Medicare Compliance & Reimbursement

Plans, PBMs looking at automatic enrollees first.

Uncertainty surrounds many facets of Medicare's prescription drug benefit, as plan-sponsor hopefuls submitted their applications March 23.

Little is known of drug-only insurance plans bearing partial risk for enrollees' prescription-drug costs, and drug-cost and utilization information is scarce for Medicare beneficiaries. That leaves would-be sponsors with little information on which to base the bids they must submit by June 6.

Speculation On The Rise About Target Groups

But as the Centers for Medicare and Medicaid Services (CMS) release more detailed guidelines and potential sponsors announce their intentions, the picture is becoming a little clearer. Among observers' predictions: sponsors will design plans specially targeted to different beneficiary groups, such as dual eligibles; and enforcing rules intended to prohibit plans from discouraging enrollment by sicker beneficiaries will be a potentially sticky wicket for CMS.

Perhaps to the surprise of some, sponsors are developing drug plans to target different markets, said Health Strategies Consultancy President Dan Mendelson at a March 14 Kaiser Family Foundation briefing.
 
Rather than constructing formularies to attract the widest possible range of beneficiaries, plans "are appearing to segment the Medicare population," he said. When the details become known over the next few months, "I would expect to see a considerable level of variation" both between regions and between individual prescription drug plans "among formularies that are offered."

One big reason that such differences will emerge, said Georgetown University Research Professor Jack Hoadley: In order to participate in the drug benefit to the extent that they - and federal officials - hope, PDPs not only must meet CMS's requirements but also "are responsible to the market" for designing plans that will attract beneficiaries to sign up. Beneficiaries vary widely in factors such as health status and wealth, making it difficult to meet all their needs with a single plan, said Tom Paul, chief pharmacy officer for UnitedHealth Group's elder-care division, Ovations.

Developing a low-cost plan with a tight formulary that nevertheless will adequately serve dual eligibles, most of whom are sicker than the average beneficiary, seems like a daunting challenge.  But Mendelson said that "there is an incentive" for companies to try it. Besides the enticement of knowing that your plan is targeting the one population "that's guaranteed to enroll," companies are looking at Medicare's risk-adjustment system for Part D and concluding that it may offer generous enough payments for PDPs to make a buck, even serving the high-utilizing duals.