/healthcare-research/infostat/medicare-drug-plan-restrictions-impact-many-enrollees2 Medicare Part D plans averaged 1,431 on-formulary drugs in 2013. Zaleznick. “Medicare Drug Plan Restrictions Impact Many Enrollees.”3 2014 data obtained from HealthPocket’s study “2014 Medicare Drug Plan Consumers Face Restrictions.” Steve Zaleznick. “2014 Medicare Drug Plan Consumers Face Restrictions.” November 1, 2013. HealthPocket. https://www.healthpocket.com/healthcare-research/infostat/2014-medicare-drug-plan-consumers-face-restrictions4 Ibid.5 http://www.medicare.gov/Publications/Pubs/pdf/11525.pdf6 http://www.cms.gov/Medicare/Appeals-and-Grievances/MedPrescriptDrugApplGriev/Exceptions.html. See also http://www.medicare.gov/Publications/Pubs/pdf/11525.pdf7 The 2015 Kaiser Permanente Medicare Advantage plans (including Senior Advantage SNP Medicare Advantage plans) that have restrictions on 5% of on-formulary drugs are as follows: Kaiser Permanente Senior Advantage Basic SnJoaq (HMO), Kaiser Permanente Senior Advantage Enhanced SnJoaq (HMO), Kaiser Permanente Senior Advantage Basic (HMO), Kaiser Permanente Senior Advantage Silver Plan (HMO), Kaiser Permanente Senior Advantage Core Plan (HMO), Kaiser Permanente Senior Advantage Basic Stanis (HMO), Kaiser Permanente Senior Advantage Enhanced Stanis (HMO), Kaiser Permanente Senior Advantage Santa Clara (HMO), Kaiser Permanente Senior Advantage San Diego (HMO), Kaiser Permanente Senior Advantage Basic Kern (HMO), Kaiser Permanente Senior Advantage Enhanced Kern (HMO), Kaiser Permanente Senior Advantage Ventura (HMO), Kaiser Permanente Senior Advantage (HMO), Kaiser Permanente Senior Advantage Contra Costa (HMO), Kaiser Permanente Senior Advantage Essential Plus (HMO), Kaiser Permanente Senior Advantage Alam., SF, Napa (HMO), Kaiser Permanente Senior Advantage Essential (HMO), Kaiser Permanente Senior Advantage Marin San Mateo (HMO), Kaiser Permanente Senior Advantage Inland Empire (HMO), Kaiser Permanente Senior Advantage Solano (HMO), Kaiser Permanente Senior Advantage LA, Orange Co. (HMO), Kaiser Permanente Senior Advantage Enhanced (HMO), Kaiser Permanente Medicare Plus Std w/Part D (B) (Cost), Kaiser Permanente Medicare Plus Std w/Part D (AB) (Cost), Kaiser Permanente Medicare Plus High w/Part D (AB) (Cost), Senior Advantage Medicare Medi-Cal Plan North (HMO SNP), Kaiser Permanente Senior Advantage B Only North (HMO), Senior Advantage Medicare Medicaid Plan (HMO SNP), Kaiser Permanente Senior Advantage Gold (HMO), Kaiser Permanente Senior Advantage Silver (HMO), Kaiser Permanente Senior Advantage Core (HMO), Kaiser Permanente Sr Advantage Basic Sac., Sonoma (HMO), Kaiser Permanente Senior Advantage Basic Fresno (HMO), Kaiser Permanente Senior Advantage Enhanced Fresno (HMO), Senior Advantage Medicare Medi-Cal Plan South (HMO SNP), Kaiser Permanente Sr Adv Enhanced Sac., Sonoma (HMO), and Kaiser Permanente Senior Advantage B Only South (HMO).8 2015 Medicare Advantage plans with restrictions on 38% of on-formulary drugs include: HealthPlus MedicarePlus Option 0 (HMO), HealthPlus MedicarePlus Advantage D-SNP (HMO SNP), HealthPlus MedicarePlus Option 1 (HMO), HealthPlus MedicarePlus Option 2 (HMO), HealthPlus MedicarePlus Essential (PPO), and HealthPlus MedicarePlus Classic (PPO).9 “Prior Authorization” April 2012. Academy of Managed Care Pharmacy. http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=1533710 Zaleznick. “Medicare Drug Plan Restrictions Impact Many Enrollees.”
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