Reprinted from MEDICARE PART D NEWS, monthly business, compliance and management news and strategies to help Part D plans increase enrollment, boost revenues and minimize their risks of CMS fines, penalties and repayments.
June 2011 Volume 6 Issue 6
Humana Inc. said on May 2 that membership in its stand-alone Prescription Drug Plans (PDPs) increased to 2,353,100 on March 31 from 1,670,300 on Dec. 31, 2010. “This increase resulted primarily from higher gross sales year-over-year,” particularly for the company’s Humana-Walmart Preferred Rx Part D plan, offered in partnership with Wal-Mart Stores, Inc. Despite its popularity among seniors, beneficiary advocacy groups continue to oppose the plan.
This is a net gain of about 680,000 PDP enrollees. According to Adam Fein, president of Pembroke Consulting Inc., that growth is “more than any other organization [experienced] in 2011.” He also claims on his Drug Channels blog that the Humana-Walmart plan is “now the fifth-largest PDP in the U.S.”
Other Part D sponsors are following Humana’s lead. UnitedHealth Group’s Prescription Solutions said in April that it had created a “Value Network” of 20,000 pharmacies across the U.S. that will provide lower costs and discounts to members.
But all is not perfect. The Humana-Walmart plan has come under fire once again from a group of pharmacies, this time for operating contrary to the “any willing pharmacy” provision of the Part D regulations. According to American Pharmacies, a member-owned independent pharmacy cooperative operating in Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas, CMS’s regulation allowing Part D plans to establish preferred pharmacy networks violates another regulation allowing any willing pharmacy to participate in the Part D program.
Under the Humana-Walmart plan, said the co-op, beneficiaries will pay more for prescriptions purchased at a pharmacy other than Walmart.
The Part D regulation requires plans to allow the participation of any pharmacy that meets its terms and conditions. But it also allows plans to reduce coinsurance or copayments for Part D-eligible individuals who obtain their covered Part D drugs through in-network pharmacies, differentiate between preferred and nonpreferred in-network pharmacies, and reduce copays even more for prescriptions purchased through a preferred pharmacy.
Amanda Fields, counsel for American Pharmacies, tells PDN that “the allowance of preferred networks in Part D plans negates the ‘any willing pharmacy’ requirement mandated by Congress.”
According to the cooperative, the regulation allows Part D plans “to discriminate among pharmacies” and create “different classes of in-network pharmacies.” The Humana-Walmart Preferred Rx plan “improperly provides strong financial incentives for patients to choose Walmart-owned pharmacies over other of the plan’s in-network retail pharmacies,” it asserted.
The co-op calls this the most harmful aspect of the plan, as there is a huge disparity in copays between preferred pharmacies and nonpreferred ones.
For example, under the plan’s formulary, a 30-day supply of Tier 1 preferred generic drugs has a $2 copay if distributed by Walmart. But that same drug costs the member $10 if distributed by a nonpreferred in-network retail pharmacy.
By enabling a Part D plan to make preferred pharmacies “so cheap and nonpreferred pharmacies comparatively so expensive,” CMS is discouraging members from enrolling in the plan, American Pharmacies said. For example, a senior in a rural area would not enroll in the plan because there was no Walmart close enough and because the copay at the non-Walmart pharmacy is too expensive, it asserted.
Preferred Networks Are Allowed
Fein tells PDN that he disagrees with the American Pharmacies’ interpretation, “which sounds like sour grapes rather than an accurate statement about the [Part D law].” He adds that “CMS has clearly stated that a [Part D plan] can set up a more limited pharmacy network and use reduced cost-sharing to direct enrollees to those in-network pharmacies.”
On his blog, Fein calls this an “incentivized preferred network design,” under which a Part D beneficiary’s out-of-pocket costs are lower at 4,200 preferred pharmacies — Walmart, its subsidiaries Sam’s Club and Neighborhood Market, and Humana’s RightSource mail-order pharmacy.
“While I’m not a lawyer, I believe that the paragraph immediately following the ‘any willing pharmacy’ section of the [Part D law] supports the establishment of preferred pharmacy networks such as the Walmart-Humana PDP or the Prescription Solutions’ Pharmacy Value Network,” says Fein.
This is not the first time Humana has come under fire. Last year the National Community Pharmacists Association (NCPA) complained to CMS that the agency should not have approved the plan because it “violates the spirit and intent of the rules and regulations surrounding the Part D program” and specifically Part D marketing guidelines (PDN 1/11, p. 1).
It appeared, based on NCPA comments, that the association had concerns with some of the larger Part D plans that it sees taking a huge market share and hurting community pharmacies.
Fields says that “CMS has still not responded to American Pharmacies’ letter, nor has there been any contact from Humana or Wal-Mart regarding the issues raised in American Pharmacies’ letter.”
CMS and Humana did not respond to PDN’s request for comments by press time
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