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AIS's Health Business Daily
Featured Story November 4, 2008 Rep. Waxman Asks CMS to Back Up Prescription Drug Plan Statements as 2009 Costs Rise, Brand Coverage Falls Reprinted from MEDICARE PART D COMPLIANCE NEWS, a monthly newsletter on implementation problems and compliance strategies for the new Medicare drug benefit. By Barbra Golub, Managing Editor, (bgolub@aispub.com) Despite CMS's claim that in 2009 97% of beneficiaries enrolled in a stand-alone Medicare Prescription Drug Plan (PDP) will have access to plans with premiums no more costly than in 2008, monthly premiums for some of the largest PDPs will increase significantly, according to a review of CMS's recently released data on PDPs. And one congressional leader calls CMS's statements "misleading." The average monthly premium for basic PDPs is projected to be approximately $28 in 2009, up from $25 in 2008, according to recently released CMS data. Every state except Alaska will have at least one PDP with premiums of less than $20 per month, the agency said. Beneficiaries in Alaska will have access to one PDP at $23 per month, it noted. "These statements by CMS — which imply that most seniors will not be affected by increasing…premiums — are misleading," said Rep. Henry Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee. In a letter dated Oct. 14 to CMS Acting Administrator Kerry Weems, Waxman countered CMS's statement that 97% of PDP beneficiaries would have access to plans with premiums the same or less than in 2008 by claiming that 16.3 million beneficiaries - 92% of all PDP enrollees - "will be forced to pay higher premiums if they wish to remain in the same [PDP]." Waxman asked CMS to provide his committee no later than Oct. 31 with all analyses on premium increases; impacts of these premium hikes on program enrollment, program costs, and program beneficiaries; and estimates of expected premium increases for 2010 through 2012. CMS officials did acknowledge, though, when they announced the 2009 premiums, that some beneficiaries "may see significant premium increases" if they remain in the same plan for 2009. And in direct response to Waxman's letter, CMS spokesperson Peter Ashkenaz tells PDN that "we have been telling beneficiaries since August (when we announced the benchmarks) that they will need to compare the value of their current plan by looking at the plan coverage and costs as they enter the open-enrollment period." Although 97% of beneficiaries will have access to lower-cost options, Ashkenaz says "we have said before, they may need to change plans." In fact, CMS's prepared statement of Oct. 10 on the Medicare Prescription Drug Plan Finder Web site includes the following: "Some beneficiaries may see significant premium increases or changes, such as reduced coverage in the gap, if they stay in the same prescription drug plan in 2009." The agency is "gathering the data to respond to [Waxman]," Ashkenaz adds. Analysis Shows Big Increases According to the Avalere Health LLC consulting firm, the average premium for the top 10 PDPs by enrollment will increase more than 30%, with some rising more than 60%. The 10 largest PDP sponsors have more than 60% of the beneficiaries in stand-alone PDPs. "There are pretty big increases in the plans where most of the people are enrolled," says Bonnie Washington, vice president of the Medicare practice at Avalere. For example, Humana standard PDP, the second largest plan with 1.5 million members, will charge a monthly premium of $40.83 in 2009, up 60% from the $25.52 premium in 2008. Washington describes Humana's premium changes as "startling," and she notes that at the beginning of the Part D program in 2006, the company had some of the lowest Part D premiums on the market. "They have gone from very, very low to a little above average. They made a business decision not to have low-income-subsidy [LIS] members join," she said. Under Part D, if a plan submits a bid at or below a certain benchmark, it becomes eligible for signing up and retaining LIS beneficiaries. CMS announced in August that it will reassign 1.3 million LIS beneficiaries to new PDPs effective Jan. 1, 2009, because their existing plans bid above the 2009 benchmarks. This is down slightly from the 1.6 million that were reassigned to new plans in 2008. According to Avalere, the number of PDPs that qualify for a full-premium subsidy dropped from 495 in 2008 to 308 in 2009. In all states but Wisconsin, the number of PDPs offering LIS coverage in 2009 has decreased. And in six states — Arizona, Florida, Hawaii, Maine, Nevada, and New Hampshire — there will be five or fewer drug plans available to automatically enroll low-income beneficiaries with Medicare. Nevada will have only one PDP for those people automatically reassigned by CMS, and Arizona will have only two. This essentially eliminates any choice of PDPs for low-income beneficiaries unless individuals can pay for part of the premium cost from their limited incomes, Avalere said. "Bait-and-switch tactics are in full play," Robert Hayes, president of the Medicare Rights Center, a Medicare advocacy group, said in a prepared statement. He also cited Humana as one of the worst offenders, claiming that its standard drug plan "is increasing its premium by 330% since it launched its 'low premium' plan in 2006." Humana spokesman Tom Noland says the company's prices reflect the experience it has seen over the past three years and the expectations of what will most interest Humana members and potential members going forward. The company is "acquainting [potential enrollees] with the full spectrum of all our PDPs and MA-PD offerings, and allowing them to choose the plan that's best for them," he says. But securities analyst Carl McDonald of Oppenheimer & Co. says in an Oct. 2 note to investors that "it seems [Humana] is making significant changes to its benefit design [and] appears generally more focused on profitability in 2009 than membership growth." McDonald also recently noted that WellCare Health Plans, Inc. and HealthSpring, Inc. will lose significant LIS membership in their PDPs in 2009 as a result of their bids being above the LIS benchmark. WellCare is expected to lose almost 450,000 LIS beneficiaries in 2009, or approximately 45% of its membership, he said. HealthSpring will lose almost 93,000 members, he added. Universal American Corp. seems "to be the winner as it will pick up net membership in 2009, as it bid above the benchmark in only a handful of small regions," McDonald said. Plans that bid below the benchmark will "benefit from membership growth, and potentially higher margins," he explained. CMS has said it will begin mailing notices in early November to LIS beneficiaries who qualify for extra help as of Jan. 1, 2009, and will be reassigned to new plans. These beneficiaries will have the option of remaining in their current plan and paying the extra premium, staying in the plan CMS reassigns them to, or electing to join a different plan of their choice. Beneficiaries who no longer qualify for extra help as of Jan. 1, 2009, will not be reassigned. And beneficiaries who joined plans on their own or switched to different PDPs than those CMS enrolled them in will not be reassigned, even if their premiums increase. These beneficiaries will receive a notice from CMS explaining that the cost for their plan premiums in 2009 will increase and advising them of their options to stay in their plan or join another plan. Overall, the CMS data show that the Part D market remains steady, says Washington. "We still have roughly the same number of plans, so there still seems to be a very good, stable market," she adds. Washington also notes that Part D beneficiaries don't change plans easily. But that could change in part due to the economic situation, she says. "With the cost of everything else going up, and having these premium increases be, in some cases, pretty significant [i.e., more than $10 per month] I wonder if this is the year you'll see…more people choosing to switch. " In addition to higher premiums, beneficiaries face a continuation of the erosion of brand-name coverage they saw last year. As in 2008, none of the 16 national PDPs will offer brand-name drugs in the coverage gap or 'donut hole' — the gap in 2009 between $2,700 in total drug spending and $4,350 in out-of-pocket expenses. And only three local organizations will offer plans with some coverage of brands in the gap. Alliance Medicare
Rx (offered only in Michigan), Quality Rx Plus (offered only in Florida),
and DeanCare Rx Enhanced (offered only in Wisconsin) will offer most
generics and a "few" brands in the coverage gap in 2009, according
to CMS data. And the only local sponsor to offer brand-name drugs in
the gap in 2008, Citrus Health Care, Inc. in Florida, is offering only
some generics in its Citrus Part D Plus plan in 2009. |
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