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As the Centers for Medicare and Medicaid Services developed the blueprint for the drug benefit, we first aimed to ensure that all beneficiaries, regardless of their health status or financial means, have access to high-quality, affordable drug coverage that keeps pace with current medical practice. Second, we aimed to provide continuous access to drugs needed by the chronically ill and third, to create a competitive, transparent marketplace offering a wide array of benefits to consumers.
Rigorous standards were set for health plans that wanted to participate. These standards mirror those that have worked to keep coverage up to date for employees and retirees of the federal government and for the millions of Americans who have health care coverage through their employers. Access to the benefit for people of limited means was made possible through both additional financial assistance and coordinated enrollment-focused outreach.
Persons who are also covered by Medicaid ("dual eligibles") will pay no monthly premium or deductible, and their prescriptions will have copayments ranging from $0 to $5. Because these beneficiaries are on state Medicaid rolls, we have been able to enroll them automatically in plans in their regions to ensure that they will have uninterrupted comprehensive drug coverage. They can choose among alternative zero-premium plans at any time. We are also facilitating the enrollment of approximately 2 million more beneficiaries who are enrolled in the Medicare Savings Program, a limited form of Medicaid that does not include drug coverage, if they have not chosen a plan by spring 2006.
There are an additional 7 million beneficiaries with limited finances who may qualify for substantial extra assistance but who are hard to reach. We have been working with partners within the federal and state governments and within the health care community to provide as many means of contact and as much information as possible. Regional offices and partners have conducted more than 40,000 training sessions and presentations and have created 140 coalition networks with 10,000 volunteers. The www.medicare.gov Web site provides a variety of interactive tools and assistance, and a help line (1-800-MEDICARE) is staffed around the clock.
Formulary and other coverage requirements are designed to ensure that beneficiaries will have continuous access to medically necessary drug treatments, as required by law. For example, working with physicians and other health care providers, we identified six critical categories of drugs — antidepressants, antipsychotics, anticonvulsants, anticancer agents, immunosuppressants, and antiretroviral drugs for patients with HIV infection. For patients who require these drugs, therapeutic substitutions could be harmful, even over the short term. So all formularies include "all or substantially all" drugs in these categories, in addition to at least two drugs in every other therapeutic class.
We did not mandate that all formularies include all available drugs, because such a requirement would have limited the ability of plans to negotiate lower drug prices and therefore would have driven up beneficiaries' costs. Instead, we required plans to make their coverage and costs clear to enrollees and to have a rapid appeals process for beneficiaries who need nonformulary drugs. Because of the combination of strict formulary oversight and strong competition among plans, both of which are necessary if the benefit is to be optimal, most plans are offering broad formularies. The vast majority include more than 80 of the 100 drugs most used by seniors.
In addition, we created what we hope will be a well-functioning market for prescription-drug coverage, where suppliers compete in terms of quality and price. We believe that such choices can work in health care, forcing competitors to reduce costs and offer better products in order to attract beneficiaries. But such competition requires careful ground rules, such as a high degree of transparency to facilitate informed choice, risk-adjusted government payments that level the playing field for plans that attract beneficiaries who have chronic illnesses, and formulary requirements ensuring that all plans are high quality.
There is already evidence that this market for prescription-drug plans is working, given the quality, cost, and range of offerings. For instance, the average premium and cost to the government of the drug plans offered for 2006 is 14 to 15 percent lower than the costs projected by independent experts: the average monthly premium is about $32, as compared with a projected $37; and the costs to the government are about $15 lower per month per beneficiary than was projected. In 49 of the 50 states, there is at least one plan with a premium of $20 per month or less. The lower prices reflect the discounted drug prices negotiated by the plans and other efficiencies achieved through partnerships and purchasing leverage. These savings are broadly available, so beneficiaries are not restricted to a single plan with a single formulary. For example, beneficiaries can choose a plan with an open formulary (which includes essentially all generic and brand-name drugs) or one with a closed formulary (which excludes some drugs). Plans with closed formularies tend to have lower premiums and more greatly discounted drug prices.
Competition has also resulted in better coverage options than those that would have been available if Congress had defined a specific coverage package rather than a minimum standard of coverage. Less than one third of both the prescription-drug plans and the Medicare Advantage plans use the standard benefit structure outlined in the Medicare law. In the standard structure, beneficiaries have a $250 deductible, pay 25 percent of their next $2,000 in drug costs, and then pay 100 percent of the next $2,850. At that point, catastrophic coverage begins, and beneficiaries pay only 5 percent of drug costs. But beneficiaries can instead choose plans with no deductible, plans with coverage for the $2,850 gap, or plans that offer drugs with different levels of copayments (tiered copayments). Tiered copayments are usually fixed, lower copayments (less than the 25 percent copayment in the standard benefit) for drugs that are inexpensive and designated as preferred drugs and higher copayments for drugs that are not included on a preferred list or for which there is a lower-cost generic form.
With these competitive choices, the prescription-drug benefit does not have to be one size fits all for Medicare's diverse 42 million beneficiaries. But every plan must meet Medicare's actuarial standards, provide access to medically necessary drugs, and protect against high drug costs. Beneficiaries can choose among plans according to their preferences and specific financial needs, using several available tools. Medicare's help line and Web site provide patients with personalized information on the costs of the plans and the drugs included in their formularies, and there are also numerous community resources and partners.
Some beneficiaries will have challenging questions and will probably turn to their physicians. They may start by asking physicians basic questions about coverage as they begin to consider their choices. In addition to referring patients and their caregivers to Medicare's help line and Web site, physicians can get information on local advisers in their community through www.eldercare.gov, and they can get explanatory materials to distribute in their offices through www.cms.hhs.gov/medlearn/drugcoverage.asp.
Physicians are uniquely suited to helping their patients to review the medications they take and to identify plans that provide substantial savings on those or equivalent medications. Physicians will want to focus particularly on patients who are dually eligible and have been automatically enrolled in a plan but may wish to switch to another one.
Assistance is available to physicians (see table), including tools for the office and a brief course that can be taken for continuing medical education credit. The Formulary Finder at www.medicare.gov provides quick search capability, and the Prescription Drug Plan Finder provides cost information on all drugs used by a beneficiary. Medicare is also making the formulary information publicly available so that offerings can be incorporated into commercial formulary evaluation search tools.
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Source Information
Dr. Bach is a senior adviser and Dr. McClellan the administrator of the Centers for Medicare and Medicaid Services, Washington, D.C.
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Related Letters:
Medicare Drug Benefit
Cooper H. A., Lear A. A., Kravitz R. L., Chang S.
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N Engl J Med 2006;
354:1960-1961, May 4, 2006.
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