Medicare Part D Premium for 2008 Shows Modest Increase to $25 for Drug Plans

Aug. 14, 2007 – The monthly premium senior citizens will pay in 2008 for Medicare Part D – the prescription drug program - will be approximately $25, according to a news release from the Centers for Medicare & Medicaid Services that was released yesterday. The releases points out this is “nearly 40 percent lower than originally projected” in 2003, when the program was presented, and lower than CMS projected earlier this year. But, it is an increase over this year, which CMS says is “due primarily to technical adjustments.”

Editor's Note: See complete Fact Sheet on price increase from CMS below this news report.

Drug spending jumped from $72 to $191 billion for all Americans not in confined care

May 18, 2007

Medicare Drug Program Now Covers 90 Percent of Senior Citizens

U. Michigan study says the poor as likely as the rich to be covered

Aug. 9, 2007

Best Bet to Find Drug Covered by Medicare Part D Formulary is Go Generic

Study finds 90% of generics widely covered, just 6% of brand-name

June 19, 2007

Medicare Payment Delays Driving Pharmacies Out of Business, They Say

Average 3 store closures per day in 2006, first year of drug program

June 14, 2007

Medicare Wastes Millions Assigning Low-Income Seniors to Costly Drug Plans

Consumer Unions says Medicare should seek ‘Best Value’ for 6 million seniors

May 17, 2007

Medicare Plan Prices of 10 Top Brand-Name Drugs Increased 6.8% Just Since December

Possible $17 billion in unanticipated prescription drugs costs for beneficiaries and taxpayers

May 14, 2007

AARP Starts Media Campaign Urging Lawmakers to Allow Negotiations for Medicare Drugs

New bill also introduced to do away with late enrollment penalty

March 26, 2007

Medicare Drug Benefit 'Financially Irresponsible' says U.S. Comptroller

Boomers retiring en masse will create a 'tsunami of spending'

March 7, 2007

Senior Citizens on a Rollercoaster with Medicare Drug Plan Pricing

Consumer Union finds over a quarter of sample increased drug cost after seniors were 'locked in'

March 2, 2007

Medicare Drug Program Helps to Slow Growth in Health Care Spending Again

Still, this year's $2.1 trillion spent by Americans will double in 10 years

Feb. 21, 2007

Where Senior Citizens Live Makes Difference in Medicare Drug Cost

Some seniors may pay thousands of dollars more for medicines than others buying same drugs in other states

January 10, 2007

Administration Says Medicare Drug Program Cost Drop Shows No Need to Negotiate on Drugs

Most antifraud complain reports by prescription drug plans are missing at CMS

January 8, 2007

Read the latest news
> Medicare
> Medicare Drug Program

> Senior Politics
> Today's Senior Headlines

The estimated actual average premium for 2008 for basic coverage is far below the original estimate for 2008 of $41, and the most recent estimate of $27. And, while the average expected premium for basic coverage in 2008 is higher than the actual average for 2007 (about $22), this is due primarily to technical adjustments required by law rather than increased bids.

“Average plan bids remain very stable and continue to be lower than our expectations,” said Paul Spitalnic, Director of the Parts C and D Actuarial Group in the Office of the Actuary at CMS.

CMS says the price is being held down primarily by strong competitive bidding by health and prescription drug plans and beneficiaries’ choices.

CMS anticipates that the actual average premium paid by beneficiaries for standard Part D coverage in 2008 will be roughly $25. This, points out CMS, is nearly 40 percent lower than originally projected when the benefit was established in 2003 and also lower than projected earlier this year.

“Competition and smart choices have been two important factors in holding down the cost of the Medicare drug benefit. The Part D program is serving beneficiaries at a far lower cost than originally expected,” said CMS Acting Deputy Administrator Herb B. Kuhn.

“Medicare drug benefit bids continue to be well below projections because of slower than expected growth in prescription drug costs generally, in part because of increased generic usage, effective plan negotiation, and strong competition.”

More Savings from Changing Plans

Approximately 87 percent of beneficiaries enrolled in a stand-alone prescription drug plan (PDP) will have access to Medicare drug plans that cost them the same or less than their coverage in 2007.

Thus, the majority of beneficiaries could avoid any premium increase in 2008 by enrolling in a lower-cost stand alone PDP in their region, says CMS.

Moreover, many beneficiaries have access to a Medicare Advantage plan with lower prescription drug premiums. It will be important for beneficiaries to compare their coverage options for 2008 based on overall cost, coverage, and convenience in order to select the plan that best meets their needs, stresses CMS.

MA-PD premiums continue to be lower than PDP premiums. On average, in 2007, the MA-PD premiums prior to rebates are about $7 lower than those for PDPs. In 2008, they will average $11 lower.

The lower MA-PD bids and premiums reflect the effects of aggressive competition as well as lower costs resulting from better care coordination and drug benefit management techniques. In practice, many MA-PD plans also apply a portion of their rebates from Parts A and B to reduce their Part D premiums, in many cases to zero.

“The fact that premiums are nearly 40 percent below the original projections indicates that we are indeed getting great value out of this program,” added Kuhn.

“And, when paired with the many new preventive benefits and this year’s national education tour to let people know about the importance of prevention, people on Medicare are living better, healthier lives, and saving money because of this new prescription drug benefit.” He added that, “the information contained in the new bids for 2008 is likely to further reduce the projected cost of the Part D program beyond 2008.”

Under Part D, beneficiaries with low incomes can receive valuable extra assistance with their drug plan premiums and cost-sharing.

Nearly 9.5 million beneficiaries are currently receiving extra help through the Part D program. To avoid a premium for these low income beneficiaries and to avoid any gap in coverage, about 1 in 6 of these beneficiaries will be assigned by CMS to a new plan sponsor in their coverage area on a random basis (effective January 1, 2008).

These beneficiaries will be able to switch to another plan if they choose. The average value of the Part D benefit, premium subsidy, and cost-sharing subsidy for low-income enrollees is estimated to be about $3,660 per year in 2008 ($3,353 in 2007).

“By any measure, 2007 has been a good year for Medicare’s Part D prescription drug benefit, and 2008 is shaping up to be yet another good year for the program. Millions of Medicare beneficiaries now have coverage through Part D and the vast majority are very satisfied with their benefits. Furthermore, the program is 30 percent less expensive overall for the first 10 years than originally estimated,” said Kuhn.

“To build on this success, we will continue to work with beneficiaries through our local grassroots efforts, which include counseling beneficiaries so that they can make informed choices about the plans that will best meet their needs in 2008.”

In addition to average premiums, CMS has announced: the 2008 national average monthly bid; the base beneficiary premium; the regional low-income subsidy premium amounts for 2008; and the 2008 Medicare Advantage regional PPO benchmarks. These data can be found at: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/RSD/list.asp?listpage=3

Daily Report by KaiserNetwork.org

Daily Reports

KaiserNetwork.org

Medicare Drug Program Premiums go to $25 But Savings Possible by Switching Plans

GAO finds fault with CMS audits of Medicare Advantage plans

CMS on Monday announced that average monthly premiums for the Medicare drug benefit will increase to $25 in 2008, up from $22 in 2007, the Baltimore Sun reports (Baltimore Sun, 8/14). About 87% of beneficiaries will have access to prescription drug coverage at the same cost or less in 2008 than in 2007, according to CMS (CQ HealthBeat, 8/13).

Beneficiaries can access prescription drugs with premiums at the 2007 level by enrolling in a different drug benefit plan during the open enrollment period, which begins Nov. 15 (AP/Detroit Free Press, 8/13).

Beneficiaries enrolled in private Medicare Advantage plans will see an increase in savings compared with beneficiaries in stand-alone plans in 2008, according to CMS. Beneficiaries in MA plans in 2007 paid $7 less each month for drug coverage premiums than beneficiaries in stand-alone plans; in 2008, beneficiaries in MA plans will pay $11 less for drug coverage (CQ HealthBeat, 8/13).

The increase in premiums primarily is a result of technical adjustments required by law, not because insurers estimated it will cost more to provide drug coverage for beneficiaries (AP/Detroit Free Press, 8/13). Herb Kuhn, acting deputy administrator of CMS, said that the monthly premiums are able to stay below $41 -- the monthly premium predicted in 2003 when the program was created -- because of "slower-than-expected growth in prescription drug costs generally, in part because of increased generic usage, effective plan negotiation and strong competition" (CQ HealthBeat, 8/13).

GAO Report

In other Medicare news, a Government Accountability Office report finds that CMS audits of MA plans -- intended to ensure the plans offer the proper amount of benefits -- are too few in number and take too long to occur, CQ HealthBeat reports.

CMS is required each year to audit one-third of the contract bids filed by managed care companies seeking to offer MA plans. The bids outline which benefits the plans will offer to beneficiaries and estimate how much the benefits will cost.

The GAO report found that the percentage of bids audited ranged between 18.6% and 23.6% from 2001 to 2005. In 2006, CMS audited 13.9% of bids, when the number of participating MA plans increased sharply, according to the report.

GAO also found that CMS "does not plan to complete the financial reviews until almost three years after the bid submission date each contract year," which "will affect its ability to address deficiencies in a timely manner." When too few audits are conducted or when audits are conducted years later, the "intended oversight is not achieved and opportunities to determine if organizations have reasonably estimated the costs to provide benefits to Medicare enrollees are lost," according to the report.

In response, CMS said it would create final plans that address how to meet the one-third audit requirement and how to deal with problems uncovered during audits prior to approving the following year's bid. CMS also said it will include contract language stating its intentions to pursue financial recoveries or to seek legislative authority to do so if necessary, which GAO encouraged in its report (Reichard, CQ HealthBeat, 8/13).

"Reprinted with permission from kaisernetwork.org You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2006 Advisory Board Company and Kaiser Family Foundation. All rights reserved.”

Fact Sheet Issued Aug. 13, 2007 by the Centers for Medicare & Medicaid Services

Strong Competition and Beneficiary Choices Contribute to Medicare Drug Coverage with Lower Costs than Predicted

Part D Overview

The vast majority of all Medicare beneficiaries, including over 10 million low-income beneficiaries, are receiving comprehensive prescription drug coverage through Medicare Part D, employer-sponsored retiree health plans or other creditable coverage such as the VA, TRICARE, or FEHBP (January 2007 press release).

The new drug benefit created an enormous challenge and a great opportunity. The promise is being fulfilled with approximately 100 million Part D prescriptions being filled every month. As a further sign of success, the estimated average 2008 monthly plan premium for standard coverage is nearly 40 percent lower than originally estimated.

Five separate surveys show that more than 75 percent of beneficiaries – and several polls report even higher totals – are satisfied with the program.

In addition to beneficiary participation and satisfaction, the program has also excelled in beneficiary savings and is operating at a significantly lower cost to taxpayers than originally estimated.

Beneficiaries today are saving an average of $1,200 a year versus those without coverage.

Moreover, CMS actuaries estimated this past January that payments to Part D plans are projected to be $113 billion lower over the next ten years than estimated the previous year, a reduction of 10 percent.

Importantly, of the $113 billion reduction in cost, $96 billion is a direct result of competition and significantly lower Part D plan bids in 2007.

Part D costs and premiums continue to be well below projections because of slower than expected growth in prescription drug costs generally, effective plan negotiation of discounts and rebates, and strong competition among plans.

The program is 30 percent less expensive overall for the first 10 years than originally estimated. The impact of this years bid process will be reflected in the President’s budget for 2009

Part D Open Enrollment Period – 2006 and 2007

Part D’s second open-enrollment period, which ran from November 15 to December 31, 2006 for the 2007 plan year, was preceded by a broad local and national outreach campaign.

In addition to helping new enrollees select a plan, the campaign was designed to encourage beneficiaries to compare their 2006 plans with 2007 plan options in order to make a confident decision in their health and drug coverage plan selection. This effort included 12,700 events coordinated with 40,000 partners in hundreds of cities across the nation.

The 2008 open-enrollment period (Part D’s third) will run from November 15 to December 31, 2007.

CMS will continue its strong outreach and education efforts to ensure that beneficiaries make well informed decisions about their coverage needs in 2008.

The strong efforts to get beneficiaries to “prepare and compare” during the 2006 open-enrollment period paid off. CMS tracking surveys conducted earlier this year indicate that 85 percent of seniors were aware of the 2006 open-enrollment period and over 50 percent reviewed their current coverage.

Among the 600 seniors surveyed, 34 percent reported comparing plans, and over half of these seniors evaluated premiums, deductible or co-pays, and coverage—that is, their comparisons appeared to be thorough.

The survey further noted that while only 6 percent reported switching plans during the open-enrollment period, 2 out of 3 switchers reported reviewing their coverage and comparing plans, and 4 out of 5 switchers were satisfied with the process.

Overall, during the 45-day open-enrollment period, there were about 900,000 enrollments, including 350,000 that were done online. In addition to strong participation during the enrollment periods, the implementation of the Part D program, with hundreds of thousands of newly enrolled beneficiaries going to pharmacies for the first time, went smoothly in January 2007.

Even before the New Year began, CMS officials worked with pharmacies and drug plans to closely monitor the program as it entered its second year. Very few of the problems people encountered at the program’s implementation in January 2006 have been experienced this year. We continue to refine the enrollment process, improve our partner and online tools, and work with pharmacists to discover challenges early and have them resolved.

Low-Income Subsidy Beneficiary Outreach

Over 10 million low-income beneficiaries are getting comprehensive drug coverage for little or no cost, including almost 9.5 million who are enrolled in Medicare Part D. CMS continues to make additional efforts to encourage enrollment among the hard-to-reach population eligible for the low-income subsidy, which in 2008 is estimated to be worth $3,660 ($3,353 in 2007).

In January, CMS waived the 2007 late-enrollment penalty for low-income beneficiaries who are traditionally harder to reach.

CMS is committed to ensuring not only that everyone who might qualify applies for extra help, but also that continuing eligibility determinations for those beneficiaries who currently qualify (“re-deeming”) are conducted promptly and fairly.

The next round of re-deeming will occur this fall. In 2006, during the first round of re-deeming, about 630,000 beneficiaries lost their deemed status, and nearly 60 percent subsequently regained LIS eligibility – including those who regained their deemed status and those who reapplied and qualified for LIS with SSA.

Many people with limited income and resources qualify for these big savings and yet may not be aware of the LIS program. In advance of the upcoming open-enrollment period, this fall, CMS will continue to work with our expansive grassroots network to reach out to beneficiaries with no drug coverage, particularly those who may be eligible for extra help.

CMS has worked hard over the past year to update its files on people who might be eligible for Part D and the low-income subsidy. CMS has been able to pinpoint Medicare beneficiaries in pockets of need, directly down to the ZIP-code level.

CMS has also been working with our partners to identify best practices and develop new tools to make outreach more effective to help beneficiaries with low literacy and limited English skills understand how to apply for extra help. All of the data and materials are online at the CMS website at www.cms.gov.

2008 Part D Premiums

Due in large part to strong competitive bidding by health and prescription drug plans and beneficiaries’ choices, the Centers for Medicare & Medicaid Services (CMS) anticipates that the actual average premium paid by beneficiaries for standard Part D coverage in 2008 will be roughly $25.

This is nearly 40 percent lower than originally projected when the benefit was established in 2003 and also lower than projected earlier this year.

Approximately 87 percent of beneficiaries enrolled in a stand-alone prescription drug plan (PDP) will have access to Medicare drug plans that cost them the same or less than their coverage in 2007. Thus, the great majority of such beneficiaries could avoid any premium increase in 2008 by enrolling in a lower-cost plan in their region.

Moreover, many beneficiaries have access to a Medicare Advantage plan with lower prescription drug premiums.

It will be important for beneficiaries to compare their coverage options for 2008 based on overall cost, coverage, and convenience in order to select the plan that best meets their needs.

While competitive bids for both PDPs and MA-PDs have been lower than independent analysts projected at the outset of Part D, bids are notably lower for Medicare Advantage plans.

On average, in 2007, the MA-PD premiums prior to rebates are $7 lower than stand-alone prescription drug plans. In 2008, they will be $11 lower.

The lower bids reflect the effects of aggressive competition as well as lower costs resulting from better care coordination and drug benefit management techniques.

The increase in the average Part D premium for basic coverage, from about $22 in 2007 to roughly $25 in 2008, is due to certain technical factors in the law that govern the allocation of plan costs between Medicare and beneficiaries.

Among the most important of these factors is the normalization of the risk-adjustment model. This model allows for higher payments to plans that have sicker enrollees and lower payments to plans that have healthier enrollees.

Risk adjustment relies on assigning a risk score to every Medicare beneficiary and must be normalized such that the average risk score is 1.00. If risk scores average greater than 1.00, then Medicare will pay more than it should for an average beneficiary.

Similarly, if risk scores are on average less than 1.00, Medicare will pay less than it should. The great majority of enrollees will have plans available in their region with premiums below what they are currently paying.*

For 2006 and 2007, the Part D risk scores were not normalized because of data limitations, resulting in average risk scores greater than 1.00 and higher Medicare payments.

For 2008, the normalization process ensures that the average projected risk score is 1.00 and that Medicare payments will be based on a beneficiary with average health status.

The increase in the average premium for 2008 is also affected by the continued transition to the statutory method of determining the national weighted average bid.

Again due to data limitations, it was not possible to calculate the national average bid in 2006 using actual plan enrollments as weights. Now that such enrollments are known, the computation is possible, and a transition to this method is in process.

With normalization of the risk-adjustment process and the transition to enrollment weights for the national average bid, the result is a somewhat faster increase in premiums and a somewhat slower growth in the Medicare subsidy.

As noted above, the majority of beneficiaries could avoid any premium increase in 2008 by enrolling in a lower-cost plan in their region.

In addition to releasing the premium information discussed above, CMS is announcing the 2008 “national average monthly bid,” which is $80.52; and the “base beneficiary premium,” which is $27.93 per month.

These amounts are used to determine the Medicare premium subsidy to Part D drug plans, which will be $52.59 per month in 2008, down slightly from $53.08 in 2007. The regional low-income subsidy payment amounts for 2008 and other data can be found at: http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/RSD/list.asp?listpage=31

*All of the premium averages shown are for basic coverage, exclude the supplemental premiums payable for additional drug coverage, and are calculated before the application of MA rebates that reduce MA-PD premiums.

Nursing Home Abuse, Medical Malpractice? Contact a lawyer. click here

Click to More Senior News on the Front Page

Published by New Tech Media - www.NewTechMedia.com

Other New Tech Media sites include CaroleSutherland.com, BethJanicek.com, www.DeweySquare.com, SASeniors.com, DrugDanger.com, etc.

E-mail - editor@SeniorJournal.com