Growing Reinsurance Payments Weaken Competitive Bidding in Medicare Part D.

ABSTRACT: OBJECTIVES:To examine variation in risk-adjusted reinsurance payments across Part D plans, analyze its implications for the program, and explore options to reduce reinsurance payments. DATA/STUDY DESIGN:2007-2015 Part D Plan Payment and Premium data; 2010-2013 Part D Prescription Drug Event data; and 2013 Part D Plan Formulary Files. PRINCIPAL FINDINGS:Risk-adjusted reinsurance payments varied widely across plans at a given out-of-pocket (OOP) premium. The variance in risk-adjusted reinsurance in common OOP premium ranges increased between 2010 and 2015. High risk-adjusted reinsurance payments were negatively correlated with use of utilization management tools for high-cost drugs. CONCLUSIONS:Growing reinsurance payments shrink plans' liability for managing drug spending for high-cost enrollees, creating plan moral hazard, and making OOP premiums a noisy signal of plans' total costs.

SUBMITTER: Jung J 

PROVIDER: S-EPMC6232437 | biostudies-literature | 2018 Dec

REPOSITORIES: biostudies-literature