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Summary

New Avalere analysis finds higher premiums for the enhanced standalone drug plans participating in the model.

Under the voluntary Part D Senior Savings Model set to begin in January 2021, the Centers for Medicare & Medicaid Services (CMS) aims to test whether or not lowering out-of-pocket costs for insulin will lead to improved outcomes.1 The model caps copayments at $35 for a 30-day supply of insulin and includes additional financial protections for plans.

Recently, the CMS announced the plans that are participating in this demonstration. Avalere analyzed plan data to identify the share of plans participating, assess current enrollment in these plans,2 compare the differences in beneficiary premiums between participating and non-participating plans, and assess availability across geographic areas. Avalere found that for 2021, 34% of Medicare Advantage plans offering drug coverage (MA-PDs) and half of enhanced standalone Prescription Drug Plans (PDPs) are participating in the Part D Senior Savings Model in 2021.

Background

The Part D Senior Savings Model alters how manufacturers provide coverage gap discounts under the coverage gap discount program. According to the CMS, plans had a disincentive to offer supplemental coverage to reduce cost-sharing in the coverage gap due to the calculation of manufacturer gap discounts. For plans participating in the model, supplemental coverage will be applied after manufacturer gap discounts, rather than before the gap discounts, as a means of aligning the incentives. The CMS is also offering additional risk-corridor protection for plan years 2021 and 2022 to encourage plan participation in the model. Risk-corridor protection will be given to plan benefit packages that have higher enrollment than average from patients with diabetes who use insulin.

Only enhanced Part D plans—including standalone enhanced PDPs and Medicare Advantage plans that offer enhanced Part D drug coverage—are eligible for participation. The analysis focused on participation among the enhanced PDPs and on the MA plans that are not special needs plans (hereafter referred to as MA-PD plans).

“With a copay set at $35 per month for insulin up to the catastrophic region, beneficiaries enrolling in the Senior Savings Model will be able to better predict their out-of-pocket costs,” said Rebecca Yip, Principal. “Importantly, the lower insulin copays under this model could increase medication adherence and lead to lower medical costs for those enrolling in these plans.”

Premiums Are Higher for PDPs and Lower for MA-PD Plans Participating in the Model

Avalere found that 310 (50%) enhanced PDPs and 1,287 (34%) MA-PD plans are participating in the demonstration.

Premiums vary by plan type. The average enrollment-weighted monthly premium3 enhanced PDPs is $23.46 more for participating versus non-participating plans ($57.53 versus $34.07). For MA-PD plans, the average enrollment-weighted premium for MA-PD plans is $10.36 less for participating versus non-participating plans ($22.74 versus $33.10).

Participating PDPs have a larger share of higher premium plans than the non-participating PDPs. Of the non-participating PDPs, 56% have monthly premiums between $1 and $25, compared to only 32% of participating plans. However, only 12% of the non-participating PDPs have premiums of at least $75, compared to 26% of the participating PDPs.

The average premium for participating MA-PDs is lower than non-participating MA-PDs because a higher percentage of participating MA-PD plans have a $0 premium (57%) compared to non-participating MA-PD plans (52%). A similar share of MA-PD plans have a premium of at least $75 (12% for participating MA-PD plans vs. 14% for non-participating MA-PD plans).

“The Senior Savings Model changes how coverage gap discounts are applied and, as such, slows beneficiary progression through the coverage gap,” said Tom Kornfield, Senior Consultant. “The average premium is $23 more for the participating prescription drug plans but is $10 less for the participating Medicare Advantage plans.”

Figure 1. Plan Participation and Premiums in Part D Senior Savings Model by MA-PDs and PDP Enhanced Plans, 2021*
Figure 1. Plan Participation and Premiums in Part D Senior Savings Model by MA-PDs and PDP Enhanced Plans, 2021*

*Plan premiums for 2021 are weighted by September 2020 enrollment.

Figure 2. Premiums, Non-Participating and Participating PDPs and MA-PDs, 2021
Figure 2. Premiums, Non-Participating and Participating PDPs and MA-PDs, 2021

Participation and Premiums Vary by State and Plan Type

In most states, about half of the enhanced PDPs are participating in the demo. In the 5 states with the largest PDP enrollment, representing 30% of total enrollment, plan participation varies slightly, from a low of 41% of plans in Texas to a high of 59% in Florida. Among these 5 states, Ohio has the lowest average premium of $58.00 compared to an average premium of $68.72 in California.

Table 1. PDP Participation and Premiums in 5 Largest States by Enrollment
Non-Participating Plans Participating Plans Percentage of Plans Participating Average Premium in Non-Participating Plans Average Premium in Participating Plans Premium Difference
California 11 9 45% $47.34 $68.72 $21.38
Florida 7 10 59% $29.61 $64.50 $34.89
Texas 13 9 41% $42.51 $58.51 $16.01
Illinois 10 9 47% $52.48 $56.72 $4.24
Ohio 10 9 47% $28.54 $58.00 $29.46

The MA-PD plans vary in terms of participation from a low of 14% in Oregon, West Virginia, and Maryland to a high of 69% in Rhode Island. In the 5 states representing 41% of total MA-PD enrollment, the share of plans participating varies from a low of 23% in New York to a high of 52% in Florida. The weighted average monthly premium for those 5 states also varies from a low of $3.41 in Florida to a high of $47.03 in Pennsylvania.

Table 2. MA-PD Participation and Premiums in 5 Largest States by Enrollment
Non-Participating Plans Participating Plans Percentage of Plans Participating Average Premium in Non- Participating Plans Average Premium in Participating Plans Premium Difference
California 224 94 30% $25.06 $12.74 -$12.32
Florida 155 167 52% $6.93 $3.41 -$3.52
Texas 114 56 33% $15.15 $10.35 -$4.80
New York 133 40 23% $30.31 $41.57 $11.26
Pennsylvania 115 75 39% $45.95 $47.03 $1.07

Methodology

The primary data used for this analysis are from the CMS 2021 Part D Senior Savings Model Landscape file. Avalere used September 2020 enrollment to weight average plan enrollment and premiums. New plans were attributed an enrollment weight of zero. The analysis excludes plans offered in US territories. Avalere did not assume any shifts in enrollment.

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Notes

  1. The pharmaceutical manufacturers that will voluntarily participate in the Part D Senior Savings Model for CY 2021 will include Eli Lilly and Company, Novo Nordisk, Inc., Novo Nordisk Pharma, Inc, and Sanofi-Aventis US, LLC.
  2. Enrollment as of September 2020.
  3. Weighted by September 2020 enrollment.
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