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Editor's note: Medicare Part D, designed to provide enhanced prescription-drug coverage for seniors, went into effect in January 2006. Here we present two opposing viewpoints on how successful the implementation of Medicare Part D has been to date and whether it is fulfilling its stated objective.
Because the average beneficiary had many options, choosing a plan was often daunting, but enrollment assistance has been available through Medicare and other organizations. Of the 42 million beneficiaries eligible for drug coverage, more than 31 million were enrolled in a plan by early May 2006, including 6.2 million people who previously had prescription-drug coverage through state Medicaid programs (referred to as full-benefit "dual-eligibles"); another 5.8 million Medicare beneficiaries had drug coverage from sources such as the Department of Veterans Affairs or a current employer. Many more joined close to the May 15 deadline. Of the 5 million beneficiaries who are not enrolled or otherwise covered, roughly 3 million have limited incomes and are eligible for additional assistance.
At the beginning of 2006, there were some substantial problems. Certain beneficiaries, particularly certain dual-eligibles who switched plans late in December, did not have full coverage information readily available when they went to pharmacies. We at the Centers for Medicare and Medicaid Services (CMS) make no excuses for these problems, and we have been working hard to fix them.
We are cognizant that we will probably never again face such an enormous transition, and we are attempting to improve all aspects of the program. As of April 1, reports of problems at pharmacies had decreased by 95 percent, and the waiting time for beneficiaries who call our 1-800-MEDICARE telephone number is now routinely less than two minutes.
We are also taking steps to help beneficiaries as soon as they enroll. Although Medicare prescription-drug coverage is generally effective on the first day of the month after enrollment, we are encouraging beneficiaries to allow at least two weeks between a new enrollment or enrollment change and their first use of coverage, if at all possible. Beneficiaries who have difficulty obtaining prescriptions after they enroll may contact their selected plan or Medicare for assistance. As we move past the initial implementation of the benefit, we have three broad goals: ensuring that competition promotes simplicity as well as better benefits, minimizing drug prices while providing access to needed drugs, and intensifying outreach to lower-income beneficiaries who do not yet have comprehensive drug coverage.
Several different types of coverage are available to beneficiaries. Our beneficiaries are socioeconomically and medically diverse and their needs vary widely, so we believe that these options are a positive feature of the program. Others have argued that a uniform (perhaps mandatory) benefit would be superior. The data on plan choices are relevant to this argument (see pie charts).
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In making choices among plans, beneficiaries have highlighted the features that are most important to them. As we assist other beneficiaries in making their choices, we will therefore emphasize these distinctions: whether plans carry a $250 deductible or none, whether they require flat copayments or coinsurance, whether they offer coverage in the doughnut hole, the breadth of their formulary, and the scope of any prior authorization required for formulary medications. For 2007, Medicare expects to approve only two plan options from each plan sponsor, unless there is a compelling reason for a third.
Competition is providing better coverage options and is leading to lower costs than expected for beneficiaries and taxpayers. As of April 2006, the average monthly premiums for beneficiaries were 32 percent lower than was originally forecast. (The average premium is $25 per month, as compared with a projected $37 per month.) The overall cost to taxpayers for 2006 has dropped by about 20 percent from the mid-session estimates from last year, according to the CMS Office of the Actuary. Some beneficiaries are achieving larger savings than the average suggests, because they are electing plans that offer their medications or generic equivalents at low prices. (Specific drug prices can be searched at www.medicare.gov.) We believe that these savings are a product of the plans' three sources of negotiating leverage: market leverage, inclusion of "preferred" drugs available in many classes with lower copayments, and the availability of tailored information on how much a beneficiary can save by switching to a generic or preferred brand-name drug.
Some have suggested that Medicare should negotiate directly with drug manufacturers to achieve lower prices for beneficiaries, rather than allow the plans to negotiate individually. The data on plan costs are germane to this debate. The Congressional Budget Office and the Office of the Actuary at CMS both concluded that Medicare itself could not obtain the same level of discounts unless it imposed severe formulary restrictions that would limit therapeutic options for beneficiaries.2,3,4 The plans have achieved their low prices without such restrictions because of their other sources of pricing leverage. Today, the average plan includes 91 of the 100 most commonly taken drugs (coverage that compares favorably with most Medicaid preferred-drug lists and the Veterans Affairs plan), and some plans offer "open" formularies that provide access to essentially all drugs.
An estimated 3 million Americans who qualify for the limited-income subsidy in Part D have not signed up. For those who qualify, the benefit is available for either no premium or a substantially reduced premium, with copayments ranging from $1 to $5 or 15 percent coinsurance. The average value of the coverage is estimated at $3,700 per year. Enrollment for these beneficiaries has been extended past the May 15 general-enrollment deadline and will not be subject to late-enrollment penalties. Many physicians are helping by handing their Medicare patients a Social Security Administration application for the limited-income subsidy along with their prescriptions; others are directing their patients to www.ssa.gov/prescriptionhelp or 1-800-772-1213. We believe that as physicians, we should try to ensure that the prescriptions we write do not go unfilled because of cost, particularly when help is so easily available. Limited-income assistance reduces the cost of prescription drugs by 95 percent on average. These savings will help elderly people obtain the medications they need.
Although the drug benefit is now up and running for more than 31 million beneficiaries, we still have our work cut out for us. We must ensure that choices are available and easy to comprehend and that formularies provide a broad range of therapeutic options at a reasonable cost to patients. We must work with physicians and other providers to reach beneficiaries with limited incomes. These steps will ensure that elderly people and people with a disability continue to benefit.
Source Information
Dr. Bach is a senior adviser and Dr. McClellan the administrator of the Centers for Medicare and Medicaid Services, Washington, D.C., and Baltimore.
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