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Juliette Cubanski, Ph.D. The Henry J. Kaiser Family Foundation Medicare Policy Project - www.kff.org/medicare Families USA Health Action 2007 Washington,

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Presentation on theme: "Juliette Cubanski, Ph.D. The Henry J. Kaiser Family Foundation Medicare Policy Project - www.kff.org/medicare Families USA Health Action 2007 Washington,"— Presentation transcript:

1 Juliette Cubanski, Ph.D. The Henry J. Kaiser Family Foundation Medicare Policy Project - Families USA Health Action 2007 Washington, D.C. 25 January 2007 MEDICARE PART D Where Do We Stand? Where Are We Going?

2 Overview Part D Plan Landscape and Enrollment Part D Plan Landscape and Enrollment Private plan availability is higher in 2007 than 2006, and there continues to be wide variation in coverage and benefit design Private plan availability is higher in 2007 than 2006, and there continues to be wide variation in coverage and benefit design The majority of beneficiaries now have drug coverage, but around 10% (~4 million) are not enrolled The majority of beneficiaries now have drug coverage, but around 10% (~4 million) are not enrolled Views and Experiences of Beneficiaries and Providers Views and Experiences of Beneficiaries and Providers Most enrollees say they are satisfied with their Part D plans so far, but many are still vulnerable to high out-of-pocket costs Most enrollees say they are satisfied with their Part D plans so far, but many are still vulnerable to high out-of-pocket costs Pharmacists and physicians have played a key role in helping beneficiaries navigate their Part D plans Pharmacists and physicians have played a key role in helping beneficiaries navigate their Part D plans Unanswered Questions and Issues to Monitor Unanswered Questions and Issues to Monitor Exhibit 1

3 Part D - The Medicare Drug Benefit Exhibit 2 Drug benefit is offered exclusively through private organizations, not traditional Medicare Drug benefit is offered exclusively through private organizations, not traditional Medicare 2 types: 2 types: Stand-alone prescription drug plans (PDPs) that supplement traditional fee-for-service Medicare Stand-alone prescription drug plans (PDPs) that supplement traditional fee-for-service Medicare Medicare-Advantage prescription drug (MA-PD) plans – integrated medical and drug benefits – primarily HMOs, PPOs Medicare-Advantage prescription drug (MA-PD) plans – integrated medical and drug benefits – primarily HMOs, PPOs Plans can change from year to year – add, drop, modify Plans can change from year to year – add, drop, modify New approach to delivering a Medicare benefit New approach to delivering a Medicare benefit Take-up is voluntary, not automatic Take-up is voluntary, not automatic Standard benefit available, but plans can vary Standard benefit available, but plans can vary Coverage and cost depends on plan chosen Coverage and cost depends on plan chosen Additional subsidies (extra help) available to people with low incomes, but subject to income and asset test Additional subsidies (extra help) available to people with low incomes, but subject to income and asset test Dual eligibles no longer have drug coverage through Medicaid Dual eligibles no longer have drug coverage through Medicaid

4 Changes in Plan Options from 2006 to 2007 Plan participation Plan participation Mostly the same organizations but far more plan options Mostly the same organizations but far more plan options PDPs: 1,429 in 2006 to 1,875 in 2007 PDPs: 1,429 in 2006 to 1,875 in 2007 MA plans: 3,195 in 2006 to 3,971 in 2007 MA plans: 3,195 in 2006 to 3,971 in 2007 Monthly premiums Monthly premiums Lowest increasing from $1.87 to $9.50 Lowest increasing from $1.87 to $9.50 Highest increasing from $ to $ Highest increasing from $ to $ Benefit design and formularies Benefit design and formularies Minor changes in many plan offerings, along with major changes in some others Minor changes in many plan offerings, along with major changes in some others According to CMS, at least a 13% increase in number of drugs covered According to CMS, at least a 13% increase in number of drugs covered Exhibit 3

5 DC drug plans (2 states) drug plans (26 states) drug plans (18 states) drug plans (5 states) Beneficiaries in Most States Had a Choice of At Least 50 PDPs in ,875 Stand-alone PDPs Offered Nationwide Exhibit 4 57

6 Most Beneficiaries Had Access to One or More Medicare Advantage Plans in 2007 San Diego County: 24 MA-PD Plans (+ 55 PDPs and 2 SNPs) Miami/Dade County: 43 MA-PD Plans (+ 57 PDPs and 19 SNPs) Polk County: 20 MA-PD Plans (+ 53 PDPs and 2 SNPs) 3,971 MA Plans Offered Nationwide Exhibit 5

7 Standard Medicare Prescription Drug Benefit, 2007 $328 Average Annual Premium $265 Deductible $2,400 in Total Drug Costs $5,451 in Total Drug Costs ($3,850 out of pocket) $3,051 Coverage Gap (Doughnut Hole) NOTE: Annual premium amount based on $27.35 national average monthly beneficiary premium (CMS, August 2006). Amounts for premium, coverage gap, and catastrophic coverage threshold rounded to nearest dollar. SOURCE: Kaiser Family Foundation illustration of standard Medicare drug benefit, updated with Part D benefit parameters for 2007 (from CMS, OACT, May 22, 2006). Plan Pays 75% Plan Pays 15%; Medicare Pays 80% Enrollee Pays 100% Enrollee Pays 5% Enrollee Pays 25% Beneficiary Out-of-Pocket Spending Exhibit 6

8 SOURCE: Hoadley et al. Benefit Design and Formularies of Medicare Drug Plans: A Comparison of 2006 and 2007 Offerings; November Enhanced Actuarially Equivalent Standard$250$0 Partial (<$250) No Coverage Generic Only Brand and Generic Benefit Design Coverage in the Gap Deductible Amount The Standard Drug Benefit Design is Not the Typical Part D Plan Offering in 2007 Percent of plans: Exhibit 7

9 Part D and the Doughnut Hole Of 22.5 million Part D enrollees in 2006: Of 22.5 million Part D enrollees in 2006: 9 million received low-income subsidy and face no gap in coverage 9 million received low-income subsidy and face no gap in coverage Less than 1 million enrolled in plans with full gap coverage Less than 1 million enrolled in plans with full gap coverage An estimated 11 million Part D enrollees had no coverage in the doughnut hole in 2006 An estimated 11 million Part D enrollees had no coverage in the doughnut hole in 2006 Of that total, 4 million Part D enrollees were estimated to have spending in the doughnut hole Of that total, 4 million Part D enrollees were estimated to have spending in the doughnut hole 2 million were estimated to reach catastrophic coverage level 2 million were estimated to reach catastrophic coverage level Between 2006 and 2007, the number of PDPs that cover brand-name drugs in the doughnut hole decreased slightly Between 2006 and 2007, the number of PDPs that cover brand-name drugs in the doughnut hole decreased slightly From 33 PDPs in 2006 to 27 PDPs in 2007 From 33 PDPs in 2006 to 27 PDPs in 2007 In 11 states there are no plans available with full coverage of brands and generics in the gap In 11 states there are no plans available with full coverage of brands and generics in the gap Exhibit 8

10 Average Monthly Premiums Are Highest for PDPs Offering Full Gap Coverage $30.17 $51.11 $93.46 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 No Coverage GenericsOnly Generics and Brands Exhibit 9 SOURCE: Hoadley et al. Benefit Design and Formularies of Medicare Drug Plans: A Comparison of 2006 and 2007 Offerings; November Number of PDPs in 2007: 1,

11 HHS Estimates 90% of Medicare Beneficiaries Have Drug Coverage NOTES: Numbers do not sum to 100% due to rounding. 1 Includes coverage from Veterans Administration, Indian Health Service, employer plans without retiree subsidies, and employer plans for active workers. 2 Includes employer/union, FEHB, and TRICARE coverage. 3 Approximately 0.5 million dual eligibles are enrolled in Medicare Advantage drug plans and are reported in this category. SOURCE: HHS, June 14, Data as of June 11, Total Number of Beneficiaries = 43 Million Total in Part D Plans: 22.5 Million (53%) Stand-Alone PDP Medicare Advantage Drug Plan 3 Dual Eligibles in PDPs Creditable Employer/Union Coverage 2 No Creditable Coverage Other Creditable Coverage 1 Exhibit 10

12 UnitedHealth Wellpoint Humana WellCare Health Plans Kaiser Permanente Coventry Health Care Universal American Financial Corporation Member Health Medco Health Solutions 5.7million 4.4million 1.2 million Health Net Enrollment in Medicare Drug Plans Is Concentrated in a Few Organizations SOURCE: CMS Medicare Drug Coverage Enrollment Data, July 26, All other parent organizations (n=216) have fewer than 400,000 PDP and/or MA-PD enrollees 1.0 million 0.8 million 0.7 million 0.5 million 0.4 million 3 organizations have 50% of total Part D enrollment of 22.5 million Top 10 Parent Organizations: Exhibit 11

13 Variation in Costs for 2007 Among the 10 PDPs with the Highest Enrollment Cost Sharing by TiersPremium* Tier 1Tier 2Tier 3Specialty AARP Medicare Rx$27.83 $6$28$ % Humana Standard$15.17 Standard Benefit (25% Coinsurance) Humana Enhanced$22.03 $5$30$6025% Wellcare Signature$23.79 $0$57$8533% Community Care Rx Basic$29.03 $025%50%No Tier UnitedHealth Rx Basic*$29.18 $7$20$ % Medicare RX Rewards Value$24.72 $5$29No Tier25% Humana Complete$80.43 $5$30$6025% Silverscript$27.50 $5$37No Tier25% Prescription Pathway Bronze$25.23Standard Benefit (25% Coinsurance) Exhibit 12 Note: *Marketed as Pacificare Saver in Monthly premium amount is weighted average across all regions where plan is offered. SOURCE: Hoadley et al. Benefit Design and Formularies of Medicare Drug Plans: A Comparison of 2006 and 2007 Offerings; November 2006.

14 Variation in 2007 Cost Sharing in Top 10 PDPs for Top 10 Brand-Name Drugs Note: *indicates drugs covered by all 10 PDPs with highest 2006 enrollment. SOURCE: Hoadley et al. Benefit Design and Formularies of Medicare Drug Plans: A Comparison of 2006 and 2007 Offerings; November Exhibit 13

15 Choice Matters – Even for Healthy Seniors ESTHER Esther would pay between $577 and $1,309 per year in a PDP, and between $300 and $970 in an MA-PD plan, including premiums, depending on the plan she chooses. Esther is 67 and lives in Bethesda. She takes only one drug, Fosamax, for osteoporosis. CAROLYN Carolyn, age 60, on SSDI and is about to go on Medicare. She has rheumatoid arthritis and other chronic conditions and takes 8 medications. The difference between her most and least expensive plan option is at least $3,000 – greater for PDPs The difference between her most and least expensive plan option is at least $3,000 – greater for PDPs Carolyn would pay between $4,423 and $11,522 per year in a PDP, and between $4,608 and $7,973 in an MA-PD plan, including premiums, depending on the plan she chooses. The difference between her most and least expensive plan option is roughly $700 for either PDP or MA-PD The difference between her most and least expensive plan option is roughly $700 for either PDP or MA-PD Exhibit 14

16 Only a third of surveyed seniors say there are important differences among Part D Plans ASKED OF SENIORS ONLY: Would you say there are important differences among the Medicare drug plans now available, or do you think they are all basically the same? SOURCE: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9- 19, 2006) Dont know/ Refused They are basically the same Important differences Exhibit 15

17 Part D Plan Enrollment Decisions in 2006 Contrary to conventional wisdom, beneficiaries did not report conducting extensive research before choosing a Medicare drug plan Contrary to conventional wisdom, beneficiaries did not report conducting extensive research before choosing a Medicare drug plan Many relied on trusted sources including pharmacists, family members, and friends Many relied on trusted sources including pharmacists, family members, and friends Most beneficiaries did not use resources provided by Medicare to help choose a plan Most beneficiaries did not use resources provided by Medicare to help choose a plan Only 10% of beneficiaries said they or a family member used Medicare.gov Only 10% of beneficiaries said they or a family member used Medicare.gov Name recognition and prior experience with the company were key factors for many in selecting a Part D plan, possibly trumping other considerations Name recognition and prior experience with the company were key factors for many in selecting a Part D plan, possibly trumping other considerations Exhibit 16

18 Trends in Seniors Impressions of Drug Benefit *Question prior to Apr-05 referred to new Medicare prescription drug law. Note: The increase in the percent saying favorable is statistically significant between Jun-06 and Nov-06. SOURCE: Kaiser Family Foundation surveys. AMONG SENIORS: Given what you know about it, in general, do you have a favorable or unfavorable impression of the new Medicare drug benefit? Exhibit 17

19 Many Part D Plan Enrollees Say They Are Satisfied and Saving Money All in all, have your experiences using your new Medicare drug plan been: Compared to what you paid for prescriptions last year, are you now saving money, paying more or paying about the same overall? Dont know/ refused Very positive Somewhat positive Somewhat negative Very negative Dont know Saving money Paying about the same Paying more Exhibit 18 AMONG SENIORS WHO SAY THEY ARE ENROLLED IN A MEDICARE PRESCRIPTION DRUG PLAN: SOURCE: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9- 19, 2006)

20 Yet Many Seniors Report Problems Related to Getting Prescriptions Under Their Part D Plan Exhibit 19 AMONG SENIORS WHO SAY THEY ARE ENROLLED IN A MEDICARE PRESCRIPTION DRUG PLAN: Have you had administrative problems, such as problems getting enrollment cards, problems with premium payments, or billing mistakes associated with your Medicare plan, or not? Have you had any problems getting your Rx drugs, such as drugs not being covered by your plan or being unable to afford the cost of drugs under your plan, or not? Yes, had a MINOR problem Yes, had a MAJOR problem Have had either type of problem 12% 12% 23% SOURCE: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9- 19, 2006)

21 Problems Filling Prescriptions by Number of Prescriptions and by Income 3 Rx 3 Rx daily daily SOURCE: Kaiser Family Foundation Health Poll Report Survey (conducted June 8-18, 2006) 6 Rx 6 Rxdaily Percent who report having problems related to getting prescriptions by the number of prescriptions taken daily… 4 or 5 Rx daily Percent who report having problems related to getting prescriptions by 2005 income… Income > 20K Income 20K AMONG SENIORS WHO HAVE USED THEIR MEDICARE DRUG PLAN: Minor Problems Reported Major Problems Reported 27% 34% 46% 41% 33% Exhibit 20

22 How well would you say the new Medicare drug benefit works for your customers in each of the following areas… Very well Not well at all Somewhat well Lowering their out-of-pocket costs Not too well Getting them access to the prescription drugs they need SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006) Most Pharmacists Say Benefit Works Well for Their Customers Exhibit 213% 4%

23 Yet nearly one in five pharmacists say most of their Medicare customers have had problems with their drug plan SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006) To the best of your knowledge, have any of your Medicare customers experienced problems getting their prescriptions filled since joining a new Medicare drug plan? IF YES: Would you say most, some or just a few of your customers who joined Medicare drug plans have had problems filling prescriptions? Most None Some Just a few Exhibit 22

24 Had to pay out-of-pocket for their prescription because pharmacist couldnt verify their enrollment Had problems getting enrollment cards or letters of enrollment after signing up for a plan Left the pharmacy without their prescription because the drug wasnt on their plans formulary Left the pharmacy without their prescription because they couldnt afford the copayment Specific Problems Reported by Pharmacists Percent of pharmacists who say any of their customers have experienced the following specific problems filling prescriptions since joining a Medicare drug plan… SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006) Exhibit 23

25 About half of surveyed doctors say the Medicare drug benefit works well for their patients Among the 78% of doctors who say at least a few of their patients are enrolled in Medicare drug plans: How well would you say the new Medicare drug benefit works for your patients in each of the following areas… Very well Not well at all Somewhat well Lowering their out-of-pocket costs Not too well Getting them access to the prescription drugs they need Dont know/ Refused SOURCE: Kaiser Family Foundation National Survey of Physicians (conducted April 25-July 8, 2006) Exhibit 24

26 No Dont know/ Refused Among the 78% of doctors who say at least a few of their patients are enrolled in Medicare drug plans… SOURCE: Kaiser Family Foundation National Survey of Physicians (conducted April 25-July 8, 2006) To the best of your knowledge, have any of your Medicare patients experienced problems getting their prescriptions filled since joining a new Medicare drug plan, or not? Yes Would you say that most, some, or just a few of your patients who joined Medicare drug plans have had problems filling prescriptions? Some Just a few Most Yet most doctors say at least some of their Medicare patients experienced problems in their drug plan Exhibit 25

27 Seniors, Pharmacists, and Doctors Agree: Medicare Drug Benefit is Too Complicated Percent who agree or disagree that the Medicare prescription drug benefit is too complicated SOURCES: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9- 19, 2006); Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006); Kaiser Family Foundation National Survey of Physicians (conducted April 25-July 8, 2006) Ages 65 and over PharmacistsDoctors AgreeDisagree Dont know/Refused Exhibit 26

28 Which statement better reflects your opinion? Statement A: Medicare should offer seniors dozens of plans so they can select their own Statement B: Medicare should select a handful of plans that meet certain standards, so seniors have an easier time choosing Dont know/ Refused Support for Limiting Plan Choice ASKED OF SENIORS ONLY: SOURCE: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006) Exhibit 27

29 Message to Congress About Medicare Part D AMONG SENIORS: Overall, what message would you send to policymakers in Washington regarding the new Medicare drug benefit? Is working well and no real changes are needed Is not working well and should be repealed Is not working well and needs major changes Could be improved with some minor changes Note: Dont know/refused responses not shown SOURCE: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006) Exhibit 28

30 Cut the program back because it is costing the government too much money Proposals to Change Medicare Part D Somewhat favor Strongly favor Percent of seniors who favor each of the following proposals: Source: KFF/HSPH The Publics Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006) Allow government to negotiate with drug companies for lower prices Waive the penalty for late enrollment Reduce the number of available drug plans Keeping the program exactly as it is Spend more federal money to get rid of doughnut hole Allow seniors to get drug plan directly from Medicare 81% 76% 68% 66% 65% 26% 25% Exhibit 29

31 Nationwide, 1 in 4 beneficiaries estimated to be eligible for Part D low-income subsidies are not receiving them Beneficiaries Eligible for Low-Income Subsidies (LIS) = 13.2 million 2.0 million (15%) Eligible by SSA and receiving subsidy 0.5 million (4%) Eligible but estimated to have creditable coverage SOURCE: Testimony of Mark McClellan, CMS Administrator, June 14, Data from CMS, as of June 11, 2006, and updated LIS eligibility determinations from SSA, as of July 14, million (24%) NOT receiving subsidy 7.5 million (57%) Full/partial dual eligibles and SSI recipients receiving subsidy 0.1 million (1%) Anticipated facilitated enrollment Total = 5.7 Million Non-Duals Eligible for LIS Exhibit 30

32 Part D Successes and Challenges to Date Exhibit 31 According to HHS, 90% of all Medicare beneficiaries now have creditable drug coverage – including over 23 million in Part D plans According to HHS, 90% of all Medicare beneficiaries now have creditable drug coverage – including over 23 million in Part D plans Plan participation was greater than expected in 2006, and the market expanded in 2007 Plan participation was greater than expected in 2006, and the market expanded in 2007 Initial implementation problems were overcome, and not repeated on a large scale in 2007 Initial implementation problems were overcome, and not repeated on a large scale in 2007 Most enrollees say they are satisfied with their plans so far Most enrollees say they are satisfied with their plans so farHOWEVER… Some beneficiaries still lack drug coverage and could face late enrollment penalty Some beneficiaries still lack drug coverage and could face late enrollment penalty Plans vary greatly in terms of coverage and benefit design Plans vary greatly in terms of coverage and benefit design Unknown how well beneficiaries can choose a plan that meets their individual needs with so many choices Unknown how well beneficiaries can choose a plan that meets their individual needs with so many choices Difficulty getting extra help to those with low incomes Difficulty getting extra help to those with low incomes LIS participation lower than projected; outreach difficult LIS participation lower than projected; outreach difficult Asset test excludes many with low incomes Asset test excludes many with low incomes Even with drug coverage, many enrollees could face high costs Even with drug coverage, many enrollees could face high costs No coverage in the doughnut hole No coverage in the doughnut hole High cost sharing for specialty drugs High cost sharing for specialty drugs

33 Questions and Unknowns about Part D Enrollment and Plan Participation Enrollment and Plan Participation Which plans will stick around over time? What will happen to other sources of coverage, especially retiree plans? Do beneficiaries understand changes to their coverage? How do beneficiaries react? Which plans will stick around over time? What will happen to other sources of coverage, especially retiree plans? Do beneficiaries understand changes to their coverage? How do beneficiaries react? Variations Across Drug Plans and Formularies Variations Across Drug Plans and Formularies What are the implications of these variations for patients, especially those with chronic and/or rare conditions? What are the implications of these variations for patients, especially those with chronic and/or rare conditions? Experiences in the Doughnut Hole Experiences in the Doughnut Hole How many people will be affected each year? What will their experiences be? Does utilization change? How many people will be affected each year? What will their experiences be? Does utilization change? Exceptions and Appeals Processes Exceptions and Appeals Processes How many enrollees are affected? How do these processes work for enrollees? How many enrollees are affected? How do these processes work for enrollees? Outreach to the Unenrolled Outreach to the Unenrolled What more can be done to get low-income subsides to those who are eligible but not receiving them? What happens to beneficiaries whose LIS status changes? How many beneficiaries will end up paying the late enrollment penalty? What more can be done to get low-income subsides to those who are eligible but not receiving them? What happens to beneficiaries whose LIS status changes? How many beneficiaries will end up paying the late enrollment penalty? Future Directions for Part D Future Directions for Part D How will the benefit and the program evolve over time? What are the prospects for possible reforms, such as drug price negotiation, simplification? How will the benefit and the program evolve over time? What are the prospects for possible reforms, such as drug price negotiation, simplification? Exhibit 32

34 …thank you. Any questions?


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