Changes Coming to Medicare Prescription Drug Plans in 2022
Key takeaways:
Medicare drug coverage costs are changing in 2022, resulting in plans with higher deductibles, initial coverage limits, and out-of-pocket spending thresholds.
There will be minor changes to Part D drug coverage from 2021 to 2022. But check your Annual Notice of Change (ANOC), because your specific plan still may see large shifts in drug coverage compared with 2021.
Medicare will continue to offer enhanced Part D plans that cap certain insulin drugs at $35 for a month’s supply in 2022.
In 2022, the most popular form of formulary drug restriction is still quantity limits — the average plan has a quantity limit on nearly 37% of its covered drugs.
It’s Medicare open enrollment season (October 15, 2021, to December 7, 2021), which means now is the time to reevaluate your Medicare Part D prescription drug plan for 2022. GoodRx Research dug into the plans and here are the changes we found.
Are there any changes to the cost-sharing structure of Medicare Part D programs?
Because Medicare is a federally administered program, the program’s cost-sharing structure (how much enrollees pay out of pocket) is subject to changes per federal policy. This year, there is another adjustment to the standard benefit, and, in 2022, Medicare will continue to offer plans that cap insulin costs at $35 for a month’s supply.
1) Adjustment to Medicare plans’ standard benefit
Each year, the Centers for Medicare & Medicaid Services (CMS) sets a benchmark for the cost-sharing structure of all Medicare plans. All Part D plans must choose to provide the standard benefit (or an equivalent benefit) or an enhanced benefit. A standard benefit plan will use Medicare’s required baseline cost-sharing structure, and an enhanced benefit plan will usually charge a higher premium for a wider range of benefits.
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Some notable changes to the standard benefit in 2022 are the following:
Prescription drug plans use benefit phases to determine what costs you are responsible for. The deductible is the phase where you are responsible for 100% of costs. After paying the full deductible amount, you are then in the initial coverage phase, where you pay a copayment or coinsurance, and the plan will pay the rest. The standard deductible is increasing $35 and will be $480 in 2022.
When the amount that you and your plan have paid reaches a certain threshold, you reach the initial coverage limit and enter into the coverage gap phase (also called the “donut hole”) of your plan, where you will be responsible for a larger share of the cost of the drug. The initial coverage limit is increasing $300 and will be $4,430 in 2022.
The out-of-pocket spending threshold is increasing $500 and will be $7,050 in 2022. This is an important threshold, because once you’ve spent that amount out of pocket in 2022, you leave the coverage gap and enter into the catastrophic phase, where you only pay a small fraction of drug costs. Medicare pays most of the bills at this point, for the rest of the calendar year, until plan benefits reset on January 1, 2023.
2) Availability of plans that cap insulin costs at $35 for a month’s supply
In 2022, Medicare will continue to offer beneficiaries some enhanced alternative prescription drug plan options that offer lower out-of-pocket costs for insulin. The enhanced plans will cap what a beneficiary pays for a month’s supply of a broad set of insulins at $35. This program will be in effect until the end of 2025.
What are the ways that Medicare Part D plans can change drug coverage from year to year?
Medicare prescription drug plans can make the following changes to prescription drug coverage:
First, Medicare can stop covering a medication and drop it from its formulary (a list of drugs the plan will cover, broken into tiers). However, Medicare requires plans to cover at least two medications in commonly prescribed categories (such as antidepressants and insulins).
Second, Medicare can change the tiering of a drug on a plan, which can affect the out-of-pocket cost for a drug (in general, a higher tier means higher costs).
Third, Medicare can add a restriction to a drug, like a prior authorization, quantity limits, or step therapy. These restrictions can create another barrier to patients being able to pick up their prescribed medication at the pharmacy counter.
Every fall, Medicare requires plans to send an Annual Notice of Change (ANOC) to enrollees. The document includes any high-level changes in coverage and costs that will be effective in the new year. Examples of ANOCs from Cigna SecureRx and Scan Classic (HMO) show how two plans communicate these changes, as well as changes to pharmacy and healthcare provider networks for 2022.
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Be sure to review your ANOC to learn more about how your plan will be changing in the new year and whether you should enroll in a new plan.
How will Medicare Part D coverage change in 2022?
GoodRx Research analyzed the publicly available Medicare prescription drug plan data to evaluate any changes to plan coverage in the upcoming year. In 2022, there are over 5,300 plans, 85% of which are Medicare Advantage plans. However, this doesn’t mean people have all plans available to them. In actuality, an enrollee’s Medicare plan availability will depend on where they live.
Here are the major trends in drug coverage we discovered when comparing 2022 plans to those from 2021:
1) The average plan’s overall drug coverage is virtually unchanged from 2021 to 2022
GoodRx Research looked at all Medicare plans’ drug coverage in 2021 and 2022. We defined drug coverage as the share of drugs covered by a plan relative to the best plan in each year. We found that the average plan in both years covered a similar share of drugs (56% and about 55%, respectively).
But just because the overall share of covered drugs is staying flat doesn’t mean you can count on your individual plan to keep the same coverage in January 2022. Take Kaiser Permanente Senior Advantage LA, Orange Co. (HMO), a plan with over 235,000 enrollees, as an example. It had a 9 percentage-point decrease in its share of covered drugs from 2021 to 2022. This underscores how important it is to check your plan’s Annual Notice of Change and formulary to see if your drug is still covered in the new year.
2) On average, plans are adding and dropping drugs at the same rate
To observe patterns of plans adding and dropping drugs, we looked at plans that were available in 2021 and renewed in 2022. Overall, we found that plans are adding and dropping drugs at nearly the same rate — on average, plans dropped 6% of drugs that they covered in 2021 and newly added about 5% of drugs in 2022. However, dropping drugs is not always an indication of poorer coverage. For example, in 2022, all renewal plans dropped Truvada from their coverages and added emtricitabine/tenofovir, Truvada’s generic equivalent.
3) On the average plan’s formulary, the share of drugs on lower tiers slightly decreased in 2022
In both 2021 and 2022, we only looked at plans that had five tiers: 77% and 71% of all plans in each year, respectively. For each year, we observed the share of drugs in each tier for the average plan. As seen in the chart below, the share of drugs in each tier barely shifted from 2021 to 2022. Remember, a higher tier means higher out-of-pocket costs.
4) Quantity limits remain the most popular form of restriction on plans’ formularies
Drug restrictions limit which drugs can be filled at the pharmacy counter or the quantity of drugs that can be filled. We observed that the average share of drugs that have any restriction increased from about 46% in 2021 to nearly 48% in 2022. In both years, quantity limits were the most popular form of a drug restriction used in formularies.
Summing it up
GoodRx Research finds that Medicare prescription drug plans have minimal drug coverage changes from 2021 to 2022. However, it is good practice to reevaluate the prescription drug plan that you’re in for 2022, especially before the end of open enrollment on December 7, 2021. Remember that individual plans can make substantial changes to their drug coverage.
To evaluate Medicare prescription drug plans:
Be sure to review your Annual Notice of Change to check for any changes made to your plan and to ensure that the plan will fit your needs for the new year.
If you need to switch plans, you can compare plans in your area by using the Medicare Plan Finder tool.
Read the Medicare & You Handbook to get more information about how Medicare coverage works.
If you get stuck, you can call the State Health Insurance Assistance Program (SHIP), a network of free, unbiased local counselors who help people sort through their Medicare choices.
If you missed the open enrollment period (October 15, 2021, to December 7, 2021), there are still options to switch prescription drug plans, including the following:
If you are on a Medicare Advantage plan, there is a Medicare Advantage Open Enrollment Period from January 1 to March 31 of each year. During this time, you can either switch to a different Medicare Advantage Plan (with or without drug coverage) or go back to original Medicare.
You can switch Medicare plans if you have a special circumstance. In certain instances, Medicare allows you to change your plan outside of the open enrollment period. This option could give you another opportunity to switch to a plan with better coverage of your drug. The circumstances are outlined here.
The Centers for Medicare & Medicaid Services allows you to switch plans one time outside of the open enrollment period if you switch to a plan rated 5 stars on the Medicare Plan Finder tool. You can do this once a year between December 8 and November 30.
If you qualify for Extra Help, you can take advantage of special enrollment periods and switch your prescription drug coverage.
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Co-contributors: Amanda Nguyen, PhD
Methodology
All Medicare analyses use the Centers for Medicare & Medicaid Services (CMS) Prescription Drug Plan Formulary, Pharmacy Network, and Pricing Information files. These data include specific formulary structures, benefits, plans, and networks, and they are updated monthly and quarterly. We used 2020 and 2021 October files in our analysis (the data reflects the plan structure for 2021 and 2022, respectively). Our analysis does not include National PACE plans, employer-sponsored plans, and demonstration plans per Medicare’s documentation. In addition, information about plans’ enrollment was obtained from the enrollment files. We tracked plans from 2021 to 2022 using the CMS plan crosswalk files.
In this analysis, we defined a plan by unique contract-id and plan-id combinations. We excluded any plans that did not have any formulary information in the formulary files. We also excluded observations from the formulary file if the NDC did not map to the GoodRx internal drug database.
Enrollment: To determine enrollment, we matched plans in each year with their respective enrollment numbers.
Drug coverage: We calculated the drug coverage for each plan in each year by taking the number of drugs covered on that plan as a proportion of the drugs covered on the “best plan.” We deemed the “best plan” the total unique number of drugs covered across all Medicare Part D plans in each year for drugs in the GoodRx database. To summarize, we took the average of all plans’ drug coverage proportions in each year.
Added/dropped drugs: We observed the number of dropped and added drugs by first only keeping renewal plans, which are 2022 plans that link to 2021 plans and retain the same service areas in both years. For each plan in both years, we mapped the plan’s formulary to the GoodRx drug database and compared what drugs the plans had available in each year. For each plan, we counted all drugs covered in 2021, but were not covered in 2022 as a proportion of drugs in 2020 (dropped drugs). Similarly, we counted all drugs covered in 2022 that were not covered in 2021 as a proportion of all drugs in 2021 (added drugs). To get an average across all plans, we took the enrollment-weighted average of the proportion of added and proportion of dropped drugs.
Drug tiering: We first limited the plans in both 2021 and 2022 to those that only had 5 tiers in their formularies. Then, for each plan in each year, we calculated the proportion of drugs in each tier. To roll it up for each year, we took the average of the proportion of drugs in each tier across all plans.
Drug restrictions: We determined the drug restrictions proportions by looking at plans’ formularies in each year, determining which drug had which restriction. Then, for each plan, we calculated the proportion of drugs that had each type of restriction and the proportion of drugs that had any restriction. To roll it up for each year, we took the average proportion of each restriction across all plans.
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References
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