Consolidation fuels a 23% drop in Medicare Part D plans in 2022

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Consolidation among standalone Medicare Part D prescription drug plans was the root cause of a 23% decline in offerings for 2022, according to new findings by the Kaiser Family Foundation.

The average Medicare beneficiary will have a choice of 23 stand-alone prescription drug plans (PDPs) in 2022, seven fewer PDP options than in 2021, the data showed. Although the number of PDP options in 2022 is far lower than the peak in 2007 – when there were 56 such options, on average – there are still numerous standalone drug plan options, according to KFF.

Next year, beneficiaries will also have access to 31 Medicare Advantage prescription drug plans (MA-PDs), on average, which is a 15% increase in MA-PD options since 2021. That average excludes Medicare Advantage plans that do not offer the drug benefit; overall, an average of 39 Medicare Advantage plan options will be available in 2022, excluding plans not available to all beneficiaries, such as Special Needs Plans and group plans.

In all, a total of 766 PDPs will be offered by 16 firms in the 34 PDP regions, plus another 10 PDPs in the territories. That's a decrease of 230 PDPs from 2021. 

The relatively large decrease in the number of PDPs for 2022 is primarily the result of consolidations of plan offerings sponsored by Cigna and Centene, resulting in the market exit of three national PDPs from each firm in each region: all three of Cigna's Express Scripts PDPs and three of Centene's six Wellcare PDPs. Part D sponsors are limited to offering no more than three PDPs in each region. 

This accounts for just over 200 PDPs offered in 2021 that will no longer be offered in 2022. Enrollees in these consolidated plans will be automatically switched to other plans offered by the same plan sponsor, although they can choose to switch into a different plan during the annual open enrollment period.

The number of firms sponsoring stand-alone drug plans has declined steadily over time, from more than 40 firms in 2010 and earlier years, dropping below 25 firms beginning in 2015, and at 16 firms in 2022. That's lower than in any other year since Part D started. 

PDP enrollment is expected to be concentrated in a small number of firms in 2022, as it has been every year. Based on August 2021 enrollment, eight out of 10 enrollees in 2022 are projected to be in PDPs operated by just four firms: CVS Health, Centene, UnitedHealth and Humana. All four firms offer PDPs in all 34 regions next year.

WHAT'S THE IMPACT?

The estimated national average monthly PDP premium for 2022 is projected to be $43, a 15% increase from the $38 posted in 2021, weighted by August 2021 enrollment. It's likely that the actual average weighted premium for 2022, after accounting for enrollment choices by new enrollees and plan changes by current enrollees, will be lower than this estimated average, according to KFF. CMS reported that the average premium for basic Part D coverage offered by PDPs and MA-PDs will be an estimated $33 in 2022. 

KFF's premium estimate is higher because it's based on PDPs only – excluding MA-PDs – and includes PDPs offering both basic and enhanced coverage, with enhanced plans generally having higher premiums than basic plans.

PDP premiums will vary widely across plans in 2022. Among the 16 nationally available PDPs, average premiums will range from a low of $7 per month (or $85 annually) for SilverScript SmartRx to a high of $99 per month (or nearly $1,200 annually) for AARP MedicareRx Preferred. In other words, among the 16 national PDPs, there is a $1,100 difference in annual premiums between the highest-premium PDP and the lowest-premium PDP.

Some Part D stand-alone drug plan enrollees who choose to stay in their current plans may see lower premiums and other costs for their drug coverage, but nearly three-fourths of non-low-income-subsidy PDP enrollees will face higher premiums if they remain in their current plan, and many will also face higher deductibles and cost sharing for covered drugs, the analysis found. 

Most Part D PDP enrollees who remain in the same plan in 2022 will be in a plan with the standard, maximum $480 deductible and will face much higher cost sharing for brands than for generic drugs, including as much as 50% coinsurance for non-preferred drugs. 

Some beneficiaries could see overall cost savings, including the monthly premium, deductible and cost sharing, if they switched to a lower-premium plan, while for other beneficiaries, a higher-premium plan might better meet their needs at a lower overall total cost.

THE LARGER TREND

Despite these year-to-year changes in plan coverage and costs, as well as changes in beneficiaries' health needs, a previous KFF analysis found that most Medicare beneficiaries did not compare plans during a recent open enrollment period, and most Part D enrollees did not compare the coverage offered by their drug plan to other drug plans.

The numbers are similar across both Medicare Advantage and traditional Medicare, with 68% of MA beneficiaries saying they don't compare medical plans, and 73% of those in traditional Medicare claiming the same.

Medicare beneficiaries with traditional Medicare can compare and switch Medicare Part D stand-alone prescription drug plans or join a Medicare Advantage plan, the privately run alternative to traditional Medicare. At the same time, enrollees in Medicare Advantage can compare and switch MA plans or elect coverage under traditional Medicare with or without a stand-alone drug plan.

Coverage and costs vary widely among both MA plans and Part D prescription drug plans. Plans can change from one year to the next, as can beneficiaries' healthcare needs. These factors could lead to unexpected and avoidable costs, and disruptions in care, for beneficiaries who stay put and do not at least review their options annually, KFF found.

Because failing to shop around can have impacts on enrollees' coverage and costs, the Centers for Medicare and Medicaid Services advises that beneficiaries review and compare Medicare plans every year.

A recent analysis from the Commonwealth Fund has found that Medicare Advantage enrollees do not differ significantly from beneficiaries in traditional Medicare in terms of age, race, income, chronic conditions, satisfaction with care or access to care, after excluding Special Needs Plan enrollees.

Both groups reported waiting more than a month for physician office visits, while similar shares of Medicare Advantage and traditional Medicare enrollees report that their out-of-pocket costs make it difficult to obtain care.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com