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Medicare Drug Program News
Average Monthly Cost of Basic Medicare Drug Plan to
Jump $3 in 2009, Says CMS
Jump to $28 per month based on trends in drug costs,
new catastrophic cost estimates
 Aug.
20, 2008 - The average monthly premium that senior citizens should
expect to pay for standard Medicare Part D coverage in 2009 will be $28,
which is about $3 higher than this year but 37 percent lower than was
projected back in 2003. As the drug program enters its fourth year, the
Centers for Medicare & Medicaid Services, says this projection is based
on plan bids that reflect nationwide price trends.
The $3 premium increase is due to general trends in
drug costs, the phase-out of a CMS demonstration project, and higher
plan estimates for catastrophic coverage based on prior experience,
according to a CMS news release issued last week.
The estimated average monthly premium for 2009 of
roughly $28 for basic coverage is far below the original estimate for
2009 of $44.12, which was made at the time the Medicare Prescription
Drug, Improvement, and Modernization Act (MMA) was enacted in 2003,
according to the CMS press statement.
Measured by enrollment, lower costs than
originally expected and persistently high satisfaction rates, the Part D
drug benefit program has in a short time become a stable, familiar, and
vital part of Medicare said CMS Acting Administrator Kerry Weems.
Of course, individual plans premiums and benefits
may change. Given their past record of making smart choices, I expect
beneficiaries will continue to compare their plan options in the
upcoming enrollment period based on cost, coverage and convenience.
Average plan bids have increased at roughly the
same rate as drug costs, said Paul Spitalnic, director of the Parts C
and D Actuarial Group in the Office of the Actuary at CMS.
The basic premiums paid by Part D enrollees cover
about one-fourth of the cost of the standard Part D drug benefit.
Enrollees with low incomes qualify for subsidies that typically cover
the full amount of these premiums.
CMS also says beneficiary satisfaction rates remain
high and program costs remain lower than originally expected.
For 2009, beneficiaries will continue to have
access to plans that offer enhanced coverage. While all Medicare
beneficiaries, no matter where they live, will continue to have access
to plans that offer gap coverage of generic drugs, the cost of such
enhanced coverage is paid by enrollees through additional premiums.
Eligible low-income enrollees receive coverage
during the coverage gap at minimal or no cost. In addition,
approximately 97 percent of beneficiaries enrolled in a stand-alone
prescription drug plan (PDP) will have access to other Medicare drug
plans that would cost them the same or less than their coverage in
2008.
The vast majority of PDP enrollees could thus avoid
any premium increase in 2009 by enrolling in a lower-cost stand alone
PDP in their region. Moreover, many beneficiaries have access to a
Medicare Advantage (MA) plan with lower prescription drug premiums.
The MA-PD premiums continue to be lower than PDP
premiums. On average, in 2008, the MA-PD premiums prior to rebates are
about $9 per month lower than those for PDPs. In 2009, they will
average an estimated $11 lower.
Many MA-PD plans keep premiums low by applying a
portion of their rebates to reduce their Part D premiums, in many cases
to zero, as well as by using care coordination and drug management
techniques, CMS says.
Under Part D, beneficiaries with low incomes can
receive valuable extra assistance with their drug plan premiums and
cost-sharing. Nearly 10 million beneficiaries are currently receiving
drug coverage for little or no cost through the Low-Income Subsidy (LIS)
benefit. The average value of the Part D benefit, premium subsidy, and
cost-sharing subsidy for low-income enrollees is estimated to be about
$3,900 in 2009.
Low-income beneficiaries who are determined to be
eligible to receive a full premium subsidy are randomly auto-enrolled in
a Part D plan that has a premium at or below the premium subsidy amount
if they do not choose a plan. As a result, these beneficiaries do not
have to pay any Part D premium.
In some cases, the premium for the plan in which an
LIS beneficiary is enrolled during 2008 may increase above the premium
subsidy amount in 2009. In such cases, if the beneficiary does not
affirmatively choose to stay in that plan, or choose another plan, the
beneficiary will be assigned by CMS to a new plan sponsor in their
coverage area effective January 1, 2009, where the beneficiary can
continue to receive prescription drug benefits at no cost.
The number of low income beneficiaries reassigned
to a new plan in this manner would have been significantly higher if CMS
had not issued a final rule this past April designed to reduce such
reassignments by revising the methodology for calculating the subsidy
amount.
In addition, eligible low-income beneficiaries are
not required to pay a late enrollment penalty. Finally, beneficiaries
that are auto-enrolled in a plan always remain free to switch to another
plan if they choose.
Beneficiary experience in Part D continues to be
good, with millions of people getting the prescription drugs they need,
said Weems. CMS will continue to provide up-to-date information about
their plan benefits at
www.medicare.gov and 1-800-MEDICARE (1-800-633-4227) and
beneficiaries will receive their annual Medicare & You 2009 handbook in
October.
In addition to average premiums for 2009, CMS has
announced: the 2009 national average monthly bid; the base beneficiary
premium; the regional low-income subsidy premium amounts for 2009; and
the 2009 Medicare Advantage regional preferred provider organization
benchmarks. These data can be found at:
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/RSD/list.asp
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AARP MedicareRx Saver raised its average premiums
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