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CMS 'Call Letters' Aim to Simplify Medicare Plan Menu

APRIL 4, 2006 -- The Centers for Medicare and Medicaid Services issued bidding instructions Tuesday urging private plans in Medicare to simplify their offerings for 2007. However, the CMS "call letters" instructing prescription drug and managed care plans on preparing their bids for next year do not formally standardize those offerings, a step urged by some congressional Democrats.

CMS said it wants "clearly understandable" options and that plans should compete by making it easier for beneficiaries to make comparisons. The agency said "distinct preferences" are emerging among beneficiaries for certain design features in the Medicare prescription drug benefit and that plans should focus their competitive energies on offering alternatives in those areas.

CMS wants alternatives such as deductibles versus no deductibles for drug coverage and the use of fixed-dollar co-payments for prescriptions versus "co-insurance," in which out-of-pocket costs are a percentage of the cost of the prescription. Other alternatives should include coverage versus non-coverage in the "doughnut hole," the portion of the standard drug benefit in which beneficiaries must pay 100 percent of prescription costs; a range of premium charges; and tighter versus broader formularies of covered drugs.

Bidders should make sure that differences in plans offered "can be reasonably understood," said the CMS call letter for "PDPs," the prescription-drug-only plans offered in traditional Medicare.

Two Is Enough, Mostly
Consistent with the proposed version of the call letter, CMS said that in general it wants a PDP sponsor to offer no more than two types of drug plans.

"In general, we expect that more than two bids from a sponsoring organization would not provide meaningful variation, unless one of the bids is an enhanced alternative plan that provides coverage in the coverage gap," the letter said.

The document also addresses a number of problems that fouled the start of the drug benefit for some beneficiaries and pharmacists, such as long telephone wait times for assistance and delayed updates of enrollment data.

"CMS expects sponsors to develop and maintain information systems that accurately process updated enrollment information at least weekly," the letter says. Call centers operated by drug plans to handle questions by current and prospective enrollees must answer 80 percent of calls within 30 seconds. "Abandoned" calls in which beneficiaries on hold hang up must not exceed 5 percent of all beneficiary calls.

Those new timeliness standards also apply to toll-free call centers that plans must operate to answer inquiries from pharmacists and doctors or nurses about a beneficiary's coverage. The call center must be open when the pharmacies participating in a plan are open, even if that's 24 hours a day. CMS is going to be releasing weekly reports on call center performance, the agency said.

The call letter also advises plans that they must have a "one-stop" area on their Web sites providing information on how beneficiaries can appeal decisions not to cover drugs.

A separate CMS call letter to managed care plans on the Medicare Advantage side of Medicare also aims to clear up beneficiary confusion. In some cases, "beneficiaries are unable to make meaningful distinctions between the various plans offered by a sponsor," the letter said. Sponsors must eliminate plans "that are substantially duplicative in terms of cost sharing, provider networks and benefit design," including drug coverage offered by the plans, the letter said.

CMS also said that, in general, it will no longer be possible to market a managed care plan as having a "zero premium" for Medicare Part B, which covers physician services and certain other forms of care outside the hospital. The agency noted that in 2007 higher-income beneficiaries will pay higher premiums for Part B than other beneficiaries. Since an MA plan must offer uniform benefits, the zero premium claim could not be made in marketing, but plans can tout premium rebates, the letter explains.

Consumers Union has expressed strong support for limiting the number of drug benefit designs. "The current proliferation of plans, many with minor differences, has simply led to confusion and predictable paralysis of choice among many beneficiaries and their families," the publisher of Consumer Reports said in a March 1 comment on a draft version of the call letter.

It expressed support for legislation offered by Rep. Marion Berry, D-Ark. (HR 752), and Sen. Richard J. Durbin, D-Ill. (S 345), that would create a drug plan administered directly by Medicare and that would compete with private prescription drug plans in the program. The Medicare-run plan would have authority to negotiate prescription drug pricing.

Pending such legislation, "we support the concept of reducing the number of plans and, to the extent possible, grouping them according to a few broad characteristics," Consumers Union said. But "we doubt that any grouping will be enough to help consumers," the group added.

Issues such as formularies of covered drugs, tiers of varying co-payments within plans, utilization controls, and differences in grievance and appeal procedures "are simply too complex to be made understandable to the layperson."

In the Senate, Democrats Max Baucus, Mont. and Ron Wyden, Ore., have expressed interest in introducing legislation simplifying drug plan comparisons by standardizing the plans that could be offered.

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