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Medicare Part D method wastes millions

Tuesday, May 15, 2007

Medicare’s Random Assignment of Low-Income Seniors to Prescription Drug Plans Waste Millions in Taxpayer Dollars

Possible savings of $2 billion by placing low-income in lower-cost, comparable plans

(Washington, DC) – Medicare’s practice of randomly assigning low-income beneficiaries to prescription drug insurance plans is wasting millions in taxpayer dollars because seniors and those with disabilities are being placed in expensive plans when lower-cost, comparable plans are available, Consumers Union says.
“Medicare randomly assigns 6 million low-income Americans to prescription drug insurance plans without checking to make sure those plans are the best value, or if they even cover the most commonly used drugs,” said Bill Vaughan, senior policy analyst with Consumers Union, publisher of Consumer Reports.
“If Medicare expects seniors to shop around for the best prescription drug plans, why can’t it do the same for low-income beneficiaries, many of whom are severely ill or disabled?” Vaughan added.
The House Energy and Commerce Health subcommittee today is examining Medicare’s prescription drug program for low-income beneficiaries. Vaughan said Medicare should assign low-income beneficiaries to the three or four plans in an area that offer coverage of the most commonly prescribed drugs, achieve high quality marks, and offer the lowest price on those drugs. That could achieve up to $2 billion in savings over five years, he said.
“With common-sense assignment of low-income folks to inexpensive, comprehensive drug plans, Medicare could save enough money to make the prescription drug benefit much better,” Vaughan said.
Consumers Union has been monitoring monthly price changes in the Medicare Part D Prescription Drug Plans since December 2005 in five major states for five commonly used prescription drugs. As part of that work, research found that many Medicare low-income subsidy beneficiaries are being assigned (1) to plans which cost the taxpayer millions more than lower-cost comparable plans, and (2) to plans with serious deficiencies in their drug coverage.
For example, in the Dearborn, Mich., area, low-income beneficiaries were being assigned to plans that were $525 more expensive than similar plans. In the Boston area, beneficiaries were randomly assigned to a plan that cost the taxpayer $1,406 more than the cheaper plans in the area.
Also in Dearborn, those below 150 percent of the federal poverty level were being randomly assigned to plans where the annual co-payments for the beneficiary on five common drugs ranged from $270 to $2,709.
“It defies common sense to believe that a low-income senior who is scraping by can afford hundreds of dollars in co-payments for their needed prescription drugs,” Vaughan said. “The current system is simply hurting the low-income and the taxpayer.”
Vaughan also said that random assignment can be terribly disruptive for those low-income beneficiaries on Medicaid who turn 65 and are then randomly assigned to a Medicare drug plan.
“A person on Medicaid who turns 65 can get assigned to a plan that is not covering her current prescriptions. With today’s computer capabilities, Medicare ought to be able to intelligently assign to plans where there is minimum disruption. This is especially important for those on mental health and cancer medications. But today’s system is not just random, it’s harmful,” Vaughan said.
Contact: Bill Vaughan, Susan Herold, 202-462-6262