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Medicare Part D: Successes and Continuing Challenges

CONTACT: Jane Lane

BOSTON, May 30, 2007 - Eighteen months ago, the Medicare drug benefit Part D was implemented nationwide amidst a firestorm of criticism, concern and confusion about its complexity and fairness. On Wednesday, May 30th, a panel of experts evaluated this critically important healthcare benefit in a panel discussion and accompanying study.

The forum, ‘Medicare Part D: Successes and Continuing Challenges’, co-sponsored by the Massachusetts Health Policy Forum at the Heller School for Social Policy and Management at Brandeis University and the Massachusetts Medicaid Policy Institute, featured a panel discussion by four experts in Medicare, Medicaid and elder services.  

Participants included Charlotte Yeh, MD, regional administrator for the Center for Medicare and Medicaid Services (CMS), Donna McCormick, managing attorney for the Medicare Advocacy Project at Greater Boston Legal Services, Alison Kirchgasser, director of federal and national policy management at the Massachusetts Office of Medicaid, and Ruth Blackman, director of elder services at Action for Boston Community Development.   

In addition, Cindy Parks Thomas, PhD, senior scientist at the Schneider Institute for Health Policy at the Heller School, presented a policy brief on the impact of Medicare Part D in Massachusetts.  The report summarizes the activities involved in implementing Medicare Part D, the impact it has had on Massachusetts health programs, and the experiences of beneficiaries and others in the outreach and enrollment process.

The report discusses both positive and negative aspects of Part D implementation. On the positive side:  

  • As of January 2007, approximately 777,000 Massachusetts Medicare beneficiaries – 78 percent of those eligible – either enrolled in Medicare Part D or had insurance through employers equal to that of Part D, and nearly ninety percent of all beneficiaries have some form of prescription drug coverage.

  • National surveys indicate that the majority of Medicare beneficiaries transitioned without incident and are satisfied with their drug benefit.

  • In 2006, savings to the Commonwealth from Part D included an estimated $21-25 million to MassHealth, $20-50 million to Prescription Advantage and $21 million to the state retiree group insurance program.

  • Due to extensive problems with the initial transition to Medicare Part D in early 2006, Massachusetts provided $17.6 million in emergency coverage of MassHealth members, most of which has been reimbursed by Medicare.

  • The Massachusetts Legislature provided $4.6 million to assure access to drugs for MassHealth dual eligible beneficiaries, during and after the transition period.

  • Many problems at the outset were resolved to some extent in the first year.

Some of the negative aspects include the following:

  • There may be as many as 125,000 Medicare beneficiaries in Massachusetts – 12 percent of beneficiaries – who remain without drug coverage.

  • According to one estimate, fewer than half of beneficiaries who may be eligible for extra financial help through the Low Income Subsidy have been approved for assistance. 
  • Many of the most vulnerable beneficiaries have experienced problems accessing drugs and navigating the appeals process.

  • Problems deducting premiums from Social Security payments occurred at the outset and remain an ongoing problem. 
  • Part D drug plan premiums have increased after one year, with some doubling in price.

  • No drug plan in Massachusetts covers brand name drugs in the coverage gap (sometimes called the ‘doughnut hole’), so many beneficiaries with annual drug costs between $2,400 and $5451 are faced with paying the full cost.

  • The risk remains that employers will decide to drop more generous retiree drug coverage as drug costs increase and Medicare Part D establishes itself further.

"The state has done well financially in the first couple of years because Medicare now covers drugs for many people who used to get them through state programs, such as MassHealth,” said Robert Seifert, executive director of the Massachusetts Medicaid Policy Institute. “The questions now are whether those savings will continue, and whether the divided financing of medical services and drugs affects the coordination and quality of care."

The report praises the program’s expansive outreach effort, noting that enrollment in Medicare Part D was achieved ‘through a set of activities in the public and private sectors’, which included educating outreach counselors, beneficiaries, providers and insurers on the numerous plan options.  Other activities which led to a successful enrollment process included identifying eligibility for subsidies, assisting with applications, and proactive efforts to minimize transitional problems.  The experience with Part D implementation provides valuable lessons for Massachusetts Health Care Reform.

“Because of the efforts of thousands of individuals throughout the Commonwealth, many beneficiaries have transitioned without incident,” according to Dr. Thomas.  “However, there is still much work to be done to ensure that beneficiaries receive their needed prescriptions, that they are not overburdened by the high out of pocket costs required, and that those remaining individuals who are eligible but not receiving benefits are enrolled.”