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Medicare to Cover Most Drug Costs Says Final Plan
for 2006 Announced Today
Jan. 21, 2005 Medicare late
today issued the final rules for the prescription drug benefit that
begins in 2006, which reportedly will pay as much as 75 percent of the drug costs
for most Medicare beneficiaries. This will be the new Part D section of
Medicare.
The new plan calls for service delivery through
private insurance companies that will be subsidized by the government.
The plan will reduce by $8 billion state spending for drugs for
low-income seniors over its first five years, according Mark McClellan,
the Centers for Medicare & Medicaid Services administrator.
In addition, 6.3 million low-income Medicare
enrollees who also qualify for Medicaid, will be enrolled in the new
drug benefit automatically to avoid a possible lapse in coverage,
McClellan said.
HHS Secretary Tommy G. Thompson announced the final
regulations establishing the new Medicare prescription drug benefit and
improved access to health care services through Medicare.
"For too long, America's seniors have struggled to
pay for their medicines. Today sets in motion historic developments for
the elderly and disabled. In less than a year, for the first time,
Medicare will offer a prescription drug benefit to help them pay for the
prescription drugs their doctors tell them that they need," Secretary
Thompson said.
The prescription drug benefit, and the other
provisions included in the regulations issued today are key elements of
the Medicare Modernization Act passed by Congress and signed into law by
President Bush on Dec. 8, 2003. Enrollment for the new prescription drug
plans will begin this November.
The regulations issued today:
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Create the first prescription drug benefit for beneficiaries in
fee-for-service Medicare. Medicare Advantage plans will continue to
offer prescription drug coverage to enrollees and enhance their existing
coverage.
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Help ensure that retirees who currently receive health and drug coverage
from their former employers or unions will continue to be able to do so.
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Improve the Medicare Advantage program and for the first time offer a
regional preferred provider organization (PPO) contracting option.
>
Offer two new less costly options for Medigap coverage.
The final regulations, developed after an extensive
public comment process that began when proposed rules were published in
August, will be on display at the Federal Register today.
"All people with Medicare are now one huge step
closer to having a new drug benefit and new health plan options,
regardless of their income or how they receive their medical coverage,"
said Centers for Medicare & Medicaid Services Administrator, Mark B.
McClellan, M.D., Ph.D. "In less than a year, seniors will get critical
new help with access to 21st century, prevention-oriented medical care."
While the Medicare-approved drug discount card
remains active throughout 2005, the regulations issued today begin the
shift from providing discounts and temporary assistance alone to
providing broad-based drug coverage in 2006.
The Medicare Prescription Drug Benefit
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Basics of Medicare Drug Plan for 2006 |
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Prescription Drug Benefits
will be added to Medicare in 2006 as Part D. All
people with Medicare will be able to enroll in plans that cover
prescription drugs. Plans might vary, but in general, this is
how they will work:
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You will choose a prescription drug plan and pay
a premium of
about $35 a month.
■
You will pay the first $250 (called a
deductible).
■
Medicare then will pay 75% of costs between $250
and $2,250 in
drug spending. You will pay only 25% of these costs.
■
You will pay 100% of the drug costs above $2,250
until you
reach $3,600 in out-of-pocket spending.
■
Medicare will pay about 95% of the costs after
you have spent $3,600.
Some prescription drug plans may have additional options to help
you pay the out-of-pocket costs.
Extra Help Will be Available
for people with low incomes and limited assets.
Most significantly, people with Medicare in the greatest need,
who have incomes below a certain limit wont have to pay the
premiums or deductible for prescription drugs. The income limits
will be set in 2005. If you qualify, you will only pay a small
co-payment for each prescription you need.
Other people with low incomes and limited assets will get help
paying the premiums and deductible. The amount they pay for each
prescription will be limited.
Medicare Advantage
plan choices will be expanded to include regional
preferred provider organization plans (PPOs). Regional PPOs will
help more people with Medicare have multiple choices for
Medicare health coverage, no matter where they live. PPOs can
help you save money by choosing from doctors and providers on a
plans preferred list, but usually dont require you to get a
referral. PPOs are among the most common and popular plans right
now for working Americans.
All
of these options are voluntary. You can choose to remain in the
traditional Medicare plan you have today. |
The new regulations will provide a prescription
drug benefit available to everyone who is in Medicare, regardless of
their income, how they get their health care now (whether through
traditional fee-for-service Medicare or a Medicare Advantage plan) or
how they currently get their drug coverage.
The new rules ensure the drug benefit will:
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Offer
comprehensive help for those with limited means - including no premiums
or deductibles for more than nine million beneficiaries
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Give beneficiaries
a choice of at least two drug plans that will cover a comprehensive set
of both brand name and generic drugs
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Give beneficiaries
convenient access to pharmacies, generally within just a few miles or
less of their home.
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Guarantee that
Medicare beneficiaries living in nursing facilities will be able to
enroll in a drug plan and take advantage of the new benefit. All
prescription drug plans will contract with long-term care pharmacies.
>
Ensure that dual
eligible beneficiaries who have both full Medicaid and Medicare benefits
are automatically enrolled in a drug plan if they fail to sign up by the
middle of December, so that they have no gap in coverage with the
transition to the Medicare benefit.
Coverage for Retirees
The new rules give employers and unions a menu of
flexible options enabling them to continue providing high-quality drug
coverage for their retirees at a lower cost. An employer whose coverage
is at least as good as or better than the Medicare benefit and whose
contribution to coverage is as good as or better than the Medicare
subsidy can receive a tax-free subsidy for continuing that coverage. The
rules also help employers supplement or "wrap around" the Medicare drug
benefit, so comprehensive coverage can be provided at a lower cost, just
as many employers currently supplement Part A and B benefits.
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Medicare Rights Center President
Expresses Mixed Response
Robert M. Hayes, president of the
Medicare Rights Center, released the following statement after
the final plan was announced on Friday.
We are encouraged that the Administration
recognizes the grave risk 6.4 million poor Americans face when
their prescription drug coverage under Medicaid ends on December
31, 2005. It is a train wreck waiting to happen.
We are dismayed that the regulations issued
today do little to avoid the humanitarian debacle that faces the
poorest and sickest Americans, many of whom will lose their
access to the medicines they need. The systems are not, and
will not be in place to maintain consistent drug coverage for
the most vulnerable Americans.
The Administrations steps to move up
enrollment of the poorest older and disabled Americans into
Medicare drug coverage are welcome but inadequate. They do not
address the reality: Medicaid must temporarily continue for
people whose Medicare drug plans cannot be verified at the time
they buy their medications. CMS must require Medicare drug
plans to offer open formularies or honor Medicaid program
formularies and pharmacy network agreements through 2006.
Otherwise, millions of Americans in great
need will face needless illness, suffering and a greater risk of
premature death. They will be among the men and women left
worse off by the 2003 Medicare legislation.
The 1,162 pages of regulations cover
hundreds of issues and require careful review. We are pleased
with some of the changes we have seen and disappointed by the
absence of others.
One point jumps out: this failure by the
Administration to address realistically the human misery that
faces poor Americans next January will threaten the health of
millions of men and women, and will haunt all people who
recognize the moral value of health care for our neighbors in
need.
Medicare Rights Center (MRC) claims
to be the largest independent source of health care information
and assistance in the United States for people with Medicare.
Founded in 1989, MRC helps older adults and people with
disabilities get good, affordable health care. |
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Employers
can also use their own customized prescription drug plan or Medicare
Advantage plan to provide comprehensive coverage. Finally, for the many
retirees in plans with little or no employer contribution, enrolling in
the Medicare Part D benefit allows them to lower their drug costs
because of the 75 percent subsidy it provides -- and employers can
provide financial assistance in this case as well, for example by paying
the Part B premium or supporting an account based arrangement to provide
tax-free payments for health care costs.
More Help for Beneficiaries Receiving State
Benefits
States will be able to enhance coverage they offer
because the new drug benefit will save states about $8 billion over the
next five years. States will only have to pay a portion of the drug
costs for "dual eligible" Medicare beneficiaries with Medicaid drug
coverage, based on their own prior Medicaid drug cost experience. States
with State Pharmacy Assistance Programs (SPAPs) will be able to provide
the same or better coverage for their beneficiaries at a lower cost per
beneficiary for the states, and states with Pharmacy Plus programs can
also wrap around the Medicare benefit to help lower their costs. States
will also be able to receive new assistance with the costs of drug
coverage for their retirees, just like other employers offering
qualified retiree drug coverage.
More Opportunities in Medicare Advantage Programs
Medicare Advantage will be strengthened to provide
lower-cost coverage and additional benefits to even more beneficiaries.
Those who choose a Medicare Advantage plan can get drug benefits as part
of their overall health plan, allowing the plans to better coordinate
beneficiaries' medical care and drug coverage.
The rules create a new regional Medicare Advantage
Preferred Provider Organizations (PPOs) contracting option as an
additional choice for Medicare beneficiaries beginning on Jan. 1, 2006.
A new competitive bidding system for paying Medicare Advantage plans is
also established. These changes provide important new options for
Medicare beneficiaries who lack comprehensive and inexpensive
supplemental coverage (for example, from Medicaid or an employer) that
provides extra benefits and lower out-of-pocket costs compared to the
traditional fee-for-service Medicare plan.
Recent studies indicate that
beneficiaries in a Medicare Advantage plan pay about $700 less a year in
out-of-pocket medical costs, and sicker beneficiaries may save as much
as $1,900.
Unlike the current Medicare Advantage program,
which features local plans that serve individual counties and groups of
counties, the new regional PPOs will serve 26 regions across the U.S.,
which include all rural areas. The regional maps were released on Dec.
6, 2004, and can be found at
http://www.cms.hhs.gov/medicarereform/mmaregions.
All regional PPO plans are required to offer the
same benefits as traditional fee-for-service Medicare with simplified
cost-sharing and new protections against catastrophic costs. They are
also expected to offer additional benefits not available in
fee-for-service Medicare.
Medicare is also implementing full risk adjustment
of its payments to all Medicare Advantage plans, moving from 50 percent
risk adjustment in 2005 to 75 percent in 2006 and 100 percent in 2007.
Consequently, the funding for coordinated-care plans in Medicare will be
increasingly concentrated on beneficiaries who have predictably high
health needs.
The new rule also provides even more assistance for
beneficiaries with special needs by supporting the creation of plans to
offer health care services to such beneficiaries, including those who
are dually eligible for Medicaid, those with severe or disabling chronic
conditions, and those who live in nursing homes and other long term care
institutions.
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