Medicare Part D Stand-Alone PDPs Crucial in Rural Areas Amid Market Changes

Medicare Advantage plans have become predominant in covering over half of eligible Medicare beneficiaries; however, in the most rural counties, traditional Medicare remains the primary coverage choice, leading to greater reliance on Medicare Part D stand-alone prescription drug plans (PDPs).

Recent changes to the Medicare Part D benefit, including a new $2,000 out-of-pocket cap, have increased plan costs, disproportionately impacting PDP premiums since Medicare Advantage plans can offset these costs using rebates, an option unavailable to PDPs. To stabilize the PDP market, the Biden Administration introduced a demonstration program in 2024 providing enhanced premium subsidies for up to three years, which helped limit premium increases in 2025 but saw a reduction in PDP availability and significant premium variation.

The future of the premium stabilization program under the Trump administration remains uncertain, with executive orders requesting recommendations for reducing Part D premiums but without explicit mention of PDPs. Analysis of 2025 data reveals that nearly 58% of Medicare Part D enrollees in the most rural areas are enrolled in stand-alone PDPs, compared to 42% in Medicare Advantage drug plans, highlighting regional disparities.

In 27 states, at least half of rural Medicare Part D enrollees rely on PDPs, and in eight states, this figure exceeds 75%, likely due to limited Medicare Advantage provider networks in rural regions. The study categorizes geographic areas according to Urban Influence Codes from the USDA, defining most rural counties as those not adjacent to metropolitan areas, with data showing higher PDP enrollment in these areas compared to urban or less rural regions.

Furthermore, 15 states and the District of Columbia report that 50% or more of Part D enrollees across all geographic areas are covered by PDPs, underscoring the significant role these plans play nationally, especially in rural locations.

This analysis provides important insights for healthcare policymakers and insurers regarding Medicare Part D plan enrollment trends and the implications of policy changes on drug coverage accessibility and affordability in rural America.