Administrative Burdens Make Medicare Part D Cumbersome

Initially, Part D offered so much to so many who needed help. Now the program is straining under its own weight.

Tom Kaye, RPh, MBA

Should we be surprised that a government program is more costly to run than a private entity?*

When Part D was proposed, the intention was to stimulate competitive market forces that medical care had not seen before, and to drive the cost of medications down by competitive bidding. In addition, manufacturers’ access to enrollees would be limited. This was a great concept that initially worked.

The administrative needs for prescription drug plans set up under Part D were challenging, but as the years rolled on, more administrative burdens were added. Medicare Part D continues to work, but the government has erected barriers to efficiency.

Almost three years after the launch of Part D, we have a robust prescription drug history that can serve as a source for utilization research, and side-effect monitoring that will lead to new opportunities to identify drug-to-drug interactions. Further to the point, we can look at the data to determine medication adherence and determine how much health improvement could be made.

What price?

But at what price? During Part D’s evolution, the program’s complexity has increased with formulary filings and other administrative/operational issues.

In the beginning, it had six protected drug classes, which included a substantial number of individual drugs. These were well thought through, and were based on clinical knowledge of the drug category and the need for robust choices to expand the variability for certain disease states. But step edits, prior authorizations, proxy files, and drugs selected for preferred listing, along with duplicative efforts in operations, have strained the Part D program, making it cumbersome for pharmacy benefit managers and plans to respond to formulary changes or management needs.

For example, the seemingly simple task of generating a denial letter for a medication that is not covered requires hours of resources and multiple departments. Any communications to members must be approved by the Centers for Medicare & Medicaid Services (CMS). Template letters containing approved language can be used, but without modification the letters may not be easily understood by the members. Vague or unclear letters generate phone calls to member services, adding to the resource needs for the part D program.

As the Part D program evolves, the administrative burden for sponsor plans grows. Frequent last-minute rule changes, often indecisive guidance, and the avalanche of CMS rules and guidance transmittals all nip away at the sponsors’ resources. This adversely affects the sponsors’ yearly bid.

Bureaucracy is punishing a program that has offered so much to so many who need help in accessing medications.

The aspects of unintended consequences has crept into the Part D program, which was initially designed to perform well, but now appears to be hindered by undue actions that don’t contribute to the tasks of medication supply to the Medicare recipients.

Tom Kaye, RPh, MBA, is senior pharmacy director of Passport Health Plan in Louisville, Ky., and a member of MANAGED CARE’S Editorial Advisory Board.

*See “The Formulary Files” in our May 2008 edition:

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