Medicare Advantage

Consider preferred pharmacy plans for Medicare Part D drug coverage

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The 2016 Open Enrollment Period (OEP) for Medicare Part D prescription drug plans (PDPs) has recently ended, having run from Oct.15-Dec. 7, 2015. One important option to consider for your PDP, whether for 2016 or beyond, is the selection of a preferred pharmacy for you and your family. According to the Centers for Medicaid & Medicare Services (CMS), in 2016, 85 percent of Part D regional prescription drug plans (PDPs) will include preferred pharmacies.

Preferred pharmacy plans are becoming very popular with Medicare beneficiaries, due to their convenience and lower premiums. These plans provide beneficiaries with lower out-of-pocket costs for prescription drugs and lower cost-sharing amounts. Cost-sharing is the amount enrollees may be required to pay for health care services or prescriptions. It can include copayments, coinsurance and deductibles.

Beneficiaries happy with pharmacy coverage

In a survey conducted by Hart Research Associates, a leading polling organization, it was found that Part D enrollees are overwhelmingly satisfied with their preferred pharmacy plans. Among the findings are:

  • Nine out of 10 of Part D enrollees aged 65 and over were found to have convenient access to these preferred pharmacies, whether living in urban, suburban, small town or rural areas.
  • Eliminating preferred pharmacies would increase Part D premiums by approximately $63 annually for over 75 percent of Part D enrollees.
  • Over the next 10 years, preferred pharmacy plans will reduce federal Medicare spending by $7.9 billion to $9.3 billion.

There are currently 62 plan sponsors offering 754 regional PDP options. This percentage is similar to 2015, suggesting that preferred pharmacies will continue to play a big part in Part D coverage. However, pharmacy owners are not fans of these plans, in general. That is because with preferred pharmacy plans, the largest source of savings is usually that of reduced pharmacy profits.

But what if you failed to enroll in a preferred pharmacy plan this past Part D OEP? Well, you may be able to enroll during the upcoming Medicare Advantage Disenrollment Period (MADP). From Jan. 1-Feb. 14, 2016, the MADP enables millions of eligible Americans to make changes to selected plans. For instance, Medicare Part C (Medicare Advantage; private insurance plans) members can join a PDP. This coverage will begin the first day of the month after the plan receives the enrollment form.

A source of political controversy

But even with these complaints, preferred pharmacy networks are becoming a cornerstone of Medicare Part D. As such, politicians are being careful when considering policies that may impact the costs and quality of these plans. One example is the independent drugstore lobby’s “any willing pharmacy” mandate (H.R. 793/S. 1190).

With this policy, Medicare PDPs select specific pharmacies to be their plan’s “preferred” pharmacy. This forces enrollees to switch to that pharmacy. If they prefer to stay with their current pharmacy, they face higher prescription copayments. Additionally, independent community pharmacies are typically excluded. This policy’s fate is being decided by a bipartisan Congressional board. However, opponents that if passed, this policy would threaten preferred pharmacy plans and increase spending by $21 billion over 10 years.