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Will ACA exchanges earn 90% satisfaction ratings someday?
Some industry observers believe the rollout of the new insurance exchange marketplaces harkens back to the 2005 kick-off of Medicare Part D. Although seniors might have been unfamiliar with private insurance plans offering drug coverage, today’s consumer is bound to be more confused.
Those entering the health insurance market for the first time in 2014 face a wide range of options than the new Part D seniors had. Choices include provider networks, cost sharing and plan levels, but many consumers will likely base their choice of health plan on premium cost alone.
Although Part D’s initial enrollment period was plagued by technical glitches with call centers and poorly trained staff members-similar to what consumers are experiencing now with the exchange enrollment process. However, Jack Hoadley, research professor at Georgetown University’s Health Policy Institute, says that did not deter people from signing up.
Today, Part D earns a 90% satisfaction rating from seniors.
As Medicare Part D enters into its eighth year, the number of beneficiaries has grown from about 22.5 million in 2006 to 36 million in 2013. About 63% (22.7 million) are in stand-alone Prescription Drug Plans (PDPs); the balance are enrolled in Medicare Advantage Drug Plans (MA-PDs).
The number of available plans, however, has followed a different trend, starting at 1,429 in 2006, peaking in 2007 at 1,875. There will be 1,169 Part D choices in 2014.
Some departures have been at the mercy of federal healthcare regulators. For example, they halted new enrollments and marketing for CVS Caremark's SilverScript Medicare prescription coverage, threatening to shut down the plan after an operational system glitch left "tens of thousands" of seniors unable to get their medications, Medicare officials say.
Hoadley says fewer plan choices should make decisions easier for seniors. He notes that many plans have exited the market because they did not have enough enrollees or were acquired by other plans.
Besides growth in the number of beneficiaries and a decrease in PDPs, Part D has faced a variety of other changes over the years, from the cost of premiums and deductible limits to the introduction of five-star ratings and the closing of the coverage gap, better known as the donut hole.
Preferred pharmacy networks and five-tiered formularies also have become an integral facet of Part D.
The average monthly Medicare Part D premium will remain steady, projected to be $31, up $1 from the three pervious years, according to the Centers for Medicare & Medicaid Services (CMS).
Premiums have risen 54% since the first year of the program with a projected increase of 5% between 2013 and 2014.
2014 should be a good year for Part D beneficiaries with expectations for lower premiums-anywhere from 15% to 38%-and lower out-of-pocket costs, says Ellen Duffield, senior vice president, government programs for Catamaran, a pharmacy benefits manager headquartered in Schaumburg, Ill.
She attributes some cost reductions to the use of preferred provider networks. Duffield also anticipates that the online Medicare Plan Finder tool will make it easier for people to apply for Part D and decide on the plans that best fit their financial and health needs.
But Hoadley says premiums have not had as big affect on enrollment as would be expected.
“During any given enrollment period, most beneficiaries remain in the same plan because they are satisfied or find it too confusing to make a change. This should be a signal to plans that they can increase premiums without losing market share.” he says.
In addition, plans with lower member costs may have innovative designs, such as a limited pharmacy network or fewer drugs covered. He advises that members should examine all their out-of-pocket costs.
Part D deductibles have fluctuated over the years, starting at $250 in 2006. The deductible is $310 for 2014, which is down $15 from last year.
In 2014, the donut holeâ¨falls between $2,850 and $4,550. Part D enrollees will continue to receive a 52.5% discount (50% paid by the drug manufacturer and 2.5% paid by the Medicare Part D plan) on the total cost of their brand-name drugs as well as a 28% discount on generic drugs while in the donut hole.
Starting in 2011, CMS began phasing out the coverage gap reducing the coinsurance for brand name and generic drugs in the donut hole. Coinsurance will reach 25% by 2020.
Since the Affordable Care Act (ACA) was enacted, 7.3 million beneficiaries who reached the donut hole in their part D plans saved $8.9 billion on prescription drugs, about $1,209 per person. In just the first 10 months of 2013, 3.4 million people saved 2.9 billion, an average of $866 per beneficiary, according to CMS.
An estimated 19% of seniors will enter the donut hole this year.
Chuck Clapton, partner in the law firm of Hogan Lovells, says closing the donut hole has the potential to increase and eliminate incentives to use generic drugs.
According to the Kaiser Family Foundation, notable trends for 2014 include a growing share of PDPs using preferred pharmacy networks. In 2006, only a few PDPs used this type of pharmacy network.
Hoadley says that 72% of plans now are using lower-cost preferred networks, many of them in conjunction with a broader network. Preferred pharmacy networks will reduce federal Part D costs up to $9.3 billion during the next 10 years and $870 million in 2014 alone, according to Milliman.
Another strategy to keep Part D costs in check is the five-tier design. In 2006, most plans had three tiers. By 2014, 77% of PDPs will offer five tiers, splitting the generics into preferred and non-preferred, according to the Kaiser Family Foundation.
Avalere Health says specialty tiers will be included for 93% of plans in 2014, with varying numbers of coinsurance levels. CMS set a 25% maximum coinsurance (after the deductible is met and before the initial coverage limit) or 33% when no deductible is required. The threshold for specialty tier drugs is $600 per month.
Hoadley says there is more distinction in cost sharing for Part D beneficiaries now than in previous years.
One of the more noteworthy changes in Part D has been the Medicare five-star rating system. According to an analysis of star ratings by the Q1Group, stand-alone PDPs averaged 3.4 stars for the 2014 plan year, and Medicare Advantage Part D plans averaged 3.66 stars. In total, 11 plans gained a 5-star rating.
This year, plans need to be more diligent about achieving higher ratings because plans that score three or fewer stars for three consecutive years will likely lose their CMS contracts. However, CMS is currently working with plans to raise their ratings, according to the agency.
Duffield predicts that lower performing plans will focus more on increasing adherence to chronic disease medication and changing formularies to support ratings. Studies have shown that enrollees are swayed by higher star ratings.
Hoadley says ratings are more important to plans than consumers because they provide an opportunity to earn incentives, while poor performance could put a PDP out of business.
Part D offers some flexibility in formularies, requiring at least two drugs in 148 categories, but CMS is not dictating which drugs.
PDP and MA-PD sponsors must cover “all” or “substantially all” protected drug classes identified by CMS:
• anti-retrovirals; and
• immunosuppressants for the treatment of transplant rejection.
In 2013, barbiturates used for all medically appropriate diagnoses and benzodiazepines joined the other classes of drugs on Part D formularies.
Duffield says that plans are limiting the availability of high-risk medications and supporting the use of more appropriate drugs in their formularies to conform to Medicare star rating requirements.
Formularies also must be designed to not discriminate against any subset of beneficiaries.
Another recent change is allowing subscribers to fill new prescriptions with a short fill (less than 30-days’ supply) at a pro-rated price. The aim is to reduce waste when an initial drug therapy proves ineffective for a patient.
Satisfaction with Part D overall remains high: 90% of enrollees are either somewhat are very satisfied with the program-primarily because costs are reasonable-according to KRC Research. The satisfaction level does not vary much by demographics, political alignment or whether beneficiaries are low income, dual-eligible or disabled.
Those with low out-of-pocket costs and low premiums are predictably the most satisfied with their Medicare drug coverage. As many as 90% say their plans are convenient, easy to understand, work well, offer good customer service and deliver on their promise. That same number would recommend Part D coverage.