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Medicare Drug Benefit Less Generous than Calif. Program, Study Says

MARCH 21, 2006 -- Many low-income California residents now receiving drug coverage under the Medicare drug program have benefits less generous than they received as part of the state's Medicaid program, according to a report released Tuesday.

The study, compiled by Avalere Health for the California HealthCare Foundation, found that coverage for California dual-eligibles—beneficiaries who qualify for both Medicare and Medicaid but who now receive their drug coverage under Medicare as part of the drug law—was inferior to their coverage under Medi-Cal for the four classes of drugs analyzed in the report. Those are antipsychotics, which are used to treat conditions such as schizophrenia; antiretrovirals, which are used to treat HIV; and antihypertensives and anticholesterol drugs, which are used to help regulate high blood pressure and reduce cholesterol.

Approximately one million of California's Medicare beneficiaries have transitioned from Medi-Cal's prescription drug coverage to Medicare drug plans. While these dual-eligibles pay no deductible or monthly premium for their Medicare drug coverage, they do have to make copayments of $1 to $5, which is higher than Medi-Cal's non-mandatory $1 copay for all prescription drugs.

In addition, the study found, dual-eligibles who were automatically enrolled in a Medicare drug plan by the Centers for Medicare and Medicaid Services (CMS) receive different coverage, depending on the plan they were enrolled in.

"The wide variance in plans accepting dual-eligibles calls into question the appropriateness of the auto-assignment policy for enrolling this group of beneficiaries," said Jon Blum, vice president of Avalere Health and a co-author of the report.

CMS Spokesman Peter Ashkenaz said that the health plans being offered to the California beneficiaries provide access to medically necessary drugs. "The conditions are all being treated as they are supposed to be," he said. "The generic equivalent or other drugs that work in similar ways are covered by the plans," Ashkenaz said, adding that the study focused on access to specific brand-name drugs when many generics work just as well. CMS requires plans to include at least two drugs in each therapeutic category or class in their plan formularies, which are lists of approved drugs. CMS also designated another six drug categories as "protected," and expects plans to cover all or substantially all available drugs.

The Avalere report evaluated 10 prescription drug plans into which some of California's dually eligible beneficiaries were automatically enrolled. The analysis found that plans accepting dual-eligibles covered a low of 626 drugs and a high of 3,360.

While Medi-Cal covered 20 anti-psychotic drugs, which can have different effects on different people, some of the plans that accepted automatically enrolled beneficiaries covered 15 of the same drugs. Avalere's review of two subclasses of cardiovascular drugs showed that while Medi-Cal covered 26 drugs, auto-enrollment PDPs cover between 12 to 32 of these drugs.

The plans reviewed in the report also vary in their requirements for "prior authorization," before the plan will cover a prescription not on a plan's formulary. While one auto-enrollment plan requires prior authorization for eight antipsychotic drugs, others do not require prior authorization for any drugs in the same class, the study found.

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