Medicare Part D 2016: 75% of Seniors in a Preferred Pharmacy Network (PLUS: Which Plans Won and Lost)

Narrow pharmacy networks—either preferred or limited models—are now a widely accepted element of benefit design.

Just released data from the Centers for Medicare & Medicaid Services (CMS) confirms that preferred cost-sharing networks continue to dominate Medicare Part D. According to our exclusive analysis, 75% of seniors are enrolled in Prescription Drug Plans (PDPs) with preferred cost sharing pharmacy networks for 2016.

The top two companies—Humana and UnitedHealthcare—will enroll almost half of Part D beneficiaries in PDPs. Meanwhile, CVS Health’s SilverScript enrolled almost 80% of beneficiaries in an open network plan.

Read on for our latest look at the biggest companies and plans. In a future post, I’ll examine how Part D plans are building performance-based pharmacy networks.

DATA OR DATA NOT

Data on Prescription Drug Plan (PDP) enrollment in 2016 are available from this CMS page: Medicare Advantage/Part D Contract and Enrollment Data. Note that these data reflect enrollments accepted through December 4, 2015. The final 2016 numbers may differ slightly, because the open enrollment period ended three days later, on December 7, 2015.

Last October, I identified the Medicare Part D prescription drug plans (PDP) with preferred network structures. See EXCLUSIVE: In 2016, 85% of Medicare Part D plans have a preferred pharmacy network . My evaluation includes only stand-alone PDPs. I eliminated the following plans from the sample:

• Employer-sponsored plans
• Medicare Advantage PDPs (MA-PDP)
• Plans from U.S. territories and possessions (American Samoa; Guam; Northern Mariana Islands; Puerto Rico; Virgin Islands)
• Employer/union-only group plans (contracts with "800 series" plan IDs)

The final sample included 82 Part D plans, operating 886 regional PDPs. The new enrollment data allows us to see how these plans performed.

JUDGE A PLAN BY ITS SIZE, DO YOU?

For 2016, 62 plans have preferred networks. These plans operate 754 regional PDPs, which account for 86% of the total regional PDPs for 2016.

Based on the initial enrollment figures, these 62 plans enrolled 14.9 million people, or 75% of the PDP total through December 4, 2015. By comparison, 81% PDP beneficiaries enrolled in a preferred plan as of the initial 2015 enrollment data. http://www.drugchannels.net/2015/01/in-2015-8-of-10-seniors-choose.html

The top three parent organizations—Humana, UnitedHealthcare, and CVS Health's SilverScript—account for almost two-thirds of enrollment in stand-alone Part D plans. The top 10 companies (shown below) are 91% of enrollment. These figures are comparable to the 2015 figures.

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The second chart contains our exclusive summary of the 10 largest Medicare Part D PDPs with preferred pharmacy networks. These 10 plans account for 60% of total Part D enrollment.

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For a summary of pharmacy chains’ participation in preferred networks, see How the Eight Biggest Retail Chains (and Independents) Are Participating in 2016's Part D Preferred Network.

KNOW THE GOOD FROM THE BAD

Here are the 2016 highlights from some of the largest Part D plan sponsors:

Humana grows again. Humana is offering the same three plans as it has in the past two years: Humana Enhanced, Humana Preferred Rx Plan (its original plan with Walmart), and the co-branded Humana Walmart Rx Plan. All three plans have a preferred network and are being offered in all 34 regions. These three plans collectively garnered 4.6 million (23.3%) of total Part D enrollees. That’s 12% higher than Humana’s 4.1 million total from last January. The Humana Walmart Rx Plan had the largest increase in enrollment.

UnitedHealthcare slipped. UnitedHealthcare offers two AARP plans with preferred cost sharing pharmacy networks. These plans have 4.6 million (22.9%) of enrollees. That’s lower than the 4.9 million initial enrollment figures for 2015.

CVS Health’s SilverScript was an open network winner. CVS Health’s SilverScript Choice remains the largest open network plan. It has 3.8 million members, up 20% from last January. By contrast, the SilverScript Plus preferred network plan shrank to only 123,544 enrollees, or 0.6% of the total.

Aetna rebounded, despite more controversy. Aetna Medicare’s enrollment grew by 37%, giving it 4.8% of total beneficiaries. Last year, Aetna faced allegations that its online plan information did not accurately identify preferred pharmacies. This year, Aetna is being criticized for extremely low Maximum Allowable Cost (MAC) reimbursements to its network pharmacies. Adventure. Excitement. A PDP craves not these things.

Wellcare’s open network switch didn’t work. For 2016, Wellcare switched its three plans from preferred cost sharing to open networks. Its plans accounted for 60% of all open network plans, but only 21% of open network enrollment. Its total enrollment dropped by 96,000 beneficiaries (-8%) compared with last year's initial enrollment period.

Rite Aid’s EnvisionRx was flat. EnvisionRx, the PBM that Rite Aid acquired last year, enrolled 364,397 people—just 795 more people (+0%) than it enrolled last year.

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Data covering the entire open enrollment period will be released in February.

And if this all seems vaguely familiar, then you’ll know how I felt after seeing The Force Awakens. (I loved it anyway, in case you’re wondering.)