Tuesday, October 20, 2020

Preferred Pharmacy Networks Dominate in 2021 Medicare Part D Plans: The Scoop on Cigna, CVS Health, Humana, WellCare, and More

Last week, open enrollment began for the 2021 Medicare Part D plans. 

Our exclusive analysis of these data reveals that preferred cost sharing pharmacy networks will maintain their dominance as an established component of Part D benefit design. 

For 2021, 98% of Medicare Part D regional prescription drug plans (PDP) will have a preferred network. By the beard of Zeus!

Below, I provide historical data on preferred networks’ growth and then discuss the top nine companies offering the 2021 plans. None of these major plan sponsors will offer a national plan with an open network for 2021.

In upcoming articles, I’ll examine how chain and independent pharmacies will participate in these plans and what that means for pharmacy profits. As always, Drug Channels brings you the news—so you don't have to get it yourself.


A preferred network gives consumers a choice of pharmacy while providing financial incentives to use the pharmacies that offer the payer lower costs or greater control. A consumer with a preferred network benefit design retains the option of using any pharmacy in the network. However, the consumer’s out-of-pocket expenses will be higher at a non-preferred pharmacy.

Preferred network models have grown rapidly within the Medicare Part D program, where CMS calls them preferred cost sharing networks. CMS calls the pharmacies in such a network preferred cost sharing pharmacies.

According to federal regulations, preferred pharmacies in Part D must offer “covered Part D drugs at negotiated prices to Part D enrollees at lower levels of cost sharing than apply at a non-preferred pharmacy under its pharmacy network contract.” (source) Beneficiaries who qualify for the Low-Income Subsidy (LIS) face low out-of-pocket drug costs regardless of a pharmacy’s preferred status.

To identify the 2021 Part D preferred cost sharing pharmacy networks, we used the 2021 Plan Finder Data and the 2021 PDP Landscape Source Files (v 09 08 20). Our analysis includes only stand-alone PDPs. We eliminated the following plans from the sample:
  • Employer-sponsored plans
  • Medicare Advantage PDPs (MA-PDP)
  • Plans from U.S. territories and possessions (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, Virgin Islands)
  • Employer/union-only group plans (contracts with "800 series" plan IDs)
Our final sample included 89 plans, which will operate 996 regional PDPs:
  • Twenty-one plans are being offered in all 34 regions, for a total of 714 PDPs (=21*34).
  • Three plans are operating in 33 regions, and two plans are operating in 29 regions. These five plans account for a further 157 regional PDPs.
  • The remaining 63 plans are operating in eight or fewer regions and account for 108 PDPs. Many of these plans are state-level Blue Cross Blue Shield plans.
You can review our 2020 analysis in Preferred Pharmacy Networks Rebound in 2020 Medicare Part D Plans.


The chart below shows the growth of preferred networks in stand-alone prescription drug plans. In 2011, only 7% of total regional PDPs had a preferred network. For 2021, 98% of Medicare Part D regional prescription drug plans (PDP) will have a preferred network.

[Click to Enlarge]

From 2015 to 2017, the share of plans with a preferred network remained fairly steady. During this period, however, the total number of plans declined significantly, from 1,169 in 2014 to 746 in 2017. From 2017 to 2021, the total number of plans will have increased by 34%, to 996. The number of plans with preferred networks, meanwhile, will have increased by 55%, from 633 in 2017 to 980 in 2021.


Here are the 2021 highlights from the nine major companies with national plans. These companies account for 888 (92%) of the total 966 PDPs. Many companies are offering the same plans in 2021 that they offered in 2020. None of these companies’ plans will have an open retail network. All of these plans have preferred cost sharing networks.
  • Aetna Medicare will offer the two legacy CVS Health SilverScript Choice and Plus plans, both of which have preferred networks. It will also offer a new SilverScript SmartRx plan. Recall that CVS Health’s Part D business is now integrated with Aetna and reported within the company’s Health Care Benefits segment.
  • Cigna and Express Scripts: Cigna will offer three plans (Secure, Secure-Essential, and Secure Extra). Cigna has dropped the HealthSpring name from these plans for 2021. Express Scripts will offer its own three plans, separately from Cigna: Choice, Saver, and Value.
  • Clear Spring Health is a plan sponsor that entered the market in 2020. It will offer two plans with preferred networks: Clear Spring Health Premier Rx and Clear Spring Health Value Rx. Clear Spring Health is part of the Group One Thousand One insurance company.
  • Humana will offer the same three plans that it offered for 2020—Basic Rx, Premier Rx Plan, and the Humana Walmart Value Rx Plan. However, the Humana Basic Rx plan will switch from an open network to a preferred retail network.
  • Mutual of Omaha Rx will offer its Rx Plus and Rx Value plans. These plans launched for the 2019 plan year and are offered through Omaha Health Insurance Company, a Mutual of Omaha affiliate company.
  • Rite Aid’s Elixir will offer its RxPlus plan in all 34 regions and the RxSecure PDP in 17 regions (compared with three regions for 2020). The Elixir business was previously known as EnvisionRx.
  • UnitedHealthcare will offer two AARP-branded plans and a co-branded AARP MedicareRx Walgreens plan.
For more on the economics and strategies of narrow network models, see Chapter 7 of our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Stay tuned for our look at the pharmacy industry’s winners and losers in the 2021 networks. Until then, you stay classy, Drug Channels readers.

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