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Pricing & Reimbursement Series: Medicare Part D's progress so far

The roll-out of Part D in January 2006 represented a significant leap forward, since it provided coverage for outpatient drugs for Medicare patients for the first time. A high number of both patients and insurance providers are now involved in the program, as a result of strong patient enrollment.

Scope

Overview of Part D enrollment, plus an analysis of how it has impacted the healthcare insurance market, and the branded and generic drug environment

Analysis of how Part D plans have changed from 2006 to 2007

Analysis of problems faced by Part D since its roll-out, and the identification of possible improvement areas going forward

Identification of how key issues such as the dual eligible patient population and drug sourcing in the donut hole are shaping Part D evolution

Report Highlights
Uptake into Part D has been strong, and despite the size and complexity of the program, patient satisfaction has been relatively high. The program faced a number of teething problems during roll-out, which have largely been resolved (e.g. IT issues); however, there are still a number of issues that haven't been remedied.

A significant factor to impact Part D is the way that plan providers have handled patients covered by both Medicare and Medicaid. Providing these 'dual eligibles' with adequate coverage has been a significant challenge, particularly during the roll-out of the program.

The choice facing Part D beneficiaries about where to source drugs when they enter the gap in coverage in Part D programs (termed the donut hole) is also impacting plan providers and patients, since patient choice in this situation has a significant impact on market dynamics.

Reasons to Purchase

Gain a clear understanding of how Part D has evolved since its roll-out in January 2006

Understand the problems that Part D has faced, together with identifying areas for improvement

Gain insight into the key issues that are shaping Part D currently and in the future

Table of Contents

• CHAPTER 1 EXECUTIVE SUMMARY - page 4
  • Scope of the report - page 4
  • Key findings - page 4
• CHAPTER 2 PART D: REVIEW OF THE PAST YEAR AND FUTURE DIRECTION - page 11
  • Overview of the usage of Part D in its first year - page 11
    • Patient enrollment in Part D has been strong - page 11
    • Part D beneficiaries have selected PDPs over MA-PD programs - page 12
    • Although the program has been going for a relatively short period of time, clear leaders in Part D provision have already emerged - page 13
    • Increased employer reliance on Part D is set to continue to drive strong enrollment in Part D in the future - page 14
  • Part D has significantly impacted the branded and generic drug marketplace, as well as the healthcare insurance providers - page 15
    • Currently, Part D is driving sales of both branded and generic drugs - page 16
    • Part D is also driving the growth of insurance companies, despite the significant financial risk of the scheme - page 17
  • There are a range of subtle differences in benefit design and formularies between 2006 Part D schemes and 2007 schemes - page 17
    • Although Part D costs to the patient are rising slowly, this is not set to significantly impact enrollment - page 18
    • The rise in the number of coverage plans and expanded formularies both increase the complexity of Part D - page 20
    • The requirement for six required categories of drugs in Part D formularies remains largely unchanged going into 2007 - page 21
    • Future perspectives: 2007 will be similar to 2006, however, the Part D landscape is likely to change significantly from 2008 onwards - page 21
      • Patient switching is low going into 2007 - page 22
      • 2008 is likely to see a significant change in Part D structure and delivery, leading to greater switching - page 22
• CHAPTER 3 PERSPECTIVES: PROBLEMS AND IMPROVEMENTS - page 24
  • Although there have been a range of problems with Part D, the incidence of these has fallen since its roll-out - page 24
    • Roll-out problems at the beginning of Part D have reduced drug access - page 26
    • Healthy senior citizens are angry with Part D enrollment criteria - page 27
    • Drug prices are slightly higher under Part D, although this does not appear to be significantly impacting Part D beneficiaries - page 28
    • Enrollees have had a number of problems accessing information on Part D, making it harder for these patients to gain optimal drug coverage - page 28
      • CMS helplines are more reliable than insurance plan helplines, yet there is still scope for improvement - page 29
      • Pharmacists and physicians are not well-enough trained in Part D, nor do they have enough time or resources to help patients navigate Part D - page 29
    • A number of pharmacies have faced significant cashflow problems as a result of Part D - page 31
    • Restrictive Part D plan requirements cause an increase in unnecessary hospitalizations - page 31
    • Part D is still overly complex, leading to coverage disruptions - page 32
      • Part D's complexity is making life difficult for Part D beneficiaries - page 32
      • There are key improvement opportunities to make Part D easier to navigate for patients - page 32
  • Patient and physician perspectives reveal that Part D is generally approved of, even if there are key improvement opportunities - page 34
    • Patients generally approved of Part D, even if they are not very enthusiastic about the program - page 34
    • Physician and pharmacist impressions of Part D are generally favorable, although they also believe the program is too complex - page 37
• CHAPTER 4 SIGNIFICANT FACTORS INFLUENCING PART D FROM A PROVIDER AND PATIENT PERSPECTIVE - page 39
  • Dual eligibles are a critical Part D patient population because of their high cost, yet they have faced significant problems - page 39
    • Part D's complexity is a particular challenge to dual eligibles - page 40
    • Dual eligibles were transferred onto Part D on the first day of its implementation - page 40
    • Dual eligible healthcare is co-ordinated by a number of stakeholders who need to interact effectively - page 40
    • A large proportion of patients on Medicare are relatively unaware of low-income assistance - page 41
    • Dual eligibles faced problems being recognized and charged appropriately by Part D providers - page 41
    • Dual eligibles need to be continuously assessed - page 41
  • Patients source drugs from a range of options once they hit the donut hole - page 41
    • Patients deciding to stick in the Part D scheme can use specialized Part D plans, plus LISs and PAPs - page 43
      • Part D programs that provide donut hole coverage are scarce, although there are plans to increase the number - page 43
      • Financial support for Part D patients: LISs and MSPs are the primary financial support for low-income Part D patients - page 44
      • There is scope for PAPs to continue to be used in the donut hole - page 44
    • Patients sourcing pharmaceuticals outside Part D use PAPs, parallel importation and discount/free drug schemes - page 46
      • Patients turn to parallel importation from Mexico and Canada for cheap pharmaceuticals, both inside the donut hole and out - page 46
      • Beneficiaries can use the Part D appeals process to obtain necessary drugs - page 46
  • There are two key political factors shaping Part D evolution - page 47
    • The financial blow to the states following the transition of Medicaid patients to Part D has been softened by an improved state clawback - page 47
    • The recent change in Democrat/Republican power mix is changing the Part D landscape - page 48
• CHAPTER 5 BIBLIOGRAPHY - page 50
  • Publications and online articles - page 50
• CHAPTER 6 GLOSSARY - page 54
  • Glossary of terms - page 54


• List of Tables
• Table 1: Breakdown of Part D enrollment for top 10 providers, July 2006 - page 14


• List of Figures
• Figure 1: At least half of the patients with access to Part D have enrolled in the plan - page 12
• Figure 2: There have been a number of problems in Part D, for which a range of solutions have been proposed - page 25
• Figure 3: Patient perspectives, six months after roll-out, 2006 - page 35
• Figure 4: Medicare-eligible seniors' impressions of Part D, 2006 - page 35
• Figure 5: Proposals judged by seniors as important when changing Part D - page 36
• Figure 6: Pharmacists have more concerns than physicians over core problems with Part D - page 37
• Figure 7: Part D patients' options for sourcing pharmaceuticals depend on whether they continue sourcing from Part D or if they leave the scheme - page 42
• Figure 8: Sources of coverage in the donut hole for Part D enrollees - page 43

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