Featured Health Business Daily Story, Feb. 29, 2012

PDP Enrollment Data Imply Seniors Pursue Rx Savings at the Expense of Convenience (with tables: Medicare Part D PDPs With Preferred Pharmacy Networks; Medicare Part D Enrollment for Top 10 PDPs)

Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.

February 24, 2012Volume 13Issue 4

Low premiums, zero-dollar deductibles and preferred pharmacy networks were winning strategies for Medicare Part D sponsors this last open-enrollment period, as evidenced by new CMS data on Prescription Drug Plan (PDP) enrollment. Both the Humana Walmart-Preferred Rx Plan and Coventry Health Care, Inc.’s First Health Part D Value Plus succeeded at netting new enrollees. And UnitedHealth Group’s AARP MedicareRx Preferred plan lost 12% of its members, although it still remained the market leader.

“So many people are making an active choice year over year, changing their PDP and shopping around for lower cost,” observes Bonnie Washington, senior vice president and head of reform, Avalere Health LLC. “This is definitely a group of beneficiaries who are looking at their options and making decisions and moving plans based on those decisions, and we see that happening with the growth in enrollment of these lower-premium plans.”

“The Part D plans really have consumers who are very focused on cost, and the existence of a coverage gap really focuses the senior’s mind on trying to contain costs below that coverage gap, so it has created a generation of shoppers,” says Adam Fein, president of Pembroke Consulting, Inc. “The preferred network is just another variation of a consumer-directed plan that applies the consumer shopping mentality to a pharmacy benefit.”

According to a Pembroke analysis of PDP enrollments accepted through Jan. 12, 2012, almost one-third of all PDP enrollees are now in a plan with some kind of preferred pharmacy arrangement (see table, p. 5). Moreover, year-over-year enrollment in preferred network plans grew twice as quickly (12.3%) as overall PDP enrollment (6.3%).

“I think this really calls the bluff of pharmacy loyalty,” asserts Fein. “Enrollment in these lower cost plans shows that consumers, even older consumers, are willing to trade off convenience for price.”

Preferred pharmacy networks encourage members to use a select group of pharmacies by offering a lower copay amount, while restricted networks limit the number of in-network pharmacies with no financial incentive to the member (see box, p. 7).

Despite losses of auto-assigned low-income beneficiaries, UnitedHealth continues to be the No. 1 PDP provider with more than 4 million enrollees in its AARP MedicareRx Preferred plan (see table, below). “Their enrollment actually declined by half a million primarily due to the fact that they lost eligibility to enroll low-income beneficiaries with a zero premium in several geographic areas,” explains Washington.

Both the AARP MedicareRx Preferred and MedicareRx Enhanced plans have no deductible and offer copays as low as $2 on generic drugs when purchased through participating “Pharmacy Saver” locations, which are mostly supermarket pharmacies and Target Corp. stores. Monthly premiums are slightly higher than major competitors’ plans, depending on location.

Meanwhile, the Humana Walmart plan — which launched in 2010 and offers a $15 monthly premium and in-store copays as low as $1 when using subsidiaries of Wal-Mart Stores, Inc., including Walmart, Sam’s Club, Neighborhood Market and Walmart Express — is now the third-largest PDP. Enrollment jumped 66% from 2011 to 2012.

In conference call to discuss fourth-quarter earnings on Feb. 6, Humana Inc. Chairman and CEO Michael McCallister said the company anticipates adding another 500,000 to 600,000 PDP enrollees this year, “another robust increase” on top of the net new PDP membership growth of more than 870,000 for 2011. He attributed growth in both years to the cobranded offering with Walmart, noting that its one-price, one-benefit structure nationwide makes it easier for potential enrollees to understand the plan design, “especially in the PDP environment, where the number of plan choices runs into the hundreds.”

Another preferred pharmacy plan that has performed well so far is Coventry’s First Health Part D Value Plus, which picked up nearly 350,000 enrollees during its first open-enrollment period. The zero-deductible plan is not cobranded, but offers preferred generic medications for no copay at preferred pharmacies, such as Walgreen Co., Target and Walmart, and has a monthly premium of around $24, depending on the geographic area.

“When designed properly, these networks are successful in controlling costs while retaining consumer choice,” maintains Fein. “When Coventry announced its plan, for tier 1, there was a zero-dollar copay and a $7 copay at other pharmacies, so you can make your choice. But we’re not talking about huge differences in cost, and they managed to become one of the larger plans with that — the 13th largest — so there’s clearly a desire for consumers to try to save money.”

The CVS Caremark Value plan also got a big boost in enrollment — up 114% from 624,000 enrollees in February 2011 to 1.3 million for the same month a year later — helped by CVS Caremark Corp.’s January 2011 acquisition of Universal American Corp.’s Part D lives (DBN 1/7/11, p. 1), according to Washington. Universal American had approximately 1.9 million PDP lives when the deal was completed in April 2011. “Universal American operated its own brand for a couple of years, but this year CVS was required [by CMS] to merge it with its other plans, so the enrollment really comes from including Universal American lives in that plan,” she explains.

CVS Caremark recently unveiled plans to buy Health Net, Inc.’s PDP, which could trigger even more consolidation within the PDP market (DBN 1/27/12, p. 1). That deal, which is expected to close in the second quarter of 2012, will add about 400,000 PDP lives, bringing the company’s total PDP membership to approximately 4 million, said President and CEO Larry Merlo in a fourth-quarter earnings call on Feb. 8.

But Fein suggests there may still be room for smaller players to compete. “There is enormous concentration among Part D sponsors: The top three companies operate plans with six out of 10 enrollees,” he says. “Smaller PBMs, such as [SXC Health Solutions Corp. subsidiary] InformedRx and Catalyst Rx, have minimal Part D penetration, so it’s a growth area for them.” Catalyst recently partnered with AARP to start serving its non-Medicare population (see brief, p. 8).

Meanwhile, Rite Aid EnvisionRx Plus, a new preferred pharmacy PDP offered by Envision Insurance Company and Rite Aid Corp., saw very little enrollment, with fewer than 2,000 signed up during the open-enrollment period. “It was a complete bust, which says something about Rite Aid’s lack of overall consumer appeal,” says Fein. “They’re not attracting enough new prescriptions, so they are shrinking the company and focused on retaining their most loyal customers.”

Both Washington and Fein agree that the success of preferred pharmacy networks in Part D could lead to even greater proliferation in the commercial space.

“Part D is unique because it’s a pharmacy benefit only. But if you think forward a couple of years to the [health insurance] exchanges, everyone’s expecting that to be a very price-sensitive market. So it’s possible that if these sorts of arrangements are successful in lowering costs and keeping premiums low, you’ll see this trend continue in that market as well because it’s going to be all about the premiums,” concludes Washington.

The enrollment data can be found at www.cms.gov/MCRAdvPartDEnrolData/.

Medicare Part D Prescription Drug Plans (PDPs) With Preferred Pharmacy Networks, 2012

Plan Name

Parent Organization

2012 Enrollment1

% of 2012 PDP Enrollment

2012 Rank, based on Enrollment2

% Change vs. 20113

AARP MedicareRx Preferred

UnitedHealth Group

4,031,526

20.5%

1

–11.9%

Humana Walmart-Preferred Rx Plan

Humana

1,391,232

7.1%

3

+66.5%

First Health Part D Value Plus

Coventry Health Care

349,456

1.8%

13

n.a.

Aetna CVS/pharmacy PDP

Aetna

331,219

1.7%

14

n.a.

AARP MedicareRx Enhanced

UnitedHealth Group

115,088

0.6%

23

+4.5%

CVS Caremark Plus

CVS Caremark

50,197

0.3%

43

–22.5%

Rite Aid EnvisionRxPlus

Envision Insurance

1,914

0.0%

142

n.a.

Total

6,270,632

31.8%

+12.3%

1 2012 data reflect enrollments accepted through Jan. 12, 2012.

2 Rank out of 193 PDPs with non-zero enrollment as of Jan. 12, 2012.

3 2011 data reflect enrollments accepted through Jan. 14, 2011. “n.a.” indicates plan was not available in 2011.

SOURCE: Pembroke Consulting, Inc. Published on Drug Channels (www.DrugChannels.net) on Feb. 8, 2012.


Medicare Part D Enrollment for Top 10 Prescription Drug Plans (PDPs), 2011-12

2012 PDP Offering

2011 Plan Enrollment

2012 Plan Enrollment

% Change (2011-2012)

AARP MedicareRx Preferred

4,565,805

4,021,398

-12%

Community CCRx Basic

1,719,489

1,813,954

5%

Humana Walmart-Preferred Rx Plan

835,690

1,391,148

66%

Humana Enhanced

1,408,181

1,385,022

-2%

CVS Caremark Value1

623,617

1,335,925

114%

First Health Part D Premier

1,056,737

994,083

-6%

WellCare Classic

673,882

685,670

2%

CIGNA Medicare Rx Plan One

505,753

577,930

14%

HealthSpring Prescription Drug Plan

424,946

468,540

10%

Medco Medicare Prescription Plan - Value

362,146

432,905

20%

All PDPs

16,954,754

17,477,848

3%

1 2012 CVS Caremark Value plans include enrollment from the Advantage Star Plan by Rx America plans due to consolidation in 2012.

Note: Analysis excludes enrollment in US territories.

SOURCE: Avalere Health LLC analysis using DataFrame, a proprietary database of Medicare Part D plan features. 2011 enrollment based on February 2011 enrollment data. 2012 enrollment based on February 2012 enrollment data.


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