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."