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Seniors Pay a High Premium for Loyalty to Their Part D Plans
By Mary Agnes Carey, CQ
HealthBeat News
October 5, 2007
Consumers who stay in their current Medicare prescription drug plans
will see on average a 21 percent increase in their monthly premiums next
year, according to an analysis released Friday by the firm Avalere
Health.
Using newly released data from the Centers for Medicare and Medicaid
Services (CMS) and Avalere’s own analysis tools, the firm computed an
“enrollment weighted” average premium for the Medicare Part D
marketplace. Avalere said that under its method, premiums of plans with
the most enrollees are assigned a heavier weight relative to plans with
low enrollment. A premium increase for a prescription drug plan, or PDP,
with three million enrollees would have a greater impact than a premium
increase for a plan with 10,000 enrollees.
The top 10 PDP sponsors in Medicare have more than 80 percent of the
people enrolled in stand-alone PDPs and all raised their premiums, with
the exception of two: CVS Caremark’s Silver Script plan, which will be
25 percent cheaper in 2008, and First Health’s Part D premier plan,
which will cost 4 percent less. Avalere’s analysis also found that the
Humana PDP Standard plan, which currently has the second-highest
enrollment, raised its premium an average of 69 percent, while the
largest increase, 89 percent, is United’s Medicare Rx AARP Plan-Saver
PDP, which as of July had more than 900,000 enrollees, according to
Avalere.
“The reality of the Medicare experience is that beneficiaries have been
very loyal thus far to their initial plan selections,” Avalere President
Dan Mendelson said in a statement. “If consumers stick to their choices
again, they are likely to see a dramatic increase in their monthly
premiums. But consumers who shop around may be able to find lower cost
alternatives.”
CMS Spokesman Jeff Nelligan reiterated Friday that beneficiaries have
many choices for their prescription drug coverage. ”More than 90 percent
of Medicare beneficiaries in a stand-alone Part D prescription drug plan
will have access to at least one plan in 2008 with premiums lower than
they are paying this year,” he said in a statement. In every state,
beneficiaries will have access to at least one plan with premiums of
less than $20 a month, and a choice of at least five plans with premiums
of less than $25 a month.
Chris Curran, Humana’s director of corporate communications, said that
Humana’s 2008 member premiums, set by CMS after the company filed its
bids in June 2007, “are largely the function of changes in the
government’s formula since last year, as well as overall medical trend.”
Curran added that Humana’s premiums are below the government’s national
benchmark in 41 states and Puerto Rico. “In fact, 97 percent of our
[Medicare managed care plans that offer prescription drug coverage]
members have the same or lower premiums in 2008 than they had in 2007,”
Curran said.
Peter Ashkenaz, a spokesman for United, noted that since premiums vary
by region, beneficiaries would see increases based on a regional basis
rather than on a national average.
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