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.

journal_name

Health Serv Res

journal_title

Health services research

authors

Jung J,Feldman R

doi

10.1111/1475-6773.12866

subject

Has Abstract

pub_date

2018-12-01 00:00:00

pages

4371-4380

issue

6

eissn

0017-9124

issn

1475-6773

journal_volume

53

pub_type

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