The Part D Experience: What are the Lessons for Broader Medicare Reform?
The Kaiser Family Foundation sponsored a forum on the Part D program which was enacted in 2003, almost ten years ago. At the time of passage, there were many uncertainties about how the program would fare, e.g. would plans participate, would beneficiaries enroll. The Part D program has had much success in many areas. The following slides highlight the Part D program in 2012 and trends since 2006.
http://www.kff.org/medicare/upload/Overview-of-Medicare-Part-D-in-2012-Slides.pdf
Jack Hoadley summarized the following findings from his Issue Brief “Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition” http://www.kff.org/medicare/upload/8308.pdf
• Part D enrollment is significantly below projected levels — Enrollment is 73 percent in 2012 which is below the projected enrollment of 87 percent. (Note — this includes RDS enrollees). 10 percent of beneficiaries have no equivalent coverage and are assumed to have made a decision not to enroll or are not aware of their drug coverage options.
• Benefit costs are lower than projected — Part D spending is 68 percent of the projected costs. This is due to a variety of factors including the shift to generics, lower overall drug pricing trends, slower drug pipelines, lower enrollment, impact of competition and informed consumer shopping.
• Generic drugs — Generic drug use increased from 60 percent to 75 percent thus significantly impacting lower program costs.
• MA-PD enrollment is higher and premiums are lower than PDPs — MA-PD premiums are lower than PDPs even after taking into account the use of savings from the medical side.
• Average utilization has increased however this is consistent with projections.
• Rebates have been higher than expectations but there is no publicly available information on the trends.
• There is evidence that competition has influenced Part D spending — The Part D market is robust (national average of 31 plans although there has been some consolidation) and bidding has affected premiums and availability of low income subsidies. However over half of enrollment is concentrated in a five plans and. Consumer tools have improved over the course of the program and have influenced plan selection, however only six percent of beneficiaries switch plans from year to year.
Jim Capretta emphasized the remarkable success of Part D in controlling costs especially when factoring in MA-PD premiums which result in an overall Part D average premium of $30 and average increase of $1 per year. Karen Ignagni mentioned high consumer satisfaction with Part D plans and plan tools to manage costs such as tiering, Medication Therapy Management and utilization management. Ignagni also reported that Part D plans are working with specialty societies on clinical pathways to assist with bundling and management of chronic diseases. Marilyn Moon pointed out that reinsurance, risk adjustment and risk corridors have reduced the risk for insurance companies in Part D thus ensuring plan participation.
Panelists noted that the Part D program has several lessons for Medicare reform and discussion of premium support models. Jim Capretta stated that while there is more complexity on the medical side than on the drug side, that Part D should provide lessons in who should do what, for example, the plans are better at negotiating drug prices and avoiding the FFS problems when the government regulates prices. He also noted that the government has been effective in overseeing the marketplace. Marilyn Moon noted that Part D has more controls and protections than are being discussed in the premium support models, that much of the Part D success has been in riding the generic wave, and that MA subsidies will be going away. Ignagni noted that MA plans are doing better in controlling diabetes and preventing readmissions. Jack Hoadley observed that the plan finder would be much more complicated when adding cost sharing and quality information on medical services.