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Groups Urge Seniors to Closely Examine Medicare Drug Plan Choices

By Mary Agnes Carey, CQ HealthBeat Associate Editor

November 16, 2007 -- As Medicare recipients mull their choices for drug coverage in 2008, a new analysis warns that the most popular Medicare standalone drug plans will cover fewer drugs in 2008, and consumer groups are urging seniors to closely review their current coverage for price hikes and other changes.

"Medicare private drug plans are a moving target for Americans with Medicare," said Robert M. Hayes, president of the Medicare Rights Center, a consumer group. "A plan that worked well for someone this year may be more expensive, cover different medications, and have different restrictions on their covered drugs in 2008. No one should assume that their drug coverage will remain the same if they stay in their current plan."

The annual Medicare prescription drug enrollment period began yesterday and continues through Dec. 31. Beneficiaries can select a health plan that offers drug coverage or a prescription drug only plan for 2008. CMS announced Thursday that the Medicare Web site,, now provides beneficiaries with the five-star ratings of the quality and performance of individual health plans and drug coverage plans.

But too many plans are receiving those five-star ratings, which may render the new system meaningless, said Consumers Union senior policy analyst Bill Vaughan. "The move to five stars starts sets the stage for Medicare to give beneficiaries more helpful information about the range of quality," Vaughan said, "but when you look at the Web site . . . many of the ratings don't deal with issues that seem relevant to consumers."

Consumers Union has urged the Centers for Medicare and Medicaid Services (CMS) to rate on a grading curve, or tier plans into percentiles of performance, which they said would make it easier for consumers to understand how well plans are serving beneficiaries. The group also asked the agency to implement a quality system that concentrates on key consumer issues, such as how often and how much a plan increases prices once a beneficiary enrolls and how they handle consumer complaints.

An analysis released Friday by the firm Avalere Health found that of the top 10 prescription drug plans by enrollment, all but two will decrease the total number of covered drugs next year. When taken together, the top 10 plans decreased the size of their formularies by 26 percent, from an average of 3,094 drugs in 2007 to 2,285 drugs in 2008.

Overall, the report concludes, the enrollment weighted average of covered drugs in 2008 is 2,134, a 26 percent decrease from the 2007 average of 2,892. Avalere officials said the reductions may be attributed largely to plans' reaction to a decision from CMS to no longer include drugs that have not been approved by the Food and Drug Administration (FDA) on the CMS list of formulary-approvable drugs.

CMS Spokesman Jeff Nelligan said Friday that while the agency determined that Medicare drug plan formularies should only include FDA-approved drugs, the number of FDA-approved drugs on the list has increased. "Because of the Medicare requirement for beneficiaries to have access to all medically necessary drugs, drugs that have been proven safe and effective will be available to substitute for these non-FDA approved drugs," Nelligan said.

Some reports indicate Medicare beneficiaries will be paying more next year for their drug coverage. An analysis from the consumer group Families USA found that in 2008, premiums for the average beneficiary in a standalone prescription drug plan will increase by 21 percent. A report from the Kaiser Family Foundation found that the average monthly premium for standalone Medicare drug plans in 2008 will increase by 17 percent, from $27.39 to $31.99, if enrollees remain in their current plans. Nearly one of five of this year's enrollees will experience an annual increase of at least $120 if they stay in the same plan next year, the study found.

The Department of Health and Human Services said Thursday that more than 90 percent of beneficiaries in a standalone Part D prescription drug plans will have access to at least one plan in 2008 with premiums lower than they are paying this year. Beneficiaries in every state will 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.

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