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CMS Medicare Landscape Files: Low-Cost PDPs Poised to Compete; Attention Focused on MA Plan Participation

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Today, the Centers for Medicare & Medicaid Services (CMS) released the 2014 landscape files containing data on plan participation, premiums and benefit designs for the Medicare Part D and Medicare Advantage (MA) markets.

Avalere Health’s flash analysis highlights the success of low-cost standalone prescription drug plans (PDPs) in gaining market share. As we dive into the data, we anticipate seeing a familiar trend in 2014: the continued emergence of low-cost PDPs with preferred pharmacy networks offering value-priced options to enrollees.

In previous years, beneficiaries have flocked to Medicare Part D plans-particularly national plan sponsors-that offer benefit packages with lower premiums and limited pharmacy networks. Part D plans credit preferred networks with helping them simultaneously better manage costs and grow enrollment. In 2013, the four PDPs (with national or near-national status) with a premium below $30 per month were Humana’s Walmart Preferred PDP, Coventry’s First Health Part D Value Plus PDP, UnitedHealth’s AARP MedicareRx Saver Plus PDP, and CVS Caremark’s SilverScript Choice PDP.

Overall, as the 2014 annual election period approaches, Avalere expects top Part D sponsors to continue to use and refine their low-cost PDPs to attract enrollees with competitive premiums.

On the MA front, plan participation has been strong in recent years despite the payment cuts imposed by the Affordable Care Act (ACA). Yet, for 2014, MA plans are facing new financial pressures, including the ACA health insurer fee and recent changes to the risk adjustment model. In particular, the payment cuts stemming from the changes to the risk-adjustment model are likely to disproportionately affect MA Special Needs Plans, which serve beneficiaries with chronic conditions and other special healthcare needs. With this confluence of pressures on MA plans, Avalere will be closely examining plan availability for 2014.

Avalere Health will continue to offer key insights on key Part D and MA changes and compile additional analyses, as they become available.

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