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Medicare Promotes New Tools for Choosing a Drug Plan, but Critics Point to More Problems

By Mary Agnes Carey, CQ HealthBeat Associate Editor

October 13, 2004 -- As Medicare officials detailed new tools to help beneficiaries enroll in the program's drug benefit, outside groups said Medicare pays private insurers too much to provide drug and health care coverage. They also challenged the accuracy of the answers private plans provided to Medicare beneficiaries.

Centers for Medicare and Medicaid Services Administrator Mark B. McClellan said Friday that cost and coverage information on 95 percent of plans being offered to Medicare beneficiaries was available on, the official Web site of the Medicare drug benefit. Information for the remaining 5 percent of plans will be posted Monday, he said.

During a conference call with reporters on his last day as CMS administrator, McClellan also discussed a variety of changes to Medicare's "Drug Plan Finder," such as a new feature to help beneficiaries determine the monthly cost of drug coverage. Enrollment for the 2007 Medicare drug benefit begins Nov. 15.

Beneficiaries can purchase standalone prescription drug plans or enroll in "Medicare Advantage" coverage, which offers both drug and other health care benefits. About 6 million of Medicare's more than 42 million elderly and disabled beneficiaries are enrolled in Medicare Advantage plans.

A CMS analysis of the drug benefit released Friday found that, compared with those without drug coverage, beneficiaries in standalone drug plans will save an average of 53 percent off the cost of drugs and up to a maximum of 68 percent through the lowest-cost plans available. Beneficiaries in lowest-cost plans who switch to generics could see an 87 percent savings over brand-name prices, according to the CMS analysis, which was based on medications most often used by beneficiaries for conditions such as high blood pressure, high cholesterol, and heart failure.

Separately, a report released Thursday by the Medicare Rights Center and the California Health Advocates said CMS should require Medicare drug plans to provide "timely and accurate" answers to beneficiaries who call about Medicare drug coverage.

"Too often a call to one of the private drug plans does more to mislead than to help," Medicare Rights Center President Robert M. Hayes said in a statement. The report urges CMS to give the drug plans detailed requirements for the plan's information customer service representatives in areas such as the enrollment process, gaps in coverage, and which drugs are covered.

CMS spokesman Jeff Nelligan said the agency closely monitors Part D drug plans and sends compliance letters when necessary.

A separate study from the consumers group Families USA said Medicare is overpaying the drug and insurance industries for products and services that Medicare could provide for far less. Medicare Advantage plans, in particular, cost taxpayers an extra $2.7 billion in 2005 and $4.6 billion in 2006, the report concluded.

McClellan said he had not read the Families USA report but said "they've been saying things like that for a while."

McClellan said higher payment rates for Medicare Advantage plans offered in rural areas have helped expand Medicare choices for millions of beneficiaries and that Congress made the decision to increase those payment rates. He also said that starting in 2007 Medicare Advantage plans would be "risk adjusted" so plans caring for the sickest beneficiaries would be paid the highest rates. Families USA said its figures reflected that accounting for health care status.

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