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Administration Opens 'Large Conversation' with Nation on Medicare Drug Benefit

JUNE 16, 2005 -- Led by President Bush, administration officials said Thursday they are opening a sustained campaign to fuel a national discussion of the Medicare prescription drug benefit that starts Jan. 1. Acknowledging that beneficiaries will face a potentially confusing array of choices, officials said they are getting an early start on perfecting Internet and other tools to help Medicare enrollees sort through their choices. Beneficiaries will have until May 15, 2006 to pick a drug coverage plan after the open enrollment period begins Nov. 15.

Addressing an afternoon rally at HHS headquarters, Bush said that "over the next 11 months, we will unite a wide range of Americans: from doctors, to nurses, to pharmacists, to state and local leaders, to seniors groups, to disability advocates, to faith-based organizations."

"Together, we will work to ensure that every American on Medicare is ready to make a confident choice about prescription drug coverage, so they can finally receive the modern health care they deserve." Bush added that "countless" organizations are "holding community events and connecting with seniors face-to-face, so Medicare recipients can get their questions answered and make informed choices about prescription drug coverage. In other words, we're on a massive education effort, starting today. And I'm asking for America's help."

"We're preparing the nation for a large conversation," HHS Secretary Michael O. Leavitt told reporters earlier in the day. "It may be a daughter sitting down with her parents... it may be a youth volunteer. We're creating information now" to fuel those discussions.

The good news in the program may look like bad news to some people—lots of choices to evaluate, with large pocketbook consequences riding on the decisions made. Leavitt said there will be multiple drug coverage plans in every part of the country, multiple drugs in each therapeutic category of the plans, and robust competition that will serve beneficiaries well. He said Wall Street analysts' estimates that 28 to 30 million of the nation's 42 million Medicare beneficiaries will enroll in the drug benefit next year are reasonable.

Centers for Medicare and Medicaid Services Administrator Mark B. McClellan, noted that Medicare Advantage plans will offer more generous drug coverage than drug-only "PDPs," or Prescription Drug Plans, in which beneficiaries who wish to remain in the traditional fee-for-service part of Medicare will enroll.
Three-quarters of those Medicare Advantage (MA) plans offer drug benefits now; under the Medicare overhaul law (PL 108-173), MA plans will also receive the payments PDPs receive to provide drug coverage.

McClellan said better MA drug benefits could take the form of lower deductibles, co-payments, or premiums, or of filling in "gaps" in coverage, an apparent reference to the "doughnut" hole in which beneficiaries must pay 100 percent of drug costs for a large range of their pharmaceutical outlays if they incur major prescription drug costs in a year.

Medicare Advantage enrollment, now at about five million, could grow considerably thanks to the better drug benefits. McClellan said 90 percent of beneficiaries in 2006 would have access to Medicare Advantage health plans. Although the plans are expected to offer better drug benefits, they also entail higher out-of-pocket costs—in the case of HMOs, much higher—if enrollees go outside the plans provider network for doctor or hospital care.

McClellan said MA enrollment is growing at a pace of 50,000 per month now. He declined to predict how the advent of better drug benefits in 2006 would affect that pace of enrollment growth.

Right now, there are limits on how detailed the national conversation on benefits can be. Information about the drug benefits offered by Medicare plans won't be available until October when the "Medicare and You" handbook is mailed to the households of all beneficiaries. However, beneficiaries will have until May 15, 2006 to actually enroll. The drug benefit itself starts Jan. 1, 2006.

But officials stressed that applications to determine eligibility for the more generous drug benefit for low-income beneficiaries are already available. McClellan said it's very important that beneficiaries who might qualify fill out the applications as soon as possible to determine whether they are eligible.

Medicare has found that describing the coverage as a "low-income" benefit may not get the point across because some people who qualify may not think of themselves as poor, McClellan noted.

The CMS chief said that 7 to 8 million beneficiaries fall into the category of non-Medicaid-eligible Medicare beneficiaries who are eligible for the low-income benefit. "We have a large outreach operation starting right now" to reach them, McClellan said. The Social Security Administration is in the middle of a campaign to send out almost 19 million applications between May and August.

Medicare expects to sign up 20 percent of the 7 to 8 million—a very high figure for that population based on experience with other forms of government low-income assistance.

Some six million Medicaid beneficiaries also eligible for Medicare will be automatically enrolled in the new drug benefit if they do not pick a plan themselves. About 10 million Medicare beneficiaries have retiree drug benefits; McClellan said they will get notices this fall from their retiree plan on what decisions they need to make.

McClellan estimated there are 12 million beneficiaries into a category he called "other people" that includes two million people with Medigap coverage. The category is a likely source of enrollment in the drug benefit, officials said.
Officials estimated that they will spend $300 million in fiscal 2005 on outreach, including the Medicare and You handbook, one-on-one counseling by state and local agencies, Internet sites, and the 1-800-Medicare helpline.

The administration also is enlisting pharmacists and doctors in the education effort, Leavitt said. Doctors don't have time to help patients pick the right plan, he said, but can give them information on where to go for help.

Leavitt added that HHS has entered into partnerships with senior groups and a variety of other partners. "We're going to reach beneficiaries where they live, work, pray, and play," he said.

John Lewis, D-Ga., of the House Ways and Means Health Subcommittee and ranking member of the Oversight Subcommittee, complained Thursday that some low-income beneficiaries had received empty envelopes in a mailing about the drug benefit.

He called on Republicans to carry out oversight hearings on the implementation of the benefit. A CMS official said the administration received fewer than 100 calls about empty envelopes and resent the mailing to those people.

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