Medicare Part D:

Changes in Utilization Similar for Randomly Reassigned and Other Low-Income Subsidy Beneficiaries

GAO-11-546R: Published: Jun 22, 2011. Publicly Released: Jul 22, 2011.

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Kathleen M. King
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To help defray out-of-pocket prescription drug costs for limited or low-income Medicare beneficiaries, the Medicare Part D outpatient prescription drug program offers a low-income subsidy (LIS) for eligible beneficiaries. In 2010, about 9.4 million beneficiaries received the LIS--about 40 percent of the approximately 23 million Medicare Part D beneficiaries in that year. Most of the LIS beneficiaries received the full LIS, thus paying no premiums or deductibles as long as they enrolled in so-called "benchmark" stand-alone prescription drug plans (PDP). Benchmark PDPs are those plans with premiums at or below a specified benchmark for a given geographic region, calculated by the Centers for Medicare & Medicaid Services (CMS), the agency within the Department of Health and Human Services (HHS) that administers the Medicare program. Full LIS beneficiaries may also enroll in other Part D plans--either nonbenchmark PDPs or Medicare Advantage prescription drug plans (MAPD)-- but must pay any difference between the premium of the plan in which they choose to enroll and the benchmark for their region. Because plan premiums can change from year to year and because CMS recalculates the premium benchmarks annually, some PDPs may be benchmark PDPs in one year and not in the following year. In these instances, CMS is required to randomly reassign those LIS beneficiaries who are in plans whose premiums will no longer be at or below the new benchmark the following year into PDPs with premiums that will be at or below the benchmark. Beneficiaries subject to random reassignment can choose to either stay in their current plan or enroll in a new plan prior to being randomly reassigned by CMS, but if they choose either option, and that plan's premium is higher than the new benchmark, they are responsible for paying any premiums above the new benchmark. From 2007--the first year LIS beneficiaries could be randomly reassigned--through 2010, an average of almost 1.3 million LIS beneficiaries has been randomly reassigned into new PDPs each year. Questions have been raised by Medicare beneficiary advisors and others about the benefits of available benchmark PDPs, and some suggest that the random reassignment process may create challenges for affected LIS beneficiaries. For example, according to some advisors, random reassignment may impact LIS beneficiaries' drug coverage. Specifically, beneficiaries may be randomly reassigned by CMS into benchmark PDPs that do not cover the drugs they are taking, requiring them to consult with a medical provider to prescribe a therapeutically equivalent alternate drug. Similarly, they may be randomly reassigned by CMS into benchmark PDPs that impose more or different utilization management (UM) requirements-- such as prior authorization requirements, quantity limits, or step therapy--on certain drugs they are currently taking, thus also requiring the intervention of a medical provider. In addition, there are concerns that random reassignment may lead to changes in pharmacies impacted LIS beneficiaries have access to, which may further impact drug utilization. Congress asked us to examine the features of benchmark PDPs and explore how the random reassignment process may affect beneficiaries' drug utilization. In this report, we describe: 1. how drug coverage and access to pharmacies compared between benchmark and nonbenchmark PDPs from 2007 through 2010; and 2. how changes in drug and pharmacy utilization compared between randomly reassigned and other LIS beneficiaries who were not randomly reassigned from 2007 to 2008.

Drug coverage was somewhat more limited for benchmark compared to nonbenchmark PDPs and became gradually more restrictive for all PDPs from 2007 through 2010, while pharmacy access was comparable. The average number of drugs covered by benchmark PDP formularies was slightly smaller than the average covered by nonbenchmark PDP formularies--about 5 percent smaller in 2010, for example. Benchmark PDPs also imposed UM requirements on a similar to slightly greater share of drugs than other PDPs. For example, benchmark PDPs imposed at least one UM requirement on 28 percent of covered drugs compared with about 26 percent among nonbenchmark PDPs, on average, in 2010. Both benchmark and nonbenchmark PDPs experienced a gradual reduction in the number of drugs covered and a gradual increase in the number of drugs subject to at least one UM requirement from 2007 through 2010. Access to retail and mail order pharmacies was comparable among benchmark and nonbenchmark PDPs, with the average number of pharmacies per plan per state generally increasing during the period for both types of plans. The extent to which randomly reassigned LIS beneficiaries experienced changes in their drug and pharmacy utilization after reassignment was comparable to the extent of such changes among other LIS beneficiaries. Specifically, for drugs they had taken continuously for the full year of 2007, randomly reassigned and other LIS beneficiaries experienced comparable rates of reductions in drug fills, substitutions to therapeutically equivalent drugs, and discontinuations of the drugs in 2008. For example, 32 percent of randomly reassigned LIS beneficiaries experienced a reduction in fills in 2008, compared with 32 percent of LIS beneficiaries who chose new plans and 31 percent of LIS beneficiaries who did not change plans. Additionally, the share of LIS beneficiaries who experienced a change in pharmacies used in 2008 compared to 2007 was comparable across randomly reassigned and other LIS beneficiaries. While we did not identify measurable differences in the rates of utilization changes experienced by randomly reassigned beneficiaries compared to other LIS beneficiaries, beneficiary advisors said that the uniquely vulnerable LIS population may nevertheless experience hardships or inconvenience when changing prescription drug plans. HHS generally agreed with our findings. In particular, HHS stated that it concurred with our principal finding that the extent to which randomly reassigned LIS beneficiaries experienced changes in their drug and pharmacy utilization after reassignment was comparable to the extent of such changes among other LIS beneficiaries. However, HHS noted that our finding concerning the uniquely vulnerable LIS beneficiary population potentially facing particular hardships or inconveniences when changing drug plans was not supported by data in the report. Our report did not associate this finding to our data analyses, but instead noted that based on our discussions with beneficiary advisors, the particular hardships or inconveniences may exist despite our data analysis findings.

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