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January 2008

Part D: 3.1 million switched plans

By Larry Lipman | Thursday, January 31, 2008, 04:23 PM

About 3.1 million Medicare beneficiaries switched prescription drug plans last fall, according to figures released Thursday by the federal government.

Of those who switched, about two-thirds were low-income beneficiaries who were automatically reassigned so they would not have to pay a monthly premium.

The total number of beneficiaries enrolled in private drug plans under Medicare Part D increased by 1.5 million to 25.4 million, according to the Centers for Medicare and Medicaid Services.

Roughly 40 million elderly or disabled people, or 90 percent of the 44 million Medicare beneficiaries, now have some form of prescription drug coverage including 6.6 million in an employer- or union-sponsored retiree plan and 7.5 million covered by other federal or private plans, the agency reported.

Meanwhile, the federal cost of program is expected to be $117 billion lower over the next 10 years than had been projected last summer. The total expected cost to Medicare from 2008 to 2017 dropped from $915 billion to $798 billion.

A CMS news release attributed the reduced cost estimate to a slow-down in the rise of drug prices, lower estimates of how much the private plans will cost, and higher-than-predicted rebates from drug manufacturers.

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As we enter the third year, Medicare’s prescription drug benefit is proving a resounding success,” Health and Human Services Secretary Mike Leavitt said in a statement. “Enrollment continues to rise, customer satisfaction remains very high, and costs for beneficiaries and taxpayers are considerably lower than original projections.

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Bush planning $91 billion in Medicare cuts?

By Larry Lipman | Thursday, January 31, 2008, 04:01 PM

Reports that President Bush is again planning to call for tens of billions of dollars worth of Medicare cuts has drawn fire from a key House leader.

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Bush’s budget, scheduled to be released Monday, will call for a $6 billion cut in projected Medicare spending next year and $91 billion over five years, according to a story in today’s New York Times.

Last year, Bush proposed cutting Medicare by $4 billion and $65.6 billion over five years. Those cuts were not adopted by Congress.

“This budget will be dead on arrival,” said Rep. Pete Stark, D-Calif., chairman of the House Ways and Means’ health subcommittee.

Bush’s budget is expected to call for $83 billion in cuts to hospitals with the remainder coming from other health care providers. The hospital cuts would include:

  • A $15 billion across-the-board reduction in hospital payments

  • A $25 billion reduction in payments to hospitals that serve a disproportionately large number of low-income patients

  • $23 billion less for training hospitals

  • $20 billion less for hospital construction and equipment.

    Stark said Bush’s budget “would endanger the health care of America’s seniors, people with disabilities, and low-income children. We’ve known for years that his ‘compassionate conservatism’ was simply a slogan. These proposed cuts show his single-minded focus on starving popular and effective public programs, while protecting fat-cat insurance companies that are overpaid with taxpayer dollars.”

    Stark noted that Bush does not plan to reduce payments to private managed care plans under the Medicare Advantage program. The nonpartisan Medicare Payment Advisory Commission (MedPAC) has reported that Medicare Advantage plans are paid 12 percent more, on average, than the cost of traditional fee-for-service care.

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    Private fee-for-service plans slammed at Senate hearing

    By Larry Lipman | Wednesday, January 30, 2008, 04:55 PM

    Private fee-for-service Medicare plans, the fastest-growing form of Medicare, are both excessively costly and medically inefficient, a Senate panel was told Wednesday.

    The plans cost 17 percent more than traditional Medicare and do not meet the same quality care standards imposed on other private plans such as health maintenance organizations (HMOs), the Senate Finance Committee was told.

    In the past two years, enrollment in private fee-for-service plans has grown from 200,000 to 1.7 million beneficiaries. The plans are popular because in return for a beneficiary’s Medicare premium, the plans allow members to receive care from any doctor, cover many of the expenses generally covered by private Medigap plans, and offer additional benefits such as vision, hearing and dental care.

    But the plans have been plagued by questionable marketing techniques, low payment rates to health-care providers, and confusion among beneficiaries, the committee was told.

    “These products give the private sector a bad name,” said Sen. Ron Wyden, D-Ore., who compared private fee-for-service plans to “Dodge City before the marshal arrives.”

    Mark E. Miller, executive director of the nonpartisan Medicare Payment Advisory Commission — created by Congress to recommend changes in Medicare payments — told the committee that the high payment rates for private fee-for-service plans come “at an unacceptably high cost to Medicare.”

    In a report accompanying his testimony, Miller noted that private fee-for-service plans “are among the least efficient plans” while HMOs “are the most efficient” managed care plans.

    Miller told the committee the private fee-for-service plans have a competitive advantage over other managed care plans because they do not have to meet stringent quality standards and they receive larger payments from Medicare for the same services.

    “We are concerned that private fee-for-service plans might undermine more efficient managed care plans,” he said.

    The Senate hearing was composed exclusively of critics of private fee-for-service plans.

    Mohit Ghose, a spokesman for the American Association of Health Plans, said private fee-for-service plans were specifically created by Congress to provide care in rural areas where other managed care plans historically have been unable to establish networks of health providers.

    Ghose said the choice of plans, including privte-fee-for-service plans, still save beneficiaries money when compared to traditional Medicare. He pointed to a study released Wednesday by the independent Kaiser Family Foundation that found that private fee-for-service plans save more than $3,000 for beneficiaries who most use Medicare.

    That study also found that the value of extra benefits provided by private fee-for-service plans was less than those provided by other managed care plans and that about half of private fee-for-service plans are in counties served by other managed care plans.

    Although private fee-for-service plans generally offer increased benefits, the Senate panel was told that many plans charge beneficiaries more than traditional Medicare for copayments for services such as hospital care and medical equipment.

    In addition, doctors may refuse to accept private fee-for-service patients even if they take traditional and other managed care Medicare patients.

    Dr. Albert W. Fisk, medical director of the Everett Clinic in Everett, Wash., told the panel that his clinic no longer accepts private fee-for-service patients because the plans pay doctors less than traditional Medicare and are slower to pay their bills.

    “I’m concerned that my constituents may have difficulty getting access to doctors,” said Sen. Charles Grassley, R-Iowa, the panel’s ranking GOP member.

    The Medicare Payment Advisory Commission has repeatedly recommended that all private managed care plans — including private fee-for-service plans — be paid at the same level as for traditional fee-for-service Medicare.

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    Wanna learn more about Medicare finances?

    By Larry Lipman | Friday, January 11, 2008, 01:43 PM

    The Kaiser Family Foundation has released an issue paper analyzing how Medicare is financed and the fiscal challenges the program faces in the future.

    The paper also outlines the impact of potential program changes, looks at the Medicare drug program and Medicare Advantage plans.

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    New areas being covered by medical equipment competitive bid program

    By Larry Lipman | Tuesday, January 8, 2008, 05:04 PM

    Atlanta, Austin, Dayton, Greensboro and High Point, N.C., are among the 70 metropolitan areas that will be covered by a new Medicare program requiring competitive bidding for durable medical equipment and supplies.

    weems-100.jpg Kerry Weems, administrator of the federal Centers for Medicare and Medicaid Services, announced the expansion of the competitive bidding program Tuesday at a news conference in Los Angeles. The southern California area has been plagued by widespread fraud in durable medical equipment sales charged to Medicare.

    Ten other metropolitan areas — including Palm Beach, Broward and Miami-Dade counties — have been scheduled to come under the competitive bidding program in July. The areas announced Tuesday will come under the program in 2009.

    Under the program, companies that sell durable medical equipment will have to be industry accredited and certified by Medicare to ensure that they are a legitimate business and must submit bids for the equipment items. Companies whose bids come in under a threshold set by the industry will be authorized to bill Medicare for the supplies.

    Currently, Medicare sets prices for durable medical equipment based on prior sales data, which Weems said results in overpayments.

    The kinds of supplies and equipment that will be covered include: oxygen; power wheelchairs; enteral (feeding tube) nutrients; respiratory devices; hospital beds; pressure wound therapy; and walkers.

    Weems predicted the program would provide Medicare beneficiaries with better access to quality equipment at lower prices.

    Recent investigations by the Health and Human Services’ Office of Inspector General have exposed about $1 billion in medical equipment-related fraud. Federal and state task forces also have charged more than three dozen people in Miami for defrauding Medicare in the sale of durable medical equipment.

    The durable medical equipment industry hailed the expansion but criticized Medicare for allowing fraud to flourish for so long.

    “Medicare has failed to effectively exercise its already ample authority to combat fraud and abuse. It is time for CMS to shine a spotlight on its own processes with respect to its ability to ensure the integrity of Medicare,” the American Association for Homecare said in a statement.

    “The association questions why it has taken Medicare so long to impose effective measures to prevent fraud.”

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    Report: Medicare prescription plan’s effect widespread

    By Larry Lipman | Tuesday, January 8, 2008, 02:29 PM

    The full implementation of the Medicare Part D prescription drug plan in 2006 has dramatically reshaped the landscape of who pays what for health care, according to a report released by the federal government Monday.

    As a result of Medicare Part D, the number of prescriptions filled, the amount of retail drug spending and the public share of spending for drugs increased from 2005 to 2006, according to the annual report on national health spending prepared by analysts in the Centers for Medicare and Medicaid Services.

    Meanwhile, the rate of growth in the amount that consumers spent on health care goods and services not covered by insurance slowed, primarily because of Medicare Part D. The growth of so-called “out-of-pocket” health care spending increased 3.8 percent in 2006. If the amount spent on prescriptions was not included in the calculation, out-of-pocket spending would have grown 5.3 percent. That means consumers spent significantly more out of their own pockets for other health services than for prescription drugs.

    Overall, Americans spent 12 percent out-of-pocket for their health care in 2006. That percentage has steadily decreased since 1998, when it was 15 percent. In 1960, before the creation of Medicare, Medicaid and widespread employer health insurance, 47 percent of all health care spending was out-of-pocket.

    Partially as a result of Medicare Part D, the growth in spending for prescription drugs increased in 2006 for the first time in six years, the report said. The growth in retail drug spending was 8.5 percent in 2006 compared to 5.8 percent in 2005.

    In 2006, Medicare suddenly accounted for a much greater portion of prescription drug spending. Medicare covered only 2 percent of retail drug spending in 2005; in 2006 it covered 18 percent.

    The advent of the Medicare Part D program shifted some prescription drug coverage for elderly and disabled Americans from employers to the federal government.

    “The public share of drug spending increased from 28 percent in 2005 to 34 percent in 2006,” the report said.

    Overall, the United States spent roughly $21 trillion - $7,026 per person - on health care in 2006. That was 6.7 percent more than was spent in 2005.

    Despite the increase in the rate of spending for prescription drugs, the rate of growth for other health care services generally decreased:

    • Hospital spending grew by 7 percent to $648.2 billion, a 0.3 percentage point slowdown from 2005.
    • Physician and clinical services grew 5.9 percent to $447.6 billion, the slowest rate of increase since 1999 and 1.5 percentage points slower than in 2005.
    • Nursing home and home health care services spending grew 3.5 percent to $124.9 billion, again the slowest rate of increase since 1999, and a 1.4 percentage point drop from 2005.

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