Medicare Part D Struggles Continue

Although CMS has resisted calls to declare a general amnesty for beneficiaries who missed the May 15 enrollment deadline for Medicare Part D drug coverage, the agency is allowing a small group of seniors to sign up before the end of the year without penalty. Meanwhile, some federal lawmakers are attempting to address other problems faced by those who already have signed up for the prescription drug program.

“The program is available for seniors and people with a disability who qualify for the extra help for their Medicare prescription drug coverage or who live in an area affected by Hurricane Katrina," said a June 15 CMS fact sheet about the sign-up extension. "People who qualify for extra help account for the vast majority of Medicare beneficiaries who have not yet enrolled in Medicare Part D or do not have other ‘creditable’ coverage.”

CMS released numbers on June 14 showing that 38.2 million Medicare beneficiaries had some form of drug coverage, 10.4 million of them through the Part D benefit. Another 6 million are receiving coverage through a Medicare Advantage plan. The rest receive drugs through retiree benefits or other third-party coverage. That leaves 4.4 million beneficiaries without coverage; 3.2 million of those are low-income beneficiaries, who have been the hardest to reach.

“The challenge has been met, and today, for over 38 million Americans -- 90 percent of people with Medicare -- the promise is being fulfilled, day in and day out, prescription by prescription. In fact, more than 3.5 million Part D prescriptions are being filled each day, and the cost of monthly plan premiums is nearly 40 percent lower than original estimates,” said HHS Secretary Mike Leavitt in the June 14 news release.

What those numbers don’t reflect are the difficulties patients and their physicians have had to face in navigating the program, including a dizzying array of plans to choose from and often complex and confusing drug formularies.

Physicians have worked hard to switch patients to regimens that match the preferred drug lists of new Part D plans, and they and their patients soon will have to deal with the program's so-called doughnut hole, said Jerry Avorn, M.D., a professor of medicine at Harvard Medical School and chief of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women's Hospital in Boston.

When patients start reaching that doughnut hole, the gap in coverage between $2,250 and $5,100 that is built into Medicare Part D, “this is going to come back to haunt physicians,” said Avorn in an interview.

House Democrats recently announced a proposal to modify the program to require CMS to negotiate lower drug prices and use the potential savings to fill the doughnut hole.

The proposal would make prescription drugs more affordable, provide seniors with the option of a plan administered by Medicare, and restrict the ability of drug plans to increase copayments and create burdensome bureaucracy, according to a statement by House Minority Leader Nancy Pelosi, D-Calif.

Several recent analyses suggest that the Medicare Part D program is failing to curb rising drug prices and that when seniors reach the doughnut hole they will paying more for drugs.

AARP’s Public Policy Institute, which regularly tracks quarterly changes in drug prices, reported last month (PDF file: 15 pages / 144 KB. More about PDFs.) that the average price for brand-name drugs rose 6.2 percent between April 2005 and March 2006, compared with a 3.5 percent rise in the general inflation rate during that period.

Families USA also released a June report, “Big Dollars, Little Sense: Rising Medicare Prescription Drug Prices,” (PDF file: 32 pages / 184 KB. More about PDFs.) that shows drug prices within the Part D benefit have risen in line with the overall rise in drug prices. In addition, the report found that even the best discounts offered by Medicare plans could not compete with the lower prices offered to the VA system.

“Part D plans are doing essentially nothing to contain the fast-rising prices by the drug industry,” Families USA President Ron Pollack said in a June 20 press release.

Speaking to lawmakers last month, CMS Administrator Mark McClellan, M.D., Ph.D., said that the Part D program has been a fiscal success story.

“The broad participation of beneficiaries with relatively low drug costs, coupled with the overwhelming popularity of plans with low premiums and generally slower growth in drug costs, has lowered costs for Medicare,” he testified (PDF file: 18 pages / 144 KB. More about PDFs.) before the House Ways and Means Committee.

"Competition is working," said McClellan, but he added that CMS will continue to provide strict oversight to ensure that the industry remains in compliance with the rules of the program.