Volume 3  Number 1  January 25, 2006
Second Opinions

The Medicare Drug Benefit: An "Unnatural" Disaster

Part D, the new Medicare Prescription Drug Improvement and Modernization Act (MMA) became law on Jan. 1, 2006. When this plan went into effect it became more than a baffling fact of life for 43 million Medicare beneficiaries, their health plans, physicians, and pharmacists. Among 6.4 million "dually eligible" Medicare-Medicaid recipients, it became a nightmare. These beneficiaries, poor people who should have been randomly assigned to a private drug plan, became victims of computer glitches as names were dropped out of the system, the result of bureaucratic snags and data maldistribution. For hundreds of thousands of these beneficiaries, unable to obtain medications promised by Medicare, the Administration was forced to order insurers to provide a 30-day supply of drugs previously taken. According to the New York Times, the action came after twenty states declared public health emergencies, and announced they would pay for prescriptions that should have been covered by the federal Medicare program.

Republicans have joined Democrats in charging that the federal government botched the introduction of the prescription drug program. Governor Time Pawlenty of Minnesota, a Republican, said, "…the new federal program is too complicated for many people to understand, and (its) implementation…by the federal government has been awful." Two weeks ago he signed an executive order making the state a "payer of last resort." The Senate Democratic leader, Harry Reid of Nevada, said the mismanagement of the program had "devastating consequences for seniors." Other leaders of both parties joined in criticism as it became clear that the problems of an ill-conceived drug plan would prove to emulate the Katrina disaster in bringing serious political problems to Washington. When the Health and Human Services Secretary, Michael Leavitt, announced to the media last month that he had helped his mother enroll, it was no surprise for anyone who follows the federal legislative process, known for its endless political compromise and sellouts.

The Good-Bad News

Between Nov.15, 2005 and May 15, 2006, Medicare-eligible patients will be able to sign up for one of several prescription-drug plans offered in their states. Two varieties of plans are available: fee-for-service Medicare, and plans associated with a HMO's or preferred provider organizations (PPOs). Most states will have roughly 45-60 options offered by 15-20 different sponsors, all with different premiums, deductibles, and co-payments, coverage gaps, different formularies (lists of covered drugs), pharmacy networks, and geographic coverage.

Reports are now circulating that some indigent patients, are being hospitalized after stopping medication because they could not afford new co-payment requirements enacted by specific health plans. Deaths can and probably will occur among certain low income beneficiaries. Adding to a sense of urgency for some patients are penalties for late enrollment. Beneficiaries who do not sign up for a drug plan by May15, 2006 will have future premiums increased by 1% for each month of delay.

Further confusion involves drug classification. All plans have a list of covered drugs, the formulary, that may be classified according to various therapeutic categories and cost, whether the drug is generic, preferred brand name, and "nonpreferred" brand name, some of which will require prior authorization, or limits on number of pills. The bad news is that plans are not required to have more than two drugs in any treatment category, and plans can change their formularies monthly, whereas most beneficiaries will be locked into their drug plan for the year. As a result, some patients will be forced to switch to alternative drugs midyear or else pay more for the privilege of maintaining their treatment status. Furthermore, some important drug classes used widely in psychiatry, the benzodiazepines, and some opiates used in treatment of chronic pain are not covered.

Premiums will average $33 per month nationwide, but most states will have at least one plan that charges less than $20 per month. Premiums are expected to cover about 25% of the standard drug benefit, with the government contributing the rest. The index or model plan entails a $250 deductible, followed by 75% coverage for the next $2,000 in total drug costs followed by the gap where patients pay the next $2850 in drug costs. Once the patient has spent $3,600 during the calendar year, the model plan should cover 95% of any further prescription drug costs. This outrageous "donut hole" provision has the double effect of amplifying the confusion and cutting coverage for the sickest patients, those requiring the most prescription drugs. It is estimated that the average physician might require more than an hour to analyze drug benefits and advise a single patient. Often the pharmacist is the key here, but overwhelmingly, the system is flawed in its complexity, despite the good features.

Help is Available

Even the government acknowledges that selecting a plan is daunting for those without access to its Internet help site. That's a big hurdle, because estimated computer use among households of those over 65 is only 35%.

Still, the official Medicare site remains one of the best Internet sites for patients and physicians. Here, Landscape of Local Plans lists all plans available by state and county, and provides vital information on cost (premiums, deductibles and payments), comparison of formularies (how and what drugs are covered), convenience, such as pharmacy and mail-order options, etc. Local Information can be obtained from this website , 1-800-722-1213, or 1-800-MEDICARE. Another useful site is maintained by the AARP.

For financial help: Contact the social security Administration. An application is required. Other support is available from The National Council on Aging.

Media Comment on the New Drug Plan

It comes as no surprise that the print and broadcast media are saturated with news, editorial comment, and criticism about the new drug plan, from TV, Fox News, CNN, to hundreds of local papers to the big dailies, e.g. The New York Times, USA Today, UPI, etc. A scathing series of articles is appearing in the Los Angeles Times. In the lead article (abstract free, full article at a charge) appearing Jan. 19, Michael Hiltzik accuses the Administration of fraud in selling the drug program to Congress in 2003 by estimating its cost at less that $400 billion over 10 years when scarcely a month after its enactment, the White House issued a new estimate: $535 billion. Hiltzik continues "...Richard Foster, Medicare's chief actuary, had known of the higher estimate — but had been told he'd be fired if he warned Congress before the vote. (The current estimate is $700 billion.) As written, the legislation complied with a drug industry demand that Medicare be prohibited from negotiating with manufacturers for lower drug prices. Among those helping the industry...was Rep. Billy Tauzin (R-Louisiana), whose committee on energy and commerce oversaw Medicare...Tauzin soon quit Congress to become president of the Pharmaceutical Research and Manufacturers of America — Big Pharma's Washington lobbying group."

According to a Medicare spokesman, Peter Ashkenaz, enrollment numbers indicate that over half the eligible beneficiaries, about 24 million people are now receiving Part D drug coverage. He added that "the biggest modification of Medicare in its 40-year history was bound to encounter a bump or two...and millions of beneficiaries are getting their drugs just as easily as before." He also noted that the new system does have a built-in "safety net."

(Full disclosure: My family has not yet decided whether to enroll in the new plan.)

Martin F. Sturman, MD, FACP

Copyright 2006, Mathemedics, Inc.

EasyDiagnosis is an automated online subscription service that analyses existing medical symptoms and predicts likely causes and conditions. Click here to find out more about this unique service and click here to subscribe.