Monday, June 26, 2006

Medicare Part D Out Of Control

Dear Friends and Colleagues:

Attached a NYT article reporting about the deceptive marketing practice of Medicare Part D drug plans.

Many of these plans DO NOT follow federal guidelines that regulate the marketing standards and information disclosure of the participating private health plans.

This can lead to deceptive consumer advertising and confusion about the quality of products offered.

Another example of a poorly designed government program that is running out of control.


June 25, 2006

Troubles Linger in Regulation of Medicare Customer Service


WASHINGTON, June 24 — After enthusiastically promoting Medicare drug plans for three years, the Bush administration is having difficulty regulating these same plans to ensure they comply with federal standards for marketing, customer service and consumer protection.

Medicare officials are juggling two potentially incompatible roles as they try to police the new program while defending it against a barrage of election-year criticism from Democrats.

The new benefit is administered by dozens of private insurers under contract to Medicare, which has set detailed standards for marketing and customer service. Federal officials said many insurers had evaded their duty to resolve complaints from beneficiaries and had instead simply referred callers to the government's toll-free telephone number, 1-800-MEDICARE (1-800-6-334-2273).

In a recent memorandum to insurers, Cynthia G. Tudor, a senior Medicare official, said the government "has been receiving a large number of urgent requests from beneficiaries who are enrolled" in drug plans under the new program, known as Part D of Medicare.

"These urgent requests generally mean that the beneficiary is in immediate need of a medication refill," Ms. Tudor said.

On two occasions in the last month, Ms. Tudor reminded all insurers of their "obligation to resolve complaints" from their members. She told them not to refer subscribers to 1-800-MEDICARE, saying the federal call center "is not intended to respond to complaints or questions enrollees have about their particular Part D plan."

Under federal rules, Medicare officials can impose civil fines up to $100,000 for each violation of federal standards. In a document describing its enforcement strategy, the Bush administration said it saw no need to disclose the penalties or other sanctions that might be imposed on prescription drug plans in the future. A public listing of enforcement actions "could unfairly impede business opportunities" for insurers that later correct their deficiencies, it said.

"Sanction authority is not designed to be punitive," the administration said.

Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services, said his agency was monitoring plans' compliance with federal standards and would "take action when appropriate."

In the last six months, President Bush and Medicare officials have repeatedly said that consumers need more data on the cost and quality of care provided by doctors and hospitals.

Drug plans must report large amounts of data on their performance to the federal government — for example, the number of claims approved and rejected, the number of complaints against each plan, the number of grievances and appeals, the average waiting time on telephone help lines and the proportion of prescriptions filled with low-cost generic drugs. So far none of the data has been released, even though members of Congress from both parties say it would help consumers.

"If you ask me to choose a prescription drug plan, you ought to give me the information I need to make an intelligent decision," said Representative Pete Stark, Democrat of California. Representative Phil English, Republican of Pennsylvania, said he supported the idea of giving consumers a wide range of choices, "provided they get useful information" on the options available.

Dr. McClellan said his agency would consider the performance of drug plans in deciding whether to renew their contracts next year. Moreover, he said, if Medicare officials find that an insurer is "substantially out of compliance" with federal requirements, they can terminate its contract this year.

But John K. Gorman, a former Medicare official who is now a consultant to many insurers, said: "The government has given companies an unofficial grace period in the first year, while they try to make this program work. We do not expect to see much enforcement unless there's an egregious violation."

Insurers say the government is responsible for some of the problems that have provoked the most complaints from beneficiaries. These problems include delays and errors in withholding Medicare premiums from Social Security checks.

Rarely has the government relied so heavily on private contractors to deliver public benefits. More than 29 million people receive drug benefits subsidized by Medicare. Federal officials are struggling to find the right mix of regulation and gentle persuasion, giving insurers a large degree of discretion about how to achieve objectives set by Congress and the White House.

Federal officials issued regulations for the Medicare drug program in January 2005. Since then, they have clarified, revised and expanded the requirements by issuing hundreds of guidelines, memorandums, bulletins, fact sheets, tip sheets, instructions, "frequently asked questions" and other documents providing informal guidance to Medicare drug plans and pharmacists.

Consumer advocates, insurers and health care providers said it was extremely difficult to keep track of the shifting federal policies.

"It's hard to find out the current state of the law," said Leslie B. Fried, a lawyer at the American Bar Association. Elise Smith, vice president of the American Health Care Association, a trade group for the nation's nursing homes, said, "It's almost impossible to keep track of all the changes and clarifications."

Judith A. Stein, director of the Center for Medicare Advocacy, a nonprofit group that counsels beneficiaries, said, "Most of the guidelines are phrased as recommendations or suggestions, not binding requirements, so they are difficult to enforce." Insurers have repeatedly asked the administration to clarify what is required and what is simply recommended.

Karen M. Ignagni, president of America's Health Insurance Plans, a trade group, said the administration had invented "a new regulatory model" for the drug benefit, working with insurance companies to solve problems reported by doctors, druggists or beneficiaries. "It's a very productive partnership," Ms. Ignagni said.

The White House recently cautioned agencies against using guidance documents as a form of "backdoor regulation," and it noted that several courts had refused to enforce such standards.

In one case, the United States Court of Appeals for the District of Columbia Circuit said the phenomenon was familiar: "Law is made, without notice and comment, without public participation," as agencies issue more and more guidance documents expanding the reach of their regulations.

The federal government has issued guidelines for the marketing of Medicare drug plans, but state officials say they have not been adequately enforced.

Jorge Gomez, the Wisconsin insurance commissioner, who is also a spokesman for the National Association of Insurance Commissioners, said: "State regulators are very concerned about the aggressive marketing practices of certain prescription drug plans. Some brokers and agents are using Medicare Part D as a pretext to get in the doors of Medicare-eligible consumers, then selling them a variety of unrelated and sometimes unsuitable insurance products."

In addition, Mr. Gomez said, some beneficiaries were placed in health maintenance organizations when they thought they were signing up only for drug coverage.

The administration recently told states they "may not take enforcement action" against insurers for deceptive marketing of Medicare drug coverage. In general, it said, only the federal government can regulate such marketing.

Medicare Part D Reality

Dear Friends and Colleagues:

Attached are two articles regarding the Medicare Part D program.
The first is an editorial from today's New York Times reviewing the status quo of the program.
Several issues are of concern:
  1. A New York Times/CBS News poll last month, for example, found that 42 percent of those already enrolled said they were spending less on prescription drugs, 19 percent were spending more, and 30 percent were spending the same amount.
  2. Most of the people enrolled already had coverage, through employers, unions or other government programs. All Medicare has done is subsidize some of it.
  3. Among those with no previous drug coverage( 11 million to 14 million) at least 4.5 million of them remain uninsured, according to the administration, so the enrollment drive could have missed some 30 to 40 percent of this target group.For those the enrollment deadline has expired and they face growing LIFETIME penalties.
  4. It is not clear how successful the plans have been at negotiating low drug prices with the manufacturers.
  5. It is not clear whether the program has attracted enough healthy beneficiaries to subsidize the chronically ill and thus hold down premiums.
  6. A recent evaluation found that patients whose drug benefits were capped used fewer drugs than patients whose benefits were not capped. They also ended up in the hospital or the emergency room more often and generally had worse clinical outcomes.
It is very important to understand that Medicare Part D beneficiaries face now the so-called "doughnut hole": after the initial $250 deductible beneficiaries have to pay 25% of the drug costs up to $2000, then at $2251 coverage ceases until the drug costs reach $5,100, at which point the drug benefit kicks in again and pays 95% of all costs.
We do not know how this will affect the overall drug utilization among Medicare beneficiaries. I suspect many will again reduce their drug expenditures and skip medications. Many will try to get samples from their doctors or to obtain coverage from pharmaceuticals companies.
The second article from the current online edition of Health Affairs analyzes the drug benefit as it relates to psychotropic medications. The author claims that the structure of the drug benefit’s delivery system creates incentives for plans to underprovide medications, like psychotropic drugs, that are used persistently and are associated with high expected costs. Regulators have put policies in place to counteract these incentives.
This is an issue that need to be followed carefully. In several examples he suggests the following approach:
"An elderly depressed Medicare beneficiary with a lower income who does not qualify for the low-income subsidy might be better off enrolling in a plan with a high monthly premium if that plan has placed the antidepressant they are taking on a lower tier. A disabled dually eligible beneficiary with schizophrenia who is stabilized on an antipsychotic medication will be better off in a plan that allows him or her to maintain use of that drug. This beneficiary will not be exposed to high out-of-pocket costs in terms of premiums, deductibles, or copays, but the flexible application of pharmacy management tools will be very important to avoiding disruptions in treatment and allowing for medication changes. Because mental illnesses frequently co-occur with other chronic medical conditions, it will be important for beneficiaries with mental illnesses to enroll in plans that offer adequate coverage of other classes as well."

Doctors Pay Drop

Dear Friends and Colleagues:
Attached you find a recent article discussing the declining physicians reimbursement.
In this article Cecil Wilson, MD, Chair of the AMA Board of Trustees is quoted "(the survey) confirms what they (physicians) already know from their own practices: payments are not keeping up with inflation."
Several (depressing) highlights of the article:
  • average physician's net income declined 7 percent from 1995 to 2003, after adjusting for inflation, while incomes of lawyers and other professionals rose by 7 percent during the period.
  • primary care doctors, who are already among the lowest-paid physicians, had the steepest decline in their inflation-adjusted earnings — a 10 percent drop —contributing to decreasing numbers of primary care physicians.
  • while the general inflation rate was 21 percent during the period, payments from Medicare rose only 13 percent, according to the study, and payments from private insurers rose even more slowly.
  • Among Medicare beneficiaries, the number of minor procedures grew 6 percent a year on average during the eight years that physician income fell, the report said.
This year the AMA is battling ( again) a cut in Medicare reimbursement. Remember, that our AMA successfully prevented Medicare cuts last year calling instead for a permanent fix of the flawed SGR formula on which physicians reimbursement is based.
This year we will have to battle the same issues again and we need the support of each and every physician in Florida.
If you are not a member JOIN NOW. Motivate your colleagues to join. Our AMA saved every physician who is participating in Medicare THOUSANDS of dollars. Joining the AMA is a wise investment.
Remember, all insurance carriers follow Medicares reimbursement guidelines. That means if Medicare cuts the fees ALL of them will follow.
We need to stop Medicare cuts now and in the future. We need all of your support !!! JOIN or REJOIN NOW!
Yours truly,


New York Times June 22, 2006

Doctors' Average Pay Fell 7% in 8 Years, Report Says

The Dr. Smiths are having trouble keeping up with the Mr. Joneses.

A report planned for release today indicates that the average physician's net income declined 7 percent from 1995 to 2003, after adjusting for inflation, while incomes of lawyers and other professionals rose by 7 percent during the period.

The researchers who prepared the report say the decline in doctors' inflation-adjusted incomes appears to be affecting the types of medicine they choose to practice and the way they practice it — resulting in fewer primary care doctors and a tendency to order more revenue-generating diagnostic tests and procedures.

Primary care doctors, who are already among the lowest-paid physicians, had the steepest decline in their inflation-adjusted earnings — a 10 percent drop — according to the report by the Center for Studying Health System Change, a nonprofit research group in Washington.

The average reported net income for a primary care physician in 2003 was $146,405, according to the study, after expenses like malpractice insurance but before taxes. The highest-paid doctors were surgeons who specialize in areas like orthopedics, who had an average net income of $271,652, nearly double what the primary care doctors said they earned.

The report was based on a national telephone survey of roughly 6,600 physicians in 2004 and 2005 and earlier surveys by the research center. "These are large enough changes that physicians are responding," said Paul B. Ginsburg, the center's president and a health economist.

Doctors, he said, are reacting to the financial incentives under the current payment system by choosing to specialize and work in fields where they can increase their income by providing more services, like diagnostic tests or procedures, he said.

Dr. Cecil B. Wilson, the chairman of the board of the American Medical Association, said that for practicing physicians the survey "confirms what they already know from their own practices: payments are not keeping up with inflation."

Mr. Ginsburg said that during the eight-year period in the study, payments from Medicare and commercial insurers had indeed lagged general inflation.

While the general inflation rate was 21 percent during the period, payments from Medicare rose only 13 percent, according to the study, and payments from private insurers rose even more slowly. Medicare sets physician payments under a formula that has been widely criticized, but so far Congress, which oversees the program, has not addressed some of the issues involved.

The current Medicare payment system, for example, rewards physicians for entering fields like cardiology or gastroenterology in which they can perform a procedure or do a test. Doctors like psychiatrists or primary care physicians, who spend their time evaluating or diagnosing patients, do not have as many of those options for generating additional revenue.

"Physicians have responded to the stagnant fees by producing more visits as well as more procedures," said Mr. Ginsburg. Among Medicare beneficiaries, the number of minor procedures grew 6 percent a year on average during the eight years that physician income fell, the report said.

The lower income of primary care physicians is also resulting in fewer medical students entering family medicine, said Dr. Rick Kellerman, the president-elect of the American Academy of Family Physicians. And most doctors going into internal medicine are choosing to specialize rather than become general internists, he said, adding that the financial disparities may result in an eventual shortage of primary care physicians.

"What it is going to come down to is problems with access," in which patients wanting the services of a primary care physician will not be able to find a doctor able to see them.