Tighter Part D formularies

Executive Summary

CMS' 2008 Medicare Part D plan bidding methodology appears to be generating more restrictive formularies for low-income members, UnitedHealth Group exec Simon Stevens comments during United's third quarter earnings call Oct. 18. "Some of the low-income members are about to be switched to alternative plans whose drugs the formulary excludes altogether - some of the top branded medicines that their physicians are currently prescribing them," he said. Each year, low-income beneficiaries eligible for Medicare subsidies are automatically assigned by CMS to plans with premiums below a certain benchmark. United may lose up to 650,000 low-income Part D members in 2008 as a result of the bidding process (1"The Pink Sheet" Oct. 1, 2007, p. 12). In response to tightening margins in 2008, United chose to raise its premiums, rather than limit its formularies, Stevens indicates...