The Fund is studying ways to close the gap in drug coverage and reduce other out-of-pocket costs for beneficiaries. One method is incorporating drug and Medigap-type coverage into the traditional Medicare program and offering it as an elective, comprehensive, high-option benefit. This kind of package would have a low deductible, low cost-sharing, and no coverage gap, while offering catastrophic protection. It also would cost beneficiaries far less than the typical premiums for Medigap policies and the forthcoming drug benefit.

To further improve the financial security of seniors, the Fund plans to explore the feasibility of providing current and future beneficiaries with the opportunity to "pre-fund" supplemental benefits. Beneficiaries would be able to start accumulating contributions at age 50 by deducting pre-tax dollars from earnings and investing them in individual Medicare savings accounts. The funds could be available for long-term care expenses, prescription drugs, or other services, or they could be used to buy into Medicare before age 65.

In addition to the financial difficulties associated with high out-of-pocket costs, beneficiaries face the anxiety of trying to navigate our complex health care system. In an October 2003 issue brief,⁽³⁵⁾ Moon and colleagues reported that more than one-third of Medicare beneficiaries have four or more chronic conditions and more than one-half of beneficiaries see two to three physicians in one year. All beneficiaries—especially those with multiple chronic conditions—must grapple with health care decisions: which types of clinicians to see, when to visit providers, what kind of care is best, and what they can do to help manage their conditions. Individuals could be better served by clinicians who would oversee all their care, help them navigate the health care system, provide information on self-care, and serve as advocates. To this end, the Fund will be exploring a medical home benefit that offers each beneficiary a patient-centered care practice. The Fund is also investigating how to provide a post-hospital care coordination benefit for those high-cost, high-risk beneficiaries who spend time in hospitals.

The benefits of a medical home, prescription drug coverage, and other services are important developments. But, in order to receive optimal care, the Medicare program and its beneficiaries still must identify the top-performing health care providers—those furnishing the highest quality care at relatively low cost. The Fund is planning to sponsor research to advance state-of-the art performance measurement that will provide information to improve care and efficiency for Medicare beneficiaries.