Medicare Part D

In its annual release of key premium, benefit and plan information for Medicare Advantage and Part D, CMS on Sept. 27 emphasized stability and robust offerings for 2025, despite repeated warnings from industry trade groups and plans of anticipated benefit reductions in the face of revenue challenges. While emerging analyses tell a slightly different story — that of insurers pursuing higher deductibles and/or maximum out-of-pocket cost amounts to maintain, for example, competitive premiums — industry experts say these early comparisons only tell part of the story, as other yet-to-be released data will convey additional nuances of MA and Part D market changes.

Medicare Advantage insurers and their distribution partners are bracing for a busy Annual Election Period, thanks in part to multiple Part D benefit changes resulting from the Inflation Reduction Act. Adding to their concerns about likely market disruption and enrollee confusion is a new drug manufacturer letter that raises operational and financial questions about the interplay between Patient Assistance Programs (PAPs) and the Medicare Payment Prescription Plan (M3P).

In a letter dated Aug. 19, Pfizer Inc. informed Part D beneficiaries using its Pfizer Oncology Together program that they must enroll in the M3P before they can be reconsidered for the PAP. According to the company’s website, Pfizer Oncology Together provides financial assistance with out-of-pocket (OOP) deductible, co-pay, or coinsurance costs for eligible patients who have been prescribed certain Pfizer Oncology oral and injectable medicines.

After failing to meet minimum medical loss ratio (MLR) requirements for three years in a row, Centene Corp. is prohibited from enrolling new beneficiaries into its Medicare Advantage Prescription Drug (MA-PD) plan in Missouri, while a UnitedHealthcare (UHC) subsidiary regained enrollment abilities after a similar suspension. According to a Sept. 6 letter posted to CMS’s Parts C and D enforcement actions webpage, Centene’s Wellcare of Missouri Health Insurance Company, Inc. reported MLRs of 78.9%, 77.7% and 84.0% for contract years 2021, 2022 and 2023, respectively. When an MA organization has an MLR for a contract that is below 85.0% for three or more consecutive years, CMS must suspend the MAO’s ability to accept new enrollments in the second succeeding contract year after the third consecutive year of noncompliance, explained CMS. The enrollment freeze will take effect for any coverage beginning Jan. 1, 2025, through Dec. 31, 2025, and the contract will be removed from the Medicare Plan Finder list of available MA-PD plans during the 2025 Annual Election Period that begins on Oct. 15. According to CMS enrollment data for September, Wellcare of Missouri serves 4,254 MA enrollees, including 2,872 with Part D coverage. Meanwhile, UHC’s Care Improvement Plus South Central Insurance Co. was released from an enrollment suspension after reporting an MLR exceeding 85.0% for contract year 2023, according to a separate notice issued on Sept. 6. The UHC plan, which currently serves about 8,600 MA-PD enrollees, will be allowed to enroll beneficiaries during the upcoming AEP.

Republican lawmakers in an Aug. 26 letter to the Congressional Budget Office (CBO) criticized the rollout of a demonstration program that is intended to ease Medicare Part D premiums for beneficiaries and help stabilize the market but could cost taxpayers billions of dollars. It is the latest salvo from politicians since CMS announced the Part D Premium Stabilization Demonstration on July 29, the same day it revealed the national average monthly bid amount (NAMBA) would increase by nearly 180% next year.

Debra Devereaux, an executive consultant with Rebellis Group, speculates that some stand-alone Prescription Drug Plans (PDPs) “must have had eye-popping bids” to prompt CMS to launch the program. She suggests that PDPs likely increased their premiums for next year to offset major changes that are part of the Inflation Reduction Act (IRA) and will result in plans shouldering significantly more financial risk. The demonstration program is only for PDPs and does not include Medicare Advantage Prescription Drug (MA-PD) plans.

The Inflation Reduction Act (IRA) was a sweeping piece of legislation that impacted multiple industries, but the prescription drug aspects of the law have arguably gotten the most attention, both positive and negative. CMS recently released the eagerly anticipated negotiated prices for the first 10 drugs, which will go into effect on Jan. 1, 2026. In preparation for the law’s potential impact, research from Zitter Insights found that both Medicare and commercial plans already have begun to modify their drug management approach.

Among the pharma provisions of the IRA, which was signed into law by President Joe Biden on Aug. 16, 2022, are requiring Medicare to negotiate the prices of the most expensive Medicare drugs, starting with the top 10 Part D agents; sanctioning companies whose Part B drugs’ prices increase faster than the rate of inflation; and implementing a phased-in Medicare Part D redesign that modifies the percentages different stakeholders are responsible for and caps beneficiaries’ out-of-pocket costs at $2,000 starting next year.

Now that CMS has revealed the prices of the first 10 drugs subject to Medicare price negotiation, all eyes are on how Part D plans will cover those drugs on their formularies in 2026, when the new prices go into effect.

To that end, a recent poll from Zitter Insights offers some clues about how payers and PBMs are thinking about this thorny question.

If Medicare Part D covered GLP-1 drugs for obesity, rather than just Type 2 diabetes, it could increase annual spending by $3.1 billion to $6.1 billion, according to a recent Health Affairs study.

The introduction of GLP-1 medications for treatment of diabetes and obesity has reignited the debate over Medicare’s prohibition on covering weight loss medications. In June, the House Ways & Means Committee advanced legislation that would provide a limited pathway for adults 65 and older to get anti-obesity GLP-1s covered by Medicare. The bill has not yet passed the full House.

A Humana Inc. executive speaking at the Wells Fargo Healthcare Conference on Sept. 4 said the Medicare Advantage-focused insurer will exit 13 counties where membership was “insignificant” and reduce its plan offerings in other counties, impacting an estimated 560,000 MA members next year. The selected counties will leave Humana’s footprint largely intact, while impacted members in other counties will have Humana plans to choose from, Chief Financial Officer Susan Diamond told Wells Fargo analyst Stephen Baxter. “The exit itself is positive in the sense that those plans were not contributing,” said Diamond. And in the other counties, if Humana can “ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in such a way that they will be positively contributing.” Despite seeing elevated utilization and medical cost pressure in the first half of the year, the insurer on Sept. 3 reaffirmed its full-year guidance of approximately $16.00 adjusted earnings per share. Diamond during the conference added that Humana is seeing more prior authorization decision appeals than it has seen historically. She also disclosed that Humana anticipates greater utilization of supplemental benefits such as over-the-counter cards and dental services in the fourth quarter, "just recognizing the benefit changes we've made for 2025."

Centene Corp. late last month riled agents and brokers with the news that it would no longer pay new and renewal commissions for enrollments in its stand-alone Prescription Drug Plan (PDP) products. During a Sept. 4 presentation at the Wells Fargo Healthcare Conference, Centene executives for the first time publicly acknowledged the firm’s controversial decision.

“One important thing to note on PDP, partly because of the IRA [Inflation Reduction Act] changes and then final rate notice provisions at the time that we filed bids, we made the difficult decision to eliminate broker commissions this year for PDP only,” Centene CEO Sarah London emphasized during the conference. She added that “we'll continue to pay full commissions in Medicare Advantage and obviously work very closely with the broker community to support the work they do, to support our members.”

In an email to contracted brokers on Aug. 23 that has now stirred considerable controversy, Centene Corp. said it would no longer pay new and renewal commissions for enrollments in its stand-alone Prescription Drug Plan (PDP) products.

For insurance agents who previously enrolled clients in a Centene/Wellcare product and anticipated putting time and resources into continuing to serve that client, the rug was effectively pulled out from under them. Fearing that the move could set a dangerous precedent, the broker community over the last week has rallied to voice its objections and demand answers from the leading PDP carrier.