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How Are People with Medicare and Medi-Cal Fairing Under Medicare Part D?

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Published: April 2006

Health and Human Services Secretary Mike Leavitt’s recent progress report on Medicare Part D stated claims that prescription “drug costs are going down,” and that the “Medicare drug benefit is working for the vast majority of dual eligible beneficiaries in most states.” Other government and advocate reports of beneficiaries statewide with both Medicare and Medi-Cal are less optimistic. Around the state, California’s Health Insurance Counseling & Advocacy Program (HICAP) offices are receiving numerous calls from these dual-eligible beneficiaries who are unable to pay their prescription drug copayments and therefore unable to receive their needed medications. With the new $1-$5 copayment they must pay for each medication, their drug costs have increased dramatically. This article examines the rocky start of the new Part D program and offers another perspective on the plight of California’s beneficiaries with Medicare and Medi-Cal.

Are the cost of drugs rising or falling?

In a recent report, “Medicare Drug Plan Prices Are Higher than Medicare Drug Card Prices,” the U.S. House of Representatives Minority Staff Committee on Government Reform found that prescription drug prices for the 10 most popular drugs used by seniors increased more in the seven weeks between December 2005 and February 2006 than in all of calendar year 2005, and that drug plan prices are 14 percent higher than Medicare drug card prices for the same drugs. Consumer price inflation (which increased only 2.3 percent during the nine month period), drug price inflation (which increased only 3.6 percent), and changes in manufacturers’ average wholesale prices cannot account for this 14 percent increase. The report concludes that the large price increase is just “further evidence that the new Medicare drug benefit enriches the pharmaceutical industry at the expense of seniors, individuals with disabilities, and taxpayers.”

The premise of the new Part D drug benefit is that competition among private drug companies will provide seniors and individuals with disabilities with comprehensive coverage and significant savings on prescription drugs. Yet, according to a report from the Office of Inspector General (OIG) and several advocate reports, this does not seem to be the case. The OIG found that only 18 percent of dual eligibles who were randomly assigned to a Part D plan (PDP) have coverage for all 178 of the most commonly-used drugs. Also nearly one third of dually-eligible beneficiaries who were randomly assigned to a PDP are in plans that include less than 85 percent of these drugs. In looking at costs, a Families USA report, “Falling Short: Medicare Prescription Drug Plans Offer Meager Savings,” compares Medicare prescription drug plan prices for the top 20 drugs prescribed to beneficiaries in 2004 with the prices negotiated by the federal government through the Department of Veteran Affairs (VA). They found that the median price difference for the top 20 drugs was 48.2 percent. The report concluded that, the lowest price offered by any Medicare prescription drug plan for half of the top 20 drugs prescribed to seniors was at least 48.2 percent higher than the lowest price available through the VA. For 15 percent of the drugs examined, the lowest Medicare prescription drug plan price was at least four times the VA price.

Is the drug benefit working for those with Medicare and Medi-Cal?

The Kaiser Commission on Medicaid and the Uninsured reported in its February 2006 survey that 31 state Medicaid directors (61 percent), including California’s director, described widespread problems affecting a significant number of dual-eligibles. Forty-nine states reported that dual-eligibles had been charged incorrect cost-sharing amounts. Forty-three states reported that dual-eligibles did not know the plan to which they had been auto-assigned. Thirty-seven states implemented temporary programs to ensure that dual-eligibles obtain needed medications. Some other commonly reported problems included:

  • Beneficiaries enrolled in more than one plan or assigned to a plan that does not have a participating pharmacy within 50 miles of the beneficiary’s home;
  • Failure of some plans to adhere to the Centers for Medicare and Medicaid Services (CMS) transition plan requirements or failing to cover all or substantially all of the drugs in the six protected categories; and
  • Some pharmacies deciding not to participate in Part D or refusing to check Part D plan assignments for duals.

In addition to these problems, when getting drugs through the Part D plans has failed, dual-eligibles throughout California have often had difficulty accessing the Governor’s emergency Medi-Cal drug coverage. While advocates have worked together with the Department of Health Services to correct problems, people who continue to experience difficulties accessing the Governor’s emergency drug coverage when needed, or hear of others with these problems, can contact their local Health Insurance Counseling & Advocacy Program (HICAP) and/or California Health Advocates (CHA).

In the past, pharmacists were required to waive any copayments for Medi-Cal drugs if a beneficiary was unable to pay them. Now, however, Medicare Part D allows a pharmacist to deny drugs when a person is unable to pay these new copayment amounts. The only dual eligibles exempt from these new copayment obligations are those who live in certain long term care facilities such as nursing homes but not assisted living or residential care facilities. HICAP offices across the state are reporting numerous calls from dual-eligibles who are unable to pay their copayments. Recently, one man from San Diego county called in saying he had only $60 left for the month to cover food or medications, not enough for both. Another woman living on $800 per month with $500 going towards rent, did not have enough money to pay the copayments for her 15 medications. Like these two beneficiaries, many dual-eligibles cannot afford these cost increases and are forced to choose between basic necessities: the drugs they need and food to eat or a place to live.

Conclusion

CMS is attempting to both fix these and other problems, and keep the program running in its current form. Indeed for some people, particularly those who previously had no prescription drug coverage, Medicare Part D is working and helping them save money. For the dually eligible in California, however, who are most severely impacted by this new benefit and who already had good coverage, they must now pay more for a benefit that provides less. Because of this situation, advocacy groups and beneficiaries across the country are asking that fundamental changes be made to the program. Advocates believe that the design of Medicare Part D is ultimately unsound in that it relies solely upon private, commercial companies to deliver a vital, public benefit. Federal legislation would be required to: restructure the program in a way that allows the traditional Medicare program to administer the benefit; allow Medicare to negotiate prices with pharmaceutical companies; extend enrollment periods; and eliminate the donut hole, among other fixes. On the state level, advocates are pushing to either make the Governor’s temporary emergency drug coverage permanent with a provision to also cover dual-eligibles’ copayment amounts, or allow people with Medicare and Medi-Cal to continue using the Medi-Cal system to receive their prescription drugs. Without such fixes, Medicare Part D is unable to ensure that beneficiaries, especially dually eligible beneficiaries, receive the drugs they need.

Information for this article was contributed in part by: California Healthline article, “Medicare Drug Costs Higher Than Other Options,” March 7, 2006; Secretary’s Progress Report on the Medicare Prescription Drug Benefit; a report by the Kaiser Commission on Medicaid and the Uninsured, “The Transition of Dual Eligibles to Medicare Part D Prescription Drug Coverage: State Actions During Implementation;” CMA Weekly Alert, “Second Progress Report On Medicare Part D Is At Odds With What Experts' Reports Show,” March 9, 2006; a Families USA report, “Falling Short: Medicare Prescription Drug Plans Offer Meager Savings;” a report from the U.S. House of Representatives Minority Staff Committee on Government Reform, “Medicare Drug Plan Prices Are Higher than Medicare Drug Card Prices,” February 2006; a report from the U.S. House of Representatives Minority Staff Committee on Government Reform, “Medicare Drug Plan Prices Are Increasing Rapidly,” February 2006; and OIG, Dual Eligibles’ Transition: Part D Formularies’ Inclusion of Commonly Used Drugs, OEI-05-06-00090, January 2006.

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