Neither Highest Premiums Nor Top Ratings For Medicare Drug Plans Result In Broadest Coverage of Expensive Medications
Analysis of 2018 Medicare Advantage & Part D Plans Reveals Difficulties for Consumers Looking for Extensive Specialty Drug Coverage
Despite the high utilization[i] of generic drugs in the United States, medication spending remains a top concern for consumers, particularly older consumers who have a higher probability of using multiple drugs regularly.[ii] A Kaiser Family Foundation study observed that in the period between 2007 and 2015 that the number of Medicare Part D enrollees (without low-income assistance) reaching "catastrophic" level of drug spending had more than doubled.[iii] One of the major cost contributors to current levels of drug spending is specialty drugs, medications whose commonality is typically a very high retail price.[iv] This year, it is estimated that specialty drug expenses will account for half of U.S. drug spending.[v]
Insurance, while not eliminating the financial burden of specialty drugs, greatly reduces the expense so long as the drug is covered by the insurance plan. For Medicare beneficiaries, drug coverage is typically obtained through standalone Part D drug insurance plans or through Medicare Advantage plans that incorporate drug coverage alongside traditional medical service coverage. HealthPocket examined both categories of insurance products to determine the extent of specialty drug coverage in 2018 as well as their underlying trends.
A brief explanation of Medicare drug coverage rules[vi] is necessary before discussing the findings of this study. As is the case for Affordable Care Act plans, Medicare Part D and Medicare Advantage plans are not required by the government to cover every FDA-approved prescription medication. Instead, these Medicare drug plans are required to include in their formularies (i.e. the list of drugs covered by the insurance plan) at least two chemically distinct prescription medications in each drug class or category.[vii] Inclusion of a drug on a plan formulary may come with certain restrictions, such as quantity limits or drug authorization requirements that must be approved by the insurance plan. There are several categories of medications that Medicare Part D does not cover such as fertility drugs, hair regrowth drugs, over-the-counter drugs, and erectile dysfunction drugs.[viii] Additionally, Part D drug plans must cover all or substantially all drugs in six medication categories: immunosuppressant (for prophylaxis of organ transplant rejection), antidepressant, antipsychotic, anticonvulsant, antiretroviral, and antineoplastic classes.[ix]
When a drug is included within a particular Medicare plan’s formulary, it is assigned a cost-sharing tier that determines the out-of-pocket costs for the medication. Tier assignments are made by the individual Medicare plan as are the cost-sharing requirements for the non-specialty tiers. For drugs assigned to the specialty drug tier, cost sharing paid by the drug plan enrollee is normally limited to 25% of the drug cost after the deductible is satisfied and before catastrophic coverage rules apply for excessive drug spending within a calendar year.[x]
From a consumer perspective, the above rules produce the following realities:
- Not all prescription medications are covered by Medicare drug plans
- The list of medications covered by insurance differs among Medicare drug plans
- The out-of-pocket costs for a given drug can vary by Medicare drug plan
It is also important to note that if a drug is not within a plan’s formulary, it is not eligible for cost-sharing from the insurance plan.[xi] Additionally, money spent on an uncovered drug is not counted toward the eligibility threshold for “catastrophic coverage” where cost-sharing is greatly reduced. A drug plan enrollee does have the right to file an exception[xii] request for an uncovered drug but approval of the request is not guaranteed. Regardless of the outcome of the exception request, an enrollee would normally have to wait until the next annual enrollment period to enroll in a new insurance plan covering the drug that is uncovered by the enrollee’s current insurance plan.
Specialty Drug Coverage In Part D & Medicare Advantage Plans
When examining government data on specialty medication coverage within Medicare drug plans across the nation,[xiii] HealthPocket found considerable differences. The table below illustrates variances among the plans.
|2018 Medicare Part D Plans||2018 Medicare Part D Plans|
|Highest Number of Specialty Drugs Covered||952||918|
|Average Number of Specialty Drugs Covered||531||635|
|Lowest Number of Specialty Drugs Covered||435||301|
The above data demonstrates that the Medicare insurance category (Part D or Medicare Advantage) in 2018 did not have unambiguous trends with respect to specialty drug coverage. While Medicare Advantage plans average more specialty drugs within their category, the plan with the most specialty drugs is a Medicare Part D plan. Likewise, despite the Medicare Advantage category’s higher average number of specialty drugs, the plans with the fewest specialty drugs on formulary come from the Medicare Advantage category as well and not Part D.
HealthPocket found the plan with the most specialty drugs listed within its formulary of covered drugs is Educators Rx Advantage (PDP) Medicare Part D plan offered in Idaho and Utah. At 952 specialty drugs, it not only topped all Part D plans but also surpasses all Medicare Advantage plans. At $184.50, it is in the top tier of Part D premium expense but it is not the most expensive plan and there were many Part D plans above $100-a-month threshold that have far fewer specialty drugs covered.
|Average Number of Total Drugs Covered||Average Number of Specialty Drugs Covered||Specialty Drugs As a Percentage of Covered Drugs|
|2018 Part D Plans||3,346||531||16%|
|2018 Medicare Advantage Plans||3,753||635||17%|
When looking at the relationship between the total number of drugs covered and what percentage of the covered drugs are specialty, Medicare Advantage plans average both a higher number of drugs on formulary and a slightly higher percentage that are specialty. Medicare Advantage’s average for total drugs on formulary is 12 percent higher than the average for Part D plans in 2018. Medicare Advantage plans’ also average 20 percent more specialty drugs than Part D.
Does The Highest Premium Plan Provide The Largest Specialty Drug Coverage?
HealthPocket examined both Part D and Medicare Advantage plans to see if the plans with the highest premium had the most specialty drugs included in their formularies. HealthPocket found that for both Part D plans and Medicare Advantage plans, the plans with the highest monthly premium do not have the broadest specialty drug coverage.
For Part D plans, the plan with the highest premium in the study is offered in Texas by a Blue Cross Blue Shield organization. The plan, Blue Cross MedicareRx Plus (PDP),[xiv] had a monthly premium of $197.10. The number of specialty drugs within this plan’s formulary was 642, which is far below the 952 specialty drugs covered by the Part D plan with the most specialty drugs covered (see prior section).
For non-Part D plans, the plan with the highest premium in the study is a Medicare Cost plan (which is similar to Medicare Advantage with some additional out-of-network benefits), HealthPartners Freedom Ultimate with Enhanced Rx (Cost), in Minnesota for $375.90 a month. This plan lists 680 specialty drugs within its formulary, compared to 918 specialty drugs for the plans with the largest specialty coverage. Among traditional Medicare Advantage plans, Medicare Plus Blue PPO Assure (PPO) from Blue Cross Blue Shield of Michigan has the highest monthly premium at $312.50. It covers 609 specialty drugs, which is lower than the average of 635 specialty drugs for Medicare Advantage plans as a whole.
Do 5-Star Plans Provide The Largest Specialty Drug Coverage?
Medicare drug plans are rated on a 5-star scale,[xv] with fewer stars indicating lower scores on various quality and performance measures and 5-star plans indicating the highest scores.[xvi] Given that 5-star plans are considered excellent, HealthPocket examined whether these plans exhibit any advantages with respect to specialty drug coverage.
Unfortunately, a 5-star rating does not result in greater specialty drug coverage. The average 5-star Part D plan covered 495 specialty drugs, which is fewer than the 531 average for Part D plans as a whole. In fact, the 5-star Part D plan with the most specialty drugs covered, Blue MedicareRx Premier (PDP) from Anthem Blue Cross Blue Shield offered in several New England states, has 553 specialty drugs on its formulary, which is almost the same amount (531) of specialty drugs averaged for all Part D plans regardless of star rating. The amount is also far fewer than the Part D plan with the most specialty drugs (952, Educators Rx Advantage (PDP) Medicare Part D plan offered in Idaho and Utah).
5-star Medicare Advantage plans fared better within HealthPocket’s analysis than 5-star Part D plans. On average, 5-star Medicare Advantage plans cover 606 specialty drugs, fewer than Medicare Advantage plans as a whole (635) but more than the average for 5-star Part D plans (495). The honor of the most specialty drugs covered by a 5-star Medicare Advantage plan is shared by KelseyCare Advantage Rx (HMO) and KelseyCare Advantage Rx+Choice (HMO-POS). Both plans are offered in Texas and each has 804 specialty drugs within their formularies’ specialty tier.
As of 2018, approximately 60 million Americans obtain prescription drug insurance either by a stand-alone Medicare Part D plan or a Medicare Advantage plan.[xvii] For those concerned about breadth of specialty medication coverage, HealthPocket has found that neither reliance on highest premium nor top star ratings nor Medicare insurance category guarantees that a Medicare drug plan will cover the most specialty drugs. Multiple websites (e.g. Medicare.gov, HealthPocket.com, www.ehealthmedicareplans.com) help consumers easily identify whether a specific specialty drug they are taking is included or excluded on a plan’s formulary, and what the costs will be, but none of these sites (as of the writing of this report) show how many drugs are included in the formulary and how many of those drugs are specialty drugs. Downloading PDF files of formularies for every insurance plan and manually counting the specialty drugs covered in each one is not a realistic option for most seniors.
Given that it is difficult to predict what medications a Medicare beneficiary may need in the future and high cost of specialty drugs, it would be helpful for Medicare insurance plan comparison sites to share the aforementioned formulary details to help beneficiaries to make more informed decisions. Otherwise, Medicare beneficiaries may unknowingly enroll in plans with low specialty drug coverage.
Data on 2018 Medicare Part D and Medicare Advantage plans with prescription drug coverage (MAPDs) was taken from Prescription Drug Plan Formulary, Pharmacy Network, and Pricing Information Files provided by the Centers for Medicare & Medicaid Services. Additional data on star ratings was taken from Landscape Source Files provided by the Centers for Medicare & Medicaid Services. Medicare Advantage plan data included Special Needs Plans and also Cost plans.
Only data for Medicare plans in U.S. states were included in the analysis and Medicare plans offered in U.S. territories[xviii] (e.g. American Samoa, American Virgin Islands, Guam, The Northern Mariana Islands, and Puerto Rico) were excluded from analysis.
Medicare plan records that had incomplete data (i.e. lacked data on specialty drug formulary assignments or lacked data regarding the number of formulary drugs) were excluded from analysis.
This analysis was written by Kev Coleman, Head of Research & Data at HealthPocket with data collection performed by Michael Bass. Correspondence regarding this study can be directed to Mr. Coleman at firstname.lastname@example.org.
[i] “Nearly 9 in 10 prescriptions filled are for generics.” Generic Drugs: Patient Education. U.S. Food & Drug Administration. FDA.gov. https://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/GenericDrugs/ucm169209.htm. Last accessed June 13, 2018.
[ii] A survey performed by AARP found that respondents age 65 and older took over four prescription medications daily on average. Linda L. Barrett, Ph.D. "Prescription Drug Use Among Midlife and Older Americans." AARP (January 2005). p.5. https://assets.aarp.org/rgcenter/health/rx_midlife_plus.pdf. Last accessed June 15, 2018.
[iii] Juliette Cubanski, Tricia Neuman, Kendal Orgera, and Anthony Damico. "No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending." Kaiser Family Foundation. (November 7, 2017). https://www.kff.org/medicare/issue-brief/no-limit-medicare-part-d-enrollees-exposed-to-high-out-of-pocket-drug-costs-without-a-hard-cap-on-spending/. Last accessed June 13, 2018.
[iv] While high price is one of the most consistent features of specialty drugs, other characteristics include targeting a rare medical condition or complexity in the manufacturing and storage of the medication. "Emerging Trends in the Specialty Drug Industry." Drug Topics & Elsevier. p.2. https://www.elsevier.com/__data/assets/pdf_file/0020/317432/Emerging-Trends-in-the-Specialty-Drug-Industry_eBook.pdf. Last accessed June 15, 2018.
[v] "Emerging Trends in the Specialty Drug Industry." Drug Topics & Elsevier. p.2. https://www.elsevier.com/__data/assets/pdf_file/0020/317432/Emerging-Trends-in-the-Specialty-Drug-Industry_eBook.pdf. Last accessed June 15, 2018.
[vi] It is also important to note that some drugs, such as injectable and IV drugs given by a doctor and not self-administered, are covered by Medicare Part B, which has a different set of rules than Medicare Part D.
[vii] In certain circumstances, only one drug may be covered. For example, if only one drug is available in a drug category or class, or if only two drugs are available in the category or class but one drug is clinically superior to the other. Medicare Prescription Drug Benefit Manual. "Chapter 6 – Part D Drugs and Formulary Requirements." Section 30.2.1. Centers for Medicare & Medicaid Services. (Rev. 18, January 15, 2016). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf. Last accessed June 13, 2018.
[viii] Medicare Prescription Drug Benefit Manual. "Chapter 6 – Part D Drugs and Formulary Requirements." Section 20.1. Centers for Medicare & Medicaid Services. (Rev. 18, January 15, 2016). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf. Last accessed June 13, 2018.
[ix] Medicare Prescription Drug Benefit Manual. "Chapter 6 – Part D Drugs and Formulary Requirements." Section 30.2.5. Centers for Medicare & Medicaid Services. (Rev. 18, January 15, 2016). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf. Last accessed June 13, 2018.
[x] For plans with decreased or no deductible under alternative prescription drug coverage designs, cost-sharing for specialty drugs is limited to 33% of the drug cost. Medicare Prescription Drug Benefit Manual. "Chapter 6 – Part D Drugs and Formulary Requirements." Section 30.2.4. Centers for Medicare & Medicaid Services. (Rev. 18, January 15, 2016). https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf. Last accessed June 13, 2018.
[xi] "Your Guide to Medicare Prescription Drug Coverage." Centers for Medicare & Medicaid Services. ( p.28. https://www.medicare.gov/pubs/pdf/11109-Your-Guide-to-Medicare-Prescrip-Drug-Cov.pdf. Last accessed June 14, 2018.
[xii] If the exception request is denied, it can also be appealed. https://www.medicare.gov/claims-and-appeals/file-an-appeal/prescription-plan/prescription-drug-coverage-appeals.html. Last accessed June 14, 2018.
[xiii] See Methodology section for further detail on scope of analysis.
[xiv] Plan ID S5715-006-0. Provider: HISC - Blue Cross Blue Shield of IL, NM, OK, TX.
[xv] https://www.medicare.gov/find-a-plan/staticpages/rating/planrating-help.aspx. Last accessed June 14, 2018.
[xvi] https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-10-12.html. Last accessed June 14, 2018.
[xvii] Juliette Cubanski. "Medicare Part D in 2018: The Latest on Enrollment, Premiums, and Cost Sharing." Kaiser Family Foundation. (May 17, 2018). https://www.kff.org/medicare/issue-brief/medicare-part-d-in-2018-the-latest-on-enrollment-premiums-and-cost-sharing/. Last accessed June 13, 2018.
[xviii] https://www.medicare.gov/your-medicare-costs/help-paying-costs/territories/program-in-us-territories.html. Last accessed June 14, 2018.