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Study: Poorest, Sickest Medicare Enrollees Face Smaller Drug Plan Menu

By John Reichard, CQ HealthBeat Editor

A segment of the Medicare population that includes many of its sickest enrollees has a declining number of prescription drug plans from which to choose, according to a consulting firm's analysis. The concern is that "they have a skinnier set of options to match up to their needs," said Lindsey Spindle, a spokeswoman for Avalere Health, the Washington, D.C.–based firm that conducted the study.

At issue are Medicare beneficiaries enrolled in the program's low-income drug benefit, which provides companies with an "LIS," or low-income subsidy, to offer more extensive prescription drug benefits to a population that can ill afford the out-of-pocket costs associated with Medicare's standard prescription drug benefit.

The population includes "dual-eligibles," who qualify for both Medicaid and Medicare and in many cases are extremely frail and suffer from multiple chronic conditions.

Avalere found that the number of plans willing to serve the population is on the decline, a trend that is forcing Medicare to switch the duals to remaining plans through an automatic reassignment process. To participate in the LIS program, plans must bid to offer benefits for a sum that matches what in Medicare lingo is known as "the benchmark," the amount of money Medicare is willing to pay plans for offering prescription drug benefits. If they bid above the benchmark the plan charges beneficiaries monthly premiums. Medicare "PDPs," or prescription drug plans, must charge no monthly premiums to serve the dual-eligible population.

Avalere found that 1.3 million low-income beneficiaries will be automatically reassigned into new plans at the end of the year because a growing number of plans are bidding above the benchmark and are no longer willing to serve the low-income population. The trend toward such automatic reassignments is on the upswing, Spindle said. "That number is up from 1.2 million individuals who CMS reassigned in 2008 and 250,000 individuals in 2007," Avalere said in a news release about the study.

A total of 308 PDPs qualified to serve low-income beneficiaries in 2009, 200 fewer than in 2008, Avalere said. Humana is continuing its withdrawal from the low-income market, while United Healthcare is expanding its presence in the market after losing nearly 600,000 low-income beneficiaries last year. Of the 10 PDPs with the largest enrollments, only one, United Healthcare's AARP MedicareRx Saver, will see an increase in the number of states for which it is eligible for auto-enrollment, Avalere said.

Six states will each have five or fewer PDPs available to automatically enroll low-income beneficiaries in 2009: Arizona, Florida, Hawaii, Maine, Nevada, and New Hampshire. In of the six states, Nevada, only one auto-enrollment PDP plan will be available.

"The fundamental question for Medicare is whether low-income beneficiaries are ending up in plans that do not fully meet their medical needs—especially given the fact that their choices are limited in many states," said Avalere Vice President Bonnie Washington.

Why the importance of having multiple plans when only a couple of years ago critics complained the program offered too many choices?

Spindle notes that because of the multiple medical conditions many low-income beneficiaries have finding a plan that covers the right mix of prescription drugs for them is a challenge.

But CMS spokesman Jeff Nelligan said that "beneficiaries with multiple chronic conditions will have access to medically necessary pharmaceuticals regardless of the plan to which they may be re-assigned. While plans may encourage use of certain drugs through co-pay structures, these utilization management tools will not affect the LIS beneficiaries." Nelligan added that with the exception of Nevada, the number of plans able to take reassignment by state ranges from two to 16.

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