CONTACT: CMS Media Affairs
August 15, 2006
(202) 690-6145
STRONG COMPETITION AND
BENEFICIARY CHOICES RESULT IN
DRUG COVERAGE WITH LOWER
COSTS THAN PREDICTED LAST YEAR
CMS Acts to Further Improve Benefit
Choices
About 38 million people with Medicare, 90 percent of
all beneficiaries, are now receiving comprehensive prescription drug
coverage through Medicare Part D, employer-sponsored retiree health plans or
other creditable coverage. A surge in enrollment took place in the closing
weeks of the enrollment period, with more than 2 million beneficiaries
signing up between May 1st and the May 15th, 2006
deadline. The benefit created an enormous challenge and a great
opportunity. The promise is being fulfilled with more than 2 million Part D
prescriptions being filled every day. As a further sign of success, the
expected cost of the average monthly plan premiums in 2007 is nearly 40
percent lower than originally estimated.
Achieving Strong Competition and Effective
Beneficiary Choices
CMS took a series of steps to promote strong
competition and to assist beneficiaries with choosing their coverage to save
even more money.
Making Competition Work for Seniors and People with
a Disability. Using a process similar to the
Office of Personnel Management oversight of the Federal Employees Health
Benefit Program, CMS established a predictable process for plans to submit
competitive bids and to negotiate the details of their benefit packages. In
addition, CMS held numerous conferences and industry training forums to
assist its partners in using the bid submission process. CMS has also
enforced the plan requirements with compliance actions and sanctions where
necessary, including over 650 warning letters, corrective action plans, and
other enforcement actions. For 2007, CMS required plans to justify their
benefit options based on coverage designs that were meaningfully different
and that were clearly preferred by many beneficiaries in 2006. Generally,
plans were allowed to offer only three options, including one option that
provided coverage in the “donut hole.”
Improved Options to Help Choose a Plan.
As a part of our continuing effort to refine the Medicare Prescription Drug
Plan Finder on
www.medicare.gov,
enhancements will be made in late August and in October of 2006 that will
improve navigation and usability of the tool as well as provide users with
clearer monthly prescription drug plan cost share information. The
enhancements include:
- Total Monthly Cost Estimator
functionality will provide a graph of the month-by-month cost share
for a selected plan. In this way, users will be able to view how
their cost share may change on a monthly basis as reflected by the
coverage levels of the drug benefit.
- This information will reflect the
beneficiary’s low income subsidy status as well as their drug list
and pharmacy selection.
- Decrease in the number of steps
leading to plan comparisons and results.
- Changes in the layout and design of
the tool based on usability testing.
In addition, the Medicare Personal Plan
Finder (MPPF), which assists beneficiaries in selecting a Medicare Advantage
plan, will be redesigned. Based on a lessons-learned approach, CMS has been
able to incorporate many attributes of the Medicare Prescription Drug Plan
Finder into the redesign of the MPPF. This includes the ability to
personalize searches, greater integration with the Medicare Prescription
Drug Plan Finder to access prescription drug plan information, and changes
to the layout and design to improve usability.
Many Ways to Enroll.
In the past year, CMS established flexible enrollment options for
beneficiaries who chose to enroll in a Medicare prescription drug plan.
Specifically, CMS now allows plans to accept enrollment requests over the
telephone or through their Internet Web sites, in addition to paper
enrollment forms. CMS has also offered beneficiaries the opportunity to
submit enrollment requests via 1-800-MEDICARE and through the Medicare.gov
Web site, which CMS then forwards to the plan for processing. Over 3.8
million enrollments have been received via
www.Medicare.gov
since November 15, 2005. CMS will continue to support all of these
enrollment approaches in 2007
Protecting Beneficiaries.
CMS also streamlined the exceptions and appeals process
that allows Medicare beneficiaries access to medically necessary drugs, by
requiring timely processing and tracking any failures to perform. CMS
implemented strict requirements for processing enrollment and copay data in
a timely manner for beneficiaries eligible for the low-income subsidy, and
for providing pharmacies with information to enable them to bill the
beneficiary’s plan properly even if the beneficiary does not have a plan
benefit card.
Finding and Fixing Problems.
Nationally, during the month of June 2006, CMS received
about 2.3 complaints per 1,000 Medicare beneficiaries enrolled in
prescription drug plans. Complaint rates averaged about 2.6 per 1,000
beneficiaries for stand-alone prescription drug plans and abut 1.4 per 1,000
beneficiaries for Medicare Advantage drug plans. To ensure that complaint
rates continue to remain very low, CMS is using the data to address plans’
weaknesses, to continue to find and fix problems, and to drive for
excellence in the services being provided to enrollees.
Better Benefits
- Almost 90 percent of beneficiaries have
enrolled in coverage other than the standard benefit. Most
beneficiaries have chosen zero-deductible plans that help with drug
costs starting with the first prescription, and most have chosen
plans that have fixed predictable co-payments for most
prescriptions. Almost all beneficiaries had the option of getting
coverage that at least partially filled in the coverage gap, or
“donut hole,” and one in six beneficiaries opted for this more
comprehensive coverage.
- In July, a Kaiser Family Foundation survey
showed that millions of seniors and people with disabilities are
satisfied with their coverage (over 80 percent), and would choose to
stay in their plan by a margin of more than 7 to 1.
Much Lower Costs
- Because strong competition is continuing in
2007, the Medicare drug benefit costs are coming down further. The
“bids” by the prescription drug plans are 10 percent lower, on
average, in 2007 than 2006.
- The average premium in 2006 for the basic
Medicare drug benefit is about $24. Last year, premiums were
estimated to be about $37 per month on average – a difference of 35
percent. Because of Part D, seniors are saving an average of over
$1,100 a year.
- The lower premium is the result of much
slower-than-expected prescription drug cost growth in 2004 and 2005,
strong competition among Medicare drug plans and beneficiaries’
tendency to choose low-cost plans. More than 75 percent of
beneficiaries chose plans that cost less than the average, and most
choosing higher-cost plans did so because of extra benefits offered.
- Average Medicare Part D premiums are
projected to increase by only 0.1 percent in 2007, based on current
enrollment. These premiums are 40 percent lower than the roughly
$40 premium predicted last year for 2007. For specific Part D
plans, some premiums will be higher than in 2006 and others will be
lower. The vast majority of beneficiaries will have access to both
stand-alone and Medicare Advantage prescription drug plans that cost
less than their current plan. If beneficiaries choose lower-cost
plans again in 2007, like most did in 2006, average premiums paid by
beneficiaries will decline compared to 2006.
- Because the cost of drug coverage is lower in
2007 than had been predicted, the projected costs of Medicare Part D
are likely to decline again.
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