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Panel Recommends Removing 'Lock In' Policy for Medicare Drug Plans

MAY 19, 2006 -- A panel of Medicare experts at a presentation on May 12 touted ending locked-in enrollment in Medicare Advantage plans and allowing beneficiaries to switch plans.

At the presentation, hosted by the Alliance for Health Reform, panelists discussed the enrollment numbers for Medicare Advantage plans, the out-of-pocket costs of beneficiaries and proposed changes to the plan. The most discussed recommendation was changing the "lock in" provision for Medicare plans.

Under the new Medicare drug law (PL 108-173), Medicare beneficiaries are not able to switch back and forth between drug plans and are locked into one plan for a year at a time.

Brian Biles, a professor in the Department of Health Policy at George Washington University, said that with the potential regarding the many Medicare Advantage plan benefit packages and the risk of out-of-pocket costs, enrollees should not be locked into a Medicare Advantage enrollment plan for an entire year.

Biles argued the lock-in should be suspended until new limits on out-of-pocket costs and improved risk adjustments are implemented.

He presented data showing that out-of-pocket costs vary depending on the state and health of the patient. The sickest 5 percent of the elderly pay 43 percent of the total cost and an average of $63,000 a year, while the healthiest 50 percent pay 4 percent of the total costs and an average of $550 a year. Thus, Medicare overpays for the healthy enrollees by $180 per year and underpays for the sickest enrollees by $4,200.

Marsha Gold, senior fellow at Mathematica Policy Research, presented findings on the Centers for Medicare and Medicaid Services' landscape. According to November 2005 data, 8 percent of Medicare Advantage enrollees paid no premium for regional PPOs and 43 percent paid no premium for HMOs.

Biles said his research found some plans with $100 to $300 a day copays for hospital care.

Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, argued that data from a study by the Commonwealth Fund found that out-of-pocket costs are instead lower. According to Ignagni, the costs are lower for those in good health in all 88 Medicare Advantage plans studied, for those in fair health in 86 out of the 88 studied and for those in poor health for 69 out of the 88.

While Ignagni said she supports a suspension to the lock-in policy, she pointed to a high satisfaction among enrollees, with less than 2 percent of enrollees disenrolling from Medicare Advantage plans.

"It's clear that a number of individuals looked at Medicare Advantage plans and made a judgment based not on experience but on a political basis," Ignagni argued.

According to Ignagni, the current lock-in policy dissuades beneficiaries from signing up with a plan. Simplifying the information beneficiaries receive could assist in overcoming this barrier, she said.

She admitted that "Medicare Advantage was on life support in 2005" but touted rebuilding since.

Suspending the annual lock-in policy would reinstate previous Medicare policy that was in place for Medicare+Choice and Medicare Advantage programs from 1997 through 2005.

Abby Block, director of the Centers for Beneficiary Choices at CMS, would not state a position on the lock-in but instead touted the large number of Medicare Advantage plans available.

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