Thursday, October 4, 2012

Avalere Analysis Reveals Significant Fluctuations in Medicare Prescription Drug Plan Premiums for 2013

Contact: Erica Garland, 202-745-5119, egarland@gymr.com

09.24.12

Seven of Top 10 PDPs Have Double Digit Increases in Premiums

Washington, D.C. – A new analysis by Avalere Health of the Centers for Medicare and Medicaid Services (CMS) Part D Landscape Files shows that seniors in some of the top plans will need to shop around if they want to avoid double digit premium increases in 2013. Humana Walmart's Preferred Rx Plan raised its premium on its popular low-cost plan by 23 percent to $18.50 per month. First Health Part D Premier, First Health Part D Value Plus and Cigna Medicare Rx Plan each raised premiums by more than 15 percent. Overall, seven of the current top 10 prescription drug plans (PDPs) have double digit increases in premiums.

But there are alternatives for cost conscious seniors. UnitedHealth's new Medicare Rx Saver Plus PDP is offering premiums averageing just $15 a month, the lowest available in many markets. In past years, low-cost entrants have captured significant market share, and Humana Walmart began the trend with its offering in 2011. Last year, First Health's low-cost offering enrolled 450,000 patients in its first year of operation. Also, Coventry and CVS Caremark have fielded very competitively priced enhanced plans - with premiums below $30 that are likely to attract interest from seniors who are looking for a low premium, but would prefer a more comprehensive benefit plan. Interestingly, these plans are cheaper than the premiums for those sponsors' basic offerings due to their use of preferred pharmacy networks. By employing limited pharmacy networks, plan sponsors are better able to offer such low-cost plans.

"Seniors need to carefully assess their options going into this open season to ensure that they have a plan that meets their needs," said Bonnie Washington, senior vice president of Avalere Health.

Because of the premium increases, half of the top 10 PDPs will lose eligibility in select regions to retain or receive low-income subsidy (LIS) beneficiaries. The First Health Part D Premier plan will lose LIS eligibility in 10 regions, but Coventry's new basic plan, First Health Essentials, will have LIS eligibility in seven regions. Humana Walmart-Preferred Rx plans will remain LIS eligible in every region. United’s new Saver Plus plan has eligibility in all regions it's offered (30).

Other key findings from the Avalere analysis include:

Overall, average Part D premiums for current plans increased by 6 percent from 2012 to 2013.

As beneficiaries continue to move into UnitedHealth's new Saver Plus PDP, the overall average premiums will decline from a 6 percent increase and mirror CMS' projection that premiums will largely remain steady for 2013.

Lost-Cost Premium Plans, 2013*

2013 PDP Offering	Parent Organization	# of Regions	2013 Average Premium**
AARP MedicareRx Saver Plus	UnitedHealth Group, Inc.	30	$15.00
Humana Walmart-Preferred Rx Plan	Humana Inc.	34	$18.50
SilverScript Choice	CVS Caremark Corporation	33	$29.13
First Health Part D Value Plus	Coventry Health Care Inc.	32	$29.75

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
Note: Includes national PDPs or close to being national PDPs. The analysis does not include plans operating in one region.
*PDPs with premiums under $30 per month.
**Enrollment weighted average premium, except for SilverScript Choice. The Choice plan is new for 2013, therefore Avalere applied a simple average.

Monthly Premiums for Top 10 PDPs in 2013

2013 PDP Offering	2013 Plan Enrollment	2012 Average Premium¹	2013 Average Premium²	% Change (2012-2013)
AARP MedicareRx Preferred (PDP)	4,011,357	$39.85	$40.42	1%
SilverScript Basic (PDP)	3,452,439	$30.27*	$32.74	8%
Humana Walmart-Preferred Rx Plan (PDP)	1,511,850	$15.10	$18.50	23%
Humana Enhanced (PDP)	1,374,479	$39.58	$43.77	11%
First Health Part D Premier (PDP)	948,649	$32.59	$38.54	18%
WellCare Classic (PDP)	672,796	$32.86	$33.76	3%
HealthSpring Prescription Drug Plan (PDP)	630,897	$33.72	$37.71	12%
Cigna Medicare Rx Plan One (PDP)	592,999	$31.09	$35.78	15%
First Health Part D Value Plus (PDP)	445,749	$25.43	$29.7	17%
Express Scripts Medicare Value (PDP)	440,491	$34.88**	$39.42	13%
Top 3 Plans	8,975,646	$32.85	$33.78	3%
Top 10 Plans	14,081,706	$33.43	$35.38	6%
All PDPs	17,434,543	$37.89	$40.27	6%

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
¹ 2012 premiums are enrollment-weighted using February 2012 enrollment data.
² 2013 premiums are enrollment-weighted using September 2012 enrollment data.
*CVS Caremark Value was renamed as SilverScript Basic for the 2013 plan year. Additionally, CVS Caremark consolidated the Community CCRx Basic PDP and Health Net Orange Option 1 PDP into the new SilverScriptBasic plan for 2013.
**Due to Express Scripts' acquisition of Medco, Medco Prescription Plan – Value was renamed as Express Scripts Medicare - Value for the 2013 coverage year.

Top 10 PDPs, Number of Regions with $0 Premium Plans, 2012-2013

2013 PDP Offering	2012 # of Regions with $0 Premium for LIS Beneficiaries*	2013 # of Regions with $0 Premium for LIS Beneficiaries*	Change from 2012-2013
AARP MedicareRx Preferred (PDP)	4	0	-4
SilverScript Basic (PDP)	28**	30	2
Humana Walmart Preferred Rx Plan (PDP)	34	34	0
Humana Enhanced (PDP)	0	0	0
First Health Part D Premier (PDP)	23	13***	-10
WellCare Classic (PDP)	22	19	-3
HealthSpring Prescription Drug Plan (PDP)	23	15	-8
Cigna Medicare Rx Plan One (PDP)	21	21	0
First Health Part D Value Plus (PDP)	0	0	0
Express Scripts Medicare Value (PDP)	16****	11	-5

Source: Avalere Health analysis using DataFrame®, a proprietary database of Medicare Part D plan features and 2013 PDP data released by CMS on September 19, 2012.
*Number of regions in which beneficiaries receiving the full low-income subsidiary do not pay a premium.
**CVS Caremark Value was renamed as SilverScriptBasic for the 2013 plan year. Additionally, CVS Caremark consolidated the Community CCRx Basic PDP and Health Net Orange Option 1 PDP into the new SilverScript Basic plan for 2013.
***While the Premier plan only has eligibility in 13 regions, a new Coventry basic plan has eligibility in 7 regions, bringing the sponsor to a total of 20 LIS-eligible regions.
**** Due to Express Scripts' acquisition of Medco, Medco Prescription Plan - Value was renamed as Express Scripts Medicare - Value for the 2013 coverage year.

Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 125 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.

Wednesday, October 3, 2012

CMS May Base More Future Star Ratings on Plan or Parent Rather Than Contract Level

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

By James Gutman, Managing Editor

September 20, 2012 Volume 18 Issue 18

CMS is considering whether more of its star-rating quality measures for Medicare Advantage and Part D plans should be based on results at the plan or parent-company level rather than at the contract level, as is usually the case now, the agency’s overseer of star-rating measures told a conference session Sept. 5.

Elizabeth Goldstein, Ph.D., director of CMS’s Division of Consumer Assessment and Plan Performance, said that the agency would like feedback from plans and others on “what is the appropriate unit of analysis for quality measures.” Speaking at CMS’s fall MA and Part D conference in Hunt Valley, Md., Goldstein explained that perhaps, for instance, call-center performance measures might be “more appropriate” in the future to assess at the plan rather than the contract level.

Similarly, she continued, maybe some clinical measures should be assessed at the parent-company rather than a lower level. Goldstein asked for comments on that idea as well.

She got some instant feedback in the question period from Jane Galvin, director of regulatory affairs at the Blue Cross and Blue Shield Association. Galvin noted that medical loss ratios, on which MA plans will be measured and subject to sanctions beginning in 2014 (see story above), now are based on the state level for commercial plans. Should this be changed for MA plans, which often are part of the same parent organizations, it could be something the insurers would be “concerned” about, she said.

Cynthia Tudor, Ph.D., director of CMS’s Medicare Drug Benefit and C&D Data Group and another speaker at the session, said Galvin’s comments were “interesting” but added that there is a “whole group” of health plans pushing for having star-rating categories measured at a higher level in an insurance company’s operations.

Agency officials also solicited feedback on the plan improvement star-rating measure CMS will use for the first time in 2013. While the form of the rating is set for 2013, Vicki Oates, director of CMS’s Division of Clinical and Operational Performance, said that the agency will request comments for use in the 2014 measure on whether it should be utilized as an absolute level or instead as an overall adjustment to a plan’s summary stars score.

The improvement measure, as it stands now, is just a single-category star rating to reflect whether an MA plan improved in its summary score from one year to the next, Goldstein pointed out. And Oates, in response to a question from MAN, noted that CMS in effect holds high-performing plans “harmless” in this measure since they don’t have much room for improvement in their scores.

Although MA plans queried by MAN generally seem appreciative of CMS’s inclusion of an improvement measure as a way for plans to show their value gains and comparisons with fee-for-service Medicare, one of them said that the new measure is just “one of 52” scored for the star ratings and therefore is not getting enough weight. Conversely, an audience member at the stars session said plans going from three to four stars should not get the same “reward” as a plan remaining at a higher rating, contending that star scores should be “absolute” and not related to “momentum.”

Tudor responded that “we’re getting lobbied by improvers” for recognition of their gains, and said it’s hard to believe that inclusion of this one improvement measure will confuse beneficiaries.

She also said that CMS expects to continue the transparency move it began last December (MAN 1/5/12, p. 1) of sending a memo to plans outlining the star-rating changes being contemplated for the following year. Moreover, there now is an appeals process that gives plans “multiple opportunities” to contest their star scores, Tudor added.

But CMS does not seem to be wavering from its premise that both MA and Part D plans should be “accountable” for the care furnished by their network providers, as Goldstein put it.

The agency, according to Oates, also is looking at individual star-rating measures for their potential to be subject to “gaming.” She cited as an example the measure regarding timely decisions on appeals for prescription drug coverage. If it finds “outliers,” presumably plans that process appeals quickly only at times they’re being measured, she said CMS might request “case-file information” and check on overall patterns in such areas as written notifications to beneficiaries and timely submission to independent review entities. Data found to be inaccurate or incomplete may result in reducing the rating for the specific measures involved to one star, Oates added.

Tuesday, October 2, 2012

Drug Coupons: A Good Deal For The Patient, But Not The Insurer

By David Schultz

Oct 01, 2012

A magazine ad for the testosterone drug AndroGel shows a discount card that allows consumers to pay "as little as $10 per month" for the medicine. Drugmaker GlaxoSmithKline announces in another magazine that it offers discount coupons for the popular inhaler Advair. And a TV commercial for Nexium notes that if consumers can't afford the heartburn drug, its manufacturer, AstraZeneca, "may be able to help."

In the past few years, coupons and discount cards have become nearly ubiquitous for prescription drugs. Such incentives are available for 395 medications, according to a recent report from industry consultant IMS Health. In a similar analysis in 2009, a marketing firm found that only 86 drugs came with coupons.

Drugmakers say the coupons help Americans get the medicine they need. But the insurance industry is concerned that they drive patients toward more expensive brand-name drugs, leaving insurers to cover the full cost, which then gets passed on to consumers in the form of higher premiums.

"An individual patient who receives a coupon might not realize that, although that particular prescription may cost less that month, overall what it does is to raise costs for everyone, including themselves," said Susan Pisano, a spokeswoman for the industry trade group America's Health Insurance Plans.

For people using Medicare, Medicaid, veterans benefits or any other federal health insurance program, using a coupon or a discount card to buy prescription medication works against efforts to keep federal spending down and may also be counter to federal law, according to some experts' interpretation.

Coupon Wars

Prescription drug coupons represent the latest battle in an escalating war between health insurers and the pharmaceutical industry.

Insurers set high co-pays for brand-name drugs to steer their members to less-expensive generics. In response, companies such as Merck, AstraZeneca, Pfizer and many others issue coupons or discount cards that cover that co-pay.

A recent article in the Journal of the American Medical Association outlined the dramatic effect coupons can have on prices paid by consumers. Using cholesterol-lowering drugs as an example, researchers found that the popular statin Lipitor comes with an average co-pay of $30 a month, compared with a $10-a-month co-pay for simvastatin, a generic drug also used to treat high cholesterol. But with a coupon from Pfizer, the drug's manufacturer, the co-pay for Lipitor goes down to $4 a month, making it less expensive for the consumer than simvastatin.

It's a great deal for the patient, but not the insurer. According to the JAMA article, the insurer pays $18 a month for simvastatin and $137 a month for Lipitor.

The coupons are "designed to get patients to bang down their doctor's door and say, 'Give me the most expensive drug,' " said Mark Merritt, president of the Pharmaceutical Care Management Association. Merritt's trade group represents companies that manage prescription benefit plans for private insurance companies and firms that participate in Part D, Medicare's drug program.

Merritt said that, since insurers ultimately end up footing the bill for the more expensive brand-name drug, they may respond by increasing premiums on everyone.

The rising cost of brand-name drugs is one of the many factors driving up the cost of health care. President Barack Obama addressed the issue at a White House news conference in 2009 during the debate over his health-care bill. When asked if Americans would have to make sacrifices to make the overhaul work, he said, "They're going to have to give up paying for things that don't make them healthier. . . . If there's a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that's going to make you well?"

Drugmakers argue the coupons save money by preventing health problems that occur when patients cannot afford prescribed medications. A 2008 study in JAMA found that 20 percent of Medicare beneficiaries in fair to poor health did not take their medicine as directed because of cost concerns.

"By reducing patient cost sharing, co-pay coupons can support patients' adherence to a treatment regimen," Matthew Bennett, vice president of the trade group PhRMA, said in a statement. "[They] can play a valuable role in generating better health outcomes and reducing the use of avoidable and costly medical care."

The coupon war is now being fought in state legislatures and in court. Earlier this year, several union health plans filed a class-action lawsuit against drug manufacturers over coupons. They're asking a judge to find the use of coupons illegal and for monetary damages. In July, Massachusetts legalized prescription coupons. It had been the only state to ban them.

Illegal Kickbacks?

The cost issue surrounding coupons is made even more complicated when the federal government is the insurer.

According to federal statutes, it is a crime to provide "any remuneration to induce or reward referrals reimbursable by a federal health care program." Some experts say coupons constitute such remuneration because they encourage consumers to purchase a more expensive product, with the extra cost ultimately falling on taxpayers. A 2010 report from the Congressional Budget Office found that Medicare pays an additional $76 every time a senior chooses a brand-name drug over a generic.

Even officials within the pharmaceutical and insurance industries said coupons should not be used by beneficiaries of government health programs. "The use of co-pay coupons is prohibited in the Medicare Part D program and pharmacies," Bennett said, "and coupon-processing vendors have safeguards in place to prevent unauthorized use."

But others say the coupons' status is not resolved.

According to Donald White, a spokesman for the Department of Health and Human Services, no court or administrative body has ever ruled that coupons are illegal. HHS has never prosecuted anyone for issuing or using coupons in the federal health programs.

A survey of 1,000 seniors enrolled in Medicare Part D -- commissioned by the National Coalition on Health Care this spring -- found that 6 percent of Medicare beneficiaries are using the coupons.

"I can't blame a senior" for doing so, said Larry McNeely, manager of policy communications at the coalition, which is comprised of unions, businesses and others seeking to reduce health-care spending and expand coverage to the uninsured. "[But] these aren't put out there for anyone's health. They're there to cripple competition from generics."

Moral Hazard

Merritt said prescription drug coupons create a moral hazard for all parties involved.

"No one has an incentive to do the right thing," he said. "The doctor has no incentive to not give out coupons to seniors. If the pharmacist says no, it will be pretty easy for a senior to go to the next pharmacist down the street. And the seniors don't have much incentive."

Of course, coupons wouldn't be so attractive if the co-pays that insurers set weren't so high. Merritt acknowledges this but said coupons are an inefficient way to make prescription medications more affordable for the people who need help the most.

"These coupons target only those who already have drug benefits. They don't help the uninsured," he said, since they cover only a small portion of the drug's total cost. "[Right now], these are available to Bill Gates as well as to someone who makes $25,000 a year."

http://www.kaiserhealthnews.org/Stories/2012/October/02/drug-coupons.aspx

CMS Data Shows Non-Renewed Plans for 2013

By Brynn Schmitz on September 28, 2012

CMS released 2013 Medicare Advantage (MA) plan data last Wednesday, September 19 revealing almost 5,976 new plan combinations and the non-renewal of more than 6,056 plans for 2013. In many cases non-renewing plans are being replaced by a new plan from the same carrier in that area.

Due to non-renewed plans, approximately 1.7mm seniors are being disenrolled from their current plan. Most non-renewed insureds (1.3mm) will be offered a replacement by their current carrier; however, according to CMS data, 393,819 will actively be looking for coverage—a 36% increase over the number of seniors this time last year. The top four states for non-renewed insureds are Washington, Virginia, California, and Texas.

Opportunity Knocks

The 36% increase in non-renewals year over year provides opportunity for agents and carriers to fill in the coverage gaps.

Call 855-861-8776 for more details about ad hoc reporting or to have access to all CMS data.

http://www.csgactuarial.com/news/cms-data-show-non-renewed-plans-for-2013/?utm_source=Campaigner&utm_campaign=CMS_Data_Show_Non-Renewed_Plans_for_2013&campaigner=1&utm_medium=HTMLEmail

MA as Political Football: Hearing Brings Out Offense, Defense

By James Gutman - September 28, 2012

It perhaps was predictable that the House Ways and Means Health Subcommittee’s hearing on the Medicare Advantage program Sept. 21 — the Friday just before the House adjourned till after the November elections — would have a clear political tint to it. While the committee members coming into and out of the 70-minute session did raise significant issues about MA, many of them seemed more interested in making political points and then leaving rather than in listening closely to the witnesses. And the hearing appeared to reaffirm that there is no consensus on what should be the future of the MA program.

Several of the Republicans on the committee were vocal defenders during the hearing of the MA program — but not of the CMS star ratings quality bonus for MA plans demonstration, which of course was developed by the Obama administration using authority in the health reform law. They made a special point of having witness James Cosgrove, director of health care for the Government Accountability Office, repeat GAO’s finding that the demo should be canceled. But they also voiced strong general support for MA, with Subcommittee Chairman Wally Herger (R-Calif.) saying “it seems the administration is trying to hide the effect of the [MA payment] cuts” in the reform law with the demo.

Democrats on the committee responded in kind. Rep. Pete Stark (D-Calif.), for example, said “our Republican colleagues would like us to believe the sky is falling” regarding MA, when in fact MA plans have increased enrollment steadily since the reform law was enacted.

So where will all this back and forth leave MA when the elections are over? Is the program so demonstrably popular and successful that it can survive no matter what happens in Congress or the presidency? Or has MA become so much a symbol of the differences, as aired in the hearing, between two sides that it will keep getting kicked around till someone wins the game?

Monday, October 1, 2012

Quote of the Day

“When you consider they lost 11% of their earnings in the [fiscal] third quarter, Walgreens has taken a significant hit [as a result of its spat with Express Scripts]. Their credibility, I think, is compromised, and certainly their position in the market overall has been compromised by this. So I would expect them to take a fairly aggressive approach to trying to recover, and the question is whether they’re going to be able to.”
— Brian Bullock, R. Ph., founder and CEO of the pharmacy benefit consultancy The Burchfield Group, told AIS’s Drug Benefit News

Report: Premium hikes for top Medicare drug plans; Report: Double-digit premium hikes seen in 7 of 10 top Medicare prescription drug plans

Associated Press

September 25, 2012

Report: Premium hikes for top Medicare drug plans; Report: Double-digit premium hikes seen in 7 of 10 top Medicare prescription drug plans

By Ricardo Alonso-Zaldivar

WASHINGTON -- Seniors enrolled in seven of the 10 most popular Medicare prescription drug plans will be hit with double-digit premium hikes next year if they don't shop for a better deal, says a private firm that analyzes the highly competitive market.

The report Monday by Avalere Health is a reality check on the Obama's administration's upbeat pronouncements. Back in August, officials had announced that the average premium for basic prescription drug coverage will stay the same in 2013, at $30 a month.

The administration's number is accurate as an overall indicator for the entire market, but not very helpful to consumers individually since it doesn't reflect price swings in the real world.

"The average senior is going to benefit by carefully scrutinizing their situation, because every year the market changes," Avalere President Dan Mendelson said. Avalere crunched the numbers based on bid documents that the plans submitted to Medicare.

The report found premium increases for all top 10 prescription drug plans, known as PDPs. However, the most popular plan — AARP MedicareRx Preferred — is only going up 57 cents per month nationally, to $40.42 from the current $39.85.

The seven plans with double-digit premium increases were: the Humana Walmart-Preferred Rx Plan (23 percent); First Health Part D Premier (18 percent); First Health Part D Value Plus (17 percent); Cigna Medicare Rx Plan One (15 percent); Express Scripts Medicare-Value (13 percent); the HealthSpring Prescription Drug Plan (12 percent); and Humana Enhanced (11 percent).

Another two plans in the top 10 also had single-digit increases. They were the SilverScript Basic (8 percent) and WellCare Classic (3 percent).

On the plus side for consumers, a new low-cost plan entered the market. Premiums for the AARP MedicareRx Saver Plus Plan will average $15 a month nationally, although it won't be available everywhere. That's $3.50 less than the current low-cost leader, the Humana Walmart plan, whose premiums are rising to $18.50.

The new AARP plan is run by UnitedHealth Group Inc., the nation's largest health insurance company. United pays AARP for the right to use its name on a range of Medicare insurance products, a successful business strategy that has proven lucrative for both partners. When Humana and Walmart teamed up to offer their low-cost plan in 2011, United felt the competition.

"There is a real focus on the premium in this market," Mendelson said. "If a plan fields an offering with a low premium, it knows it can capture a significant number of customers."

Medicare spokesman Brian Cook did not dispute the Avalere estimates. "We continue to encourage seniors to shop around and find the plan that works best for them," he said.

Medicare's open enrollment season starts Oct. 15, and beneficiaries have a wide variety of choices of taxpayer-subsidized private prescription plans. Seniors and family members can use the online Medicare Plan Finder to input individual prescription lists and find plans in their area that cover them.

About 90 percent of Medicare's nearly 50 million beneficiaries have some form of drug coverage, with more than 17 million enrolled in private plans through the prescription drug program.

President Barack Obama's 2010 health care law is improving prescription drug plans by gradually closing the coverage gap known as the doughnut hole for those with high prescription drug costs.

The Avalare numbers did have one silver lining for the Obama administration. When the projections are tweaked to account for seniors switching to lower-cost coverage, premiums for 2013 are likely to remain steady.

Separately, the administration recently announced that average premiums for Medicare Advantage insurance plans will barely inch up next year on average, while enrollment in the private medical plans will continue to rise. Many Medicare Advantage plans also combine prescription drug coverage in one package deal.

But the biggest premium announcement is yet to come. Virtually all seniors pay the Part B premium for outpatient care, including those with traditional Medicare as well as those in private plans. Currently $99.90 a month, the Part B premium it is expected to rise next year by less than $10.

http://finance.yahoo.com/news/report-premium-hikes-top-medicare-063555304.html