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Medicare Drug Program
Medicare Rules Drug Plans Cannot Change Formularies
Mid-Stream
April 27, 2006 Senior citizen consumer advocates
seemed to have won at least one battle to make changes in the Medicare
prescription drug program. Under the program, insurance companies had
the right to change the drugs they offer (formulary list) at any time.
Under the new rule, however, they must stay the same for a full contract
year. But, a new storm arose in a lawsuit charging
HHS
Secretary Mike Leavitt failed to ensure that "dual eligibles," whose
drug coverage was transferred from Medicaid to Medicare on Jan. 1, had
access to medications under the drug benefit. It's all covered in the
daily report from KaiserNet.org.
 Medicare Says Beneficiaries Can Continue To
Receive Coverage for Prescriptions Insurers Drop from Formularies
The Bush administration on Wednesday announced a
new policy that requires insurers sponsoring Medicare drug plans allow
enrolled beneficiaries to continue receiving coverage for medications,
even if the company drops the drugs from its formulary, the
New York Times reports (Pear,
New York Times, 4/27).
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Medicare Drug Program |
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Under the previous policy, insurers could change
formularies as often as they liked, as long as
CMS
approved the changes. The new policy comes in response to concerns that
beneficiaries might select a drug plan because it covers the medications
they are taking "only to see their preferred drugs dropped," the
Inquirer reports
(Sullivan,
Philadelphia Inquirer, 4/27).
Some congressional Democrats and Republicans had
said that it was not fair to allow drug companies to change their
formularies "at will" when beneficiaries are permitted to change plans
only once annually, according to the
Times.
In a memorandum being sent to insurers, the Bush
administration says, "Medicare beneficiaries select Part D plans, in
part, based on the formulary that is marketed during annual open
enrollment and therefore have a legitimate expectation that they will
have continuing access to coverage of the Part D drugs they are using
throughout the plan year."
New Policy Details
The new policy says, "No beneficiaries will be subject to a
discontinuation or reduction in coverage of the drugs they are currently
using." It says an insurer can remove a drug from its formulary,
increase copayments for a drug or impose new coverage restrictions "only
if enrollees currently taking the affected drug are exempt from the
formulary change for the remainder of the plan year." The policy allows
some exceptions.
For example, an insurer could remove a drug from
its formulary if new research shows the drug was unsafe or if a new
generic equivalent becomes available, according to the
Times (New
York Times, 4/27).
It is unclear how, if at all, the policy will
affect coverage changes in future years, the
Philadelphia Inquirer
reports. The policy change comes fewer than three weeks before the May
15 deadline for enrolling in the drug benefit without incurring a
financial penalty (Philadelphia
Inquirer, 4/27).
Comments
CMS Administrator Mark McClellan said, "The stability of drug
formularies is extremely important for many of our beneficiaries" (New
York Times, 4/27). CMS spokesperson Peter Ashkenaz said
the agency "looked at what would be in the best interest of
beneficiaries and that is allowing them to have continued access to
drugs" (Philadelphia Inquirer,
4/27).
Karen Ignagni, president and CEO of
America's Health
Insurance Plans, said AHIP supports the policy, even though
"it does not reflect common practice in the private sector." Ignagni
said the policy "will have a financial impact" on insurers, but she
added that they will "need to balance that with the goal of providing
continuity of drug coverage and peace of mind to beneficiaries" (New
York Times, 4/27).
Pam Walz, director of the Elderly Law Project at
Community Legal
Services, said, "This is certainly good news. It'll be a
relief to Medicare beneficiaries."
Richard Stefanacci, executive director of the
Health Policy Institute at the
University of the
Sciences, said, "This is probably more of a political move,
because CMS is gearing up for the final push before the deadline. It's
more to say, 'Look what we are doing to safeguard beneficiaries'" (Philadelphia
Inquirer, 4/27).
Lawsuit
In related Medicare news, a group of advocacy organizations and Medicare
beneficiaries on Wednesday filed a lawsuit in U.S. District Court in San
Francisco alleging that
HHS
Secretary Mike Leavitt failed to ensure that dual eligibles --
individuals eligible for both Medicare and Medicaid whose drug coverage
was transferred from Medicaid to Medicare on Jan. 1 -- had access to
medications under the drug benefit, the
San Francisco Chronicle reports (Colliver/Sarkar,
San Francisco Chronicle,
4/27).
The suit alleges that Leavitt also did not do
enough to ensure that low-income beneficiaries were able to enroll in
the drug benefit or that insurers were properly notified of those who
were enrolled (AP/Baltimore
Sun, 4/27). The plaintiffs include three beneficiaries
and two advocacy groups (Lin,
Los Angeles Times, 4/27).
Jeanne Finberg, a plaintiffs attorney in the case,
said, "We think hundreds of thousand of people's health may be
endangered." Ashkenaz said the problems alleged in the suit have been
resolved, adding, "From everything we've seen, those problems are in the
past" (AP/Baltimore Sun,
4/27).
Coverage Gap
The
AP/Long Island
Newsday on Thursday examined how some beneficiaries
who take medications for cancer or chronic conditions have reached the
so-called "doughnut hole" -- the gap in coverage under which
beneficiaries are required to pay for 100% of drug costs between $2,250
and $5,100.
Beyond $5,100, Medicare will cover 95% of drug
costs. An estimated 6.9 million beneficiaries will experience a gap in
coverage at some point in 2006, according to
research
from the
Kaiser Family
Foundation.
McClellan has said that many beneficiaries could
avoid the coverage gap by switching from brand-name to generic or other
lower-cost medications. Analysts say most beneficiaries expected to be
affected by the coverage gap likely will not reach it until fall (Freking,
AP/Long Island Newsday,
4/27).
Additional Coverage
USA Today on
Thursday published two articles examining issues related to the drug
benefit. Summaries appear below.
● Drug costs: The article examined recent surveys
that find that out-of-pocket drug costs have increased under the drug
benefit for about one in five beneficiaries. A recent
survey by
the Kaiser Family Foundation finds that 55% of enrolled beneficiaries
say they will save money under the drug benefit, but 19% believe they
will spend more and another 19% think they will spend about the same as
before the program. A second survey by KRC Research for the Medicare Rx
Education Network finds that 59% of enrolled beneficiaries are saving
money, while 23% are not. The surveys "confirm what had been predicted
about the program ... : There are millions for whom the plan is
increasing drug costs" (Wolf,
USA Today, 4/27).
● Low-income beneficiaries: The article examined
the "people that Medicare's new prescription drug program has hurt,
rather than helped."
USA Today reports that most beneficiaries have saved
money under the drug benefit, "[b]ut for others, perhaps about 20%, the
much-heralded program has meant higher costs, and in some cases greater
pain and more worry." The problem particularly affects low-income
beneficiaries taking multiple medications for chronic conditions,
USA Today reports
(Wolf/Appleby, USA Today,
4/27).
"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.
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