CMS To Announce Companies Participating in Medicare Prescription Drug Benefit
CMS on Friday released the "first details" about which companies will be providing prescription drug coverage under the new Medicare drug benefit, AP/Yahoo! News reports. Eight insurance companies will offer coverage nationwide, while other insurers will offer coverage regionally. According to AP/Yahoo! News, beneficiaries will have at least 11 plans to choose from and beneficiaries in larger states, such as New York and Texas, will have a choice of about 20 plans.
The eight companies offering nationwide coverage are Aetna Life Insurance Company, Connecticut General Life Insurance Company, Memberhealth Inc., Pacificare Life and Health Insurance Company, Silverscript Insurance Company, Unicare, United Health Care Insurance Company and Wellcare Health Plans. CMS Administrator Mark McClellan, said, "The competition between these organizations has resulted in lower costs than expected. Forty-nine states will have a drug plan with a premium below $20" (Freking, AP/Yahoo! News, 9/23).
The announcement comes about one week after health plans had expected the information to be released, the Boston Globe reports. More detailed information about PDPs' specific benefits cannot be released until Oct. 1, when companies are allowed to begin marketing their plans. According to the Globe, many health insurers and pharmacy benefit managers had expected CMS to release the information about which plans had been awarded contracts with Medicare earlier, and they had anticipated signing contracts with CMS by Sept. 15.
"This is an indication of how disorganized this process is, and it makes me fearful about how the implementation will go," Melissa Shannon, consumer health policy coordinator of Health Care for All, said, adding, "This program is hugely complicated and the management of it is disorganized." Shannon said, "We're getting calls today from seniors and we can't tell them anything."
In addition, PDP providers say it is unclear how much information they will be able to reveal about their plans after Friday. "This timing presents a challenge because it contracts the time period during which people can be educated and enrolled," an unnamed health plan official said. Ron Pollack, executive director of Families USA, said, "Seniors across the country will be absolutely bewildered by the choices they are confronted with, and they are going to have a very difficult time navigating those choices" (Krasner, Boston Globe, 9/23).
In related news, the Social Security Administration announced on Thursday that about three million Medicare beneficiaries have submitted applications for low-income subsidies available under the drug benefit, the AP/Arizona Daily Star reports.
The subsidies -- an estimated $2,100 per low-income Medicare beneficiary that will cover the cost of premiums, deductibles and some copayments -- are available to those with annual incomes of up to 150% of the federal poverty level. In addition, the value of beneficiaries' assets must be less than $11,500 for individuals and $23,000 for couples (AP/Arizona Daily Star, 9/23).
In May, SSA began mailing applications for the subsidies to 19 million potentially eligible Medicare beneficiaries. So far, the agency has received three million applications, but it is unclear how many of the beneficiaries who mailed in applications will qualify for the subsidy. An estimated seven million to eight million beneficiaries ultimately could be eligible, the federal government estimates.
"We're really pleased with where we are," Commissioner of Social Security Jo Anne Barnhart said (Fahy, Pittsburgh Post-Gazette, 9/23). She added, however, that her "main message today is we're not done yet." Barnhart said SSA is continuing to review the applications and is unsure how many will be approved (AP/Arizona Daily Star, 9/23). She also said that officials are trying to contact beneficiaries who did not respond to the initial mailing, CQ HealthBeat reports. McClellan said, "This is an unprecedented initial response for a voluntary federal program for people with limited means," adding that officials expect "many" of the beneficiaries who have applied will qualify for the subsidies (CQ HealthBeat, 9/22).
Some consumer advocates expressed concern that many beneficiaries might have been confused by the application and decided not to apply. Robert Hayes, president of the Medicare Rights Center, said that receiving more than three million applications "is a pretty good return rate," but he added that the "only relevant information is how many people are enrolled in the program -- how many get help." Michelle Strollo, a senior policy analyst for the Kaiser Family Foundation, said the return rate is promising, adding, "[T]here's still a long way to go" (Pittsburgh Post-Gazette, 9/23).
Two newspapers on Friday examined issues related to the new Medicare prescription drug benefit. Summaries appear below.
Philadelphia Inquirer: The Inquirer examined how the new Medicare drug benefit is the "biggest expansion of a government assistance program since" the 1960s and is "also one of the most complex." Joseph Antos, a health care policy expert at the American Enterprise Institute, said, "We are performing a national experiment now. The experiment is can we get 40 million people to look at numerous drug plan options and in fairly short order decide whether they should join up with the benefit." Already, more health plans than anticipated have applied to offer benefits under the new plan, and officials are waiting to see how many beneficiaries opt for the new benefit when enrollment begins in November. Christopher Viehbacher, president of GlaxoSmithKline's U.S. pharmaceuticals division, said the program will "be a wash" for drug companies because sales increases so far appear to be offset by discounts negotiated between PDP providers and drug companies (Mondics, Philadelphia Inquirer, 9/23).
Wall Street Journal: The Journal examined how the higher-than-expected number of PDPs will affect the new benefit. According to the Journal, most areas of the country will have between 11 and 23 PDPs competing for business, despite early concerns that few companies would choose to participate in the new benefit. In addition, because of the competition, insurers will offer premiums that are 14% lower on average than Medicare officials had predicted. While the "cut-rate prices" are "good news" for beneficiaries, they likely mean that the benefit will not be "a very profitable business" for insurers, the Journal reports. Health Net recently said it expects margins of between 2% and 3% on some of the Medicare drug benefit business, less than what some analysts and companies had predicted. However, some companies -- such as Humana and PacifiCare Health Systems, which was acquired by UnitedHealth Group -- already have large Medicare networks, so they will be able to "expand that business at very little cost," Joe France, an analyst at Banc of America Securities, said. As a result, companies that hope to provide stand-alone PDPs might discover "there isn't enough money to be made," possibly leading to a "shakeout" among participating companies down the road, the Journal reports (Fuhrmans, Wall Street Journal, 9/23).
Additional information on the Medicare drug benefit is available online.