Report Warns of Problems In Medicare Rx Plans

As the October 17 deadline approached last month for House and Senate conferees to reach a compromise agreement on Medicare reform, doubts about the workability of either the House or Senate version of reform—as well as about the passage of legislation in time to meet the deadline—began to emerge in press reports.

One of those concerns has to do with proposed subsidies for preferred provider plans. While all private plans would receive a higher level of government support than would the traditional Medicare fee-for-service program, plans in some areas would be paid only modestly more than local fee-for-service rates set by Medicare; those elsewhere—rural areas, for instance, which have not been attractive to private plans in the Medicare+Choice plan—might be reimbursed as much as 15 percent more than these rates.

Health policy analyst Marilyn Moon, Ph.D., told Psychiatric News that the subsidy proposal is liable to result in regional disparities, with private plans moving toward the most profitable markets and thus compromising enrollment in traditional Medicare within that region, Moon said.

She is vice president and director of the health program at American Research Institutes in Washington, D.C.

She offered a more global critique of the Medicare reform plans in a new Commonwealth Fund Policy Brief published last month. In the report, titled “Medicare Prescription Drug Legislation: How Would It Affect Beneficiaries?,” Moon examines the adequacy, complexity, and fairness of the proposed drug benefit; the legislation’s emphasis on greater privatization; and whether provisions in the bills could penalize beneficiaries.

Key points in the report include the following:

• The gap in coverage in both bills reduces protection against high drug expenses, just as many of the beneficiaries who are most in need are expecting relief. The House bill puts those with chronic conditions at greater risk for high expenses but is more generous than the Senate bill for those with lower costs. A flat-percentage contribution up to a catastrophic limit would be a fairer, simpler, and more straightforward way to structure a benefit, Moon said.

• The Senate bill leaves out beneficiaries with the lowest incomes, requiring them to get their benefits from Medicaid. The House bill ends coverage for low-income beneficiaries after they spend $2,000 on prescription drugs, up to about $4,900, leaving individuals with incomes at 120 percent of the federal poverty level, for example, at risk of spending about 28 percent of their income on drugs. Moon’s analysis indicates that low-income benefits should extend to individuals whose income is up to 200 percent of the federal poverty level (about $18,000 for an individual).

• The bills add much complexity to an already too complex system. For example, those wishing to remain in traditional Medicare would now have to choose a stand-alone drug plan in addition to a Medigap plan. Yet neither bill provides sufficient consumer education to help them make informed choices. The legislation provides extra money to private plans as an incentive to participate in Medicare at the same time that it asks Medicare beneficiaries to pay higher cost-shares for their Medicare services.

The report, “Medicare Prescription Drug Legislation: How Would It Affect Beneficiaries?,” is posted on the Web at www.cmwf.org/programs/medfutur/moon_rxlegislation_pb_678.pdf. ▪