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98% of Prescription Drug Plans Place a Prior Authorization on At Least 1 of the 100 Drugs Most Frequently Prescribed To Medicare Beneficiaries.

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c40226) has announced the addition of the new report from Decision Resources Inc, "Medicare Part D: Strategies of the Leading Health Plans" to their offering.

Since its creation in 1965, the Medicare program has become a major source of health care coverage for seniors, the disabled, and patients with end-stage renal disease in the United States. Historically, however, Medicare offered only limited coverage of prescription medicines. To improve beneficiaries' access to outpatient prescription medicines, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (commonly known as the Medicare Modernization Act, or MMA) introduced Medicare Part D--a new outpatient drug benefit that began operation on January 1, 2006. This report analyzes the Medicare Part D strategies of the leading health plans. We begin with a review of the key features of the Part D benefit design and the main sources of Medicare drug benefit coverage. We then examine how six leading health plans--UnitedHealth Group, Humana, WellPoint, MemberHealth, WellCare, and Kaiser Permanente--are approaching Medicare Part D. We conclude with a brief assessment of the outlook for the Medicare prescription drug benefit.

Business Implications:

The early success of the leading players in Medicare Part D is attributable not only to their marketing expertise but also to their good fortune in being automatically assigned hundreds of thousands of Medicare-Medicaid dual eligible beneficiaries. They achieved this advantage by setting their premiums below benchmark levels in many states. The Centers for Medicare and Medicaid Services (CMS) will monitor health plans closely and is unlikely to renew contracts with plans it judges to have a deficient benefit design. Furthermore, enrollees could be lured away by other plans that offer more-attractive benefits.

Several leading health plans have openly stated that their longer-term ambition in the Part D market is to transfer as many members as possible from their stand-alone prescription drug plans (PDPs) to their Medicare Advantage (MA) plans, where they can achieve much more substantial margins. If these companies can demonstrate their credentials by means of their PDPs, members may be prepared to sign up for MA plans. As a result, the balance of the Part D market could shift from PDPs to MA plans over time.

An analysis of CMS data shows that 98% of PDPs place a prior authorization or step therapy restriction on at least 1 of the 100 drugs most frequently prescribed to Medicare beneficiaries; 12 plans (1%) restrict more than 40 of these medicines. Sixty-six percent of PDPs have restrictions on 6 or more of the top 100 drugs. On average, Medicare PDPs include 93.5 of the top 100 drugs in their formularies and subject 9.5 of these medicines to prior authorization or step therapy restrictions.

UnitedHealth Group, the leading player in Medicare Part D, has what is generally regarded as the crown jewel of partnerships: an exclusive Part D marketing arrangement with AARP (formerly the American Association of Retired Persons), an organization that represents 35 million seniors in the United States. The AARP product accounts for more than 90% of United's individual enrollment in Medicare Part D.

Humana, the second-ranked company in this market, owes its early success in the PDP market in large measure to its low-pricing strategy. In 19 states, the company offers the only PDP with a premium of less than $20 per month; in another 14 states, it is one of only two insurers to offer premiums below that price. However, Humana can also offer its members a full array of Medicare products--HMOs, regional and local PPOs, and private fee-for-service plans--at a range of price points and benefit levels.

Key Topics Covered Include:

- Overview

- Part D Benefit Design

- Sources of Medicare Drug Benefit Coverage

- Strategies of the Leading Health Plans

- Key Trends and Outlook

Companies Mentioned Include:

- Blue Cross Blue Shield of Michigan

- Torchmark Corporation

- CIGNA

- Sierra Health Services

- QCC Insurance Company

- Longs Drug Stores Corporation

- Health Care Service Corporation

- Wellmark

- SCAN Health Plan

- MMM Healthcare

- Health Net

- HIP, Health Plan of New York

- Aetna

- Medco Health Solutions

- Caremark

- Universal American Financial Corporation

- Coventry Health Care

- WellCare Health Plans

- MemberHealth

- WellPoint

- Humana

- UnitedHealth-PacifiCare

- Kaiser Permanente

- Empire HealthChoice Assurance

- NewQuest Health Solutions

For more information visit http://www.researchandmarkets.com/reports/c40226
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Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:Aug 2, 2006
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