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CMS Reg Aimed at Boosting Drug Coverage for Poorer Seniors as Analysis Finds Prices Higher

By Mary Agnes Carey, CQ HealthBeat Associate Editor

January 7, 2008 -- As the Centers for Medicare and Medicaid Services (CMS) announced a proposed regulation Monday that it said is aimed at helping low-income Medicare beneficiaries remain in their current Medicare drug plan without having to pay a premium, the group Consumers Union released an analysis that found 75 percent of Medicare drug plans have raised their costs in 2008, averaging $369 for the five commonly used drugs between December and January.

The Consumers Union analysis of data from the Web site also found that about one in six plans increased prices on the five drugs by more than $500 alone during that time. Each month since December 2005, Consumers Union has been monitoring the price of five common drugs in a zip code in each of five large population states—California, New York, Illinois, Florida, and Texas. According to Consumers Union, the data has consistently shown major swings in price, most often upward.

"Most of these Medicare drug plans are increasing costs double to triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors," said Bill Vaughan, senior policy analyst for Consumers Union, in a statement.

Bush administration officials have said repeatedly that the Medicare drug benefit is working well and is helping seniors live better, healthier lives. CMS Spokesman Jeff Nelligan noted Monday a December Wall Street Journal Online/Harris Interactive Survey that found 87 percent of those enrolled in a Medicare drug benefit plan are satisfied with their plan, up from 75 percent in 2006. In that poll, six percent of beneficiaries were not satisfied with their plan.

"The design of the program helps people with Medicare with the cost of their drugs. Indeed, predictable co-payments and low monthly premiums are two reasons the satisfaction rate of the Part D program is now at 87 percent," Nelligan said. "In terms of government interference in price negotiations, both the CBO and CMS actuaries have said the savings from such a scheme are almost non-existent. The fact is, Part D is giving Medicare beneficiaries choice and access, at savings to the consumer and to the taxpayer."

In November the Department of Health and Human Services (HHS) said that more than 90 percent of beneficiaries in a stand-alone Part D prescription drug plan would have access to at least one plan in 2008 premiums lower than they paid in 2007. Beneficiaries in every state would have access to at least one prescription drug plan with premiums of less than $20 a month, and a choice of at least five plans with premiums of less than $25 a month, HHS said, with the national average monthly premium for the basic standard benefit expected to average $25, far below the original estimate for 2008 of $41.

On Monday CMS released a proposed regulation that would allow prescription drug plan sponsors, under certain conditions, to offer a reduced premium amount for certain individuals eligible for Medicare's low-income subsidy. CMS said the proposal, which would apply in regions where there otherwise would be fewer than five prescription drug plan sponsors with a "zero-premium" plan options for beneficiaries, would help to ensure there are enough organizations offering such plans and increase the number of low-income subsidy-eligible enrollees in those regions who could remain with their current plan without having to pay a premium.

"Through this proposed rule, we are seeing comment on a means of reducing the number of beneficiaries subject to random reassignment while maintaining the integrity of the annual bid process," CMS Acting Administrator Kerry Weems said in a statement. "We expect changes adopted in the final rule to be effective in the 2009 benefit year.

According to CMS, as a result of premium and subsidy changes, the premium for an individual's Medicare Part D plan can be fully covered by the subsidy in one year and not the following year. During the annual election period each fall, CMS randomly reassigns certain low-income subsidy eligible beneficiaries to another Part D plan if they would otherwise have to start paying a premium because their plan's premium will be higher than the amount subsidized by the government.

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