Medicare Part D was barely in operation a month before Congress had called two hearings on widespread problems.  The sticky morass of complications is requiring far more in administrative effort and resources than either the federal government or drug insurers ever foresaw. 

Even the number of people enrolled in the new program, and how well it is working, is proving to be hotly contested issue.  The federal government says that over 27 million Medicare beneficiaries now have prescription drug coverage and that millions of prescriptions are being filled smoothly.  But of the total, only 7.2 million have signed up voluntarily for a Part D drug plan.  TSCL believes that, large numbers of Medicare beneficiaries are not opting to enroll in the new program.

According to the Department of Health and Human Services in addition to the 7.2 who voluntarily enrolled, the 27 million total includes:

• 6.2 million "dual eligible" beneficiaries who formerly received their prescription drugs through state Medicaid programs.  They were automatically enrolled in the drug benefit.
• 3.5 million retirees enrolled in TRICARE, the military health program, or the Federal Employee Health Benefits Program.
• 10.70 million beneficiaries who already had prescription drug coverage through former employers or through unions.

The New York Times recently reported "tens of thousands of beneficiaries are perplexed to find themselves actively enrolled in two prescription drug plans at the same time."  The situation, reported as "happening fairly routinely," can leave seniors at risk of being charged two premiums at the same time, which are automatically deducted from their Social Security checks.  Blamed on one of many "computer glitches," the problem tends to affect low-income people entitled to the government's "extra help," who are allowed to switch plans if they were automatically assigned to a plan that did not meet their needs.

Forty-nine states have reported problems affecting the transition of low-income "dual-eligibles" who formerly received their prescriptions through state Medicaid programs.  In a letter to Medicare, New Jersey officials said more than 4,008 people were mistakenly enrolled in out-of-state plans, 4,744 were never enrolled in any plan, and about 600 dead people were placed on the rolls.  Many states have spent hundreds of thousands of dollars to cover the cost of prescriptions for their residents, while, at the same time, all states are required by law to send in payment to the federal government to cover prescription drug costs for their Medicaid recipients — thus paying twice.  Although the federal government has promised repayment, untangling the mess is proving to be a bureaucratic nightmare.

Some doctors and pharmacists are saying that many of the drugs supposedly covered by the new benefit are not readily available to enrollees in the drug plans because of insurers' restrictions.  A recently released analysis of Part D plans found that Medicare drug plans are significantly more restrictive than typical commercial drug plans and have higher co-pays.  The analysis said that Medicare Part D plans are more likely to require prior authorization or to have quantity limits and cover fewer drugs than commercial offerings.

The Centers for Medicare and Medicaid Services (CMS) is struggling to correct the problems administratively.  In Congress a number of lawmakers are suggesting more dramatic changes, including allowing the government to negotiate drug prices as Medicare already does with all other health care providers.  There has also been a growing call to simplify the benefit.   TSCL is reviewing a number of new legislative measures and is continuing to work with Members of Congress for solutions that would provide a simple-to-understand and easy-to-use benefit.

Sources:  "27 Million Enrolled In Prescription Drug Coverage," HHS, March 23, 2006.  "In Medicare Maze, Some Find They're Tangled in Two Drug Plans," Robert Pear, The New York Times, March 1, 2006.  "Avalere Health Releases Comprehensive Medicare Marketplace Report," Avalere Health, February 6, 2006.  "Medicare Studies Limiting Number of Drug Plans," Sarah Lueck, The Wall Street Journal, February 25, 2006.  "N.J. Details Medicare Drug Failures," Carol Ann Campbell, The Star Ledger, February 16, 2006.

May 2006