Thursday, April 28, 2011

2011 Part D Market Share: A Win for Humana and Walmart

Humana (NYSE:HUM) recently announced that it will begin reporting its operating results in four business segments: Retail, Employer Group, and Health and Well-Being Services. Humana’s Retail segment includes Medicare Advantage, Medicare Part D Prescription Drug Plans (PDPs), and HumanaOne individual health plans. See Humana Makes Financial Announcements (press release).

Next Monday, Humana will report results for the first quarter of 2011. Based on my independent analysis of CMS data on Part D plans, the company will have a lot to brag about next week for its Retail segment:

  • Humana had a net gain of about 570,000 PDP enrollees, more than any other organization in 2011.
  • The Humana Walmart-Preferred Rx Plan, a preferred pharmacy network PDP launched in October 2010, is now the fifth-largest PDP in the U.S.
At the time the Humana-Walmart plan was announced, I predicted that other payers would roll out preferred pharmacy networks—one of my four big trends for 2011. Guess what? United Health’s (NYSE:UNH) Prescription Solutions (now OptumRx), the biggest player in Medicare, just launched its own preferred network design. Details below.


Data on PDP enrollment are freely available for downloading on this CMS page: Medicare Advantage/Part D Contract and Enrollment Data. Email me if you would like an Excel spreadsheet with the raw data that I use in the analysis below.

Here are the top 10 PDP parent organizations as of January 14, 2011. The top 10 represent 83% of all enrollees in a stand-alone plan.

UnitedHealth remained at the top of the list in 2011, due in part to its affiliation with AARP. However, Humana made the biggest gains in net enrollment in 2011. CVS Caremark (NYSE:CVS) and Healthspring also posted large increases.

Note that Universal American (#3) is now owned by #4 CVS Caremark although they are reported separately in the 2011 CMS data. See CVS-UAM: Part D Powerhouse with a Surprising Alliance for details on the unusual partnership behind this deal.


A parent organization can sponsor multiple PDPs, so let's take a look at the top 10 individual PDPs:

As you can see, the Humana Walmart Preferred Rx Plan went from nothing to become the fifth largest national PDP, with 4.5% of all PDP enrollees in 2011. Given Walmart's geographic footprint, the plan's share in certain regions will be even higher.

Some observations:

  • The Humana-Walmart PDP has a very low monthly premium ($14.80) combined with an incentivized preferred network design. In other words, a Part D beneficiary’s out-of-pocket costs are lower at 4,200 preferred pharmacies (Walmart, Sam’s Club, Neighborhood Market, and Humana’s RightSource mail-order pharmacy). See Walmart-Humana: An Inevitable Surprise for Pharmacies and PBMs.
  • You may recall NCPA's Odd Reaction to the Walmart-Humana Part D Plan. NCPA railed on about patients "being financially coerced to get their medications at Walmart stores” and “reading the fine print.” I guess they have a lot more to complain about now that seniors have made their plan choices.

Humana's new reporting structure clearly positions the company for the exchanges that will be created by health care reform. See Health Reform: Impact on Drug Channels. As the Wall Street Journal noted:

"Management has said the company plans to take its retail experience selling Medicare plans to seniors and use it to market plans to other consumers as the new U.S. health overhaul expands coverage to millions more Americans in the coming years." (source)
Based on their success with the Walmart plan, it looks like they are on the right track for 2014.


  1. You forgot to mention that the Humana Walmart plan is ILLEGAL! American Pharmacies is suing CMS to stop this plan from hurting patients. Here is the press release from Tuesday. I wonder why you forgot to report on it??????

  2. I did notice the press release but don't see the merit in the case. According to the CMS Legislative Summary of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (PL 108-173), page 4:

    "The PDP sponsor must permit any pharmacy willing to meet the plan’s terms and conditions to participate, though the plan may also set up a more restrictive pharmacy network and use reduced cost-sharing to steer enrollees to in-network pharmacies. Any such reduced cost sharing cannot increase government subsidies to plans." (emphasis added)

    For those who are interested, here's a clickable link to the press release mentioned above: American Pharmacies Says Medicare Part D Laws Not Enforced.


  3. Adam

    Humana_Walmart does have a $14.80 monthly premium BUT there is a $360.00 yearly deductible that has to be met. That really means the monthly premium is $44.80. Compare that to other plans

    Also, Humana DOES NOT allow any willing pharamcy into the network.!!

    And American Pharmacies is not filing a lawsuit against CMS or Humana-Walmart. They sent a letter to CMS which questions the legality of the Human-Walmart plan. You need to read the letter yorself.

    I like your blog but sometimes you don't get the facts straight before you issue a statement.
    Do you really try and present "just the facts"?
    Yeah so does Donald Trump !I guess if your blog were not so entertaining and irritating to the "independents" then you would be doing something else for a living.

    Also, I don't believe that every "independent" pharmacy in the United States supports or belongs to NCPA. Last time I looked less then 50% of the "independents" are members of NCPA. So please quit trying make it look like they are the spokesman for all of us.

  4. I disagree with your characterization.

    The first comment above about the American Pharmacies matter was from an anonymous comment, not from me. (The author may have been confused because the press release states that "American Pharmacies is challenging the legality of the CMS regulations.") My response indicates why I did NOT mention the American Pharmacies situation in my original post. Sorry if this was confusing.

    As for the deductible issue, I discuss the specific plan details in my original October post and also included a link to the full plan design at that time. I didn't feel a need repeat the details again.

    As for Donald Trump, I will readily concede that he has more hair than me.


    P.S. The blog is more of a hobby, not what I do for a living. ;)

  5. Adam,

    Ignore the haters. You presented the CMS data fair and square. They didn't like the answer, so they are "shooting the messenger."

    Keep up the great work!

    A Fan

  6. To a Fan,

    No one said anything about hating Dr. Fein. No one is "shooting the messanger" Anyone can disagree and they should have that right. I wrote the post that Dr. Fein respnded to and I respect his response just as he respected my post. So don't read the "anger" part of it into the discussion.

    Dr. Fein- funny hobby I guess. It does get people to actually"think" and get involved.

  7. Thank you. I didn't take your comments as angry. I do want to encourage fact-based, respectful discussions, which is why I dug into and published the actual Part D data. And as you can tell, I permit all comments (pro or con)to be published .

    Hobby? Some people watch "American Idol" at night. I write blog posts.