: Medicare Plan for Drug Costs Bars Medigap Insurance

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>

> Medicare Plan for Drug Costs Bars Insurance

> Sat Dec 6, 2:34 PM ET

>

> By ROBERT PEAR

>

<http://us.rd./dailynews/nyt/ts_nyt/byline/SIG=4fh49n/*http://www.n

ytimes.com>The

> New York Times

>

> WASHINGTON, Dec. 6 Medicare beneficiaries will not be allowed to buy

> insurance to cover their share of prescription drug costs under the new

> Medicare bill to be signed on Monday by President Bush

>

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ch/news?p=%22President%20Bush%22 & c= & n=20 & yn=c & c=news & cs=nw>news

> -

>

<http://us.rd./DailyNews/manual/*http://search./search/sea

rch?p=George+W.+Bush>web

> sites), the legislation says.

>

>

> Millions of Medicare beneficiaries have bought private insurance to fill

> gaps in Medicare. But a little-noticed provision of the legislation

> prohibits the sale of any Medigap policy that would help pay drug costs

> after Jan. 1, 2006, when the new Medicare drug benefit becomes available.

>

> This is one of many surprises awaiting beneficiaries, who will find big

> gaps in the drug benefit and might want private insurance to plug the

holes

> just as they buy insurance to supplement Medicare coverage of doctors'

> services and hospital care.

>

> Congress cited two reasons for banning the sale of Medigap drug policies.

> Lawmakers wanted to prevent duplication of the new Medicare benefit. They

> also wanted to be sure that beneficiaries would bear some of the cost.

> Health economists have long asserted that when beneficiaries are insulated

> from the costs, they tend to overuse medical services.

>

> Gail E. Shearer, a health policy analyst at Consumers Union, said she had

> mixed feelings about the prohibition.

>

> " I don't want a return to abuses of 1970's and 80's, when lots of

confusing

> Medigap policies were sold to vulnerable seniors, " Ms. Shearer said. But

> she added: " Many seniors and disabled people will face a huge gap in drug

> coverage. In a bill that's marketed as providing choice to consumers,

> comprehensive drug coverage is not really an option. That's a

disappointment. "

>

> The new drug benefit would be the biggest expansion of Medicare since

> creation of the program in 1965. But patients would still face substantial

> costs.

>

> Under the standard Medicare drug benefit, the beneficiary would be

> responsible for a $250 deductible, 25 percent of drug costs from $251 to

> $2,250 and all of the next $2,850 in drug costs. Private Medigap policies

> could not cover any of those costs.

>

> A Medicare drug plan could further limit coverage by establishing a list

of

> preferred medicines known as a formulary. The list must include drugs in

> each " therapeutic category and class " antihistamines, antidepressants and

> cholesterol-lowering agents, for example.

>

> But Medicare would not have to pay anything for drugs left off the list.

> While patients could appeal a denial of coverage, they could not buy

> private insurance to cover the costs of such drugs.

>

> Under the standard benefit, a Medicare recipient would pay $3,600 of the

> first $5,100 of drug costs. After that, Medicare would pay 95 percent of

> the cost of each prescription. In theory, the bill establishes a limit of

> $3,600 a year on a person's out-of-pocket costs.

>

> But if a beneficiary bought drugs not listed on the formulary, the bill

> says, those costs would not be counted toward the $3,600 limit.

>

> Congress began regulating the Medigap market in 1990, as a way to protect

> consumers, many of whom had bought duplicative policies. The federal

> government and state insurance commissioners developed 10 standard

> policies, to replace thousands then on the market.

>

> Three of the 10 Medigap policies cover drugs. Under the legislation, an

old

> policy with drug benefits could be renewed but only by a person who chose

> to forgo the new Medicare drug benefit. A person who enrolls in the new

> program could not buy or renew a Medigap policy to help defray drug costs.

>

> Nearly 12 million retirees have drug coverage and other health benefits

> from former employers. If those retirees sign up for the Medicare benefit,

> the employers can help pay the beneficiaries' share of drug costs. But

> those payments would not count toward the $3,600 limit on out-of-pocket

> spending.

>

> Under the bill, low-income elderly people eligible for both Medicare and

> Medicaid, the federal-state program for low-income people, would receive

> their drugs through Medicare. Medicare drug plans will almost certainly

> cover fewer drugs than Medicaid now covers, state officials say. But the

> bill generally prohibits Medicaid programs from supplementing the Medicare

> drug benefit.

>

> If state officials wanted to supplement the new Medicare drug benefit,

they

> would have to pick up the entire cost of the extra coverage, as they could

> not use any federal money. States would not get the drug discounts and

> rebates they now receive from manufacturers under Medicaid.

>

>

>

> Dr. Lynn V. Mitchell, the Medicaid director in Oklahoma, said she expected

> Medicare formularies to be " more restrictive " than the drug coverage

> policies of state Medicaid programs.

>

> " If patients do not get optimal drug therapy, " Dr. Mitchell said, " costs

> will balloon in other areas. Patients may need more inpatient hospital

care. "

>

> House and Senate negotiators who worked on the Medicare bill encouraged

the

> National Association of Insurance Commissioners to study the Medigap

> market, with a view to making major changes.

>

> In a report accompanying the bill, the conference committee said Medigap

> policies should be revised to provide less upfront coverage and to require

> beneficiaries to pay more of the initial costs of hospital and physician

> services.

>

> " Numerous studies have demonstrated that covering deductibles and

> coinsurance has led to higher Medicare spending because beneficiaries

> become insensitive to costs, " the report said. " Beneficiaries with Medigap

> consume $1,400 more in Medicare services than beneficiaries without

> supplemental coverage. "

>

> This, it said, " drives up costs for everyone premiums of Medicare

> beneficiaries without Medigap coverage and costs to taxpayers. "

>

>

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