Lower costs, increasing enrollment, and high enrollee
satisfaction—that's the news the government is touting about the
Medicare Part D prescription drug
Independent analyses, however, also show increasing use of a variety of
forms of utilization management and tiered pricing structures, as well as
enormous variation in plan design and formulary comprehensiveness.
The Centers for Medicare and Medicaid Services (CMS) is reporting that the
overall projected cost of the drug benefit is $117 billion lower over the next
10 years than was estimated last summer. This is believed to be due to the
slowing of drug cost increases, lower estimates of plan spending, and higher
rebates from drug manufacturers, according to CMS.
Compared with original Medicare Modernization Act (MMA) projections, the
net Medicare cost of the new drug benefit is $243.7 billion (or 38.5 percent)
lower over the 10-year period (2004-13) used to estimate the costs of the MMA,
according to CMS.
The government also reported that 1.5 million people enrolled in Part D
during the third enrollment season, bringing the total number of enrollees to
"As we enter the third year, Medicare's prescription drug benefit is
proving a resounding success," said Health and Human Services Secretary
Mike Leavitt in a statement. "Enrollment continues to rise, customer
satisfaction remains very high, and costs for beneficiaries and taxpayers are
considerably lower than original projections."
But a series of Medicare Part D "Data Spotlights" released by
the Kaiser Family Foundation has found extremely wide variation in the
structure of prescription drug plans, use of utilization management, and
formulary comprehensiveness, so that plan choice is increasingly crucial for
One data spotlight reports that utilization-management restrictions are
more common in 2008 than they were in 2006, with 30 percent of sample drugs
subject to some use restriction in 2008, up from 20 percent in 2006 (see
The data spotlights analyze data from the 47 stand-alone prescription drug
plans available nationwide using a sample of 169 commonly used and high-cost
prescription drugs; the high-cost group includes 33 antidepressants,
representing 24 unique chemicals.
The 2008 data for the analysis were collected from the CMS Web site using
the Medicare Prescription Drug Plan Finder shortly after the plan finder
became active for the new year.
Medicare Part D prescription drug plans use a variety of techniques to
manage enrollees' use of prescription drugs, including prior authorization
(not covering a drug until the prescriber documents that it is medically
necessary), step therapy (not covering a drug until certain other drug
therapies are tried first), and quantity limits (restricting the quantity of a
covered drug dispensed over a certain period of time).
For 2008, Kaiser researchers found that quantity limits have been applied
to 21 percent of sample drugs on average across the national prescription drug
plans (PDPs), up from 12 percent in 2006, while use of step therapy has
doubled from 6 percent of sample drugs in 2006 to 12 percent in 2008.
Prior authorization is applied to about 5 percent of the sample drugs on
average, a rate that has stayed roughly the same since 2006, according to
Irvin "Sam" Muszynski, J.D., director of APA's Office o f
Healthcare Systems and Financing, said the findings are in line with anecdotal
information from APA members, as well as a study released last year by the
American Psychiatric Institute for Research and Education (APIRE), indicating
that utilization management is the most significant barrier to patients'
getting appropriate medication under Medicare Part D.
"Our office is continuing to work with CMS to resolve this
problem," Muszynski told Psychiatric News. "In the
meantime, it's vital that information about which drugs require prior
authorization, as well as the prior authorization criteria, be readily
available so that the time and effort required to obtain them can be
minimized. CMS will require that Part D plans post prior authorization
criteria on their Web sites next year."
The APIRE study appeared in Psychiatric Services in January and
was reported in Psychiatric News (December 21, 2007).
The Kaiser researchers found that, on average, plans are more likely to
apply utilization-management tools to brand-name drugs than to generic drugs
because brands tend to be more expensive, and lower-cost generic equivalents
or therapeutic alternatives are often available. National PDPs apply one or
more utilization-management tools to 38 percent of brand-name drugs but to
only 22 percent of generics, according to the Kaiser researchers.
They also found that plans vary considerably in the extent to which they
apply utilization-management tools. For example, 12 of the 47 national PDPs do
not apply step therapy to any of the 169 sample drugs, while eight of the
national PDPs use step therapy for over 25 percent of the sample drugs.
Similar variation across plans exists in the application of quantity
limits, but none of the national PDPs is using prior authorization for more
than 10 percent of the sample drugs in 2008.
Finally, it appears that utilization management is very often inversely
related to formulary comprehensiveness.
A comparison of national PDPs regarding the number of unrestricted sample
drugs (that is, with no utilization-management restriction applied) listed on
formulary to the total number of sample drugs listed shows that for 2008,
national PDPs have listed on formulary 85 percent (143 drugs) of the 169
sample drugs, on average, but only 65 percent of covered drugs (93 drugs) have
no utilization-management restrictions.
The utilization-management data spotlight was prepared by researchers at
Georgetown University, NORC (National Opinion Research Center) at the
University of Chicago, and the Kaiser Foundation.
The data spotlights and methodology are posted at<www.kff.org/medicare/med102507pkg.cfm>.
The government's Part D enrollment figures are posted at<www.cms.hhs.gov/PrescriptionDrugCovGenIn/01_Overview.asp>.
The budget estimates for the Part D program were released as part of President
Bush's budget, which can be accessed at<www.whitehouse.gov/omb>.▪