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The True Impact of Preferred Networks
In an era of restricted Part D networks and growing DIR fees, it makes NO economic sense to participate as a preferred provider in every Part D plan. The negative margins that you experience as a preferred provider in some Part D plans simply cannot be overcome through increased script volume.
AmerisourceBergen's Elevate Provider Network has proven that profitability is possible in Part D plans through careful plan analysis and by avoiding preferred provider status in plans if it essentially guarantees negative margins. It is important to remember:
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LIS (low-income subsidy) patients pay the same co-pay regardless of whether or not you are a preferred provider. Full-benefit, dual-eligible LIS patients (those on Medicaid) will have a zero co-pay in any Part D plan. Other LIS patients will have the same fixed co-payments in all plans. In some areas, LIS patients represent more than half of a plan's patient count. If you have a high percentage of Medicaid patients, the impact from not being a preferred pharmacy will be greatly minimized.
- Premiums continue to drop for many Part D plans. Also, co-insurance during an enrollee's Donut Hole phase rose to 75% in 2020, so many enrollees are no longer as pinched by costs.
Patient Loyalty Often Trumps Plan Cost Differences
That your pharmacy is not preferred with a given Part D plan does not mean your patients need to find another pharmacy or another plan. Patients choose their Part D plan based on many variables, only one of which is the perceived value and convenience of the plan's network. Patients typically look closely at:
- Monthly premium;
- Annual deductible;
- Drug coverage;
- Co-pays & cost-sharing;
- Coverage during the donut hole;
- Formulary; and
- The plan's pharmacy network.
Remember that patients who leave your pharmacy over a small co-pay differential are not likely to be your most profitable patients or the ones purchasing front-end merchandise or other services.
Pay Close Attention to PBM Plan Marketing
CMS is finalizing changes to marketing and communications requirements that will protect Medicare beneficiaries by ensuring they receive accurate and accessible information about Medicare coverage. These include strengthening oversight of third-party marketing organizations to detect and prevent the use of confusing or potentially misleading activities to enroll beneficiaries in MA and Part D plans.
This is a welcome change, as CMS in 2018 narrowed its definition of the term "marketing" in Part D to mean materials and activities intended to influence enrollees' plan choice decisions. Only materials meeting this definition now receive close CMS review, while the agency has relaxed its oversight of "communications" and "communication materials."
Be on the lookout during open enrollment for communications from Part D plan sponsors and PBMs that aren't overt marketing, but attempt to influence enrollees' plan choices through misleading "notifications" about network pharmacies and co-payments. Be sure to alert American Pharmacies if any of your patients receives such communications.
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