uploads/2015/03/Graph-951.png

Aetna’s Pharmacy Business Faced Challenges in 2014

By

Updated

Prescription drug coverage

Aetna (AET) offers prescription drug coverage to Medicare beneficiaries through stand-alone Medicare PDPs (prescription drug plans) or MA (Medicare Advantage) PDPs to Medicaid beneficiaries and employer-sponsored members.

Medicare introduced the Medicare Part D prescription drug benefit plan in January 2006 to cover expenses of prescription drugs purchased at retail and mail-order pharmacies. CMS (Centers for Medicare and Medicaid Services) contracts with health insurance companies authorized to provide Part D benefits—like Aetna, Humana (HUM), UnitedHealth Group (UNH), and Cigna (CI)—and subsidizes their prescription drug costs.

Article continues below advertisement

Aetna’s PBM (pharmacy benefit management) business processes and pays out prescription drug claims. To supply prescription drugs to enrollees at reduced prices, PBM contracts with retail pharmacies and negotiates discount arrangements. PBM also owns and operates mail-order or Internet pharmacies that send prescription drugs to customers through shipping companies. This saves costs by eliminating human intervention.

Challenges

Increased spending on specialty prescription drugs, especially on drugs used to treat Hepatitis C, has been one of the major reasons leading to cost escalation for health insurance companies (XLV). To overcome this problem, Aetna narrowed its pharmacy network to employ higher drug discounts to the contracted pharmacies in exchange of dedicated patient volumes. However, this was opposed by several health providers. Narrow networks could restrict the enrollees’ access and coverage of required drugs.

Aetna also erroneously listed a substantial number of pharmacies as “in-network” pharmacies, on CMS’s Medicare Plan Finder and on its own website, during the enrollment period for public insurance exchanges. The problem occurred because these pharmacies are included in Aetna’s retail network. They’re only available for the company’s long-term or home care members. The NCPA (National Community Pharmacists Association) raised an objection to this issue. The organization thinks that this could lead to members not being able to get drugs at their regular pharmacies.

Advertisement

More From Market Realist