Medicare Payment Policy

Voluntary switchers
Each year, Part D enrollees have an opportunity
to reevaluate their Part D plan selection for the
coming year during the annual open enrollment
period. Although some low-income subsidy (LIS)
enrollees choose plans on their own, many are
randomly assigned to prescription drug plans (PDPs)
with premiums that are below the regional thresholds
(i.e., premium free to beneficiaries receiving the LIS).
We limited our analysis of plan switching to non-LIS
enrollees to ensure that the change in plans reflected
a voluntary switch rather than random assignments
by CMS. We further restricted our analysis to
exclude individuals enrolled in employer group plans
and individuals who switched plans due to plan
terminations or service area reductions.
Between 2009 and 2010, 13.6 percent of the non-
LIS enrollees in our analysis voluntarily switched
plans. Younger enrollees were more likely than older
enrollees to switch plans, with about 16 percent of
enrollees between 65 and 69 years old switching
compared with 11 percent of enrollees 80 years or
older (Table 15-16). White enrollees were more likely
than non-White enrollees to switch plans. Hispanic
enrollees were less likely than non-Hispanic enrollees
to switch plans. Gender did not affect the rate of
switching (data not shown). Enrollees residing in
nonmetropolitan areas were more likely (17 percent)
to switch plans than enrollees residing in metropolitan
areas (13 percent). The results were similar for the
2010–2011 period.
The share of enrollees who voluntarily switched plans
differed between Medicare Advantage–Prescription
Drug plan (MA−PD) enrollees (15 percent) and PDP
enrollees (13 percent) between 2009 and 2010 but
not between 2010 and 2011 (13 percent of enrollees
in both plan types). For the two plan types (PDP and
sponsors to bear insurance risk for the benefit spending
of their enrollees. The idea was for competition among
plans to provide strong incentives for plan sponsors to
manage drug use and keep spending growth in check.
Plans that are able to manage drug spending and bid more
competitively are supposed to be rewarded with higher
enrollment than plans that do not.
358 Status report on Part D
tABLe
15–16
non-LIs beneficiaries
who voluntarily switched
plans, 2009–2011
2009–2010 2010–2011
All non-LIS enrollees 13.6% 13.0%
By age
64 or younger 14 14
65–69 16 15
70–74 14 14
75–79 13 12
80 or older 11 10
By race
White 14 13
African American 12 12
Asian/other 11 13
Hispanic 10 10
By urbanicity
Metropolitan 13 12
Micropolitan 17 16
Rural 17 16
By plan type
PDP 13 13
MA−PD 15 13
Note: LIS (low-income subsidy), PDP (prescription drug plan), MA–PD
(Medicare Advantage–Prescription Drug [plan]). The figures in the
table exclude individuals enrolled in employer group plans and those
enrolled in terminated plans or plans that experienced service area
reductions.
Source: MedPAC analysis of Medicare enrollment and Part D denominator
files.
MA–PD), most switchers—90 percent of MA−PD
enrollees and about 80 percent of PDP enrollees—
changed to plans of the same plan type (data not
shown). ■
During the first few years of the program, according to
CMS, only about 6 percent of non-LIS Part D enrollees
switched plans voluntarily each year. A low rate of
switching among beneficiaries could reflect general
satisfaction with their plan choices or difficulty in
choosing plans. Beneficiaries may be reluctant to switch
plans if they face transition issues arising from changes