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MEDICARE PART D Where Do We Stand? Where Are We Going?

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

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MEDICARE PART D Where Do We Stand? Where Are We Going?

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

  2. Exhibit 1 Overview • 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 • The majority of beneficiaries now have drug coverage, but around 10% (~4 million) are not enrolled • 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 • Pharmacists and physicians have played a key role in helping beneficiaries navigate their Part D plans • Unanswered Questions and Issues to Monitor

  3. Exhibit 2 Part D - The Medicare Drug Benefit • Drug benefit is offered exclusively through private organizations, not traditional Medicare • 2 types: • 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 • Plans can change from year to year – add, drop, modify • New approach to delivering a Medicare benefit • Take-up is voluntary, not automatic • Standard benefit available, but plans can vary • Coverage and cost depends on plan chosen • 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

  4. Exhibit 3 Changes in Plan Options from 2006 to 2007 • Plan participation • Mostly the same organizations but far more plan options • PDPs: 1,429 in 2006 to 1,875 in 2007 • MA plans: 3,195 in 2006 to 3,971 in 2007 • Monthly premiums • Lowest increasing from $1.87 to $9.50 • Highest increasing from $104.89 to $135.70 • Benefit design and formularies • 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

  5. Exhibit 4 45-50 drug plans (2 states) 51-55 drug plans (26 states) 56-60 drug plans (18 states) 61-66 drug plans (5 states) Beneficiaries in Most States Had a Choice of At Least 50 PDPs in 2007 1,875 Stand-alone PDPs Offered Nationwide 53 51 57 53 53 53 53 51 57 61 54 53 57 56 54 66 53 53 53 56 61 54 56 54 66 53 56 54 55 55 DC 53 53 51 57 45 57 59 58 53 57 53 57 56 53 60 58 46

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

  7. Exhibit 6 Standard Medicare Prescription Drug Benefit, 2007 Beneficiary Out-of-Pocket Spending Plan Pays 15%; Medicare Pays 80% Enrollee Pays 5% $5,451 in Total Drug Costs($3,850 out of pocket) $3,051 Coverage Gap (“Doughnut Hole”) Enrollee Pays 100% $2,400 in Total Drug Costs Enrollee Pays 25% Plan Pays 75% $265 Deductible $328 Average Annual Premium 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).

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

  9. Exhibit 8 Part D and the “Doughnut Hole” • Of 22.5 million Part D enrollees in 2006: • 9 millionreceived low-income subsidy and face no gap in coverage • Less than 1 millionenrolled in plans with full gap coverage • An estimated 11 million Part D enrollees had no coveragein the doughnut hole in 2006 • 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 • 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 • In 11 states there are no plans available with full coverage of brands and generics in the gap

  10. Exhibit 9 $100 $93.46 $90 $80 $70 $60 $51.11 $50 $40 $30.17 $30 $20 $10 $0 No Coverage Generics Only Generics and Brands Average Monthly Premiums Are Highest for PDPs Offering Full Gap Coverage Number of PDPs in 2007: 1,337 511 27 SOURCE: Hoadley et al. Benefit Design and Formularies of Medicare Drug Plans: A Comparison of 2006 and 2007 Offerings; November 2006.

  11. Exhibit 10 HHS Estimates 90% of Medicare Beneficiaries Have Drug Coverage No Creditable Coverage Stand-Alone PDP Other Creditable Coverage1 Total in Part D Plans: 22.5 Million (53%) Dual Eligibles in PDPs Creditable Employer/Union Coverage2 Medicare Advantage Drug Plan3 Total Number of Beneficiaries = 43 Million 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, 2006. Data as of June 11, 2006.

  12. Exhibit 11 Enrollment in Medicare Drug Plans Is Concentrated in a Few Organizations Top 10 Parent Organizations: 5.7 million UnitedHealth Humana 4.4 million Wellpoint 1.2 million WellCare Health Plans 1.0 million 3 organizations have 50% of total Part D enrollmentof 22.5 million Member Health 1.0 million Kaiser Permanente 0.8 million Coventry Health Care 0.7 million Universal American Financial Corporation 0.5 million All other parent organizations (n=216) have fewer than 400,000 PDP and/or MA-PD enrollees 0.4 million Health Net Medco Health Solutions 0.4 million SOURCE: CMS Medicare Drug Coverage Enrollment Data, July 26, 2006.

  13. Exhibit 12 Variation in Costs for 2007 Among the 10 PDPs with the Highest Enrollment Note: *Marketed as Pacificare Saver in 2006. 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. Exhibit 13 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 2006.

  15. Exhibit 14 Choice Matters – Even for Healthy Seniors ESTHER 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. Esther is 67 and lives in Bethesda. She takes only one drug, Fosamax, for osteoporosis. • 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 at least $3,000 – greater for PDPs 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. 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.

  16. Exhibit 15 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? Important differences They are basically the same Don’t know/ Refused SOURCE: KFF/HSPH The Public’s Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006)

  17. Exhibit 16 Part D Plan Enrollment Decisions in 2006 • 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 • 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 • Name recognition and prior experience with the company were key factors for many in selecting a Part D plan, possibly “trumping” other considerations

  18. Exhibit 17 Trends in Seniors’ Impressions of Drug Benefit AMONG SENIORS: Given what you know about it, in general, do you have a favorable or unfavorable impression of the new Medicare 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.

  19. Exhibit 18 Many Part D Plan Enrollees Say They Are Satisfied and Saving Money AMONG SENIORS WHO SAY THEY ARE ENROLLED IN A MEDICARE PRESCRIPTION DRUG PLAN: Compared to what you paid for prescriptions last year, are you now saving money, paying more or paying about the same overall? All in all, have your experiences using your new Medicare drug plan been: Somewhat positive Very positive Saving money Paying more Somewhat negative Paying about the same Don’t know Very negative Don’t know/ refused SOURCE: KFF/HSPH The Public’s Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006)

  20. Exhibit 19 Yet Many Seniors Report Problems Related to Getting Prescriptions Under Their Part D Plan AMONG SENIORS WHO SAY THEY ARE ENROLLED IN A MEDICARE PRESCRIPTION DRUG PLAN: Yes, had a MAJOR problem Yes, had a MINOR problem 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? 12% 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? 12% Have had either type of problem 23% SOURCE: KFF/HSPH The Public’s Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006)

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

  22. Exhibit 21 Most Pharmacists Say Benefit Works Well for Their Customers How well would you say the new Medicare drug benefit works for your customers in each of the following areas… Very well Somewhat well Not too well Not well at all Lowering their out-of-pocket costs 3% Getting them access to the prescription drugs they need 4% SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006)

  23. Exhibit 22 Yet nearly one in five pharmacists say most of their Medicare customers have had problems with their drug plan 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 Some None Just a few SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006)

  24. Exhibit 23 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… Left the pharmacy without their prescription because the drug wasn’t on their plan’s formulary Had problems getting enrollment cards or letters of enrollment after signing up for a plan Had to pay out-of-pocket for their prescription because pharmacist couldn’t verify their enrollment Left the pharmacy without their prescription because they couldn’t afford the copayment SOURCE: Kaiser Family Foundation National Survey of Pharmacists (conducted April 21-June 27, 2006)

  25. Exhibit 24 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 Somewhat well Not too well Not well at all Don’t know/ Refused Lowering their out-of-pocket costs Getting them access to the prescription drugs they need SOURCE: Kaiser Family Foundation National Survey of Physicians (conducted April 25-July 8, 2006)

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

  27. Exhibit 26 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 Agree Disagree Don’t know/Refused Ages 65 and over Pharmacists Doctors SOURCES: KFF/HSPH The Public’s 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)

  28. Exhibit 27 Support for Limiting Plan Choice ASKED OF SENIORS ONLY: Which statement better reflects your opinion? Statement B: Medicare should select a handful of plans that meet certain standards, so seniors have an easier time choosing Statement A: Medicare should offer seniors dozens of plans so they can select their own Don’t know/ Refused SOURCE: KFF/HSPH The Public’s Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006)

  29. Exhibit 28 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 not working well and should be repealed Is working well and no real changes are needed Is not working well and needs major changes Could be improved with some minor changes Note: “Don’t know/refused” responses not shown SOURCE: KFF/HSPH The Public’s Health Care Agenda for the New Congress and Presidential Campaign (conducted Nov 9-19, 2006)

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

  31. Exhibit 30 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 3.1 million (24%)NOT receiving subsidy 7.5 million (57%)Full/partial dual eligibles and SSI recipients receiving subsidy Total = 5.7 Million Non-Duals Eligible for LIS 2.0 million (15%) Eligible by SSA and receiving subsidy 0.5 million (4%)Eligible but estimated to have creditable coverage 0.1 million (1%) Anticipated facilitated enrollment SOURCE: Testimony of Mark McClellan, CMS Administrator, June 14, 2006. Data from CMS, as of June 11, 2006, and updated LIS eligibility determinations from SSA, as of July 14, 2006.

  32. Exhibit 31 Part D Successes and Challenges to Date • 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 • 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 HOWEVER… • Some beneficiaries still lack drug coverage and could face late enrollment penalty • 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 • Difficulty getting “extra help” to those with low incomes • LIS participation lower than projected; outreach difficult • Asset test excludes many with low incomes • Even with drug coverage, many enrollees could face high costs • No coverage in the “doughnut hole” • High cost sharing for specialty drugs

  33. Exhibit 32 Questions and Unknowns about Part D • 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? • Variations Across Drug Plans and Formularies • What are the implications of these variations for patients, especially those with chronic and/or rare conditions? • Experiences in the Doughnut Hole • How many people will be affected each year? What will their experiences be? Does utilization change? • Exceptions and Appeals Processes • How many enrollees are affected? How do these processes work for enrollees? • 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? • 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?

  34. …thank you. Any questions?

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