Part D After Ten Years: Successes & Challenges Jack Hoadley, - - PowerPoint PPT Presentation

Part D After Ten Years: Successes & Challenges

Jack Hoadley, Ph.D.

Health Policy Institute, Georgetown University AcademyHealth Annual Research Meeting June 27, 2016

Credits and Notes

 Major funding for this work:

 Henry J. Kaiser Family Foundation

 Some information for 2016 is preliminary and

subject to change.

 Find links to our full reports:

hpi.georgetown.edu/medicarepartd

Part D After Ten Years

 Enrollment and plan offerings  Premium trends  Evolution of benefit design  Impact of plan choice  Spending growth past and future  Future cost drivers

15.5 16.2 16.5 16.6 16.7 17.1 17.6 18.1 18.6 19.3 20.0 5.5 6.2 7.0 7.9 8.5 9.4 10.3 11.3 12.3 13.4 14.2 0.7 0.8 0.9 0.9 0.9 1.5 2.2 4.4 4.7 4.7 4.6 0.8 1.1 1.2 1.4 1.5 1.4 1.4 1.5 1.8 1.9 2.0

22.5 24.2 25.6 26.7 27.6 29.3 31.5 35.3 37.4 39.2 40.8 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Employer-only group MA-PD enrollment Employer-only group PDP enrollment MA-PD enrollment (non-employer) PDP enrollment (non-employer)

NOTE: PDP is prescription drug plan. MA-PD is Medicare Advantage Drug Plan. Includes enrollment in the territories and in employer-only group plans. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan and enrollment files.

72% (up from 53%) of Medicare Beneficiaries are Enrolled in Part D

Enrollment, by Type of Plan, 2006-2016

In millions

Share of total in: PDPs MA-PDs

72% 28% 70% 30% 68% 32% 65% 35% 64% 36% 63% 37% 63% 37% 64% 36% 62% 38% 61% 39% 60% 40%

NOTE: Excludes enrollment in the territories. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2015 Part D plan and enrollment files.

Nearly One-Third of Part D Enrollees Receive Low-Income Subsidies

Share of Part D Enrollees Receiving Low-Income Subsidies, by State, 2015 National Average, 2015 = 30%

<25% 25%-29% 30%-35% 36%+

13 15 13 10 24% 28% 34% 34% 31% 31% 25% 31% 35% 36% 24%

NJ

24% 25%

NH

26% 46% 24% 39% 23% 35% 26% 29% 26%

HI

22% 35% 29% 30%

MD

24% 32%

VT

34% 36%

CT

26% 37% 55% 37% 19% 26% 25% 25% 21% 21% 20% 21% 22% 28% 26% 35% 43% 63%

DC

25%

DE

31%

RI

38%

MA

42 55 54 50 46 33 31 31 35 30 26 * * * 26 21 15 15 15 14 15 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Stand-alone prescription drug plans MA drug plans

NOTE: MA is Medicare Advantage. Estimates are beneficiary weighted. Number of stand-alone drug plans is reported at the region level; number of MA drug plans is reported at the county level. *Data not available. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D landscape source files.

Part D Enrollees Have Fewer – But Still Many – Plan Options

Average Number of Part D Plans Offered to Enrollees, 2006-2016

NOTE: PDP is prescription drug plan. MA-PD is Medicare Advantage drug plan. Includes plans in the territories and employer group plans. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan and enrollment files.

Part D is Increasingly Concentrated Among Five Plan Sponsors

Distribution of Medicare Part D Enrollment, by Firm and Plan Type, 2006 and 2016

All other firms 42% All other firms 34% All other firms 34% All other firms 21% All other firms 45% All other firms 43% Member Health 4% Express Scripts 7% WellCare 6% Aetna 6% Health Net 3% Anthem 4% WellCare 4% Aetna 7% Wellpoint 6% Express Scripts 11% Wellpoint 5% Aetna 6% Wellpoint 6% CVS Health 13% Member Health 6% Humana 19% Kaiser Permanente 12% Kaiser Permanente 8% Humana 19% Humana 19% Humana 21% UnitedHealth 20% Humana 15% Humana 18% UnitedHealth 25% UnitedHealth 21% UnitedHealth 27% CVS Health 21% UnitedHealth 20% UnitedHealth 22%

2006 2016 2006 2016 2006 2016 All Part D Enrollment PDP Enrollment MA-PD Enrollment

$25.93 $27.39 $29.89 $35.09 $37.25 $38.29 $37.78 $38.54 $37.75 $37.02 $39.21 $22.73 $23.37 $25.31 $29.49 $30.18 $30.17 $29.42 $29.95 $29.73 $30.01 $31.21 $12.08 $10.35 $11.97 $14.59 $13.32 $12.26 $12.27 $13.30 $14.70 $17.29 $16.99

$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NOTE: MA is Medicare Advantage. Average premiums are weighted by enrollment in each year (April for 2015). Excludes Part D plans in the territories. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan and enrollment files.

Part D Premiums Rose in 2016 After a Period of No Growth

Medicare Part D Weighted Average Monthly Premiums, Overall and by Plan Type, 2006-2016 MA Drug Plans Stand-alone Prescription Drug Plans All Part D Plans

$26.31 $60.77 $28.32 $22.46 $14.80 $28.36 $12.60 $18.40 $0 $10 $20 $30 $40 $50 $60 $70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AARP MedicareRx Preferred Silverscript Choice Humana Preferred Humana Walmart

NOTE: PDP is prescription drug plan. Plan names can change from year to year; plans are designated the same if they have the same contract/plan ID. Plan names for 2016 are displayed. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan and enrollment files.

Premium Growth Has Varied Among the More Popular PDPs

Premiums for Selected Medicare Part D Stand-Alone PDPs, 2006-2016

21% 46% 2% 3% 98% 33% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

25% coinsurance 1 generic tier/ 2 brand tiers/ specialty tier 2 generic tiers/ 2 brand tiers/ specialty tier Other formulary design

NOTE: PDP is prescription drug plan. Plans with 2 generic/2 brand/specialty tier design included in ‘other formulary design’ for 2006-2008. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan and enrollment files.

Five Formulary Tiers Have Become the Norm in Part D

Share of Enrollment in Medicare Part D Stand-Alone PDPs, By Formulary Tier Design, 2006-2016

Formulary Tier Part D Plan Type Part D Cost Sharing Employer Plans 2006 2010 2016 2015

Preferred generic* PDP $5 $7 $1 $10 MA-PD $5 $6 $3 Non-preferred generic* PDP n/a n/a $7 n/a MA-PD n/a n/a $12 Preferred brand PDP $28 $42 $41 $30 MA-PD $26.70 $39 $45 Non-preferred brand PDP $55 $76.50 40% $50 MA-PD $55 $79 $95 Specialty PDP 25% 30% 27% 25% MA-PD 25% 33% 29%

NOTE: PDP is prescription drug plan. MA-PD is Medicare Advantage Drug Plan. Part D estimates weighted by enrollment in each

• year. *Prior to 2012, most Part D plans only had one generic tier, therefore the preferred/non-preferred designation is not

applicable for amounts for 2006 & 2010, and the single generic tier amount is shown under preferred generic. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2006-2016 Part D plan data; data on employer plans from Kaiser/HRET Employer Health Benefits Survey, 2015.

Cost Sharing is Up for Brands, Down for Generics

Median Cost Sharing for Medicare Part D Plans, 2006, 2010, 2016, and Employer-Sponsored Plans, 2015

1,026 892 520 328 131 132 83 149 511 841 870 754 1,109 1,041 1,031 1,169 1,001 886 2011 2012 2013 2014 2015 2016 PDPs using tiered pharmacy networks Other PDPs

NOTE: PDP is prescription drug plan. Excludes plans in the territories. SOURCE: Georgetown/Kaiser Family Foundation analysis of CMS 2011-2016 Part D plan files.

Tiered Pharmacy Networks, New in 2011, are Now Common for PDPs

Number of Medicare Part D Stand-Alone PDPs using Tiered Pharmacy Networks, 2011-2016

Share of PDPs with tiered pharmacy networks

7% 14% 50% 72% 87% 85%

NOTE: Analysis includes 20 national and near-national stand-alone prescription drug plans in Baltimore, MD (zip code 21201) and reflects pricing at a Rite Aid pharmacy in this zip code. SOURCE: Georgetown/Kaiser Family Foundation analysis of 2016 Medicare Plan Finder data.

Total Out-of-Pocket Drug Costs Vary Depending on Plan Selection

Total annual out-of-pocket cost (including premiums) by mix of drugs across PDPs, 2016

$14,600 $5,605 $10,995 $1,771 $18,687 $3,451 $1,697 $3,127 $951 $5,433 $0 $5,000 $10,000 $15,000 $20,000 Profile A: Alice Profile B: Bob Profile C: Carla Profile D: Dora Profile E: Earl

Lowest cost in 2016 Highest cost in 2016

Never switched 71.9% 1 switch 19.1% 2 switches 6.2% 3 switches 2.2% Switched every year 0.5%

NOTES: LIS is Low-Income Subsidy. PDP is prescription drug plan. Analysis includes non-LIS Medicare Part D enrollees in a PDP continuously from 2006 to 2010 (n=313,418). See appendix (ADD LINK) for full methodology. SOURCE: Georgetown/NORC/Kaiser Family Foundation analysis of Medicare Beneficiary Summary Files and Plan Characteristics Files, 2006-2010.

Most Non-LIS Part D Enrollees Switch Plans Infrequently If At All

Share of Non-LIS Part D Enrollees Continuously Enrolled in PDPs From 2006 to 2010

Share of enrollees 100% 13% 67% 17% 4% 10.5% 7.8% 7.1% 21.3% 28.4%

Total PDP-to-PDP switching rate Decrease Increase of up to $10 or no change Increase of $10 to $20 Increase of $20 or more

NOTES: LIS is Low-Income Subsidy. PDP is prescription drug plan. Analysis includes non-LIS Medicare Part D enrollees in a PDP in

• ne or more annual enrollment period from 2006 to 2010; excludes those who switched to a Medicare Advantage drug plan;

estimates are averaged across four annual enrollment periods, 2006-2010. See appendix (ADD LINK) for full methodology. SOURCE: Georgetown/NORC/Kaiser Family Foundation analysis of Medicare Beneficiary Summary Files and Plan Characteristics Files, 2006-2010.

PDP Enrollees Switch More Often When Facing Premium Increases

Switching Rates Among Non-LIS PDP Enrollees, by Change in Premium, 2006-2010 Change in Monthly PDP Premium From Year 1 to Year 2

3.2% 8.3% 5.8% 8.9%

SOURCE: Authors’ analysis of data from the 2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds; Table IV.B7 and Table IV.B10.

Modest Spending Growth in Part D Is Projected to Change

Actual & Projected Per Capita and Total Medicare Part D Spending Growth Rates, 2006-2024 Total Part D Spending Growth Per Capita Part D Spending Growth 2006-2014 (Actual) 2014-2024 (Projected) 2006-2014 (Actual) 2014-2024 (Projected)

7.8% 22.8% 8.7% 22.5% 10.2% 21.5%

SOURCE: Express Scripts Drug Trend Report, 2016

Projected Growth Likely to be Driven by Specialty Drugs

Projected Trend, Medicare, Express Scripts, 2016-2018 Trend Forecast: Specialty Drugs Trend Forecast: Traditional Drugs 2016 2017 2018 2016 2017 2018

24% 33% 38% 66% 65% 65% 49% 51% 53% 39% 42% 43%

76% 67% 62% 34% 35% 35% 51% 49% 47% 61% 58% 57%

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

Revlimid Gleevec Zytiga Enbrel Humira Orencia Copaxone Tecfidera Avonex Harvoni Sovaldi Viekira Pak

NOTE: Analysis includes 20 national and near-national stand-alone prescription drug plans in Baltimore, MD (zip code 21201) and reflects pricing at a Rite Aid pharmacy in this zip code. SOURCE: Georgetown/Kaiser Family Foundation analysis of 2016 Medicare Plan Finder data.

Out-of-Pocket Costs Can Be Huge for Specialty Drugs

Median on-formulary out-of-pocket costs, PDPs, 2016

Hepatitis C Multiple Sclerosis Rheumatoid Arthritis Cancer

$6,608 $7,153 $6,516 $5,979 $6,448 $6,235 $4,413 $4,864 $4,872 $11,538 $8,503 $7,227

Up to catastrophic coverage phase In catastrophic coverage phase Median on-formulary out-of-pocket costs in 2016:

$1,092 $1,312 $444 $259 $311 $311 $311 $311 $311 $311 $311 $311 $311 $311 $0 $500 $1,000 $1,500 $2,000 $2,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

NOTE: Data for one representative plan (SilverScript Choice) in Baltimore, MD (zip code 21201) at a Rite Aid pharmacy in this zip

• code. Estimates for February do not sum to total due to rounding.

SOURCE: Georgetown/Kaiser Family Foundation analysis of 2016 Medicare Plan Finder data.

Out-of-Pocket Costs for Specialty Drugs are Uneven Across the Year

Out-of-pocket costs for a specialty drug, by month 54% of total out-of-pocket costs are in the catastrophic phase

2016 costs for Copaxone (multiple sclerosis)

Initial coverage phase = $1,092 in out-of-pocket costs Gap phase = $1,757 in out-of-pocket costs Catastrophic coverage phase = $3,372 in out-of-pocket costs $2,404 $704

Part D Policy Issues

 Address the use and cost of specialty drugs  Address drug prices more generally  Improve beneficiary education around plan

choices

 Increase take-up of Low-Income Subsidy  Encourage better medication therapy

management

Part D After Ten Years

 Firmly established source of Medicare drug

coverage, with a steady rise in enrollment

 Modest cost growth for enrollees and taxpayers  More cost sharing for brand-name drugs  Introduction of tiered pharmacy networks

 Challenges

 Slow spending growth, especially for specialty drugs  Protect beneficiaries’ gains in access and

affordability for prescription drugs

 Integrate standalone drug benefit with initiatives for

accountable care, value-based purchasing