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Medicare Drug Program News
Medicare Drug Program: Windfall in Dual Eligibles
for Pharmaceuticals
Senate bill
will eliminate monthly premiums for
those in doughnut hole
July 18, 2006 The pharmaceutical industry has
found a windfall in the transfer of drug coverage for the dual eligibles
(qualified for Medicare and Medicaid) from the state Medicaid programs
to the Medicare
prescription drug program, while in the Senate a bill has been
offered to eliminate monthly premiums for senior citizens who fall into
the "doughnut hole" in the drug program. The Kaiser Daily Medicare
Report looks at these events and takes a closer look at the Commonwealth
survey that found "health experts" saying Part D is beneficial buts
needs changes.
 Pharmaceutical
Companies Seeing 'Windfall' From Transfer of Dual Eligibles to Medicare
Rx Benefit
The
New York Times on Tuesday
examined how "the pharmaceutical industry is beginning to reap a
windfall" from the transfer of drug coverage for about 6.5 million dual
eligibles from state Medicaid programs to the Medicare prescription drug
benefit.
Drug coverage for dual eligibles -- beneficiaries
who are eligible for both Medicare and Medicaid -- was transferred on
January 1. According to the Times, "The windfall for the drug
makers was made possible by a provision of the 2003 Medicare law that
exempts Part D drugs from 'best price' rebates that the drug makers have
been required to give to the state Medicaid programs since 1991."
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Under the rebate system, states pay no more than
the lowest drug price pharmaceutical companies offer to any private
insurer. Because the 2003 Medicare law prohibits the federal government
from negotiating drug prices under the drug benefit, many pharmaceutical
industry experts expect that drug costs under the benefit will be
higher, the Times reports. However, "[n]obody yet knows what the
total drug bill will be for [dual eligibles] under Part D, beyond the
assumption by many experts that it will be higher," according to the
Times.
Stephen Schondelmeyer, a professor of
pharmaceutical economics at the
University of Minnesota, said
the federal government and the states previously paid about $14 billion
annually for prescription drugs for dual eligibles. Without the rebates,
the annual cost would have been about $17.5 billion, about 25% higher,
Schondelmeyer said (Freudenheim, New York Times, 7/18).
Doughnut Hole
In related news, Senate Democratic Policy Committee Chair Byron Dorgan
(D-N.D.) and Sen. Bill Nelson (D-Fla.) on Monday proposed a bill (S
3647) that would eliminate Medicare beneficiaries' monthly
premiums under the drug benefit during the doughnut hole coverage gap.
Under the doughnut hole provision, beneficiaries
are responsible for 100% of total prescription drug costs between $2,250
and $5,100. Dorgan and Nelson presented the bill at a forum sponsored by
the policy committee.
Several beneficiaries who spoke at the forum said
they have reached the doughnut hole and are experiencing problems
affording medications. An estimated seven million to 10 million
beneficiaries are expected to reach the doughnut hole this year, Gerard
Anderson, a professor of health policy management and international
health at the
Johns Hopkins University School of Public
Health, said (Estes,
CQ HealthBeat, 7/17).
A June report by
PricewaterhouseCoopers shows
that 3.4 million beneficiaries will reach the doughnut hole this year (Kaiser
Daily Health Policy Report, 7/13).
Survey
Most health care industry officials and policy experts believe that the
Medicare prescription drug benefit is helpful to beneficiaries but that
changes to the program are needed, according to the results of an online
survey conducted by
Harris Interactive for the
Commonwealth Fund, CQ
HealthBeat reports. (See chart below story.)
The survey was sent to 1,246 individuals who work
in health care policy, business, academia, health care delivery and the
insurance industry; 180 individuals responded.
According to CQ HealthBeat "the survey
overwhelmingly shows support" for the drug benefit, but "the majority of
respondents said changes should be made to the benefit."
Ninety-five percent of respondents in the business,
insurance and health care industries support the benefit, while 56% to
67% of respondents in academia, research, health care delivery and
similar fields think the drug benefit is good for beneficiaries, the
survey finds.
Meanwhile, 51% of all respondents said the May 15
deadline for enrollment should have been extended and the financial
penalty for late-enrollment removed. Only 8% said the financial penalty
for late enrollment should remain in place. Thirty-nine percent of
respondents said that the deadline should have remained but that the
penalty should be removed (Abruzzese, CQ HealthBeat, 7/14).
>> The survey is available
online.
ASSESSMENT OF
MEDICARE PART D
Prescription drug
coverage under Medicare Part D became available to all beneficiaries for
the first time beginning on January 1, 2006 and beneficiaries were
required to sign up by May 15. Now that the first-ever Part D enrollment
period has ended, how much do you agree or disagree with the following
statements?
Base: All
Respondents
Note: Highlight
denotes significant difference
|
Agree (net) |
Total
(N=180) |
Academic/
Research Inst.
(n=98) |
Health Care Delivery
(n=43) |
Business/
Insurance/
Other Health
Care Industry (n=41) |
Other
(n=27) |
|
|
% |
% |
% |
% |
% |
|
Enacting Medicare Part D was, on
balance, good for beneficiaries. |
68 |
59 |
67 |
95 |
56 |
|
The current benefit structure,
which includes a coverage gap (or doughnut hole), during which
beneficiaries are fully responsible for covered drug costs in
excess of an initial threshold until they reach a maximum of
$3,600 in out-of pocket costs, will, on balance, help
beneficiaries who are most vulnerable to high drug costs. |
36 |
17 |
30 |
59 |
15 |
|
Making Medicare drug coverage
available through private plans only was, on balance, good for
beneficiaries. |
30 |
34 |
28 |
54 |
22 |
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