Most Medicare PDP Members Land in 3.5-Star Plans

by Jane Anderson

Based on current enrollment figures, virtually every Medicare beneficiary who signs up for a stand-alone Prescription Drug Plan (PDP) in 2021 will be enrolled in a plan rated 3.5 stars or higher, CMS estimated recently. However, only 17% of beneficiaries are in plans with 4 or more stars for 2021.

"If you look at the distribution of Part D stars, you can see that 81% of members are in those enormous plans that have landed organically at about a three-and-a-half-star performance zone," says Melissa Newton Smith, executive vice president of consulting and professional services at Healthmine, Inc.

"That's an interesting landing spot — this is telling us this year that PDPs are just not interested in pursuing 4 or higher star ratings without a financial incentive tied to it," Smith says. "And that 3-and-a-half stars zone is just a natural, organic industry landing spot for performance. It's the sweet spot."

Overall, CMS estimates that based on current enrollment figures, 98% of 2021 stand-alone PDP members will be enrolled in plans with 3.5 stars or higher, up from 70% in plans with 3.5 stars or higher in 2020. Only 2% of members — some 13 contracts — are in plans that received 3 stars or fewer.

"The members are flocking to large plans," Smith says. "The PBM construct of operations with the retail pharmacy networks is doing what it needs to do."

The average star rating for Medicare Advantage-Prescription Drug (MA-PD) plans is 4.06 for 2021, down slightly from 4.16 in 2020, according to CMS. Most Medicare beneficiaries enrolled in MA-PD plans — around 77% — will be in plans with 4 or more stars in 2021.

"There's a fair amount of evidence that members don't particularly care even what their MA-PD plans' star rating is, let alone their PDP star rating," Smith says. "On the PDP side, what they really care about is whether their medications are covered and what the cost structure looks like. The star rating is just not generally a factor in buying decisions for consumers."

She adds it would take financial incentives — most likely in the form of star-based bonus payments — for stand-alone PDPs to get serious about improving their star ratings.

From RADAR on Drug Benefits