Government
CMS unveils plan for Medicare drug benefit but skimps on details
■ Government officials tout the expected savings for beneficiaries, but experts worry that a lack of specifics could spark confusion.
By Joel B. Finkelstein — Posted Aug. 16, 2004
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Washington -- Medicare beneficiaries are another step closer to being offered comprehensive drug coverage with the recent release of a proposed regulation for the new program, but many questions still remain about the benefit.
One is how patients will receive medications that are not on their plan's formulary, said Haiden Huskamp, PhD, assistant professor of health economics in the Dept. of Health Care Policy at Harvard Medical School.
According to Centers for Medicare & Medicaid Services Administrator Mark McClellan, MD, PhD, "If a physician thinks an uncovered drug is urgently needed, the drug would be covered while a prompt exception process is completed."
But how will the appeal process be handled and will companies be bound by that decision, Dr. Huskamp asked. The regulation does not get into those details, she said.
Government officials did spell out how the new benefit, which kicks in Jan. 1, 2006, will help beneficiaries afford their medications.
"For seniors without drug coverage, this is real and significant savings that will help them cut their bills in half, and not their pills," said Health and Human Services Secretary Tommy Thompson.
On average, the benefit will cover about half of beneficiaries' prescription drug costs for those currently without coverage, according to CMS estimates.
The proposed rule closely follows the Medicare reform law passed last year, which allows seniors to enroll in a stand-alone prescription drug benefit or join a managed care plan that includes drug coverage.
Once beneficiaries meet a $250 deductible, the standard benefit will cover 75% of the drug costs up to $2,250 and 95% of drug costs after the beneficiary has paid $3,600 out of pocket.
Low-income seniors get even more help with their drug costs. Drug coverage for Medicare beneficiaries who are currently also enrolled in Medicaid will be shifted to Medicare, which will subsidize about 97% of their costs.
Low-income beneficiaries whose earnings are too high to qualify for Medicaid will receive added coverage amounting to between 85% and 95% of their drug costs.
The proposed rule would also implement several other changes, including allowing more seniors access to preferred provider organizations, said Dr. McClellan.
"PPOs are the most popular health plan choice for Americans outside of Medicare," he said. "They are in virtually every area of the country, urban and rural, yet hardly any Medicare beneficiaries have access. And under our proposed rule that'll change on Jan. 1, 2006."
Physician groups, including the AMA, have been hesitant to embrace that provision because of concerns that physicians may be bullied into participating with the PPOs, which often have difficulty developing physician networks in rural areas.
However, details on how Medicare would improve rural access are still lacking in the rule. This is one of the reasons CMS is encouraging the physician community to offer comments over the next few months.
No lack of confusion
The rule is also lacking in specifics about how the drug benefit will be administered. This raises concern among some experts that beneficiaries will be confused about the benefit, just as they were with the temporary drug discount cards.
Enrollment in the drug card program is steadily increasing by about 100,000 beneficiaries a week, according to CMS. But experts said a big chunk of that is due to the automatic enrollment of low-income seniors at the very beginning.
A recent review sponsored by the Kaiser Family Foundation of the discount card program revealed that it was often unclear who was sponsoring a card. There were also many "me-too" cards offering the same benefits under different names.
Seniors might be less bewildered at their choices and more willing to enroll if they had more information about the cards, said Beth Fuchs, PhD, a consultant with Health Policy Alternatives Inc., a firm that develops health policy and strategies for national and state health care associations and organizations.
Transparency may not be so important for the discount card program, which only lasts 18 months, but the problems could prove an important lesson for encouraging participation in the full Medicare drug benefit when it goes into effect, she said.
Experts following the permanent drug benefit also said they would like to see more details about how CMS will ensure that companies offering coverage don't structure their formularies in such a way that seniors who need help the most are excluded.
The U.S. Pharmacopeia recently announced that it signed an agreement with the agency to develop model guidelines for the benefit, as well as a comprehensive list of all drugs in each category. However, under the rule, the drug benefit plans will not be required to follow this model.
Pharmacy benefit managers, managed care and other companies that are expected to administer the drug benefits are profit-driven, said Harvard Medical School's Dr. Huskamp.
Whether it's intentional or not, these administrators will be looking for formularies that minimize expenditures, she said.