CMS Aims To Reduce 2010 Part D Churn With New Benchmark Formula
Executive Summary
CMS has found a way to reduce the number of drug plan reassignments that would be needed for low-income Medicare Part D beneficiaries in 2010 by adjusting its calculation of the low-income premium benchmark
|
CMS has found a way to reduce the number of drug plan reassignments that would be needed for low-income Medicare Part D beneficiaries in 2010 by adjusting its calculation of the low-income premium benchmark. Under the new method of calculation, approximately 800,000 low-income beneficiaries will be reassigned to lower-cost plans in 2010. That is half the 1.6 million that would have had to shift to a new plan under the previous method of calculating the benchmark, CMS pointed out. And it is considerably less than the 1.3 million low-income members that had to move to new plans in 2009. When individuals qualify for the Medicare low-income benefit, CMS auto-assigns them to a plan that has a premium at or below a specified premium benchmark. Members may have to be reassigned year-to-year if their premium increases to the point where it exceeds the benchmark. The change in CMS' calculation - done under the auspices of a demonstration program - involves basing the benchmark in part on Medicare Advantage drug plan premiums before the application of Medicare Parts A and B rebates. That keeps the benchmark higher, which in turn allows more plans to come in under the bar. Higher Costs To Medicare While the change is good for beneficiaries, it appears likely to increase overall costs to the Medicare program at a time when Congress and the Obama administration are actively looking for ways to scale back. That could add support to current proposals for reducing Part D costs, such as applying Medicaid-level drug rebates to Medicare/Medicaid dual eligibles in Part D or direct government price negotiations with drug firms. CMS outlined the change in an Aug. 13 announcement to Part D plan sponsors. The agency also released the 2010 national average monthly bid amount, the beneficiary premium and the regional low-income premium subsidy amounts. Based on bids submitted by the Part D plans, CMS estimates the average monthly premium a beneficiary will pay for standard Part D coverage in 2010 will be $30, up $2 from 2009. The increase in the average premium, while expected, is somewhat less than the increases of prior years. That may indicate a steadying in premium increases by plans. In 2009, premium increases among all stand-alone Part D plans spiked 24 percent, led by increases of 60 percent or more by Humana, according to an analysis by Avalere Health (1 (Also see "Part D Trends In 2009: Higher Premiums, Reduced Gap Coverage" - Pink Sheet, 29 Sep, 2008.)). The premium increases were needed to cover higher drug costs, plan sponsors said. That led to renewed calls in Congress for drug price restraints through direct government negotiation (2 (Also see "Higher Part D Premiums Whet Waxman’s Appetite For HHS Price Negotiation" - Pink Sheet, 20 Oct, 2008.)). Higher Co-Pays To Come? Even though premiums may hold fairly steady in 2010, plans may try to address higher drug costs through other means, such as by boosting cost-sharing or setting higher deductibles, suggested Avalere Senior Manager Margaret Nowak. That should raise a red flag for the pharma industry, which has been advocating for co-pay reform, since it argues that unmanageable cost-sharing is an important reason that "half the scripts written go unfilled" (3 ). More detailed information on the Part D plans will be available in September, when CMS announces 2010 sponsors, as well as those who will not renew their contracts with Medicare next year. Plan-specific formulary data is expected to be available beginning in November. - Cathy Kelly ( 4 [email protected] ) |