Is Your Pharmacy Network-ing for You?

Why networks are an important lever in your Medicare bid strategy.

As 2021 bid season approaches, it is critical to ensure that your plan is building a comprehensive benefit that helps address rising costs as well as member health care challenges, while meeting growth and Star Rating goals. This is no small feat.

It is no secret that pharmacy networks are an important part of the equation in benefit design strategy, offering value to both Health Plans and their members. One way that Medicare plans have managed to do this is by relying on preferred pharmacy networks to dramatically increase cost savings trend in the marketplace. And, though the market for Medicare Advantage Prescription Drug (MAPD) plans has been slower in using preferred networks, the prevalence of this type of cost share structure has more than doubled since 2014, based on calculations from the Centers for Medicare and Medicaid Services (CMS) cost share data.

So, here are some considerations to keep in mind as you evaluate your pharmacy network strategy in order to offer the most value to you and your members.

Your Pharmacy Network Should Drive Positive Patient Outcomes and Star Rating Improvements

The industry continues to increase focus on the role of pharmacists within patient care, not just the role of prescribers. Specifically, pharmacists can positively impact adherence and patient savings. More recently, it’s been shown that they can also impact social determinants of health because of their more consistent access to members. Similarly, this access has driven CMS to acknowledge pharmacists as an integral line of defense for the opioid crisis that could influence several Opioid and Polypharmacy star metrics.

Your Pharmacy Network Should Address Low Income (LICS) and Dual-eligible Special Needs Patient (DSNP) Participants

Though preferred cost share networks provide a great opportunity to extract plan and member value, LICS and DSNP populations have often not adopted them because of Medicare benefit constraints. Plans have the most opportunity to see overall cost improvements from management and pharmacy engagement with these members. Starting in 2021, Express Scripts will begin offering networks designed to meet the needs of these under-served populations, without sacrificing member access.

Your Pharmacy Network Should Maximize Rebates

Pharmacy rebates have become a key lever for plan sponsors to help move towards value-based care, but have garnered a great deal of attention over the last couple years. As for pharmacies, in 2018, CMS released the Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses Proposed Rule. In the rule, CMS signaled interest in moving value-based pharmacy performance payments from plans to member costs at the point of sale. While on the surface this would appear to result in lowered prescription costs for patients, in reality, it undercuts industry tools that lower overall member costs. In other words, pharmacy rebates delivered after the point of sale can help keep premium costs low for your entire population.

According to CMS, “Part D sponsors and their contracted PBMs have been increasingly successful in recent years at negotiating price concessions from network pharmacies.”2 And use of network tools have allowed plans to effectively manage premiums, which made CMS concede that “the average premium has declined each year since 2017 due in part to sponsors projecting in their bids that pharmacy rebate growth would outpace the growth in projected gross drug costs each year.”3 This proposal was ultimately abandoned in the finalized version released May 2019; however, this topic continues to be scrutinized.

Putting It All Together

If you are not currently seeing improved patient outcomes and utilizing pharmacy network management for your entire Medicare population, you are disadvantaging your ability to be competitive in the marketplace. Your pharmacies should be as invested in your members’ health as you are. Contact your Medicare market strategist or account team to ensure that you have pulled every pharmacy benefit management lever, and do not let your pharmacy network hold back your bid.

Express Scripts especially has been at the forefront, connecting pharmacy results with network value. Because of the strategies clients have adopted, including implementation of results-based performance network, over the last three years of Medicare Star performance, Express Scripts’ book of business outperformed the industry average in all three Adherence metrics by one half to a full star. Clients that implemented a preferred network have generally seen up to a 3% increase in Proportion of Days Covered (PDC) in key star categories. For MAPD contracts, adherence metrics have additional relevance due to their impact on overall stars and subsequently Quality Bonus Payment. Together, we know that we can reach the star ratings that will best serve you and your members


  1. 83 Fed. Reg. 62,174, 62,152 (November 30, 2018).
  2. 83 Fed. Reg. at 61,175. (November 30, 2018).

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