Table Of ContentTrends in Medicare Part D Coverage of
Chronic Condition Medications
November 2008
Presented by:
Christine Y. Park
Lisa J. Murphy
Brian K. Bruen
Julie M. McCune
Representatives of Medicare Access for Patients-Rx (MAPRx)
offered input during the selection of chronic conditions and
commented on the draft analysis.
Pfizer provided financial support for this research. Avalere
maintained sole discretion with regard to methods and inter-
pretation of findings, and the authors are solely responsible
for the content of this analysis.
Executive Summary
Eighty-three percent of the Medicare population has at least one chronic condition, and
receives prescriptions for one or more medications to manage those conditions.1 Prior to
2006, the Medicare program did not offer coverage of outpatient prescription drugs;
however, the Medicare Modernization Act of 2003 expanded Medicare to include a
voluntary outpatient prescription drug benefit (“Part D”). The intent of the expansion was
to improve beneficiaries’ access to necessary prescription drugs and to better manage
their health.
1
Part D coverage is not uniform for all beneficiaries; it depends on which private health
plan the beneficiary enrolls. Each private plan that offers Part D may cover a different set T
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of drugs with different cost-sharing and utilization requirements, as long as the plans d
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meet basic formulary standards. Plans may use a number of techniques, such as prior in
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authorization, quantity limits, step therapy, and cost sharing to manage the cost of e
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insuring their members. a
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Avalere Health designed this study to evaluate the possible impact of Medicare Part D t D
plans’ formulary designs on beneficiaries’ access to drugs that treat chronic conditions. C
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We conducted an analysis of Part D plan formularies in 2006, 2007, and 2008 using our r
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DataFrame® database. 2 We analyzed plan and formulary designs of all Part D offerings, e o
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including standalone Prescription Drug Plans (PDPs) and Medicare Advantage C
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Prescription Drug (MA-PD) plans. We defined beneficiary access in terms of inclusion on on
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formulary, tier placement, cost sharing, prior authorization, step therapy, and quantity C
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limits. We examined differences between the chronic condition drugs we studied and all d
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Part D drugs, between plans eligible for auto-enrollment of beneficiaries dually eligible io
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for Medicare and Medicaid and all other plans, and between PDPs and MA-PD plans. Our
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analysis was limited to drugs used to treat four chronic conditions: Alzheimer’s disease ic
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and dementia, rheumatoid arthritis, Type 2 diabetes, and schizophrenia/psychosis. io
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We found since the start of the Part D benefit, the drugs used to treat chronic conditions
appear more frequently on plan formularies, but are increasingly likely to have utilization
management requirements and higher cost sharing. An average of 62 percent of plans in
2006 and 73 percent of plans in 2008 covered each chronic condition drug, though with
greater prior authorization, quantity limits, and step therapy. Cost-sharing requirements
from 2006 to 2008 have also increased at a faster rate than other Part D benefit
parameters such as the standard deductible and the catastrophic limit.
These trends closely mirror Part D plans’ coverage of all drugs. Part D plans in 2008 cover
a greater percentage of all Part D drugs and require utilization management more often,
when compared to plans in 2006.
1 Anderson GF. Medicare and Chronic Conditions. N Engl J Med 353 (July 21, 2005): 3.
2 DataFrame is Avalere Health’s proprietary database of Medicare Part D plan features.
Our analysis found that plans that qualified for the auto-enrollment of dual eligibles
tend to cover slightly fewer chronic condition drugs, but there are no consistent trends
in plans’ utilization management requirements. Plans that are not eligible for auto-
enrollment appear to place some chronic condition drugs on higher cost-sharing tiers
than plans that are eligible for auto-enrollment.
Overall, we found few differences in formulary coverage and utilization management
requirements for chronic condition drugs between PDPs and MA-PD plans. MA-PD plans
are more likely to cover chronic condition drugs than PDPs, and rates of utilization
2 management are similar between the two types of plans.
T We also tested whether our results would vary if we weighted our calculations by the
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d number of lives enrolled in each plan. We found that plans with higher enrollment are
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in more likely to cover chronic condition drugs and typically apply utilization management
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e tools less often than low-enrollment plans.
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P For the chronic condition medications in our analysis, as well as for all Part D drugs,
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t D plans tend to provide better access to generic drugs than brand-name medications. Plans
Co cover more chronic condition generic drugs than brand-name versions; an average of 96
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r percent of Part D plans cover each generic drug versus 64 percent of plans covering each
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e o brand-name drug. In addition, Part D plans are more likely to require prior authorization
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C and step therapy and to set quantity limits for the brand-name drugs in our analysis
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on than for generic drugs.
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n Our findings suggest that beneficiaries, family members, and their advocates should
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io evaluate their plan choices each year, taking into consideration the formulary coverage
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ic paper shows, rates of prior authorization, quantity limits, and step therapy can vary
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io dramatically from drug to drug. Additionally, our findings on formulary changes from
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2006 to 2008 indicate that access for a particular drug can change over time. Finally,
given the important role of drug therapy in treatment for chronic conditions,
policymakers and stakeholders should continue to monitor trends in formulary coverage
and access.
Table of Contents
Executive Summary........................................................................................................1
Table of Contents..........................................................................................................3
Introduction...................................................................................................................4
Standards for Drug Access in Medicare Part D...........................................................5
Medicare Beneficiaries with Chronic Conditions.......................................................6
Research Question........................................................................................................7
Methodology and Limitations.....................................................................................7
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General Findings............................................................................................................9
Condition-Specific Findings........................................................................................17 Tr
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Beneficiaries with Alzheimer’s Disease and Dementia............................................17 s
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Beneficiaries with Rheumatoid Arthritis...................................................................19 M
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Beneficiaries with Type 2 Diabetes............................................................................23 dic
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Beneficiaries with Schizophrenia/Psychosis............................................................27 re
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Plans Eligible and Not Eligible for Auto-Enrollment................................................30 a
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Conclusion....................................................................................................................34 C
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Appendix: Drugs Included in This Analysis..............................................................35 er
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Alzheimer’s Disease and Dementia...........................................................................35 o
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Rheumatoid Arthritis..................................................................................................35 Ch
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Type 2 Diabetes...........................................................................................................41 n
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Schizophrenia/Psychosis...........................................................................................44 C
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Introduction
Eighty-three percent of the Medicare population has at least one chronic condition, and
receives prescriptions for one or more medications to manage those conditions.3 Prior to
2006, the Medicare program did not offer coverage of outpatient prescription drugs;
however, the Medicare Modernization Act of 2003 (MMA) expanded Medicare to include
a voluntary outpatient prescription drug benefit (“Part D”). The intent of the expansion
was to improve beneficiaries’ ability to access necessary prescription drugs and to
manage their health.
4
However, Part D coverage is not uniform for all beneficiaries; it varies based on the
T private health plan in which the beneficiary enrolls. Each of the private plans that offer
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d the Part D benefit may cover a different set of drugs with different cost-sharing and
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in utilization requirements, as long as the plans meet basic federal standards.
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ica Under the statute and regulations governing Medicare Part D, the plans that offer
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P coverage may use a number of techniques to manage the cost of insuring their
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t D members. Part D plans may establish a list of covered drugs (or formulary), different
Co cost-sharing requirements (or tiers), and utilization management techniques. For
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r example, a plan may require step therapy, in which a beneficiary must try one drug
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e o before the plan will approve coverage for another.
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ro Avalere Health designed this study to evaluate the possible impact of Medicare Part D
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ic C plans’ formulary designs on beneficiaries’ access to drugs that treat chronic conditions.
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M • How often are drugs for chronic conditions listed on Part D plans’ formularies?
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io and utilization management) for chronic condition drugs changed since the start of
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the Part D benefit?
Are there differences in access to drugs for chronic conditions when compared with
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other drugs?
How does access to chronic condition drugs compare in different types of Part D
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plans?
Are there differences in formulary access based on Part D enrollment?
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In order to answer these questions, Avalere Health conducted an analysis of Part D plan
formularies in 2006, 2007, and 2008 using our DataFrame® database.4 We used these
data to determine trends in access to prescription drugs under Part D, specifically for
those drugs most often prescribed for four chronic conditions: Alzheimer’s disease,
rheumatoid arthritis, Type 2 diabetes, and schizophrenia/psychosis.
3 Anderson GF. Medicare and Chronic Conditions. N Engl J Med 353 (July 21, 2005): 3.
4 DataFrame® is Avalere Health’s proprietary database of Medicare Part D plan features.
Standards for Drug Access in Medicare Part D
Under Part D, private plans are responsible for administering the drug benefit. Each plan
establishes its own formulary, or list of covered drugs, and each negotiates directly with
the drug manufacturers for the price it will pay for drugs. Private plans must operate
within standards established by federal law and regulations and are overseen by the
Centers for Medicare & Medicaid Services (CMS).
Every Part D plan must get CMS approval before they market to beneficiaries. For each
plan, CMS reviews the benefit offered, monthly premiums charged, and the details of the
plan’s formulary. Plans must meet minimum standards established in law and 5
regulations. The MMA, which created the Part D benefit, requires that plan formularies
include a range of drugs so that the formulary does not “substantially discourage” Tr
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enrollment by any group of beneficiaries.5 In addition, CMS will not approve a Part D plan d
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if the cost-sharing or deductible requirement “discriminates based on health status.”6 in M
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Every Part D plan formulary must meet a variety of standards to ensure a
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nondiscrimination. CMS reviews plans’ formulary categories and classes to ensure that P
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the formulary covers at least two drugs in each category and class. In addition, CMS t D
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requires special coverage for six classes of drugs: immunosuppressants, antidepressants, o
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antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics. Plans must cover ra
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“all or substantially all” of the active ingredients in these “six classes of clinical concern.” o
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CMS also limits the use of certain utilization management techniques for these Ch
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medications, prohibiting plans from applying prior authorization or step therapy when a n
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beneficiary is already taking a drug in one of these classes.7 C
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Other parts of the formulary review process include comparing the formulary’s coverage io
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to widely accepted treatment guidelines for certain conditions and examining how the M
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formulary covers drugs most commonly used by the general Medicare population and by ic
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people dually eligible for Medicare and Medicaid.8 io
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In addition to reviewing which drugs a plan places on its formulary, CMS evaluates
beneficiaries’ access to covered drugs through a review of the plan’s cost-sharing tiers
and other utilization management techniques. For example, if a drug’s placement is on a
tier with high cost sharing, the plan must place therapeutically similar products on a
lower cost-sharing tier.9 Other utilization management techniques CMS reviews include:
Prior authorization, in which the beneficiary must get approval from the insurance
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plan before filling a prescription.
5 Social Security Act, Section 1860D-11(e)(2)(D)(i).
6 CMS, Contract Year 2009 Call Letter, March 17, 2008. Available at:
http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/CallLetter.pdf.
7 Plans may apply prior authorization to drugs in the six protected classes in order to determine payment under Medicare
Part B or Part D. CMS, Prescription Drug Benefit Manual, Chapter 6, Section 30.2.5. Available at:
http://www.cms.hhs.gov/PrescriptionDrugCovContra/12_PartDManuals.asp#TopOfPage
8 CMS, Prescription Drug Benefit Manual, Chapter 6, Section 30.2.
9 CMS, Prescription Drug Benefit Manual, Chapter 6, Section 30.2.7.
Step therapy, a requirement that the beneficiary first try one treatment for the
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condition before another.
Quantity limits, which set a maximum number of days’ supply for each prescription
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filled.
CMS reviews whether a plan’s utilization management tools are consistent with other
Part D plans, industry best practices, and guidelines from expert organizations.10
Medicare Beneficiaries with Chronic Conditions
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Eighty-three percent of Medicare beneficiaries have at least one chronic condition and 23
T percent have five or more chronic conditions.11 Some of the most common chronic
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d conditions include high blood pressure, arthritis, heart disease, mental illness, and
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in diabetes.12
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ic Unlike the healthier, working-age population, who may only take prescription drugs for
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P occasional illness or injury, most Medicare beneficiaries take at least one prescription on
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t D a regular basis. Three out of four people 65 and older take regular medications for
Co chronic conditions; among seniors, 28 percent of women and nearly 22 percent of men
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er take five or more medicines regularly.13 Because of this population’s need for regular
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e o medications, the cost sharing required for prescriptions can play an important role in
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C determining beneficiary access to needed treatment.
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ic C The availability of the Part D coverage has reduced out-of-pocket drug costs for many
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n Medicare beneficiaries.14 However, enrollees may face financial challenges in accessing
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io covered drugs due to Part D plans’ cost-sharing requirements. One study of 2006 claims
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ic prescription costs.15 Those taking drugs for multiple chronic conditions are likely to have
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io even higher spending.
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Studies on drug utilization have consistently found that higher cost sharing correlates
with lower adherence to recommended drug treatment. For example, a national survey of
Medicare beneficiaries found that nearly 20 percent of Part D enrollees either did not fill
a prescription or delayed filling a prescription because of cost.16 In addition, the more
chronic conditions a person has, the more likely they are to not fill a prescription due to
10 CMS, Prescription Drug Benefit Manual, Chapter 6, Section 30.2.2.
11 Anderson GF. Medicare and Chronic Conditions. N Engl J Med 353 (July 21, 2005): 3.
12 CMS Press Release, “Medicare Drug Cards Provide Significant Savings Now for Beneficiaries With Chronic Conditions.”
July 13, 2004. Available at: http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1111.
13 Medco Health Solutions, Drug Trend Research Center, “Chronic Medication Nation.” May 14, 2008. Available at:
http://medco.mediaroom.com/index.php?s=64&cat=23.
14 Yin W, et al. The Effect of the Medicare Part D Prescription Benefit on Drug Utilization and Expenditures. Ann Intern Med
148(2008):169-177.
15 Note: Percentage excludes beneficiaries eligible for the Low-Income Subsidy. Wolters Kluwer Health, “Medicare Part D
Market Dynamics.” July 2007.
16 Neuman P, et al. Medicare Prescription Drug Benefit Progress Report: Findings from a 2006 National Survey of Seniors.
Health Affairs, Web Exclusive 26.5 (August 21, 2007): w630-w643.
cost, skip a dose, or take less medication than prescribed to make it last longer.17 There is
also some evidence that utilization management techniques such as quantity limits and
prior authorization result in beneficiaries filling fewer prescriptions, but the research is
unclear on what impact this might have on beneficiaries’ health outcomes.18
Research Question
Avalere Health designed this research to assess Medicare Part D beneficiaries’ access to
drugs used to treat chronic conditions. Our goal was to determine whether there is a
growing trend among standalone Prescription Drug Plans (PDPs) and/or Medicare
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Advantage Prescription Drug (MA-PD) plans to use higher beneficiary cost sharing or
more active utilization management for drugs used to treat chronic conditions. We also T
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sought to determine if Part D plans treat drugs for chronic conditions differently when nd
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compared to all other drugs, or for different groups of beneficiaries including those in
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dually eligible for Medicare and Medicaid. e
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Methodology and Limitations r
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For this analysis, we define access as whether a formulary covers a drug and whether C
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there are restrictions caused by utilization tools and cost-sharing amounts. To measure ve
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access, we used Avalere’s proprietary DataFrame database on the plan and formulary ge
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designs of all PDPs and MA-PD plans participating in Part D in 2006, 2007, and 2008. This f
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database is derived, in part, from CMS files on Part D plan features and includes ro
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information for more than 4,000 Medicare Part D plans, including formularies, cost- ic
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sharing requirements, and benefit structures. The analysis includes only plans that n
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operated in the United States in 2007 and excludes plans operating in U.S. territories itio
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(e.g., Puerto Rico, Northern Mariana Islands, American Samoa, U.S. Virgin Islands). M
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Chronic Conditions and Drugs Studied at
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We defined drugs used to treat chronic conditions as drugs used to treat Alzheimer’s ns
disease and dementia, rheumatoid arthritis, Type 2 diabetes, and schizophrenia/
psychosis. Using treatment guidelines, web-based resources, and drug information
publications, we identified drugs commonly used to treat each of the four chronic
conditions. A pharmacist reviewed these lists for completeness and accuracy.19 For each
condition, we further segmented the drug list based on American Hospital Formulary
Service (AHFS) codes.
The drug lists focus on treatments for the primary condition and its symptoms. For
example, the list of Alzheimer’s disease drugs includes drugs that treat cognitive and
functional losses; it excludes drugs used commonly in patients with Alzheimer’s disease
17 Soumerai SB, et al. Cost-Related Medication Nonadherence Among Elderly and Disabled Medicare Beneficiaries. Arch
Intern Med 166 (2006):1829-1835.
18 Olson, Bridget M. Approaches to Pharmacy Benefit Management and the Impact of Consumer Cost Sharing. Clin Ther 25
(2003):250-272.
19 Patti Gasdek Manolakis, PharmD. PMM Consulting, Charlotte, NC.
to treat agitation, depression, sleep disturbances, and other associated problems. (For a
list of all the drugs used in this analysis, see Appendix.)
Analysis by Condition
We analyzed data on drug coverage at varying levels of aggregation: first, we examined
trends across all drugs used to treat each condition, then we narrowed the focus to each
AHFS class associated with that condition, and finally for each drug individually. We drew
comparisons to summary statistics on access for all drugs on all Part D plans primarily at
the highest level of aggregation.
8
At each level of aggregation, we evaluated how often the product or set of products
T appeared on plan formularies, tier placement, cost sharing, prior authorization, step
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nd therapy, and quantity limits. The term ‘formulary coverage’ in this paper indicates that
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in the drug is listed on a plan’s formulary, whether or not the plan applies a utilization
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e management requirement. We examined several subsets of plans (described below) to
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ica assess whether particular types of plans are less, equally, or more restrictive in their
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P coverage of drugs for chronic conditions in comparison to all Part D drugs. For this
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t D analysis, our assessment of formulary coverage included whether a drug was included on
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o a plan’s formulary as well as the drug’s tier placement, cost sharing, and presence of any
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ra utilization management restrictions.
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f C Analysis by Type of Plan
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ro We conducted a separate analysis of access to drugs in PDPs in comparison to MA-PD
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ic C plans and throughout this paper, when we refer to “Part D plans,” we mean both
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n standalone PDPs and MA-PD plans.
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M In order to examine dual-eligible beneficiaries’ access to chronic condition medications,
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d we conducted an analysis of the Part D plans that qualify for automatic enrollment of
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tio dual eligibles. Beneficiaries who are eligible for both Medicare and Medicaid are
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s automatically enrolled in a PDP the first year they are eligible for Part D, unless they
proactively choose their own plan. In subsequent years, dual eligibles may be
automatically reassigned to a new PDP if their current plan’s premium rises above the
amount the government will subsidize. Each year, CMS announces this premium subsidy
amount after its examination of plan bids; only the PDPs with monthly premiums at or
below this subsidy amount are eligible for auto-enrollment. We used CMS’ Landscape
Source File for PDPs to compare PDP premiums each year against the premium subsidy in
that plan’s operating region; we defined PDPs with premiums lower than the regional
subsidy amount as plans that were eligible for auto-enrollment of dual eligibles.
Enrollment Weighting
Although most of the results in this paper are reported as unweighted averages, we also
weighted the data by plan enrollment to see how this would change our findings. We
used plan-level enrollment from July of each year for this analysis. We label any
enrollment-weighted results in this paper; other data we report is unweighted. We
Description:(e.g., Puerto Rico, Northern Mariana Islands, American Samoa, U.S. Virgin AHFS class associated with that condition, and finally for each drug
