In Chapter 14 (starting on page 353), MedPAC calculated the share of pharmacies listed as “preferred” by the largest Part D Prescription Drug Plans (PDPs). (The key data are reproduced below.) For 2013, MedPAC found that:
- Most PDPs contracted with more than 95 percent of pharmacies in their respective regions.
- Part D plans typically designated about one-third of these pharmacy players as “preferred.”
- The two largest co-branded plans—Aetna CVS/Pharmacy and Humana Walmart—had the smallest preferred networks.
If you are unfamiliar with preferred networks in Medicare Part D (or just want a quick refresher), check out the Drug Channels play-by-play:
- For 2014, 3 out of 4 Seniors Choose a Narrow Network Medicare Drug Plan—and Humana, UnitedHealthcare Win Big
Using all-star data unavailable to mere mortals like me, MedPAC computed the average share of pharmacies that a plan listed as preferred in its lineup. (Note that MedPAC analyzed 2013 data, while our recent articles have examined 2014 data.) Here’s what it found for 2013:
[Click to Enlarge]
- The Humana Walmart-Preferred Rx Plan lists less than one in ten pharmacies as preferred. The preferred pharmacies include all Walmart locations (Walmart, Sam's Club, Neighborhood Market pharmacies, and Walmart Express) and Humana’s RightSourceRx mail pharmacy. For 2014, this plan was renamed the Humana Preferred Rx Plan.
- The Aetna CVS/Pharmacy plan also is narrow, with only 13.4% of pharmacies designated as preferred. However, this plan had low market share, suggesting that seniors found it less attractive.
- UnitedHealthcare’s AARP MedicareRx Preferred plan had a network in which 27.9% of pharmacies were preferred. In 2014, this plan included Walgreens, Walmart, and many supermarket chains (Kroger, Safeway, Target, Publix, H-E-B, Stop & Shop, HyVee, Hannaford, and Wegmans).
- At least one (unspecified) plan designated 95.7% if its pharmacies as preferred. I wonder who was benched?
Per my color commentary, CMS drafted far-reaching revisions that would have effectively killed preferred pharmacy networks. CMS was forced to scratch those plans and hit the showers.
In MedPac's letter criticizing the proposed changes, it suggested three possible fixes to preferred networks:
- Require lower net costs—Prices net of all price concessions from preferred pharmacies shouldn’t exceed those obtained from nonpreferred pharmacies
- Actuarial equivalence—A beneficiary who does not live within a reasonable distance from a preferred pharmacy does not receive a benefit that is less generous than the defined standard benefit.
- Establish access standards—MedPAC suggested that CMS establish access standards for preferred pharmacy networks. MedPAC was careful to note, “The standard should not be so stringent as to discourage the use of tiered pharmacy networks but sufficient to allow the majority of beneficiaries enrolled in such plans to take advantage of the lower prices offered at those pharmacies if they choose to do so.”
P.S. Go Phillies!