Consolidation and Preferred Pharmacy Networks in 2022’s Medicare Part D Plans: Cigna, CVS Health, Humana, UnitedHealthcare, WellCare, and More

Open enrollment is under way for the 2022 Medicare Part D plans. Our exclusive analysis of Center for Medicare & Medicaid Services’ (CMS) data reveals that preferred cost sharing pharmacy networks will maintain their dominance as an established component of Part D benefit design.

For 2022:

• 98% of stand-alone Medicare Part D prescription drug plans (PDP) will have a preferred network.

• 66% of Medicare Advantage prescription drug (MA-PD) plans will have a preferred network.

Below, I provide historical data on preferred networks’ growth and update the top companies’ 2022 offerings. Two companies—Cigna and WellCare—have streamlined their PDP offerings by eliminating plans that had been acquired from other companies. I also provide our first analysis of the prevalence of preferred networks in three different types of MA-PD plans.

In upcoming articles, I’ll examine how chain and independent pharmacies will participate in these plans.

OUR PLAN FOR PLAN COUNTING

A preferred network gives consumers a choice of pharmacy while providing financial incentives to use the pharmacies that offer the payer lower costs or greater control. A consumer with a preferred network benefit design retains the option of using any pharmacy in the network. However, the consumer’s out-of-pocket expenses will be higher at a non-preferred pharmacy.

Preferred network models have grown rapidly within the Medicare Part D program, where CMS calls them preferred cost sharing networks. CMS calls the pharmacies in such a network preferred cost sharing pharmacies.

According to federal regulations, preferred pharmacies in Part D must offer “covered Part D drugs at negotiated prices to Part D enrollees at lower levels of cost sharing than apply at a non-preferred pharmacy under its pharmacy network contract.” (source) Beneficiaries who qualify for the Low-Income Subsidy (LIS) face low out-of-pocket drug costs regardless of a pharmacy’s preferred status.

To identify the 2022 Part D preferred cost sharing pharmacy networks, we used the 2022 Plan Finder Data and the 2022 Landscape Source Files (v 09 08 21) for PDPs and MA plans.

Our analysis of stand-alone PDPs eliminated the following plans from the sample:

• Employer-sponsored plans
• 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)

Our analysis of Medicare Advantage (MA) plans included only those plans that offered basic or enhanced drug coverage. We identified unique plans based on the combination of Contract/Plan/Segment ID.

ONE PLAN, TWO PLAN…AH AH AH AH AH!

Our final PDP sample included 80 PDPs, which will operate 766 regional PDPs:

• Sixteen plans are being offered in all 34 regions, for a total of 544 PDPs (=16*34).

• Two plans are operating in 33 regions; two plans are operating in 29 regions; and one plan is operating in 17 regions. These five plans account for a further 141 regional PDPs.

• The remaining 53 plans are operating in eight or fewer regions and account for 81 PDPs. Many of these plans are state-level Blue Cross Blue Shield plans.

Here are the total number of MA-PD plans, by type

• Health maintenance organizations (HMOs): 2,301 local plans
• Preferred provider organizations (PPOs): 1,364 local plans and 33 regional plans
• Private fee-for-service (PFFS) plans: 21 plans

For 2022, 3,719 (90%) of these 4,114 MA plans will offer prescription drug coverage.

Click here to review our 2021 analysis, which included only PDPs.

Part D enrollment in MA-PD plans has increased over time, while enrollment in stand-alone PDPs has decreased in recent years. (source)

BATTY FOR PREFERRED NETWORKS

The chart below shows the growth of preferred networks in stand-alone prescription drug plans. In 2011, only 7% of total regional PDPs had a preferred network. For 2022, 98% of Medicare Part D regional prescription drug plans (PDP) will have a preferred network.

[Click to Enlarge]

From 2015 to 2017, the share of plans with a preferred network remained fairly steady. During this period, however, the total number of plans declined significantly, from 1,169 in 2014 to 746 in 2017. From 2017 to 2021, the total number of plans increased by 34%, to 996. The number of plans with preferred networks, meanwhile, increased by 55%, from 633 in 2017 to 980 in 2021.

For 2022, however, the number of stand-alone PDPs will drop by -23%, from 966 to 766 plans. As we discuss below, this drop reflects consolidation among plan sponsors.

MA-PDs are much less likely to offer plans with preferred pharmacy networks. Overall, only 66% of these plans will have preferred networks. The prevalence of preferred pharmacy networks will vary by plan type:

[Click to Enlarge]

Unfortunately, we do not have historical data for MA-PD plans.

COUNT ON THEM

Here are the 2022 highlights from the eight major companies with national stand-alone PDPs. These companies account for 685 (89%) of the total 766 PDPs. None of these companies’ plans will have an open retail network. All of the plans have preferred cost sharing networks.

• Aetna Medicare will offer the two legacy CVS Health SilverScript Choice and Plus plans, as well as the new SilverScript SmartRx plan that was launched in 2021. Recall that CVS Health’s Part D business is now integrated with Aetna and reported within the company’s Health Care Benefits segment.

• Cigna will offer three plans (Secure, Secure-Essential, and Secure Extra). These plans were branded with the HealthSpring name prior to 2021. Express Scripts will no longer offer its own plans separately from Cigna.

• Clear Spring Health entered the market in 2020 and will offer two plans with preferred networks: Clear Spring Health Premier Rx and Clear Spring Health Value Rx. Clear Spring Health is part of the Group One Thousand One insurance company.

• Humana will offer the three plans that it offered in 2020 and 2021—Basic Rx, Premier Rx Plan, and the Humana Walmart Value Rx Plan. The Humana Basic Rx plan switched from an open network to a preferred retail network for 2021.

• Mutual of Omaha Rx will offer its Rx Plus and Rx Value plans. These plans launched for the 2019 plan year and are offered through Omaha Health Insurance Company, a Mutual of Omaha affiliate company.

• Rite Aid’s Elixir will offer its RxSecure PDP in all 34 regions (compared with 17 regions for 2021). However, the Elixir RxPlus plan will be offered in only 17 regions (compared with 34 regions for 2021). The Elixir business was previously known as EnvisionRx.

• UnitedHealthcare will offer two AARP-branded plans and a co-branded AARP MedicareRx Walgreens plan.

• WellCare will offer only three plans in 2022: Wellcare Classic; Wellcare Value Script; and Wellcare Medicare Rx Value Plus. All three plans were available in 2020 and 2021. However, WellCare will no longer offer the three plans—Rx Saver, Rx Select, and Rx Value Plus—that it had acquired as part of the Aetna-CVS Health merger.

For more on the economics and strategies of narrow networks, see Chapter 7 of our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Stay tuned for our look at the retail pharmacy industry’s winners and losers in the 2022 networks.