On November 15, 2005, enrollment opened for Medicare’s new prescription drug program. You have most likely been asked by patients for help in understanding the complexity of the options. No small task. Though there is a lot to disagree with in the way the Medicare drug benefit has been crafted, it’s what we now have and many beneficiaries can benefit from it. In addition to knowing which agencies in your communities serve seniors, you can better equip your elderly patients to make decisions by becoming familiar with web sites and other resources listed in this article.
Confusion reigns
By May 15, 2006, when the initial enrollment period ends, the government predicts that over 29 million of 43 million eligible beneficiaries will have signed up for the new benefit, with another 9 to 10 million beneficiaries maintaining their drug coverage through an employer-sponsored plan (FIGURE 1).
Whether these predictions come to pass is an open question. A Kaiser Family Foundation survey from late October 2005 found that 60% of senior citizens did not understand the benefit and 50% thought it would not help them. Of those surveyed, 43% did not know whether they would enroll, 37% said they would not enroll, and only 20% said they would definitely enroll.
One problem for seniors is that unlike the traditional Medicare program in which there are only 2 choices—whether to sign up for the traditional fee-for-service plan or a managed care plan—the new drug plan is administered by a large number of private plans that cover different medications and charge different prices for them. Seniors who said they understood the drug benefit (a minority) were more likely to view the program favorably. Perhaps most relevant for physicians is that seniors said they would likely turn to the Medicare program (33%), their personal doctor (32%), or their pharmacist (25%) for assistance.1
A quick review
Readers may recall that the prescription drug benefit portion of the Medicare Modernization Act of 2003 includes a premium (current national average of $32/month), an annual deductible, copays, and the infamous “donut hole” (FIGURE 2).2
With the program beginning in January 2006, however, there is more to keep in mind than the costs to beneficiaries: for example, who will be offering the benefit, what medications will be covered (formularies), and the effect on dual-eligibles (beneficiaries covered by both Medicare and Medicaid), so-called “Medigap” policyholders, and low-income beneficiaries.
FIGURE 1
Estimated Medicare prescription drug benefit participation, 2006
* “Others” not enrolled includes federal retirees with drug coverage through FEHBP or TRICARE, and those who lack drug coverage.
† “Other low-income” includes non-dual-eligibles with incomes <150% FPL.
Source: HHS OACT, MMA final rule, January 2005.
FIGURE 2
Standard Medicare prescription drug benefit, 2006
* Annual amount based on $32.20 national average beneficiary premium (CMS, August 2005)
Source: Kaiser Family Foundation illustration of standard Medicare drug benefit described in the Medicare Modernization Act of 2003
Who offers the plans
Medicare beneficiaries can obtain the drug benefit in either of 2 ways: through a stand-alone prescription drug plan (PDP) that covers only drugs (with the usual medical benefits obtained through the traditional Medicare program), or through a Medicare Advantage plan (MA) that is essentially a managed care plan, providing drug coverage and medical benefits in place of the traditional Medicare program.
The Bush administration has long promoted MA plans as a way to better control Medicare costs, even though the federal government currently spends more per MA beneficiary than for beneficiaries in traditional Medicare. MA plans can offer additional benefits and adjust premiums to attract customers—drug benefits for a lower premium, vision benefits, and dental benefits. However, there may be limits on using providers outside the MA plan’s network of physicians and hospitals.3
Drug plans must cover at least 2 drugs in each therapeutic class approved by Medicare, but they may use tiered cost-sharing (eg, generics and brand-name drugs in different tiers) and other management tools as long as they meet the minimum requirements of the overall bill. The decision by the White House and Congress to approve the privatization of the drug benefit has led to the current situation in which multiple private plans are competing for enrollment in each geographic region and offering different drugs for different prices. For instance, in my county, there are 7 MA plans and 43 PDP plans being offered. This makes the system overly complex and confusing. In addition, the Medicare Modernization Act allows plans to increase the copays or even end coverage of specific drugs with 60 days notice.
Dual eligibles and low-income beneficiaries