Medicare Part D

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Under Part D, Medicare beneficiaries have access to prescription drug coverage. Milliman consultants have been involved with every aspect of Medicare Part D since its inception in 2006, providing consulting services to the insurance companies, HMOs, and PBMs that offer the majority of Medicare's prescription drug plans. Our consultants are recognized leaders in this area, offering plan providers a complete suite of services.

Medicare Part D affects those who cover Medicare-eligible active employees and retirees under their health benefit plans. The program, a result of the Medicare Modernization Act of 2003, encourages employers/plan sponsors to continue offering their prescription drug coverages at lower costs.

Plan sponsors who provide drug coverage for retirees may be eligible to receive a federal tax-free subsidy as a reimbursement for a share of their costs, among other cost-reducing options. Milliman offers expert advice on Part D's implications, allowing plan sponsors to clearly understand their responsibilities and all the available options.

Milliman actuaries and consultants are frequently asked for guidance because we know how to navigate the intricacies of Medicare Part D issues. We are recognized leaders in this practice area, offering plan providers a complete suite of services, including retiree prescription drug plan review, creditable coverage testing, actuarial equivalence testing, evaluation of alternatives to the retiree drug subsidy, and implementation of communications strategies.

Employer group pricing support

Insurers often offer group coverages to employer groups that typically request customized benefit packages. Milliman provides underwriting assistance consistent with your CMS bid submission in order to facilitate the rate-development process. Milliman consultants are also experts in helping plan sponsors with Medicare Retiree Drug Subsidy (RDS).

Feasibility analyses

Milliman works with clients to assess the economic costs, required operational changes, and benefits of implementing, sustaining, or expanding a variety of Medicare products. Possibilities include expansion into Medicare products, adding more products, and geographic expansion. We summarize costs and revenues over both the pre-operational period and the first years of operation in order to quantify the necessary investment.

PBM evaluation/RFP assistance

Success in Part D requires a pharmacy benefit manager (PBM) partner that offers a competitive package of drug discounts, rebates, formularies, and administrative charges. Milliman's experience working for PBMs allows us to sift through the numerous ways PBMs structure their financial terms and perform side-by-side comparisons of competing bids on an objective basis. We also help clients conduct formal requests for proposal processes, providing comprehensive or targeted assistance depending upon their specific requirements.

Risk score analyses

Milliman consultants perform analyses to explain recent risk score changes, project future risk scores, and assist with risk score improvement efforts. One of our approaches uses prescription drug data to identify diagnoses not already included in the submissions to CMS.

Payment validation

Milliman's payment validation service compares a client's individual membership files to CMS's various membership reports and identifies discrepancies between actual and expected payments, verifying that CMS is adhering to its own payment formulas.

Competitive market analysis

Milliman concisely summarizes the benefits and premium levels of all prescription drug plan (PDP) products in a given county to allow you to strategically analyze your relative market position and make more intelligent product adjustments. The output is a simple value index measuring the member's value proposition.

Part D settlement estimates

Part D products contain three unusual financial elements: risk sharing, low-income benefit subsidies, and catastrophic reinsurance protection. At any given time, these elements can complicate the evaluation of emerging Part D financial experience. Milliman develops settlement estimates at different points throughout the calendar year, allowing our clients to properly evaluate emerging Part D experience and provide the necessary liability estimates for financial reporting purposes.

PDE audit assistance

Part D clients typically rely on their PBM to submit prescription drug event (PDE) files to CMS. These files are the basis for all federal Part D subsidies. In many instances, however, substantial discrepancies exist between these files and the claim expenses charged by the PBM to the Part D plan. Milliman's audit tools detect these inconsistencies so that appropriate corrective steps can be taken regarding either the amounts being charged by the PBM or the PDE files themselves.

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