Managed Care - December 2008 - (Page 21)

A Humana spokesman said, “Humana’s 2009 prescription-drug plans and premiums reflect the experience we’ve seen since the PDP program started in 2006 and our expectations around what benefit design will most interest our members and potential members going forward. Our prices for 2009 reflect what we anticipate it will cost us to administer the drug plans. We work very hard to appropriately balance premium with the benefits we offer.” One of the reasons why the drug plan premiums are spiking this year, suggests one prominent player, is precisely because Part D has proven to be enormously popular. “Manufacturers are taking advantage of the fact that there is a demand for their drugs and they are raising prices,” says Cheryl Matheis, the AARP’s director of health strategy. They are going up faster than inflation. “To me, it looks like they are taking advantage of their market position.” Others say that with their fourth year of operations looming, hard experience is simply catching up to the MCOs. Three years ago, says Washington, health plans “didn’t have good information upon which to base their bids. Now we’re really starting to see plan bids based on real data and plans refining their strategies, making decisions on which geographic mar- kets they want to serve, and whether they want to be in the low-income market.” Richard Stefanacci, DO, MBA, director of the geriatric health program and Center for Medicare Medication Management at the University of the Sciences in Philadelphia and a member of MANAGED CARE’S editorial board, ticks off a series of reasons for managed care’s decision to increase premiums. Reason number one: “Because they can.” Seniors tend to stay put in the same plan despite premium increases, says Stefanacci. “At most they move to plans in the same company. United and Humana both found they could increase premiums and not lose membership outside of the dually eligible members.” Reason number two: Because the feds are removing their financial safety net, making it riskier to work in Part D. Plans are facing the planned elimination of two key federal provisions put in place to protect health plans from getting hit by nasty financial surprises, says Stefanacci: reinsurance for the cost of catastrophic care and a federal safeguard in which the government helps absorb unanticipated losses. Reason number three: “Because they want to.” By pushing prices well over the regional benchmark on average premiums, health plans don’t have Part D premiums rise sharply T his year Part D plans adopted a variety of price strategies leading into open enrollment for 2009. Humana, which has been raising premiums across the board, has pushed its drug plan premium just past the AARP plan, which is the most popular in the country. AARP’s MedicareRx Preferred, meanwhile, had a smaller percentage hike but started at a higher level. Since 2006, Humana’s PDP Standard Plan premium, which started out at $9.51 a month, has surged 329 percent, according to the Kaiser Family Foundation. AARP’s plan, which started at $26.31 a month, has risen 41 percent. Humana sees huge jump PDP plan AARP MedicareRX Preferred Humana PDP Standard Humana PDP Enhanced Community CCRx Basic AARP MedicareRx Saver WellCare Classic 2008 enrollment 2,745,266 1,500,758 1,426,756 1,097,581 829,585 616,255 % of total* 16.6 9.1 8.7 6.7 5.0 3.7 Average monthly premium % change 16% 60% 64% 21% 8% 17% $32.07 $37.03 $25.52 $40.83 $23.54 $38.21 $24.93 $30.18 2008 $26.57 $28.69 2009 $24.76 $28.93 * % of total is the percentage of all Part D beneficiaries who pay premiums Source: Kaiser Family Foundation DECEMBER 2008 / MANAGED CARE 21

Table of Contents Feed for the Digital Edition of Managed Care - December 2008

Managed Care - December 2008 Editor's Memo Contents Legislation & Regulation News and Commentary Medication Management Compensation Monitor ICD-10 Offers Huge Opportunity, Challenge Part D at a Crossroads Plans Can Weather the Financial Crisis DM vs. Medical Home? Tackle Prediabetes Reasonable Approach to Morning Sickness Formulary Files Tomorrow's Medicine Outlook

Managed Care - December 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.