Providing Prescription Drug Coverage For Medicare Beneficiaries Executive Summary
O
ne of the key issues being debated by Congress and in the presidential election campaign is whether and how prescription drug coverage could be provided to older Americans. This monograph discusses only one of the options available to provide prescription drug coverage to seniors – adding prescription drug coverage to Medicare. Many other options are
available. Currently, seniors may receive prescription drug benefits from a va ri ety of sources – Medicare+Choice health plans, Medicaid, employer health plans, Medicare Supplement insurance policies, or other government sponsored health coverage. The integration of a Medicare prescription drug program with all other sources of health insurance in the current market will be difficult to plan out and administer. Most of the Task Force’s analysis is based on lessons learned from private sector health plans that offer similar coverage. Many of the drug benefit design features in those plans, including patient cost sharing, drug formularies and the use of fiscal intermediaries to administer the program, could be used if coverage is provided under Medicare. When fashioning a Medicare prescription drug benefit program, policy-makers will need to deal with the following issues: ■
Should a prescription drug benefit be provided under Medicare in the absence of an overall reform of the program? Even if the prescription drug benefit is partially funded through participant premiums, paying the government share will have a substantial impact on the federal budget, especially during the retirement years of the “baby-boomers.” Further, a prescription drug benefit may have features that will lead to its cost rising faster than that for the other acute care services covered by Medicare. Adding another expensive benefit to Medicare is not prudent when the source of funding for the current benefit structure is uncertain. Assuring adequate financing for the program needs to be addressed in a comprehensive way.
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If a prescription drug benefit is offered through the Medicare program, how would the coverage be coordinated with those plans that currently provide prescription drug benefits to Medicare beneficiaries?
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Should the program be administered by a single fiscal intermediary or by one intermediary in specific geographical areas, or should there be competing drug plans providing the benefits?
■ Whether, and to what extent, should the fiscal intermediaries
be at financial risk for their role
in controlling costs? ■
There are a number of complex issues involving the design of the benefits to be provided, including the scope of drugs covered, the form and extent of beneficiary cost sharing, benefit maximums, and incentives to beneficiaries to use drug benefits efficiently.
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Another issue that needs careful study is the use of risk adjusted payment mechanisms that take into account the health status of the beneficiaries who participate in the program. Risk adjustment helps to make payments to competing payers more equitable and is especially important to discourage competing PBMs from avoiding beneficiaries with higher than average needs for prescription drugs.