Part D Savings Slows Overall Medicare Spend

Oct 22, 2013
CMS officials recently shared a positive outlook for Medicare due to lower Part D costs from generic use, effective utilization and formulary management
  • Medicare
  • Caregivers
  • Seniors

Addressing the America’s Health Insurance Plans Medicare Conference in September, Jonathan Blum, MPP, director for the Centers for Medicare and Medicaid Services (CMS), shared a positive outlook for Medicare in the coming years, citing shared evidence that quality of care is growing, cost reduction is in place and Medicare membership is on the rise.

Blum noted that Medicare per capita spending growth is at a historic low, a result he attributes not to the economy, but to fundamental differences in how care is delivered. Specifically, he credited lower Medicare Part A costs resulting from reductions in hospital readmissions and lower Medicare Part D costs resulting from a shift to generic drugs, and effective utilization and formulary-management tools.

Cost Savings Found in Part D

The per capita spending growth rate in Medicare reached a historic low of 0.4% in 2012. One driver was Part D: Drug spending fell 0.8% in 2012, in part due to a drop in the average price paid for prescriptions as some popular brand-name drugs lost patent protection.

Drug mix also was a major factor, as beneficiaries moved from brands to generics. Express Scripts understands the cost-saving opportunities of these clinically equivalent medications, with an 84% generic fill rate for Medicare plans, compared to the 80% national average for Medicare managed care.

Formulary-management solutions play a key role in helping plans, members and CMS take advantage of both the drop in price for brands and the abundance of generic medications available. Tailoring the formulary for seniors also can help direct Medicare members to more cost-effective brand and generic therapies, while still providing access to the medications seniors need most.

Formulary management also can help plans effectively manage high risk medications; doing so provides cost savings and can help improve Star Ratings. But most importantly, it keeps members safe. With experience managing 400 custom formularies, Express Scripts can help plans tailor their formulary to meet the unique needs of their Medicare population and help address their savings goals, while ensuring complete regulatory compliance.

Utilization Management = Improved Outcomes, Cost Savings

CMS also credits effective utilization management (UM) in driving down Part D costs, which is core to the value Express Scripts can provide to MA-PD plans. Drawing from a decade's worth of experience serving the unique needs of Medicare beneficiaries, Express Scripts UM solutions minimize cost while improving patient outcomes.

We put 15 petabytes of data to use every day to help patients make better decisions about their health outcomes. Using this actionable data, our Drug Utilization Review program checks for 3,200 drug rules, including potential drug interactions, overdosing and therapy duplication every 22 milliseconds. In the same amount of time, 2,203 medical rules are verified to identify potential contraindications and allergies.

Express Scripts UM programs work hand-in-hand with our formulary management solutions to help patients adhere to the safest, most efficient therapy plan. Utilization solutions include step therapy, specialty step therapy, prior authorizations, drug quantity limits and monitoring and investigation for fraud, waste and abuse.

As CMS seeks to shift Medicare beneficiaries into four-star and five-star MA-PD plans, continually improving the quality of care while lowering costs and improving safety and health outcomes will be critical to MA-PD plan success. Providing beneficiaries with the support tools and resources to keep them safe, connect with the most cost-effective treatments and remain adherent to therapy will continue to drive down Medicare costs and improve seniors’ health and quality of life.

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