Insurers No Longer Allowed To ‘Co-Brand’ Drug Plans
Insurers sponsoring drug plans under the Medicare prescription drug benefit will not be allowed to "co-brand" with other organizations for 2007 and future plan years, CMS Deputy Administrator Leslie Norwalk said on Tuesday at a House Energy and Commerce Subcommittee on Health hearing, CQ HealthBeat reports.
For 2006, insurers were permitted to co-brand with chain drug stores, state pharmaceutical assistance programs and seniors' groups such as AARP. For such plans, both the name of the drug plan and the co-brand are listed on a beneficiary's Medicare card.
Norwalk said the practice confused some beneficiaries who mistakenly thought they could fill prescriptions only at the pharmacies listed on their cards. Prohibiting co-branding "should alleviate any potential for beneficiary confusion over which pharmacies they can use," Norwalk said.
Rep. Frank Pallone (D-N.J.) said, "The co-branding issue is just outrageous." Pallone and other panel members said beneficiaries were confused by co-branding.
The hearing also included testimony from pharmacists on their experiences with the drug benefit. Witnesses from groups representing independent pharmacy owners said pharmacy benefit managers are delaying payments by up to 45 days under the drug benefit.
Norwalk said CMS is not authorized to interfere with contracts between PBMs and pharmacies but that the agency does investigate complaints about pharmacies not receiving payments.
A recent CMS survey finds that as many as 18 of the leading 20 prescription drug plans, which account for 90% of beneficiaries' drug coverage, pay pharmacy claims on a 15-day billing cycle.
Buddy Harden, executive vice president and CEO of the Georgia Pharmacy Association, said, "There are no negotiations" between pharmacies and PBMs. "They are 'take it or leave it,'" he said.
Mark Merritt -- president of the Pharmaceutical Care Management Association, which represents PBMs -- said members of his group have promised to pay all "clean" electronic claims within 30 days. He said 30 days is the "industry standard" for electronic claims submitted by doctors, hospitals and other Medicare providers.
Rep. Sherrod Brown (D-Ohio), ranking member of the panel, said, "When pharmacies are underpaid, they can't properly serve Medicare beneficiaries."
Rep. Charlie Norwood (R-Ga.), said, "The single pharmacist out there doesn't have any option. The big plan has all the options" (Carey, CQ HealthBeat, 5/23).
The average monthly premium for Medicare prescription drugs plans is $37, compared with an average monthly premium of $19 for local HMOs and $22 for regional PPOs offered under Medicare Advantage plans, according to a study published Tuesday in Health Affairs, CQ HealthBeat reports. According to the study, conducted by Austin Frakt and Steven Pizer of the Veterans Affairs Boston Healthcare System, the average PDP region offers 42 plans, while the average MA region has 2.4 regional PPOs and the average county has 3.6 local MA plans with drug coverage.
The study also examines plan options for the so-called "doughnut hole" gap in coverage. Fifteen percent of all PDPs offer coverage during the doughnut hole, while 14% of MA plans offer the coverage and about one-third of the "relatively small number" of national PDPs do, the study shows, CQ HealthBeat reports. Monthly premiums for PDPs with coverage in the doughnut hole average $50, with premiums for PDPs covering both brand-name and generic drugs averaging $61.
CMS spokesperson Peter Ashkenaz said, "The findings in the report appear to be consistent with what we've found of the average price of the bids." Ashkenaz said the average premiums reported in the study are based on all PDPs available, not plans in which beneficiaries are actually enrolling. Premiums for those plans average $25 monthly, Ashkenaz said.
"There doesn't seem to a whole lot new here," Ashkenaz said, adding, "Premiums vary along with everything else. Beneficiaries are choosing plans that fit their individual needs" (Reichard, CQ HealthBeat, 5/23).
An abstract of the study is available online.