Narrow Networks 2017: Will Narrow Pharmacy Networks Evolve from Reduce-Reimbursement to Performance Networks?

Part D Sponsors to the Medicare Part D program must ensure that their retail pharmacy networks meet the convenient access criteria established under 42 CFR §423.120. These metrics stem directly from the statutory requirement that Medicare Part D sponsors’ entire retail pharmacy networks meet the TRICARE standard for convenient access: Sponsors and applicants must ensure that their networks have a sufficient number of pharmacies able to dispense drugs directly to patients (other than by mail order) to ensure convenient access to Part D drugs. CMS rules require that sponsors establish retail pharmacy networks in which:

  • At least 90 percent of Medicare beneficiaries in the sponsor’s urban service area, on average, live within 2 miles of a retail pharmacy participating in the Sponsor’s network;
  • At least 90 percent of Medicare beneficiaries in the sponsor’s suburban service area, on average, live within 5 miles of a retail pharmacy participating in the Sponsor’s network;
  • At least 70 percent of Medicare beneficiaries in the sponsor’s rural service area, on average, live within 15 miles of a retail pharmacy participating in the Sponsor’s network.1

Although the convenient access standard applies to plans’ entire network, there is no access standard for the subset of pharmacies at which preferred cost-sharing pharmacies (PSCP) networks is available. The convenient access standard can be used as a benchmark for assessing beneficiaries’ access to narrow network pharmacies offering preferred cost sharing and for comparing access for different groups of beneficiaries.1

Narrow networks that are largely comprised only of major retail chains are less likely to meet the convenient access CMS benchmarks compared to those networks with a mix of chain and independent pharmacies. Additionally, narrow networks based on a single pharmacy chain rarely meet the convenient access benchmark and mostly account for networks with the lowest access for urban beneficiaries. For example, of 190 narrow networks composed of a single pharmacy chain, only 7 meet the convenient access benchmark for their service areas. Of the 127 narrow networks that provide 2-mile access to fewer than 40 percent urban beneficiaries, 106 use single-chain networks2.

The Centers for Medicare & Medicaid Services (CMS) just released the initial data on the 2017 Medicare Part D plans. Analysis reveals that preferred cost sharing pharmacy networks are back. For 2017, 85% of Medicare Part D regional prescription drug plans (PDP) will have a preferred network which is comparable to the figures from the past three years. The two largest managed care organizations, United Healthcare and Humana, have chosen to offer preferred networks only for 2017.4   Narrow pharmacy networks appear to be a staple element of benefit design. Pharmacies will continue to see their prescription profit margins diminished under the current models.

As reported by Adam Fein in Drug Channels reported in its October 5, 20164 blog, the following are the 2017 highlights from the major managed care organizations regarding narrow networks:

  • “United Healthcare is offering four plans in 2017: two AARP-branded plans, a co-branded AARP MedicareRx Walgreens plan, and Symphonix Value Rx. The AARP-branded plans have preferred networks with 24,000 pharmacies, while the AARP-Walgreens plan has only 8,000 Walgreens and Duane Reade stores as preferred pharmacies.
  • Humana is offering the same three plans that it has for the past three years: Humana Enhanced, Humana Preferred Rx Plan (its original plan with Walmart), and the co-branded Humana Walmart Rx Plan. All three plans have a preferred network and are being offered in all 34 regions.
  • Last year, Wellcare switched its three plans from preferred cost sharing to open networks. Those plans will have open networks in 2017, too. Wellcare is now the largest sponsor of open network plans and accounts for 60% of them.
  • CVS Health’s SilverScript offers one plan with an open network (Choice) and one plan with a preferred pharmacy network (Plus). The SilverScript Choice plan was the largest open network plan in 2016 by enrollment.” 3

Managed care organizations will continue to utilize narrow pharmacy networks to seek savings from drug spending.  Pharmacies appear to remain willing to accept lower reimbursement rates in exchange for participation in a narrow network.

Narrow pharmacy networks should be focused on providing improved quality of care being delivered to patients. Rather, they are primarily focused on limiting reimbursement to pharmacies in terms of dispensing fees and discounted drug costs. Currently, when network managers refer to “narrow” they are referring to heavily discounted drug reimbursement rates. Such methods provide short-term savings but fall short of reaching the outcomes needed for successful prescription pharmaceutical care.

Plan sponsors should consider seeking opportunities to improve Star Ratings by employing PSCP networks. Health plans are rated on multiple measures, five of which are specifically related to medication management and the pharmacy: high-risk medications, diabetes treatment, and medication adherence for diabetes, adherence for hypertension and adherence for cholesterol. Currently, these five measures account for nearly half of a Medicare Advantage plan’s total score from CMS.5

The high risk medication use in the elderly (HRM) measure is one that managed care organizations, pharmacy benefit managers (PBMs) and pharmacists should focus on. It can serve as a useful metric in the development and execution of a pharmacist-led proactive patient outreach program to increase patient safety and potentially lower costs from adverse drug reactions.

The value of medication adherence can also be seen in the way it’s embraced by organizations that focus on health care quality and measurement. Because higher medication adherence rates lead to lowered health care costs and improved clinical outcomes, PBMs and plan sponsors should recognize the value in helping patients better understand why, how, and when to take their medications. Currently, PBMs and specialty pharmacies work with patients to deliver medications to their homes and provide targeted educational programs. Continuing to expand these efforts will result in better health outcomes and overall cost savings for patients and managed care organizations.


  1. Solicitation for Applications for Medicare Prescription Drug Plan 2017 Contracts
  2. Analysis of Part D Beneficiary Access to Preferred Cost Sharing Pharmacies (narrows)
  3. Drug Channels, January 18, 2017. “New 2017 Part D Enrollment Data: Walgreens and Walmart Trounce CVS in Preferred Networks” (
  4. Drug Channels, October 6, 2016. “EXCLUSIVE: Preferred Pharmacy Networks Are Back in 85% of the 2017 Medicare Part D Plans” (
  5. Medicare 2016 Part C & D Star Rating Technical Notes



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