In one provision of its January Notice of Proposed Rulemaking (NPRM), for Medicare Part D and Medicare Advantage, CMS proposed that it will accept no more than two stand-alone prescription drug plan (PDP) bids from each Part D plan sponsor, starting in coverage year 2016. The agency stated two reasons for this proposal. First, it would reduce beneficiary confusion in the Part D market by both lowering the number of choices that they face and ensuring that differences between competing options are clear and meaningful to them. Second, it would address the impact of one source of favorable selection that leads to higher costs for the government and the taxpayer. This note looks at evidence from Part D to help understand the context for this proposal.
Go read the rest by Jack Hoadley on the Health Affairs blog. It’s quite a nice summary of the issues. I learned a few things. One high-level lesson here is that the proposed rule isn’t just plucked out of thin air in order to crush the Part D market. (That would be dumb.) It’s based on some reasonable inferences and observations about that market and aimed at improving competition within it.