From Wikipedia,
the free encyclopedia.
Medicare Part D, part of
Medicare (United States), is a
prescription drug plan
[1] for the
elderly and
disabled in the
USA. It was enacted as part of
the
Medicare Prescription Drug,
Improvement, and Modernization Act
of 2003 (MMA). The plan will start
in January 2006.
Program specifics
The drug benefit will not be
part of the traditional Medicare
program, but rather will be
offered through private insurance
plans
[2] that will be reimbursed by
the Centers for Medicare &
Medicaid Services (CMS).
Medicare beneficiaries will have
to affirmatively choose and enroll
in a Part D plan. Benefiaries can
obtain the Medicare Drug plan
through two types of private plans
[3], beneficiaries can join a
prescription Drug Plan (PDP) for
drug coverage only or they can
join a Medicare Advantage (MA)
plan that covers drugs and all
other Medicare benefits. There
will be 34 PDP regions and 26 MA
regions in the U.S. The drug plans
will control drug costs through a
system of tiered formularies in
which lower cost drugs are
assigned to lower tiers and thus
are easier to prescribe.
Size of the program
It is expected that there will
be 11 Million newly covered lives,
which is about the population of
Ohio. There will be 6,000,000
people that will be eligible for
both Medicare Part D and
Medicaid (dual eligibles).
This is about the population of
Indiana. There will be about 2
Million people who are currently
covered by employers who will
likely lose their employee
benefits. This is about the
population of
Nevada. Therefore it is
expected that 19 Million lives
will be affected in 2006. This is
about the population of
New York. The expected per
capita drug spend is
[4] $2,250 making the total
cost of the program $42.75
Billion. This budget compares with
revenues of $54 Billion for
Pfizer and $48.6 Billion for
Johnson & Johnson, the two
largest pharmaceutical companies.
Other estimates
[5] put the 2006 costs at
$37.4 Billion. Total costs through
2015 are estimated to be $724
Billion. Some of these revenues
will be provided by "clawback" of
revenues currently provided to the
states for
Medicaid.
Enrollment
Enrollment for most
beneficiaries is voluntary. The
initial enrollment period takes
place from November 15, 2005 till
May 15, 2006. However, if a person
does not enroll by the May 15
deadline, there will be a 1
percent per month penalty based on
the average cost of the premium
until one does enroll. This is
coercive.
[6]. On January 1, 2006,
beneficiaries eligible for both
Medicaid and Medicare (dual
eligibles) will lose their
Medicaid coverage for prescription
drugs.
Costs to beneficiaries
The MMA establishes a standard
drug benefit that Part D plans may
offer
[7]. The standard benefit is
defined in terms of the benefit
structure and not in terms of the
drugs that must be covered. In
2006, this standard benefit
requires payment of a $250
deductible. The beneficiary then
pays 25% of the cost of a covered
Part D prescription drug up to an
initial coverage limit of $2250.
Once the initial coverage limit is
reached, the beneficiary is
subject to another deductible,
known as the “doughnut hole,” in
which they must pay the full cost
of medicine. When total
out-of-pocket expenses on
formulary drugs for the year,
including the deductible and
initial coinsurance, reach $3600
the beneficiary pays $2 for a
generic or preferred drug and $5
for other drugs, or 5%
coinsurance, whichever is greater.
Note that the $3600 amount is
calculated on a yearly basis; a
beneficiary who amasses $3600 in
out-of-pocket costs on December 31
of one year will have to start all
over again on January 1.
Formularies
Part D plans are not required
to pay for all covered Part D
drugs
[8]. They may establish their
own formularies, or list of
covered drugs for which they will
make payment, as long as the
formulary and benefit structure
are not found by CMS to discourage
enrollment by certain Medicare
beneficiaries. Part D plans that
follow the formulary classes and
categories established by the
United States
Pharmacopoeia will pass the
first discrimination test. Plans
can change the drugs on their
formulary during the course of the
year with 60 days notice to
affected parties.
Implementation issues
- The Medicare Part D
marketplace is an evolving,
dynamic environment with
multiple players attempting to
achieve individual goals.
- Plan and Health Care
Provider goals are not aligned:
PDP's and MA's are rewarded for
focusing on low cost drugs to
all beneficiaries, while
Providers are rewarded for
quality of care – sometimes
involving expensive
technologies.
- Plans are charged with
conflicting goals: They must
offer access to a wide variety
of drugs that beneficiary
doctors prescribe, but also
offer restrictive formularies
and hence lower prices and
premiums.
- More conflicting goals:
Plans are required to have a
tiered exemptions process for
beneficiaries to get a
higher-tier drug at a lower
cost, but plans must grant
exception when medically
necessary. However, the rule
denies beneficiaries the right
to request a tiering exception
for certain high-cost drugs.
- In short, the most confusing
part of Medicare Plan D is the
lack of standardization. Drugs
appearing on Tier 2 in one plan
may be on Tier 3 in another.
Furthermore, Tier 2 drugs may
have a different co-pay with
different plans. Also, there are
plans with no deductibles and
the coinsurance for the most
expensive drugs varies widely.
In addition, some plans may
insist on step therapy, which is
means that the patient must use
generics first before the
company will pay for higher
priced drugs. There is an appeal
process, however.
