Medicare Rx Map Includes 34 Regions For Part D, 26 For Medicare Advantage

The regional system includes smaller regions for stand-alone drug plans to make it easier for sponsors to offer benefits in 2006, CMS Administrator Mark McClellan says. CMS sought to balance the need for strong networks while keeping them manageable for sponsors.

The Medicare prescription drug program will be administered through 34 regions for stand-alone plans under Part D and 26 regions for Medicare Advantage preferred provider organizations, the Centers for Medicare & Medicaid Services announced Dec. 6.

The final map is designed to strike a balance between establishing regions large enough to attract the interest of potential plan sponsors but not so big as to be unmanageable.

"Each region must be large enough to support strong networks," CMS Administrator Mark McClellan said at a press conference, but they also "need to be small enough to make sure that plans can start right away."

The map includes several multi-state regions that are identical for MA and Part D. For instance, Vermont, Massachusetts, Connecticut and Rhode Island form one region for both; seven rural states also are combined for a region extending from Montana to Iowa.

In several cases, separate PDP regions are "nested" within a single MA region. Virginia and North Carolina, Mississippi and Louisiana, and Wisconsin and Illinois are among those states that are coupled for Medicare Advantage but are single-state Part D regions.

McClellan said the final map includes more regions for Part D stand-alone plans because CMS wanted to ensure that those regions are manageable for new plan sponsors.

"We didn't want a region to have too many beneficiaries for plans to scale-up and get started in 2006," McClellan declared.

"That's why you'll see the drug plan regions are sometimes smaller than the PPO regions. We didn't want too large a scale right off the bat to get in the way of many plans participating in the drug benefit."

A CMS document states that at least 400,000 individuals must be eligible for Part D benefits in a given region in order to make it viable for two competing PDPs.

On the other hand, more than 3 mil. eligible beneficiaries in a single region is characterized as too large. In that instance, "plans may have difficulty enrolling and providing services to beneficiaries, especially in the start-up year," the document states.

McClellan said CMS also considered state-by-state variations in prescription drug spending.

"Comments clearly indicated that limiting cost variation within a region would likely make it easier for plans to participate, so we grouped states with similar costs together to do just that," he said.

However, he noted, "there is some cost variation within all of the regions," with some of the greatest variations occurring within single states.

For regional health plans, the agency plans to make payment adjustments based on beneficiaries' county of residence.

"This way we'll pay the right amount to plans whose beneficiaries might come from high-cost areas, and we'll avoid paying regional plans too much if their beneficiaries come from low-cost areas," McClellan declared. The system will be set out in the final Medicare Rx implementation regulation expected in January.

- Andrew Dove