MEDICARE PART D

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November 8, 2005 Medicare Rights CenterVol. 8, No. 23: November 8, 2005Contents:1. FAST FACT2. PART D PLANS RESTRICT ACCESS TO RANGE OF MEDICINES3. ENROLLMENT AND THE FUTURE OF PART D4. RETIREE BENEFITS MAY NOT COORDINATE WITH PART D5. SENATE VOTES FOR MEDICARE DRUG PRICE NEGOTIATIONS6. CASE FLASH: ENROLLED AGAINST HER WILL 1. FAST FACT A new study found that death rates 90 days after hospitalization forpatients of all races were 19 percent higher at more than 500 hospitalsthat serve a higher-than- average population of African-Americans(Kansas City Star/Circulation: Journal of the American HeartAssociation, October 2005). 2. PART D PLANS RESTRICT ACCESS TO RANGE OF MEDICINES A recent sampling of Medicare drugplan formularies by the American Society of Consultant Pharmacists(ASCP) found plans imposed restrictions on access to a number ofcommonly prescribed drugs as well as critical medicines to treat the fluand diabetes. The findings contradict assertions byCMS officials that there is little difference in coverage among plansand highlight the importance of the agency's plan finder web tool, whichbelatedly came online this week. For example, ASCP found that two planslikely to be popular choices among people with Medicare imposed quantitylimits for cholesterol-lowering statins and antidepressants, includingon generics. For osteoporosis medications and ACE inhibitors used totreat hypertension, the plans either impose quantity limits, requireprior authorization or exclude some drugs entirely from the formulary.Similar restrictions apply to diabetes medications and new medicationsto treat influenza. Both quantity limits and priorauthorization requirements create new paperwork burdens for doctors andcan also be used by plans to create real barriers to access, dependingon how they are administered. For example, a quantity limit can be usedto restrict the duration of treatment, limit the monthly dose or confineaccess to smaller doses that are sometimes prescribed to reduce sideeffects. Plans that impose prior authorization must have preset criteriafor when authorization will be granted but can also use the procedure todiscourage use of certain drugs. However, that level of detail is notprovided on the CMS web site. After paring down the number of suitableplans on the formulary finder, people with Medicare will need to callthe individual plans to find out whether those restrictions will preventthem from receiving the drugs they need. ASCP also looked at the top 200 drugsused in nursing homes and compared coverage among four plans. The twomost generous plans covered 97 percent of the drugs, but the mostlimited of the four covered barely over 60 percent. Coverage looks muchworse once other restrictions are considered, such as priorauthorization, quantity limits and step therapy, which requires that apatient first try a cheaper drug before coverage is granted. That picture stands in sharp contrastto the coverage levels CMS is touting—the percentage of the top 100drugs under the drug discount card program that plans are covering.Low-cost generic drugs make up over half that list. It is no surprise,and hardly a true indicator of coverage, that most plans cover over 90percent of that top 100 list. 3. ENROLLMENT AND THE FUTURE OF PART D A recent study from the Kaiser FamilyFoundation analyzes the effect of low enrollment in Medicareprescription drug plans on future plan premiums. The paper points to survey data thatshows many people with Medicare continue to be confused by the newprescription drug benefit and are unconvinced that they would personallybenefit from it. Most projections of the future of theMedicare drug benefit are based on the assumption that the vast majorityof people eligible for the benefit will enroll. The Congressional BudgetOffice (CBO) estimates 80 percent of people with Medicare will join aMedicare prescription drug plan or a retiree plan that received thegovernment subsidy. Based on this assumption, CBO estimated that theaverage monthly premium for Part D plans will be $37.10 in 2007, risingto $47.10 in 2010. But what happens if people withMedicare don't sign up for the benefit in the numbers anticipated? The Kaiser study assumes that manyolder adults and people with disabilities who have Medicare and who havelow drug costs will not sign up for a Medicare prescription drug plan,leaving those with the highest drug spending as the bulk of Part D planenrollees. With this high drug-spendingpopulation, the authors determine that average premiums for the Medicareprescription drug benefit could be significantly higher in 2007—infact "as much as 42 percent higher." The actual average premium for 2006was lower than CBO projected –around $32—although many speculateplans were low-balling bids to boost enrollment and qualify for fullpremium subsidies for low-income people with Medicare. That could alsolead to a dramatic spike in premiums in 2007. 4. RETIREE BENEFITS MAY NOT COORDINATE WITH PART D Despite the Bush administration'sefforts to save private retiree health care benefits from extinction,some employers are choosing not to apply for government subsidies forretirees' prescription drugs and are dropping coverage, while manyothers are threatening to discontinue retiree medical and prescriptiondrug coverage if a retiree chooses to sign up for Medicare Part D. The Bush administration estimates thesubsidy payments to employers will average $668 for each qualifiedretiree in 2006, with a ceiling of $1,330 per retiree. The CongressionalBudget Office (CBO) estimates that Medicare will spend $71 billion onemployer subsidies over the next eight years. Even though some administrationofficials have predicted that Medicare Part D will halt the decline inretiree benefits, Larry Boress, vice president of the Midwest BusinessGroup on Health, warned in The New York Times that the subsidy might notbe enough. "The subsidy is a good step, but is it going to be maintainedor reduced over time?" Retirees also face the potential lossof the health coverage their former employer provides if they enroll ina Medicare drug plan. Employers generally offer prescriptiondrug benefits as part of a comprehensive package that also coversdoctors' services and hospital care. They typically do not charge aseparate premium for drug coverage and do not administer it as adistinct benefit that can be easily separated out should a retireecancel his retiree prescription drug benefit by signing up for aMedicare prescription drug plan. Companies lose the subsidy if theretiree opts to enroll in a Part D plan. According to Kaplan, a seniorhealth care consultant, "More so than not, [employer] plan sponsors aresaying if you join Medicare Part D, you will be out of our plan." To help guard against this, retireeswho already have drug coverage through their former employer yet enrollin a Medicare drug plan will receive a warning letter from the Centersfor Medicare and Medicaid Services (CMS). Only if they affirmativelypursue signing up for a Part D plan at that point will their enrollmenttake effect. By November 15, all employers whooffer drug coverage to retirees and employees 65 and older are requiredto tell those people if the company's drug plan is generous enough tocount as "creditable coverage." If the plan is creditable, retirees donot face a late enrollment penalty if they stick with their employer'splan and opt to enroll in a Medicare private drug plan later (as long asthey are not without comparable drug coverage for more than 63 days). 5. SENATE VOTES FOR MEDICARE DRUG PRICE NEGOTIATIONS Last week's budget vote showed that amajority of the Senate were willing to buck the drug companies and voteto give Medicare the right to negotiate lower drug prices, but aprocedural hurdle prevented the vote from carrying the day. Fifty-one senators voted for an amendment sponsored byOlympia Snowe, Republican of Maine, and Ron Wyden, Democrat of Oregon,that lifted a prohibition against the Centers for Medicare and MedicaidServices (CMS) using Medicare's purchasing power to help negotiate lowerdrug prices. That "non-interference" provision is included in theMedicare Modernization Act, and the law's principal authors in theSenate, Finance Committee leaders Chuck Grassley, Republican of Iowa,and Max Baucus, Democrat of Montana, voted to preserve it. BesidesSenator Baucus, the only other Democrat who voted "no" was Senator Ben, Democrat of Nebraska. However, because the parliamentarian ruled that the issue ofMedicare drug prices was not "germane" to the budget, which includedother Medicare provisions, the amendment needed 60 votes to overcome apoint order to become part of the budget package. Interestingly, a number of conservative senators who votedagainst government price negotiations for Medicare drugs were willing toextend price controls for Medicaid drugs if the savings were directedtoward their states. Medicaid pays the lowest of threeprices—the best price available to commercial buyers, a price thatholds year-to-year increase to the rate of inflation (much lower thanyearly inflation for brand name drugs) or a price that reflects aminimum rebate. An amendment sponsored by Senator JeffBingaman, Democrat of New Mexico, would extend those price controls topurchases by Medicaid HMOs and use the savings to prevent drastic cutsin Medicaid reimbursements for certain states set to take effect nextyear. Seven senators who had balked at pricecontrols for Medicare were willing to vote for the Bingaman amendment,including conservative GOP stalwarts Cornyn, Republican of Texas;Pete Domenici, Republican of New Mexico; and Kay Hutchinson,Republican of Texas. 6. CASE FLASH: ENROLLED AGAINST HER WILL Ms. G was enrolled in a Medicare HMO and was happy with her coverage.She was recently invited to attend a free breakfast seminar from anotherMedicare HMO, and even though she was content with her current plan, shedecided to attend to compare the two plans. The next day arepresentative from the plan that hosted the breakfast called her andmade an appointment to visit her in her home to go over the plan in moredetail. Ms. G met with the representative but explained that she wasvery happy with her doctors in her current plan's network and wouldconsider changing plans only if her current doctors were in the newplan's network. The representative searched the provider directory andfound that those doctors were not in plan's network, so Ms. G said shedid not want to enroll and did not sign anything. About a month later, Ms. G went to her doctor. After using her HMO'scard to pay the bill, her doctor informed her that her plan had deniedher claim because she was no longer enrolled in that HMO but in anotherMedicare private health plan. Ms. G called Medicare and discovered thatshe had been enrolled into the other HMO without her knowledge orconsent. Ms. G contacted her local State Health Insurance Assistance Program(SHIP) hotline for help and learned that it was illegal for her to beswitched from one Medicare private health plan to another without herknowledge and without her signing any forms. A counselor helped herrequest to be retroactively reinstated into her previous plan with nobreak in coverage. She was retroactively reinstated into her originalMedicare HMO and had her doctor rebill the HMO once her records wereupdated. To read more cases by subject, go to "Interesting Cases" on our web siteat www.medicarerights.org/interestingcasesframeset.html. This message was generated by the Medicare Rights Center list-serve.medicarewatch@....http://www.medicarerights.org/subscribeframeset.html. If you want more information about the Medicare Rights Center, send ane-mail to info@.... Medicare Rights Center1460 Broadway, 17th FloorNew York, NY 10036Telephone: 212-869-3850Fax: 212-869-3532 Web site: www.medicarerights.org Medicare Watch is MRC's fortnightly newsletter, established tostrengthen communication with national and community-based organizationsand professional agencies about current Medicare policy and consumerissues. Each edition contains the latest Medicare policy developments,case stories from our hotline and action steps that professionals cantake to ensure that older adults and people with disabilities get good,affordable health care.Medicare Rights Center (MRC) is the largest independent source of healthcare information and assistance in the United States for people withMedicare. Founded in 1989, MRC helps older adults and people withdisabilities get good, affordable health care.