Access and Savings of Medicare Pharmacy Networks

Feb 3, 2015
Preferred Pharmacy Networks are an effective strategy for Medicare plans to retain high quality care while reducing costs.
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  • Medicare

Medicare has experienced an extraordinary slowdown in spending these past few years, largely due to Medicare Part D.  Last spring, the Congressional Budget Office lowered its projections of total Medicare spending from 2012 through 2021 by $370 billion, and nearly 60% of that is attributable to Part D.

That’s a remarkable success story.

Despite these projections, there is a valid concern industry-wide that the impact of Part D on reduced spending might be temporary. Indeed, high cost medications that treat large populations of patients, a pipeline of niche products, new innovations for leading trend drivers, and pharmaceutical industry consolidation could reduce Part D’s role in slowing trend and challenge plans’ ability to continue to effectively serve Medicare members.

To maintain this positive momentum and retain the ability to reinvest profits into creating more programs that improve care quality for millions of Part D members, it is vital for plans to maximize all levers within their benefit design to help contain costs, while still letting beneficiaries make the most of their Part D benefit.

Med D Preferred Pharmacy Networks are a BIG Lever

At the macro level, industry studies have shown that 2014 Medicare Part D plans with preferred pharmacy networks offer high quality benefits with lower-than-average premiums, and significantly reduce Medicare spending. Some of the most recent research also puts to rest concerns about access, documenting how the average Medicare beneficiary need only travel about one extra mile to use a preferred retail pharmacy to save $20-$40 on monthly cost sharing – a significant savings for someone living on a fixed income. Some members can save even more, with no travel, by using a preferred home delivery pharmacy. 

Further, there is healthcare industry value to be gained: A 2013 study by Milliman estimated that preferred pharmacy network plans will reduce federal Medicare spending by up to $9.3 billion over the next 10 years.

Satisfaction, Choice and Access are Protected

A Pembroke Consulting analysis of newly released 2015 enrollment data from the Centers for Medicare and Medicaid Services (CMS) shows that 81% of seniors chose Part D plans with a preferred pharmacy network. Further, a recent PCMA survey of 453 Medicare beneficiaries enrolled in a Part D plan with a preferred pharmacy network, 90% of seniors in rural, suburban and urban areas reported convenient access to a pharmacy in a preferred pharmacy network in Part D, and those in small town and rural areas reported high satisfaction with their Part D plans and the pharmacies in their preferred network.

For the 2015 plan year, 81% of seniors chose Part D plans with a preferred pharmacy network.

To unlock the true value of preferred networks, they must preserve member choice and access. Express Scripts believes the hallmarks of a successful preferred pharmacy network include:

  • A sizable network that complies with CMS standards and ensures patients will not have to travel more than 2 miles in urban areas, 5 miles in suburban areas, or 15 miles in rural areas to access a preferred pharmacy.  The Express Scripts Medicare Preferred Network includes more than 29,000 pharmacies nationwide and complies with these standards;
  • Diversity in the types of pharmacies provided – chain, grocery and independent community pharmacies;
  • A home delivery pharmacy that can offer even greater savings and convenience for maintenance medications;
  • True savings for the member, both in premium costs and co-pay differential.

Despite the clear value offered by preferred pharmacy networks, certain pharmacy groups have cited data – based solely on a member’s home addresses – that suggests seniors in urban areas do not have convenient access to pharmacies. However, that flawed methodology fails to account for where a member has historically chosen to fill a prescription when all retail pharmacies were available options. Once a member’s historical preference is accounted for, there is no discernible loss of pharmacy access for plans that transition to a preferred pharmacy network.

Bottom line: these preferred networks deliver significant cost savings, while still fulfilling CMS’ high standards for pharmacy access.

Express Scripts has been a pioneer in creating valuable preferred retail pharmacy networks that effectively align patient and payer priorities, and we will keep pressing forward to help Medicare plans reap these same benefits.

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