Currently Viewing:
The American Journal of Managed Care November 2008 - Special Issue
How Similar Are States' Medicaid Preferred Drug Lists?
Jonathan D. Ketcham, PhD; and Jeffrey K. Ngai, MBA, MHSM
Systematic Analysis of Outcomes Evaluations Applied to Drug Management Programs
Carrie McAdam-Marx, RPh, MS; David T. Schaaf, MD; Anke-Peggy Holtorf, PhD, MBA; Benjamin Eng, MD; and Gary M. Oderda, PharmD, MPH
Currently Reading
Medicare Part D Formulary Coverage Since Program Inception: Are Beneficiaries Choosing Wisely?
E. Anne Jackson, BS; and Kirsten J. Axelsen, MS
Medicare Part D's Effects on Elderly Patients' Drug Costs and Utilization
Jonathan D. Ketcham, PhD; and Kosali I. Simon, PhD
Kenneth E. Thorpe, PhD
Primary Care Physicians' Views of Medicare Part D
Andrew J. Epstein, PhD, MPP; Saif S. Rathore, MPH; G. Caleb Alexander, MD; and Jonathan D. Ketcham, PhD

Medicare Part D Formulary Coverage Since Program Inception: Are Beneficiaries Choosing Wisely?

E. Anne Jackson, BS; and Kirsten J. Axelsen, MS
Analysis of Medicare Part D formulary composition since program inception suggests beneficiaries may not be using their open-enrollment periods to reevaluate available plan offerings.

Objective: To evaluate how Medicare Part D formulary composition has changed since program inception, including comparison of plans eligible for full premium subsidy (ie, benchmark plans) with their counterparts.

Study Design and Methods: The study used publicly available data released by the Centers for Medicare & Medicaid Services to generate snapshots of formulary coverage and enrollment levels in each plan year. The analysis included all Part D plans and tracked formulary coverage of 152 of the most common brand name and generic drugs prescribed to seniors.

Results: Since 2006, the number of products available without restriction has increased and the number of drugs not on formulary has decreased. However, it appears that beneficiaries (subsidized beneficiaries in particular) may not be using their open-enrollment periods to reevaluate the available plan offerings.

Conclusions: Beneficiaries need to reevaluate the Part D options available on an annual basis to maintain enrollment with the most appropriate plan available. Although all plans meet the proscribed formulary requirements, some plans offer richer drug coverage with more drugs available on an unrestricted basis. Benchmark plan status allows Part D plans to maintain or gain significant Medicare enrollment from year to year. Careful oversight should be provided to ensure that the level of formulary coverage offered at benchmark and other plans remains consistent.

(Am J Manag Care. 2008;14(11 Spec No.):SP29-SP35)

A review of coverage for 152 commonly prescribed drugs suggests beneficiaries may not be using their open-enrollment periods to reevaluate the available plan offerings.

  • Subsidized beneficiaries may be relying upon auto-assignments for their plan selection.
  • Other beneficiaries may be renewing their original plan without considering alternatives.
Effective January 2006, Medicare Part D expanded the Medicare program to include coverage for prescription drugs. Prior to 2006, low-income Medicare  beneficiaries who qualified for their state Medicaid program received drug coverage through Medicaid, while Medicare remained the primary payer for most other medical services. Individuals who are eligible for both Medicare and Medicaid are called dual-eligible beneficiaries. Under the Medicare drug benefit, dual-eligible beneficiaries qualify for reduced cost-sharing requirements and are exempt from premium payments if they are enrolled in basic plans with a premium below the minimum premium benchmark, designated as benchmark plans. Other Medicare beneficiaries with low income and minimal assets also may qualify for reduced cost-sharing requirements and are referred to as the other low-income subsidy (LIS) population in this report. If they do not choose a Medicare Part D plan, full-benefit LIS and dual-eligible beneficiaries are automatically enrolled in a benchmark plan based on a random assignment.

A May 2007 report by the Government Accountability Office acknowledged the impact beneficiary-specific assignments had in a pilot program launched in Maine, but concluded that the existing random assignment process should be maintained.1 The report found that the dual-eligible beneficiaries’ right to change plans at any time and the minimum proscribed formulary requirements provide beneficiaries with the flexibility to meet their coverage needs.

This study was conducted to assess (1) whether there are any differences in the formulary composition of the benchmark plans versus other plans and (2) whether it appears that dual-eligible and other LIS beneficiaries are actively making enrollment decisions based on formulary composition.

The analysis used data sources made available by the Centers for Medicare & Medicaid Services (CMS). The CMS Network and Formulary Public Use Files (PUFs) were the source for the formulary information.2 Subscribers to the PUFs receive monthly datasets that provide information by plan for all non–employer-sponsored Part D plans, including formulary coverage. The PUF series for a plan year are released from October of the previous year through September of the plan year. For this analysis, plan year 2006 information reflects the August 2006 PUF; plan year 2007 information reflects the July 2007 PUF; and plan year 2008 information reflects the December 2007 PUF.

The Landscape source reports were used to identify the benchmark plans.3 These reports are published annually by CMS in advance of open enrollment and provide a listing of the approved plans offered in each state. The inventory of plans corresponds to the PUF files and excludes employer-sponsored Part D plans. The Landscape reports are in Excel format and may be downloaded directly from the CMS Web site.

Enrollment information for each plan year was obtained from the annual report by plan released by CMS for plan years 2006 and 2007, and the monthly report by plan released by CMS for May 2008.4 The enrollment information reflects the total number of beneficiaries, without identifying dual-eligible or other LIS individuals. Enrollment associated with the employer-sponsored plans (ie, plan numbers 800 and higher) was excluded from the analysis, because formulary information is not available for these plans in the PUF. Enrollment in the employer-sponsored plans represented approximately 9.6% of total Part D enrollment as of August 2008.5

The analysis included stand-alone prescription drug plans (PDPs) and Medicare Advantage plans that provide a Part D benefit (MAPDs). The analysis was limited to non–employer-sponsored plans to be consistent with the formulary information available in the PUF.

For the purposes of counting plans, we defined a plan as the unique combination of contract ID and plan ID. The contract ID and plan ID are referenced in plan documents published by the Part D plan, and they are used in the PUF files and enrollment reports to track carrier or plan information. The contract ID corresponds to the carrier providing the coverage (eg, Humana Insurance Company of New York). The plan ID corresponds to the benefit offered (eg, Silver, Gold, or Bronze). PDP carriers may offer no more than 3 plans in any region (with some exceptions due to mergers or acquisitions). As such, a PDP offered in all regions would have no more than 114 unique combinations of contract ID and plan ID filed with CMS (ie, maximum of 3 plans filed in 38 regions). There may be many more combinations of contract ID and plan ID associated with the Part D component of MA-PD plans, however. Most MA-PD plans are filed at the county level (rather than the multistate region level, like PDPs). Approximately 1% of Part D enrollment is in regional MA-PD plans that are filed for a multistate area.

We reviewed the top 168 drugs dispensed to persons age >65 years as of October 2007, as identified by Verispan based on script volume.6 The drugs were stratified into the following categories:

• Drugs in excluded therapeutic classes were not included in the study. Eight of the most common 168 drugs were in this category: alprazolam, lorazepam, folic acid, clonazepam, temazepam, diazepam, Viagra, and enteric-coated aspirin.
• Generic medicines that were covered by at least 98% of Part D formularies in all years were classified as “core drugs.”
• Four of the most common drugs were the generic form of a brand drug also listed among the most common drugs. These products had recent patent expirations. Coverage for the drugs in each year was included at the best coverage available for either the brand or generic form. The 4 pairs of drugs were Norvasc/amlodipine besylate, Toprol XL/metoprolol succinate, Ambien/zolpidem tartrate, and Lotrel/amlodipine besylate and benazepril HCl.
• Four of the most common 168 drugs had to be excluded from the analysis because they could not be identified consistently from year to year in the PUF. These drugs were clopidogrel, NitroQuick, ProAir HFA, and potassium chloride ER.

The 152 study drugs are identified in the eAppendix Table (available at The 44 core drugs are categorized separately, as coverage is common and consistent across time periods and plans. Figure 1 provides a comparison of total coverage levels in each year for the drugs included in the study.

Table 1 summarizes the total enrollment and count of plans included in the analysis. The enrollment associated with benchmark plans includes all enrollees, not limited to those who qualify for the subsidy. As seen in Table 1, the enrollment in the benchmark plans decreased significantly between 2007 and 2008. The number of individuals eligible for the subsidy did not decline over this time. There were 9.2 million Part D enrollees eligible for the subsidy in 2007 and 9.4 million Part D enrollees eligible for the subsidy in 2008.

The decline in enrollment in the benchmark plans shown in Table 1 is the result of increased disruption in the plans with benchmark status in 2008. Between plan years 2006 and 2007, few plans lost benchmark status (notifications of premium increase were mailed to 0.6 million beneficiaries7). A greater number of plans lost benchmark status between plan years 2007 and 2008 (notifications of premium increase were mailed to 2.6 million beneficiaries8). From year to year, the number of beneficiaries who change plans has remained consistent. The CMS indicated that 10% of Part D enrollees changed plans between 2006 and 20079 and 12% of Part D enrollees changed plans between 2007 and 2008.10 Between 2007 and 2008, it is likely that many of the nonsubsidized enrollees renewed with their plans, even when the plan lost benchmark status. As a result, it appears the nonbenchmark plans gained enrollment, although most of the movement in enrollment would have been between plans with benchmark status.

As illustrated in Figure 1, drugs were categorized into 3 levels of coverage: (1) not listed, (2) restricted, and (3) unrestricted. Drugs that are not listed in the PUF for a plan are generally not covered, although beneficiaries may appeal to the plan for a coverage exception. A drug was classified as restricted if a prior authorization or step therapy requirement was reported in the PUF for a plan. A drug was classified as unrestricted regardless of its tier status if there were no reported prior authorization or step therapy requirements. There may be quantity limits associated with these drugs. As shown in Figure 1, across all plans, the number of study drugs available without restriction peaked in 2007. The peak in unrestricted study drugs in 2007 appears to be related to expanded formulary coverage between 2006 and 2007. Plans may have been conservative when they filed their 2006 benefits. On average, the plans that renewed between 2006 and 2007 increased the number of drugs available on an unrestricted basis by 4.5 (MA-PDs) and 5.5 (PDPs). From 2006 to 2008, the number of study drugs available on an unrestricted basis increased by 2 or more and the number of drugs not listed decreased by more than 2 drugs. The number of drugs not listed on the formulary decreased most significantly at MA-PD plans (from 12 to 6) and nonbenchmark PDPs (from 10 to 6).

The values in Figure 1 were calculated on a straight-average basis. That is, all plans were equally weighted. This calculation is analogous to a beneficiary reviewing the PDP offerings during the open-enrollment period. An enrollment-weighted approach counts each plan offering in proportion to its enrollment levels. This reflects actual beneficiary selection from the available plan offerings.

Figure 2 illustrates the number of study drugs on a straight-average and enrollment-weighted basis at 2006 and 2008 by plan type. Enrollees in the nonbenchmark plans exhibited the strongest preference for less restrictive formularies, as measured by the difference in the count of unrestricted study drugs on a straight-average basis and an enrollment-weighted basis. Enrollees in MA-PD plans showed almost no preference for less restrictive formularies using the same metric. Figure 2 also suggests the preference for PDPs with unrestricted coverage was stronger at program inception (as observed by larger differentials in 2006 than in 2008). These results hold true at the region level as well.

Enrollees in the nonbenchmark PDPs were specifically choosing prescription drug coverage (compared with MAPD enrollees who had to consider medical providers as well as benefit designs). All the individuals in the nonbenchmark plans in 2006 elected that coverage; none were auto-assigned. The higher count of unrestricted drugs on an enrollment-weighted basis reflects their selection process. The enrollment in the benchmark plans, however, reflects a mix of beneficiaries who elected the plan as well as those who were auto-assigned to the plan. The auto-assigned individuals would be expected to have coverage that is most similar to the straight-average basis (as this is reflective of the random assignment process).

Copyright AJMC 2006-2019 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
Welcome the the new and improved, the premier managed market network. Tell us about yourself so that we can serve you better.
Sign Up