October 22, 2024
Why Medicare Part D Drug Formularies Matter in Making Informed Enrollment Decisions (Part 1)
Most Medicare beneficiaries (myself included) enrolled in Medicare Advantage or stand-alone Part D drug plans stand to benefit from the well-publicized $2,000 cap on covered drugs beginning January 1st. What has not been publicized is how Medicare Advantage and Part D sponsors are reacting to the $2,000 cap which poses a new cost-shifting risk to their 2025 bottom-lines. HealthMetrix Research monitors Part D cost-sharing in its annual CostShare Reports comparing Medicare Advantage plan annual cost-sharing across health status categories – excellent, fair, poor – with corresponding utilization of core benefits and and a basket of brand/generic maintenance drugs.
The 2025 CostShare Report findings for over 90 Medicare Advantage plans across 47 states and Puerto Rico include:
- Indications of ‘tier creep’ or moving drugs from lower Tiers 1, 3 (preferred) to higher Tiers 2, 4 (non-preferred) with higher applicable copays;
- Indications of increased copays especially for brand drugs both ‘preferred’ and ‘non-preferred’, e.g., $100 current flat copay changing to 33% coinsurance of brand drug cost in 2025;
- Indications of more brand drugs ‘Not Covered’ outside of the Part D plan formulary as shown below. While there are minimum restrictions imposed by CMS on the number of drugs that must be offered in each drug classification, plan formularies are not required to include the most popular or commonly prescribed drugs in each classification. In the example below, only Eliquis is covered while three other brand drugs are not covered.
Source: CMS 2025 Medicare Plan Finder
Bottomline
The implementation of the new $2,000 annual cap on covered Part D drugs clearly adds another moving part to the Part D scenarios for Medicare beneficiaries reviewing their 2025 drug options. For those who rely only on Part D generic maintenance drugs, the savings may be negligible and out-of-pocket costs may be well within the $2,000 annual cap. Conversely, those who rely on one or more brand maintenance drugs must verify that their brand drugs will remain covered in Part D drug formularies in order to benefit from the $2,000 annual cap protection.
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Alan Mittermaier - President HealthMetrix Research Inc.
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