To participate or not to participate? 2023 considerations and 2022 landscape for the Part D Senior Savings Model

First introduced for 2021, the Part D Senior Savings Model (SSM) has proliferated over the last two years, with over 100 plan sponsors and 2,100 Medicare Part D plans participating in 2022.¹ Plans interested in participating in 2023 should understand the 2022 landscape and how the SSM aligns with their 2023 strategy. A few key takeaways from our research include:

• Participation: 60% of members enrolled in participating plans in 2022 (out of all eligible plans). United and Humana participate with the majority of their Medicare Advantage general enrollment plans, representing over 90% and 80% of their eligible membership, respectively.
• Enrollment changes: Enrollment changes were lower for participating plans than non-participating plans in 2022. This varies by market and plan type, with participating preferred provider organization (PPO) plans experiencing larger growth than non-participating PPO plans.
• Insulin coverage: Which insulin products a participating plan covers varies between prescription drug plans (PDPs) and Medicare Advantage Prescription Drug (MAPD) plans. PDPs opt to cover fewer insulin products while MAPD plans opt to cover a broader set of insulin products, which appears to be consistent with formulary decisions.
• Copays: 90% of participating plans cover insulins at the $35 maximum copay in 2022 at standard pharmacies. There are exceptions, with 15% to 25% of members enrolled in plans that offer lower SSM copays at preferred pharmacies.

This article examines the landscape of SSM participation in 2022, the second year of the program, for standalone PDPs and MAPD plans, separately. We highlight changes in SSM participation among Part D plans, including enrollment changes from December 2021 to January 2022. We also summarize which insulin products are covered by plans participating in the SSM, along with associated copay levels. Lastly, we discuss strategic considerations for participating in the SSM and considerations if new legislation similar to the SSM were enacted.

What is the SSM?

The Part D Senior Savings Model (SSM) is a voluntary demonstration program allowing plans to cover select insulins at a maximum copay of $35 per one-month supply. The model makes changes to insulin cost-sharing and benefit adjudication for non-low-income (NLI) beneficiaries and is intended to address the following dynamics:

• Improves beneficiary access: The SSM improves access to insulin by reducing insulin cost sharing for NLI beneficiaries who rely on these medications.
• Improves beneficiary predictability: In enhanced alternative (EA) Part D benefit designs, the copays for NLI beneficiaries can vary significantly by benefit phase. The SSM improves predictability by capping insulin copays at $35 per one-month supply in the deductible, initial coverage, and coverage gap phases of the Part D benefit.
• Addresses plan incentives: Few plans reduce beneficiary cost sharing for brand-name drugs in the Part D coverage gap, as it results in reduced Coverage Gap Discount Program (CGDP) payments from pharmaceutical manufacturers. The SSM allows plan sponsors to maintain the same CGDP payments as if the plan offered defined standard cost sharing in the coverage gap.

EA standalone PDPs and MAPD plans are eligible to participate in the SSM. Employer group waiver plans (EGWPs), dual-eligible special needs plans (D-SNPs), and any PDPs or MAPD plans offering basic coverage (i.e., Defined Standard, Actuarially Equivalent, or Basic Alternative plan types) are not eligible to participate. For additional SSM background, refer to the Milliman white paper “Reducing insulin costs for seniors,” published in March 2020.²

Recently, several bills have been proposed that would expand insulin coverage at a maximum monthly copay of $35 to the entire Part D market. This includes the Build Back Better Act,³ which was passed by the House on November 19, 2021, but has not been voted on by the Senate, and the Affordable Insulin Now Act,⁴ which was proposed in the Senate on February 18, 2022. Additionally, a version of this bill was proposed in the House a week later.⁵ The SSM provides a blueprint for how potential legislation may work in practice, and the emerging data provides insight into what plan strategies might look like if any of these proposals are enacted.

Who is participating?

Of the approximately 43 million individuals enrolled in an individual Medicare Part D plan in January 2022, over 17 million, or 40%, are enrolled in a plan participating in the SSM. However, when limiting this to the approximate 29 million members in eligible plans only, the percentage of members in participating plans increases to approximately 60%. Figure 1 illustrates the enrollment distribution among SSM-eligible plan types. Please note that the summaries that follow rely on total plan enrollment, including beneficiaries eligible for the low-income subsidy (LIS), who are not directly affected by the provisions of the SSM. We make the following observations by market:

• PDP: Approximately 60% of eligible PDP members in January 2022 are enrolled in plans participating in the SSM. Eligible PDP members exclude members enrolled in basic plans.
• MAPD: Approximately 60% of eligible MAPD members in January 2022 are enrolled in plans participating in the SSM. This participation varies by plan type, with higher participation in health maintenance organization (HMO) plans and HMO-point-of-service (HMO-POS) general enrollment plans than in preferred provider organization (PPO) plans.

Of the plans that participated in the SSM in 2021, nearly all participated again in 2022. Only 22 plans that participated in 2021 elected not to participate in 2022, representing approximately 47,000 members or less than 0.2% of eligible membership in January 2022. Conversely, 430 plans are participating in the SSM in 2022 that did not participate in 2021, reflecting an additional 2.5 million members or 8.5% of eligible members as of January 2022. Figure 2 illustrates the January 2022 membership for SSM-eligible plans in 2021 and 2022, based on their SSM participation in each year.

We discuss participation by parent organization separately for each market (PDP vs. MAPD) below.

PDP sponsors

The PDP market is split into three main plan types: basic PDPs, low-cost enhanced PDPs (LCE plans), and high-cost enhanced PDPs (HCE plans). Basic PDPs are not eligible to participate in the SSM and reflect approximately 47% of total PDP membership as of January 2022. Figure 4 illustrates the market positioning and SSM participation for enhanced PDPs offered nationally (i.e., in 10 or more regions). We observe the following:

• All HCE plans participate in the SSM. This includes the second-largest EA PDP, United’s AARP Preferred plan, along with HCE plans for Humana, Centene, Cigna, CVS, and Anthem. This was not the case in 2021, when CVS’s SilverScript Plus plan did not participate in the SSM. Each of these plans has an average premium greater than $60 per member per month (PMPM).
• Most LCE plans do not participate in the SSM. This includes United, Humana, Cigna, CVS, Rite Aid, and Clear Spring LCE plans. The primary exception is Centene’s WellCare Value Script plan, which is the largest EA PDP as of January 2022 and has an average premium of $12 PMPM. Mutual of Omaha also participates in the SSM with its only EA plan, which has much less membership. All LCE plans shown in Figure 4 have average premiums below $50 PMPM, with the highest enrollment plans having average premiums less than $30 PMPM.

MAPD plan sponsors

Figure 4 further summarizes the change in SSM participation for the largest parent organizations in the MAPD market, based on January 2022 MAPD enrollment. We note a few key observations:

• United has nearly 95% of members in its eligible general enrollment plans enrolled in a participating SSM plan for 2022, the highest participation rate of any plan sponsor. Participation (based on membership count) appears to exceed 80% in every region.
• Humana has over 80% of members in its eligible general enrollment plans enrolled in a participating SSM plan for 2022. Humana participated with nearly all of its HMOs in 2021 and expanded its participation in 2022 to include nearly 60% of members in its PPO plans as well. Humana’s PPO participation varies widely by region, with less than 20% of its members enrolled in participating plans in MI, ME, NH, NV, AL, and TN, compared to over 85% in NY.
• Other large carriers, such as Blue Cross Blue Shield (BCBS) plans, CVS/Aetna, and Kaiser have more limited participation in both 2021 and 2022, compared to United and Humana, the largest two MAPD plan sponsors, based on total enrollment.

How did enrollment change between 2021 and 2022?

Figure 5 shows the difference in enrollment growth from December 2021 to January 2022 based on 2022 SSM participation, split by market and plan type.

Overall, plans participating in the SSM in 2022 saw enrollment decline, compared to growth across non-participating plans. In MAPD, enrollment growth was relatively comparable between participating and non-participating plans. For PDP, enrollment change varied materially by participation status, with a decrease in enrollment among participating plans and an increase in enrollment among non-participating plans. The decrease in enrollment for participating PDPs reflects general market trends of members shifting away from plans with higher premiums and from PDPs to MAPD plans. Conversely, the increase in enrollment for non-participating PDPs tracks with observed increases in membership in first enhanced plans, which generally do not participate in the SSM (as illustrated in Figure 4 above).

Enrollment changes also vary between plans participating in the SSM for the first time in 2022 and plans participating in the SSM in both 2021 and 2022. Figure 6 compares enrollment changes for these plans.

As seen in Figure 6A, enrollment change for continually participating PDPs is less negative than the change for newly participating PDPs, providing greater insight into the overall decrease for participating PDPs presented in Figure 5A above. Conversely, for MAPD plans, enrollment change is lower or more negative for plans participating in the SSM in both years, compared to plans participating for the first time in 2022, except among PPOs and institutional special needs plans (I-SNPs).

Which insulins do participating plan sponsors cover?

Plan sponsors have the option to select which insulin products from participating manufacturers to cover through the SSM at lower cost-sharing levels (i.e., model insulins), provided they meet minimum model insulin coverage requirements specified in the model guidance, as discussed below. According to the Centers for Medicare and Medicaid Services (CMS), all manufacturers that were approved to participate in contract year (CY) 2021 continue to participate in CY 2022 and CY 2023.⁶

While there is flexibility around which insulins plan sponsors can cover through the SSM, each participating plan must cover at least one rapid-acting, one short-acting, one intermediate-acting, and one long-acting insulin in both pen and vial dosage forms. Plans may also cover insulins outside of these four categories through the SSM (i.e., fixed ratio mixtures, concentrated, and combination insulin products), though they are not required to do so. For the purpose of our summaries that follow, we focus on a subset of insulin products and group them into short-acting (includes rapid-, short-, and intermediate-acting) and long-acting, based on how formulary coverage decisions are commonly made.

Figure 7 lists select insulin products in each required category that are available for coverage through the SSM in 2022. We group brand-name reference products by product name, focusing on the most highly utilized products. We exclude Fiasp and Apidra, authorized generics, and most biosimilars due to their relatively low utilization to date in the Part D market. Please refer to the SSM website for the full list of model insulins.⁷

Figures 8 and 9 show the distribution of common combinations of insulin products covered by participating plans through the SSM in 2022, based on January 2022 enrollment. We make the following observations:

• For short-acting insulin products, both PDP and MAPD plan sponsors tend to exclusively cover either Eli Lilly products (Humalog/Humulin) or Novo Nordisk products (Novolog/Novolin), but not both. For PDPs, Novolog/Novolin products are the most common strategy, accounting for 63% of January 2022 members enrolled in SSM plans. Conversely, Humalog/Humulin products are the most common strategy for MAPD plans, accounting for 57% of members enrolled in SSM plans.
• For long-acting insulin products, the SSM coverage strategy varies by market. In the MAPD market, the majority of members are enrolled in plans where plan sponsors choose to cover all products, excluding Basaglar. For PDPs, the strategy is split fairly evenly between covering all products, excluding Basaglar, and covering Novo Nordisk products only (Levemir and Tresiba), plus Basaglar.
  This strategy distinction may reflect greater willingness by PDPs to drive more utilization to SSM products with a strict appeals process, while MAPDs may be more hesitant given member satisfaction implications on CMS star ratings. The PDP market may also be more price-sensitive, placing an emphasis on rebates to drive lower premiums, resulting in more selective coverage among PDPs. In contrast, MAPD plans may not be as focused on maximizing Part D rebates, as they are able to use Part C rebates to “buy down” Part D premiums.

What copays do participating plan sponsors offer?

Under the SSM, each model insulin is subject to a maximum $35 copay per one-month supply. Figure 10 shows the distribution of copays for a one-month supply for both standard and preferred pharmacies based on the January 2022 enrollment for plans covering SSM products at the respective copay. We make the following observations:

• For PDPs: Nearly all participating PDPs elect to cover the model insulins at the maximum $35 copay at standard pharmacies. For participating plans, approximately 21% of members have access to lower SSM copays at preferred pharmacies. This includes Humana ($30), Mutual of Omaha ($25), and Cigna ($0). Cigna’s Extra Rx also covers model insulins at $11 on a Select Care tier at standard pharmacies, in addition to $0 at preferred pharmacies.
• For MAPD plans: Approximately 90% of members are enrolled in plans with the maximum $35 copay at standard pharmacies. The most common model insulin copays for MAPDs, other than the $35 maximum, reflect $5 increments ranging from $0 to $30. A small portion of members are enrolled in MAPD plans that offer other copays for model insulins between $0 and $35, which we grouped into “Other” in Figure 11B below. Offering lower SSM copays at preferred pharmacies is much less common in MAPDs than PDPs. MAPDs with preferred pharmacies primarily elect to cover model insulins at the maximum $35, but also offer lower copays of $25 and $30 as the next most common copay (similar to PDPs).

Note: N/A indicates plans not offering a preferred network option

As shown in Figure 11, model insulins for participating plans are primarily covered on Tier 3, especially for PDPs. The primary exception for PDPs is Cigna’s Extra Rx, which covers model insulins on a Select Care tier, as previously noted. For MAPDs, model insulins are also primarily covered on Tier 3, but at a slightly lower percentage than PDPs, with the majority of the remaining model insulins covered on either Tier 2 or Tier 4. Model insulin cost sharing is consistently capped at a maximum of $35, regardless of formulary tier, but the coverage of model insulins on other tiers by MAPDs may highlight the trend that MAPDs are more likely to include all covered insulins in SSM, not just insulins on the preferred brand-name tier (Tier 3).

What strategic elements should plan sponsors consider?

Plan sponsors should carefully consider how participating in the SSM aligns with their intended strategy for 2023. We describe a few (non-exhaustive) considerations below.

Market participation

Market participation in the SSM is high in 2022, with significant growth in participating plan sponsors relative to 2021. Plan sponsors should evaluate how their benefit offerings compare to their competitors to influence their own strategy.

For example, if a plan sponsor offers a high-cost enhanced PDP, the plan would be an outlier if it decides not to participate in the SSM. For MAPD, if dominant competitors are participating in a particular market, participating in the SSM could be viewed as the “price of admission” to compete in that market. However, the plan should weigh the cost of SSM participation with offering other benefits and how each aligns with its intended benefit strategy.

Coverage strategy

Plan sponsors will have to decide which insulin products to cover through the SSM and at what level of cost sharing. Covering fewer products could drive greater utilization to preferred products, potentially increasing rebates. However, this has to be weighed against member satisfaction and disruption, which could influence star ratings.

Plans should also evaluate whether they intend to decrease cost sharing at preferred pharmacies to align with their network contracting strategies. Some network contracts require a copay differential between preferred and non-preferred pharmacies for the negotiated rates to be effective; this dynamic could extend to cost sharing offered through the SSM, depending on the contract.

In addition, new insulin biosimilars have come to market that could affect 2023 formulary strategies, including Semglee, which received approval in the second half of 2021 as the first biosimilar insulin to be considered interchangeable with its reference product, Lantus.⁸ Plan sponsors will have to weigh potential uptake in these new products with associated rebate contracting to determine the optimal strategy for 2023.

Selection

Due to higher-than-average manufacturer rebates for insulin products,⁹ members taking these drugs tend to have favorable net plan liability (after rebates and other subsidies) in Part D. However, the ability of plan sponsors to manage medical costs for diabetic members will be the primary driver of MAPD profitability and must be considered when deciding whether to participate. It is possible that higher participation in the first two years among HMOs, compared to PPOs, may reflect plan sponsors’ expected ability to manage medical costs for insulin-taking diabetic members more effectively in a narrow network plan.

Given that participation is high in the first two years, new participants may not experience significant selection, as the SSM is already broadly available to beneficiaries. In addition, if potential legislation is passed that would effectively mandate SSM participation through Build Back Better or the Affordable Insulin Now Act, this would further mitigate the impact of selection, as the entire market would be required to participate.

Methodology

We summarized the information prepared in this report based on publicly available data from the Centers for Medicare and Medicaid Services (CMS). Specifically, we relied on the following files:

• Part D Enrollment by Contract Data for January 2022 and December 2021¹⁰
• Medicare Advantage and Prescription Drug Plan Landscape and Crosswalk files¹¹
• Medicare Advantage and Prescription Drug Plan Benefits Data files¹²
• Milliman’s Medicare Advantage Competitive Value Added Tool (MACVAT)¹³

We combined each CMS file based on the contract and plan benefit package (PBP) combination for each plan and created various summaries based on the data contained within each file. Specifically, we grouped the data by plan type, parent organization, and insulin product. 

We accepted the data from CMS without audit but did review for general reasonableness. If this information is inaccurate or incomplete, conclusions drawn from it may change.

Next steps

The SSM request for application (RFA) was released on February 28, 2022, for CY 2023. All plan sponsors must apply annually even if they participated in prior years, with applications due by April 8, 2022. Of note, beginning in CY 2023, the SSM will no longer allow participating plan sponsors to opt in to a narrower first risk corridor threshold.

Plan sponsors interested in participating should ask several questions before deciding to participate, including:

• Do our competitors participate in 2022? Did they participate in 2021?
• What copay and drug coverage strategy should we take? How does that compare to the market?
• How does this decision align with our benefit and growth strategies?

In addition, proposed legislation to reduce insulin prices would affect 2023 bids, if passed. In particular, the more recently proposed Affordable Insulin Now Act would be effective October 1, 2022, and plan sponsors should have a grasp on the financial, operational, and strategic implications of these changes, if implemented. Examining the SSM landscape and framework now may help to illuminate these implications for the future.

This article may help guide in answering some of these questions. If interested in learning more about specifics in your market, consider reaching out to your local Milliman consultant.

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¹ CMS. Part D Senior Savings Model. Retrieved March 10, 2022, from https://innovation.cms.gov/innovation-models/part-d-savings-model.

² D'Anna, S., Feller, A., Hayes, M. et al. (March 2020). Reducing Insulin Costs for Seniors: Thoughts for Plan Sponsors Considering Participation in the Medicare Part D Senior Savings Model. Milliman White Paper. Retrieved March 10, 2022, from https://us.milliman.com/en/insight/reducing-insulin-costs-for-seniors.

³ The full text is available at https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf.

⁴ The full text is available at https://www.warnock.senate.gov/wp-content/uploads/2022/02/Affordable-Insulin-Now.pdf.

⁵ The full text is available at https://www.congress.gov/117/bills/hr6833/BILLS-117hr6833ih.xml.

⁶ CMS, Part D Senior Savings Model, op cit.

⁷ Ibid.

⁸ FDA (July 28, 2021). FDA Approves First Interchangeable Biosimilar Insulin Product for Treatment of Diabetes. News release. Retrieved March 10, 2022, from https://www.fda.gov/news-events/press-announcements/fda-approves-first-interchangeable-biosimilar-insulin-product-treatment-diabetes.

⁹ Cline, M., Shaw, H., Silseth, S., & Wang, M. (December 10, 2021). Analysis of Insulin Competition and Costs in the United States. Milliman White Paper. Retrieved March 10, 2022, from https://www.milliman.com/en/insight/Analysis-of-Insulin-Competition-and-Costs-in-the-United-States-December-2021.

¹⁰ See https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly-Enrollment-by-Contract.

¹¹ See https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Plan-Crosswalks.

¹² See https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Benefits-Data.

¹³ See https://www.milliman.com/en/products/medicare-advantage-competitive-value-added-tool.