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Dueling Letters On Medicare Part D Changes

Oct 25, 2010

November 15 marks the beginning of the open enrollment season for private Medicare plans, including Part D, the prescription drug plan. Officials at the Centers for Medicare and Medicaid Services say they have taken steps to streamline this year’s plan options – including eliminating some plans they consider duplicative. The changes, officials say, were part of an effort to ease seniors’ confusion.

But as the open enrollment period nears, the steps taken by CMS are drawing varied reviews.

In a September 27 letter to Health and Human Services Secretary Kathleen Sebelius, the ranking member on the House Ways and Means Committee, Rep. Dave Camp, R-Mich., and Rep. Wally Herger, R-Calif., charged that the result will be "more confusion." They criticized CMS for "arbitrarily" deciding to limit beneficiaries’ choice of plans, attacked the new policy as misguided and paternalistic and maintained that the new policy undermined President Obama’s pledge that "if you like your plan you can keep it."

But a coalition of advocacy groups, including the Medicare Rights Center and National Council on Aging, fired off an Oct. 7 letter countering these charges. In it, the groups praised these efforts to "simplify and improve" the Medicare drug program and pointed out that the trend began with the previous administration.

Although Sebelius did not offer a written response to the Republican lawmakers, Jonathan Blum, deputy administrator and director of the CMS Center for Medicare, told Kaiser Health News that the Part D program is stronger than ever. He also emphasized the need for seniors to understand what plan best fits their needs since few change plans after they initially enroll in one.

Here is the text of the two letters. Punctuation, spelling and emphasis are all from the originals:

 

The Honorable Kathleen Sebelius, Secretary
Department of Health and Human Services
200 Independence Ave. S.W.
Washington, DC 20201

Dear Secretary Sebelius,

We are alarmed that the Centers for Medicare and Medicaid Services (CMS) has arbitrarily decided to limit beneficiaries' choice of Part D prescription drug plans, particularly since these actions were not taken as a result of plans failing to meet their statutory or regulatory requirements, but instead to supposedly reduce beneficiary confusion. Under this misguided, paternalistic notion that the agency can define for seniors how much choice they desire or which drug plan they should like best, CMS has taken action every year under President Obama's Administration to eliminate prescription drug plans that federal bureaucrats deemed duplicative or unnecessary.

The effect, however, is likely to be more confusion. The Associated Press, for instance, noted that CMS' decisions to eliminate popular prescription drug plans, "could cause some head-scratching and confusion." Compounding the confusion is the actual impact on affected seniors. Avalere, a leading health care research firm, predicts that because of CMS' actions, more than 3 million seniors will be forced out of their current Medicare prescription drug plan.

The impact, for many seniors, will be higher monthly premiums for Part D coverage. For example, CMS has arbitrarily decided to shut down the second most popular prescription drug plan, AARP MedicareRx Saver, which currently enrolls more than 1.5 million Medicare beneficiaries. To "mitigate" this harm, CMS intends to automatically enroll effected seniors into a drug plan whose premiums are 15 percent higher than the plan terminated by CMS.  CMS is also terminating the eight most popular plan that currently enrolls nearly one-half million Medicare beneficiaries.

All told, Avalere predicts monthly premiums for the top 10 Part D plans, which cover 7 in 10 Part D enrollees, will increase by 10 percent next year. Avalere noted that one plan, which currently has nearly 600,000 enrollees, will increase its premiums by nearly 45 percent (from less than $64 per month to nearly $91 per month) in part because of CMS' decision to terminate drug plans.

The Deputy Director of the division that regulates Part D plans counters that seniors who will be harmed because of CMS's actions will simply enroll in a lower cost plan. However, this statement directly contradicts CMS' decision to automatically enroll more than 1.5 million current enrollees of AARP MedicareRX plan into a more costly plan. This "government knows best" approach to health care is a frightening consequence of the decision to break the President's pledge that "if you like the plan you have you can keep it."

We hereby request that CMS immediately provide all documents and correspondence related to CMS' decision to eliminate prescription drug plans over the last two years, including any analysis that was conducted to determine the impact such decisions would have on premiums of displaced beneficiaries so that Congress can consider how best to protect seniors from such decisions in the future. Given that the Part D open enrollment period begins November 15th, we request a thorough response by October 8th.

Sincerely,

DAVE CAMP, Ranking Member

WALLY HERGER, Ranking Member, Subcommittee on Health

 

The Honorable Kathleen Sebelius, Secretary
Department of Health and Human Services
200 Independence Ave. S.W.
Washington, DC 20201

Dear Secretary Sebelius,

The undersigned organizations urge the Centers for Medicare and Medicaid Services (CMS) to continue its policy to simplify Medicare Part D plan choices for beneficiaries so that Part D market competition is driven by rational, informed decision-making. Despite recent controversy about the need for beneficiaries to choose new plans for 2011, CMS has taken important strides in improving the program by ensuring that there will be a "meaningful difference" between plans offered by the same sponsor.

We are pleased that CMS has taken an active role in negotiating plan bids for the 2011 plan year, resulting in improved choices for beneficiaries. This negotiation has resulted in a better array of options, as insurance companies have withdrawn duplicative offerings and the average beneficiary may still choose between 33 different prescription drug plans. We believe that CMS must continue to use its authority to accept or reject plan bids, clarified under the Affordable Care Act, to ensure that insurance plans contracting with Medicare provide the best coverage for beneficiaries.

However, in a September 28 letter to you, Representatives Dave Camp and Wally Herger contend that CMS’s action to simplify plan choices is arbitrary and that it will unnecessarily require beneficiaries to choose new plans. We strongly disagree and urge all concerned to consider how the Part D program has been managed since it was first implemented by the prior Administration.

From the beginning, CMS has recommended that beneficiaries closely examine their plan choices each year because of the complex factors that must be weighed. Even if a plan’s premium seems competitive, changes in formulary, cost-sharing, and utilization management requirements may mean that a different plan is a better choice for the next year. In its 2007 Call Letter to plan sponsors, CMS recognized the need for simplification by instructing insurance companies that their bids must offer “meaningful variation…that will provide beneficiaries with substantially different options.”

For the 2011 contract year, CMS compared plan offerings by evaluating expected out-of-pocket cost amounts based on a uniform market basket of drugs. In certain circumstances, CMS required that some plans must have a higher value and provide coverage of at least some brand name drugs in the coverage gap. This by no means arbitrary method helped ensure that the 2011 plan year has been the most successful yet in providing beneficiaries with meaningfully different plan options.

As organizations that provide daily assistance to Medicare beneficiaries, we hear frequent complaints about the complexity of plan options under Part D. Beneficiaries find that the confusing range of choices makes it difficult to make a decision that results in favorable coverage of their prescription drug costs. A mounting body of research bolsters this daily experience. For example, a 2006 Kaiser Foundation/Harvard School of Public Health study found that 73 percent of beneficiaries believe that the drug program is too complicated. Two studies published in 2009 found that between 44 -90 percent of beneficiaries are unable to pick a plan that provides their prescriptions at the lowest price, depending on the kind of information they have available. Beneficiary confusion over plan choices is highlighted by the fact that only 6-7 percent of Part D beneficiaries have voluntarily changed Part D plans in recent years during annual enrollment.

Based on this experience, we hope that CMS will expand its policies to simplify and improve the Medicare Part D program, despite the recent criticism of this goal. We look forward to working with you to ensure that beneficiaries have meaningful choices and effective support when they enroll in Part D plans.


Sincerely,
AFL-CIO
Alliance for Retired Americans
American Association for International Aging
B'nai B'rith International
Center for Medicare Advocacy, Inc.
Families USA
Medicare Rights Center
National Academy of Elder Law Attorneys
National Association of Area Agencies on Aging
National Committee to Preserve Social Security and Medicare
National Council on Aging
National Senior Citizens Law Center
National Seniors Corps Association
Services and Advocacy for Gay, Lesbian, Bisexual & Transgender Elders (SAGE

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