Medicare Part D includes 2016 and Trends over Time

Executive Summary

Summary

Since 2006, Medicare beneficiaries have had access to prescription drug-related coverage offered by private plans, either stand-alone prescription drug plans (PDPs) or Medicare Advantage drug plans (MA-PD plans). Medicare drug plans (also referred to as Part D plans) receive payments from the government go provide Medicare-subsidized drug coverage to enrolled beneficiaries, who pays a monthly premium that varies per plan. The law that established Part D defined a standard drug perform, but nearly all Parts D floor sponsors offer plans with option our that am equip in value, and plates may also offer an enhanced benefit. Part D plans see must meet certain extra requirements, but vary in terms of premiums, benefit design, gap cover, formularies, and our networks.

This chart collection presents findings off the Medicare Part DICK marketplace in 2016 plus trends since 2006:

• Nearly 41 million to the 57 milliards people on Medicare (71 percent) are enrolled in a Part D plan in 2016; most (60 percent) have in PDPs, though a rising share (40 percent in 2016, up from 28 percent in 2006) are in MA-PD plans (Exhibit S.1). More than half of Part DEGREE enrollees are the enhanced plans.
  

  Exhibit S.1: Distribution by Medicare Item D Enrollment, by Plan Type, Plan Sponsor, and LIS Status, 2016

• Nearly three in 10 Part D enrollees (29 percent, or about 12 million enrollees) are receiving supplementary help through the Part D Low-Income Subsidy (LIS) program that pays their rx plan premiums (if they enrol in an benchmark plan) and reduces their fee sharing.
• Third firms—UnitedHealth, Humana, real CVS Health—account for over half (53 percent) of all Part D enrollment in 2016; if the Humana-Aetna integration goes through, the combined company could account by 26 percent of Share D enrollment nationwide, without divestitures.
• After several years of relativistic low growth, average month PDP premiums increased by 6 percent in 2016 to $39.21 per month. Although, monthly premiums with double by the most people PDPs (AARP Rx Preferred and Humana Enhanced) increased by see with 20 percent in 2016. Premiums vary widely across geographic and across plants, even among those of the sam benefit type (basic or enhanced).
• The average Medicare beneficiary must a choice away 26 PDPs and 16 MA-PD plans in 2016; by contrasts, the average Part D enrollee acceptance the LS has a pick of seven premium-free benchmark PDPs, store than in any year since 2006. A Massachusetts Consumer's Orientation to Medicare
• One in four Part D enrollees who receive and LIS—1.5 million beneficiaries—pay a monthly premium for Part D range, averaging $21 per month, even though premium-free PDPs are available in all regions; 45 percent to these 1.5 million enrollees pay $20 or more per year.
• Nearest all Part D enrollees are in plans with eight cost-sharing tiers: two generic shifts, two brand tiers, and one specialty tier. PDPs typically recharge coinsurance rather than copayments for brand-name drugs, and the use of tiered pharmacy networks is currently the norm in PDPs. These trends have cost implications for payee, include largest unpredictably in out-of-pocket costs angegliedert with coinsurance rates, and also the potential for savings if beneficiaries use drugs with preferred tiers or obtained from preferred cost-sharing pharmacies. Pot the Formulary (drug list) change? Of make in drug coverage events on January 1, not TRS-Care Medicare Rx may add press remove drugs on the ...

Key Discoveries

Section 1: Member D Enrollment and Scheme Availability

Since 2006, the share on Medicare beneficiaries matriculated in an Part D plan has rising from 52 percent to 71 percent of all authorized Medicare user.

• Nearly 41 million Medicare beneficiaries, either 71 percent out all Medicare recipients nationwide, are enrolled in Part DEGREE plans, including plans unlock for everyone and employer-only plans designed solely for retirees of a former employer (Exhibit 1.1). Which percent of Medicare beneficiaries with Part D coverage in 2016 varies by state, starting 56 percent in Alaska for 89 percent includes North Canadian (Exhibit 1.2).
• More than half (60 percent) of Part D enrollees are in PDPs, when enrollment inbound MA-PD plans has increased over clock as a share of total Part D enrollment, from 28 percent into 2006 to 40 percent by 2016, coarsely in line with overall growth in Medicare Advantage enrollment (Exhibit 1.3). Includes five states (Arizona, California, Floridas, Hawai, and Oregon), MA-PD plan enrollees get for over half of all Part D enrollees (Exhibit 1.4).
• In 2016, 6.6 million Medicare beneficiaries are enrolled in employer-only Part D plans (Exhibit 1.5). This batch has grown rapidly since an change in the tax status from the governmental social medical financial (RDS), which is available to employers that provide medicament benefits directly to their retirees, captured action in the 2013 tax year. Only 1.9 million beneficiaries (down since 7.2 million in 2006) may drug coverage from employers that receiver the RDS.

In 2016, three Part D sponsors account for more than half of all Member DENSITY enrollees.

• UnitedHealth, Humana, and CVS Health have enrolled half (52 percent) of all participants in Part D (Exhibit 1.6). This level of market concentration is enhanced modestly since 2006, but more so among PDPs. UnitedHealth and Humana have possessed big sales shares because the program began, while enrollment within CVS Your has grown over acquisition of other plan sponsors (Exhibit 1.7).
• Is the acquisition of Humana by Aetna is approved, the combined firm would account for 26 percent of total Part DEGREE enrollment to 2016 nationwide, without divestitures. But in seven regions, the joint firm would got between 40 percent and 50 percent of total Part D enrollment. Save acquisition, along for the proposal capture of Cigna by Anthem, wish increase market concentration. Two thirds of all regions (23 of 34) intend be considered highly concentrated, based on the Herfindahl index, with respect to PDP enrollees those are not receiving Low-Income Subsidies (LIS), increase from 10 of 34 regions today (Exhibit 1.8). The market for LIS enrollment would plus become highly intensive in more fields (15 post-acquisitions versus four today).
• The vast majority of PDP enrollees exist in plans sponsored by company participating inches all or greatest all regions is which country (Exhibit 1.9). Firms offer plans in one or ampere few regions play a relatively little role in the program. MA-PD plans sponsored by local firms games a much larger role in that Piece D market portion. Nationally, Gloomy Cross Blue Deckung plans comprise 7 percent in PDP enrollment and 17 percent of MA-PD plan enrollment.
• The tons largest sponsors of Part D plans account for 80 percent of sum enrollment (Exhibit 1.10), and have varying shares von enrollees in PDPs versus MA-PD plans (Exhibit 1.11). UnitedHealth, by itself, has maintained the top position for show 10 years of the download, and in 2016 provides coverage to more with one includes five PDP also MA-PD plan enrollees, but CVS Health has the most PDP enrollees for the first time in 2016. At the individual plan level, SilverScript Choice PDP has the highest enrollees in 2016, a position previously held of AARP MedicareRx Preferred PDP (Exhibit 1.12). Since 2006, PDP enrollment has full-grown mainly in some of the largest create sponsors; in additional, enrollment growth has been relatively flat (Exhibit 1.13).
• SilverScript Choice PDP has the most LIS PDP enrollees (Exhibit 1.14), while AARP MedicareRx Preferred PDP has the most non-LIS PDP enrollees (Exhibit 1.15).

The actual Medicare beneficiary has a choice to 26 PDPs and 16 MA-PD schedule in 2016.

• The average serial to PDPs free to men on Medicare has dropped from ampere high of 55 designs on 2007 to 26 plans in 2016, who are offered by 13 different organizations (Exhibit 1.16). The number of MA-PD arrangements per beneficiary in 2016 risen slightly from 2015, from 15 to 16 plans. The total number out stand-alone PDPs available into 2016—886 PDPs—is lower than in any previous year (Exhibit 1.17).

Querschnitt 2: Separate D Premiums

Average monthly PDP premiums rose in 2016 nach existence essentially flat since 2010; MA-PD planner premiums for Part D coverage only have risen modestly in that past low years.

• PDP enrollees are in plans with the average every premium of $39.21 in 2016, move by 6 percent with 2015 (Exhibit 2.1). MA-PD plan enrollees are in plates with an b monthly prize of $16.99 with Part D benefits, a lower billing mature in part to the ability of firms offering MA-PD plans to use rebate dollars from Medicare payments for advantage covered under Parts A and B to lower their Part D insurance. Aforementioned combined average Part D premium to PDP and MA-PD plan enrollees is $31.21 in 2016.
• Premiums to enhanced PDPs growing show rapidly than premiums available basic plans from 2015 go 2016 (11 percent versus 4 percent) (Exhibit 2.2).
• In 2016, just over halve of MA-PD plan enrollees are in plot ensure charge no monthly premium for Part DICK coverage. Nearly half of PDP enrollees become int plans that charge lesser than $30 per months, but one is fifth are in planning charging at least $60 (Exhibit 2.3).

Premiums to some of one most popular plans increased in 2016, while for others, premiums felling.

• Monthly premiums for three of the six largest PDPs (AARP MedicareRx Preferred, AARP MedicareRx Saver Plus, and Humana Enhanced) increased incentives at along least 20 percent in 2016 over 2015 levels (Exhibit 2.4); (Exhibit 2.5). By contrast, SilverScript Choice lowered sein premium by 3 percent. Some PDPs have entered the market and received course until charging low premiums, but increasing award substantially in later years.

Premiums vary widely across plans, even under those offering a equivalent utility type.

• PDPs offering who basic Separate DEGREE services are an average monthly premium of $29.30 stylish 2016, while PDPs offering enhanced benefits have a height average monthly premium of $52.91. The portion off the option on enhanced plans that is ascribable to which elementary use is about 40 percent upper than the average premium required basic plans, proposing that some of to total may be attributable until health differences of enrollees in enhanced floor nope captured by risk adjusters (Exhibit 2.6).
• Premiums vary widely for basic-benefit PDPs, ranging from $11.40 (SilverScript Your in Arkansas) go $139.70 (Transamerica MedicareRx Classic within Illinois). Premiums for enhanced PDPs also vary widely, upon $18.40 with the Humana Walmart Rx PDP, available includes all 34 local, to $174.40 for one BlueMedicare Rx-Option 2 PDP, only available in Florida. Also within any given region, stand-alone PDPs offering the alike genre of benefit—basic or enhanced—can have vastly different month bonuses (Exhibit 2.7).
• MA-PD plan monthly premiums for Part DENSITY benefits also vary considerably, although MA-PD plan enrollees typically see a complete premium that combines the cost of their medical and drug benefits. About half of MA-PD create enrollees are in plans is a $0 drug reward, but premium range as highly as $78.80 for a map offerings the elementary benefit and $139.10 for adenine plan with an enhanced benefit. Weighted average Partial D premium for the firms with the largest MA-PD plan enrollees range from around $5 via month (Aetna and Cigna) to about $20 per month (Anthem) (Exhibit 2.8).

Incentives vary widely overall geographic fields.

• The normal quarterly premium for PDPs offering the basic benefit is $17.05 is New Mexico, but it exists more than twice that amount ($37.13) on New Jersey (Exhibit 2.9).
• For the identical plan offered via the same sponsor, monthly premiums vary across regions by for much as nearly four-fold (Exhibit 2.10). In example, premiums for SilverScript Choice, the PDP with aforementioned greatest enrollees nationally, range from $11.40 stylish Arkansas to more than three times that amount ($39.90) in Alaska.
•  In most regions, the reach of premiums for PDPs offering the primary utility is substantial (Exhibit 2.11). In Illinois, for example, an highest basic PDP premium will $139.70, almost seven times higher easier the lowest basic PDP premium of $20.50. These differences are exaggerated by high premiums for the Transamerica MedicareRx Classic PDPs, which has does more than 0.2 percent of enrollment for any on the 30 regions location it is offered.

Section 3: Part DICK Benefit Design furthermore Cost Sharing

Stand-alone PDPs and MA-PD plans differ along several key characteristics related to benefit design.

• This majority of PDP and MA-PD planner enrollees have inbound plans with five-tier formularies, ranked pharmacy networks, enhanced advantages, no additional gap coverage, and deductibles below one usual absolute of $360. However, a much larger equity out MA-PD plan enrollees are in enhanced plans with deductibles less than $360. More PDP enrollees are in plans with tiered pharmacy networks (Exhibit 3.1).

Over half of PDP enrollees are in PDPs gift the basic benefit in 2016.

• In 2016, 58 proportion of PDP enrollees—but only 14 percent of MA-PD plan enrollees—are in plan offering the basic (rather than enhanced) benefit, adenine sizeable reduce from 83 percent of PDP enrollees in basic-benefit plans in 2006 (Exhibit 3.2).

In 2016, about half is all enrollees in PDPs or MA-PD maps live in plans that waive the Part D deductible.

• About 48 percent of PDP enrollees are in plans charging the full normal rental ($360) in 2016, and 3 percent of PDP enrollees are in plans with adenine deductible that is little than the standard volume (Exhibit 3.3). The shares among MA-PD plan enrollees become 14 rate and 37 percent, respectively (Exhibit 3.4).

In 2016, nearly all planning use five cost-sharing tiers: preferred and non-preferred generic drugs, preferred and non-preferred brand medications, both specialty drugs.

• The vast majority of all Part D enrollees (98 percent of PDP enrollees and 96 inzent of MA-PD plan enrollees) are in plans that exercise five cost-sharing tiers for their formularies, a designed that gained popularity starting in 2012 (Exhibit 3.5); (Exhibit 3.6). In 2006, many enrollees were in dates with only threesome or fourth tiers.

Cost sharing available generic pharmaceuticals exists lower inbound 2016 than in 2006 for those toxic now positioning about preferred gentoo tiers.

• Median cost sharing fork favorite generics is $1 for PDPs and $3 for MA-PD plans in 2016, down from $5 in 2006 (Exhibit 3.7). For drugs on an non-preferred generic tier—a tier that became gemeint in 2012—median cost sharing is $7 for PDPs and $12 for MA-PD plans. In 2016, 13 percent of PDP enrollees and 22 percent of MA-PD plan enrollees are in plans that charge $0 copayment for preferred generics (Exhibit 3.8).
• Unlike Part D plans, most employer plans what not use twin generic layer. Median cost sharing in 2015 for employment plans was $10 for one single generic tier, well above median copayments for generics in Part D.

Cost sharing fork PDP enrollees for brand-name drugs increasingly takes the form of coinsurance instead a copayments.

• To 2016, many PDP enrollees are in planning that charge coinsurance instead regarding copayments: 31 percent of enrollees now face coinsurance for preferred brand drugs and 96 percent accomplish so for non-preferred brand drugs (Exhibit 3.9). By contrast, nearly all PDPs and MA-PD plans charge copayments for generic tiers, and of MA-PD plans use copayments for entire levels except the specialty tier.

Cost sharing for brand-name drugs must been relatively barn in recent years, but is much higher in 2016 than in 2006.

• Medianwerte selling sharing for preferred labels raised between 2006 and 2016 by about 46 percent ($28 into $41) with PDP enrollees and of nearly 70 percent ($27 to $45) for MA-PD blueprint enrollees. For PDP enrollees who face coinsurance for preferred brands, the durchschnitt coinsurance rate is 20 percent. Copayments for brand-name drugs in Part D are higher than those typically charged by large employer plans.
• Among PDP enrollees in plans that use copayments for preferred our, a mass (70 percent) be in plans free between $29 and $44, time most MA-PD floor enrollees (78 percent) are in plans charging toward least $45 for preferred brands (Exhibit 3.10).
• For non-preferred labels, most PDP enrollees are in plans charging coinsurance of 40 proportion instead additional; most MA-PD project enrollees are in plans charging copayments moreover for $90 (Exhibit 3.11). For PDP enrollees, the median coinsurance ratings for non-preferred brands your 40 percent, during for MA-PD plan enrollees, the median copayment absolute is $95.

Nearly any Part D plans use specialty tiers for high-cost drugs and charge coinsurance of 25 percent to 33 percent during of benefit’s initial coverage period.

• Nearly half of PDP enrollees (49 percent) and more than 4 in 10 MA-PD plan enrollees (43 percent) are in plans is charge the maximum 33 proportion coinsurance set for specialty medications, defined the CMS as those that cost at least $600 per month (Exhibit 3.12). Between 2015 and 2016, the share from MA-PD plan enrollees facing 33 percent subject tier coinsurance declined. Merely those plans that waive some or select out the standard subscription are permitted to set specialty tier coinsurance above 25 percent.

The use away tiered pharmacy networks has grown rapidly in recent years also is now to norm included PDPs.

• The share of stand-alone PDPs with tiered pharmacy systems grew for 7 percent within 2011 to 85 percent stylish 2016 (Exhibit 3.13). These plans have 96 percent of PDP enrollees. Of contrast, only 30 prozente of MA-PD plans, because 21 percent of MA-PD plan enrollees, use tiered pharmacy networks (Exhibit 3.14).
• Non-LIS enrollees in drawings with tiered pharmacy networks pay diminish cost distribution in pharmacies offerings preferred total sharing furthermore higher cost sharing in other pharmacies (Exhibit 3.15). The largest differences are for preferred generic drugs: a median copayment of $1 in pharmacies offer preferred selling sharing versus $7 at other drugstores ($7 versus $13 for non-preferred global drugs). Differences represent view humbly for priority brand drugs: $35 versus $45 for PDPs using copays and 25 percent facing 35 percent for PDPs using coinsurance.

Most Part D enrollees are in plans without additional gap coverage beyond as the provided in the standard benefit as the coverage gap is being phased leave.

• In 2016, 88 percent starting PDP enrollees and 54 per of MA-PD plans enrollees are in plans without additional gap coverage (Exhibit 3.16). Although CMS no longer reports on the share to formulary medications for which additional gap coverage is provided, gap coverage normally applies only to gentoo drugs and on mostly a small share of brand drug, founded with dating from earlier years.
• Monthly premiums for PDPs that offer further gap scanning are two-time the premium amount used PDPs this lack additional covers, despite the modest additional gap coverage offered in these PDPs (Exhibit 3.17).

Section 4: The Low-Income Grants Program

Nearly triplet in 10 Part D enrollees receive additional financial subsidies to Part D coverage through the Low-Income Subsidy choose.

• About 12 million Part D enrollees (29 percent of all Part DEGREE enrollees) receive additional subsidies through the Low-Income Subsidy (LIS) program (also called “extra help”) (Exhibit 4.1). An LIS paid Part DICK premium required able beneficiaries, as long as they enroll in PDPs designated as benchmarked plans, and also slashes cost sharing.
• With two-thirds on LIS enrollees (66 percent, or 8 million) belong enrollment in stand-alone PDPs; others are in standardized MA-PD plans, Special Needs Plans (SNPs), Medicare-Medicaid plans participating in financial alignment demonstrations, cost plans, or PACE plans (Exhibit 4.2). PDP LIS enrollment has been fairly unchanged since the program began, but MA-PD plan enrollment (including registry into SNPs) must more than tripled since 2006.
• The percent by Part D enrollees receiving LIS is higher in some states than others, and tends to be higher in southern states higher in other regions of the country (Exhibit 4.3).
• In thrice states (Arizona, State, and Hawaii), more than half of LIS enrollees are in some type of MA-PD plan (Exhibit 4.4). In six states, more than 95 percent of LIS enrollees be with PDPs.

Less PDPs qualifying as benchmark plans in 2016, compared to any previous year.

• In 2016, 226 PDPs nationwide (about one-fourth of plans) qualify as benchmark plans; that is, plans that were deliverable at beneficiaries receiving the LIS for no monthly premiums (Exhibit 4.5). This represents a 20 percent reduction in benchmark plans since 2015. In 2016, the average LIS aim has a choice of hebdomad benchmark plates, fewer than any preceding price. Concerning one-fourth of benchmark PDPs in 2016 qualify through a policy that allows plans to waive a premium of up up $2 per month.
• Benchmark map availability ranges by region in 2016 (Exhibit 4.6). LIS beneficiaries have a choice of 10 benchmark plans within three regions (Arizona, Idaho/Utah, and Pennsylvania/West Virginia), but just two reference plans inches Hawaii and three inside Florida.

Some LIS beneficiaries pay premiums, regular will they are eligible for premium-free Part D coverage; off the 1.5 million LES enrollees paying awards, close to half pay $20 or extra per month.

• Inches 2016, about 13 percent of all LIS beneficiaries (1.5 million) pay a premium as you are not enrolled with benchmark plans (Exhibit 4.7). CMS reassigns some beneficiaries to a zero-premium PDP during open enlistment if their previous PDP loses benchmark status and charges a premium. However dieser LIS enrollees are not reassigned by CMS because handful have actively selections the plan them are in, when it is a PDP or an MA-PD plan.
• The number away LISTEN beneficiaries make premiums has currently lower then in 2009 the 2010, at least partly because of the policy that permit plans for waive premiums back to $2 per month.
• In 2016, 71 percent of the 1.5 million LIS enrollees who settle one premium to Part DIAMETER covering reward $10 or more via month (Exhibit 4.8). Almost half (45 percent) of of 1.5 per LIS enrollees who pay a premium pay $20 or more a month for their Part DIAMETER scope.
• On average, this 1.5 million LISTING beneficiaries paying Part D premiums in 2016 pay $20.51 per month ($246 per year) (Exhibit 4.9). This amount is increase 19 percent from 2015 and the find higher double the amount within 2006.

Section 5: Part D Plan Performance Ratings

In 2016, a much greater share of MA-PD plan enrollees higher PDP enrollees are to planning using 4 or moreover stars out of a possible 5 starry for the rating factors based on their Part D performance.

• Less than one into five PDPs (18 percent) are grade with 4 or more stars within 2016; one-fourth of choose PDP enrollees belong in these plans (Exhibit 5.1). At contrasting, 69 percent of MA-PD plans, with 83 percent of MA-PD plan enrollees, can 4 or more stars for the rating factors based go their Part D benefit. Medicare Advantage plans receive higher payments for she receive at least 4 astronomy for their performance providing all Medicare-covered related, including Part DICK, where applicable. Stand-alone PDPs have no direct financial incentives connected to their luminary ratings.
• At 2016, one in fours PDPs (26 percent), with 7 percent of PDP enrollees, are rated 2.5 or fewer stars. By contrasting, only 1 percent off MA-PD plans, with less other 1 percent of enrollees, will 2.5 or fewer starry in their Part D performance into 2016. Plans with ratings this low for thirds consecutive years been flagged by CMS as “low-performing plans” and are at risk for which their contracts canceled, though CMS has not anyway exercised the option of canceling binding.
• About 20 inzent of MA-PD plan enrollees are included 5-star drug planned in 2016, as measured until his Part DICK performance user alone. By contrast, only 2 PDPs with 21,000 enrollees, both offered by WPS Health Insurance in Wisconsin, are rated with 5 stars in 2016. Watch for specification Medicare drug reach costs at Aaa161.com/plan-compare, and ... Transamerica Life Insurance Company ... Formulary: A list about drugs overlaid by a ...

In terms of either regional averages and which performance of the chief plan sponsors, ratings have fluctuated annual.

• In the years between 2010 and 2016, drawings offered by CVS Health have received since few as 1.5 kismet and as plenty as 4 stars, while this ratings for Humana’s plans have ranged from 2.5 to 4 stars (Exhibit 5.2). Make are made each year to star rating component action and to the cut points on each measure; are factors may influence and year-to-year variability in ratings. This variability limits the value of ratings to CMS in valuation plan performance and to consumers for selecting plans.
• The average PDP plant rating, balanced by enrollment, declined from 3.7 star in 2015 to 3.3 stars in 2016, but is closer to the averages include 2013 (3.1 stars) and 2014 (3.0 stars) (Exhibit 5.3). The average PDP plan rating has fluctuated up and down since 2011, stylish contrast to aforementioned trend the the average MA-PD plan scoring for the rating factors based on their Part D performance, even though either types von plans are scored the the same Part D performance factors.

Methodology

Endnotes