Friday, January 17, 2014

For 2014, 3 out of 4 Seniors Choose a Narrow Network Medicare Drug Plan—and Humana, UnitedHealthcare Win Big

The Centers for Medicare & Medicaid Services (CMS) just released the first batch of 2014 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These close-to-final numbers provide an initial look at the winners and losers.

Highlights of our exclusive Drug Channels analysis:
  • 60 of 2014's 106 PDPs have a preferred pharmacy network design.
  • Three out of four (75%) seniors enrolled in one of these 60 plans.
  • The six Humana and UnitedHealthcare plans, which all had preferred networks, account for 45% of total Part D enrollment.
  • Cigna and Aetna did better with preferred network plans than open network plans.
  • Rite Aid again failed to launch a co-branded plan.
Alas, preferred networks have flown too close to the sun. CMS is targeting preferred networks for tighter regulation and expanded oversight, per CMS Wants It That Way: Big Medicare Part D Pharmacy Changes. 2014 will likely turn out to be the peak year for preferred pharmacy networks in Medicare Part D.


Data on PDP enrollment are available from this CMS page: Medicare Advantage/Part D Contract and Enrollment Data. Note that these data reflect enrollments accepted through December 4, 2013. The final 2014 numbers will differ, because the open enrollment period ended three days later (on December 7, 2013).

Last October, I identified the Medicare Part D prescription drug plans (PDP) with preferred network structures. (See For 2014, more than 70% of Medicare Part D plans have a preferred pharmacy network.) To update this list, I relied on the more current 2014 PDP Landscape Source Files (v.01.02.14).

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 (American Samoa; Guam; Northern Mariana Islands; Puerto Rico; Virgin Islands)
  • Employer/union only group plans (contracts with "800 series" plan IDs)
My final sample included 106 plans operating 1,186 regional PDPs. Note that the sample differs slightly (but not materially) from October’s pre-enrollment data.


In 2014, there are 60 Part D plans with preferred pharmacy networks. These plans operate 851 regional PDPs, which account for 72% of the total regional PDPs for 2014.

Based on the initial enrollment figures, these 60 plans enrolled 13.9 million people, or 75% of the total. That’s incredible growth from 2013, when only 43% of seniors chose plans with preferred networks.

The eight largest organizations (shown below) account for 86% of total enrollments as of December 4, 2013.

[Click to Enlarge]

The chart below contains our exclusive summary of the ten largest Medicare Part D PDPs with preferred pharmacy networks. These 10 plans account for 64% of total Part D enrollment. For a summary of pharmacy chains’ participation in preferred networks, see Walmart Plays to Win in 2014 Part D Preferred Networks, while CVS and Rite Aid Lag.

[Click to Enlarge]


Humana and UnitedHealthcare won big with preferred networks. For 2014, Humana rebranded its legacy plan with Walmart as the Humana Preferred Rx Plan. It also launched two new plans: Humana Enhanced and Humana Walmart Rx Plan. All three Humana plans have preferred networks. In 2014, all three of UnitedHealthcare’s AARP plans also have preferred pharmacy networks. Combined, the six Humana and UnitedHealthcare plans account for 45% of total enrollment.

CVS Caremark’s SilverScript plan hung on with an open network. The SilverScript plans were under sanction during the open enrollment period and couldn’t accept new enrollees. (The sanction was lifted on January 1, 2014.) SilverScript Basic, which has an open network, accounts for 86% of enrollment in SilverScript’s three plans. (NOTE: An earlier version of this article incorrectly stated that SilverScript Choice accounts for 86% of enrollment.)

Seniors prefer the preferred network plans of Aetna and Cigna. The co-branded Aetna CVS/pharmacy Prescription Drug Plan is the only one of Aetna’s three plans with a preferred network. This plan garnered 88% of Aetna’s Part D enrollment. The three Cigna plans with preferred networks account for 64% of Cigna’s enrollment. Cigna-Healthspring, its open network plan, accounts for the other 36%. Last year, no Cigna plan had a preferred pharmacy network.

Rite Aid failed again. The new Symphonix Rite Aid Value Rx enrolled a paltry 30,000 seniors (0.2% of total enrollment). This is Rite Aid’s second attempt at a co-branded plan, after the failed Rite Aid EnvisionRxPlus plan. Only two other major plans—MedicareRx Rewards Standard and Express Scripts Medicare-Choice—have Rite Aid as a preferred pharmacy. Those two plans enrolled a combined 101,071 seniors (0.5%). Better luck next year!


In 2015, preferred networks’ wax wings will start to melt. Until then, tune in for the final 2014 figures in mid-February. The 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies, available on January 28, thoroughly reviews the narrow network trend.


  1. Where are the data posted to show which pharmacy belong in which plan or even which plans offer preferred networks? You referenced the Landscape file but information on preferred pharmacy networks are not included in that file. Thanks.

  2. The landscape files describe benefit design, including the presence of a preferred network. However, CMS does not list the pharmacies in each plan's network. Drug Channels published our list for the biggest plans in Walmart Plays to Win in 2014 Part D Preferred Networks, while CVS and Rite Aid Lag.

  3. Do not want to belabor the point, but I did not see it in the landscape file. The benefit type detail does not define it, does it?
    Thanks for your help!

  4. I think that many of the PDP leaders and certainly the laggards really don't care about regulations to limit narrow networks. Why? It's simple - the narrow networks have created too much price competition. Even if you're a leader you've had to become a leader by sacrificing margin (to attract customers). It's much easier for everyone if vested interests can get the government to step in and help limit this rampant competition. And the best part is that there is no impact on demand - the government simply subsidizes the excess profits from higher costs.

    I've yet to see a single analysis that said that narrow networks have done anything to impact senior health adversely - either because of switching or non-compliance impacting health outcomes.

    CMS is taking away the punchbowl right as the party is getting started and the vested interests are standing on the sidelines or encouraging them to do it.


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