Medicare Part D: Fixing Part of the Problem
Following his landslide election in 1964, President Lyndon Johnson promised a "Great Society" that would include, as its crowning jewel, health security for older Americans. President Johnson worked hard and fast on the Medicare legislation, and in July of 1965 he signed Medicare into law, promising affordable health care coverage to Americans 65 and older.
Medicare became a national success story and quickly gained bipartisan support. In 1972, Medicare was extended to people under age 65 with serious disabilities. It was a first step in providing what other developed nations of the world enjoy: a national health insurance system.
Medicare Part A provides coverage for hospital services. Part B covers outpatient care, such as doctor's visits and physical therapy. Part C, referred to as Medicare Advantage, allows people to receive Medicare benefits through a private insurance plan.
But none of those Parts included prescription drug coverage -- leaving those on Medicare to fend for themselves when it came to paying their often large medication bills. So, after much public debate and political wrangling, the Medicare Prescription Drug Benefit (Part D) was passed and took effect in January of 2006. The Bush administration and its allies praised it as a way for people with Medicare -- including 100,000 people with HIV -- to get the medicines they need to stay healthy. And it has helped them. But, given people's needs and the vast amount of public dollars committed to the program, we should be getting more.
A Corrupt Process
Part D's problems have their roots in the corrupt process that gave birth to it. In late 2003, there was much political pressure to add a prescription drug benefit to Medicare. The White House and its Congressional allies had promised to deliver a Medicare drug benefit in the 2002 election. Older Americans with Medicare were too strong a political force to dismiss.
Nearly all Democrats were excluded from weeks of secret meetings held behind closed doors. Public interest voices were not invited into the process, while lobbyists for drug makers and insurance companies were. These meetings resulted in a program with substantial benefits for both the drug and insurance industries.
The House and Senate enacted very different Medicare bills in the summer of 2003. Congressional leadership refused to convene a traditional conference committee that would work out the differences in the bills. Instead, nearly all Democrats were excluded from weeks of secret meetings held behind closed doors. Public interest voices were not invited into the process, while lobbyists for drug makers and insurance companies were. These meetings resulted in a program with substantial benefits for both the drug and insurance industries. And once the law was enacted, to no one's surprise, a number of the people who wrote the bill accepted high-paying jobs lobbying for drug and insurance companies.
Members of Congress were given almost no time to read the 692 pages of complicated legislation, known as the Medicare Modernization Act (MMA), before they were required to vote on it. Even worse, the Bush administration kept secret its own cost estimates showing that the plan would cost $534 billion over ten years, rather than the $400 billion lawmakers were told it would cost. A top administration official told the civil servant who did the estimate that he would be fired if he released the information showing the program would cost more than $400 billion. The low cost of the MMA, compared to other proposals to add prescription drug coverage to Medicare, led many conservative Republicans -- who would not support the bill if it cost more than $400 billion over 10 years -- to vote for it. In the end, after three hours of arm twisting and deal making, Republican leaders forced the bill through in the middle of the night.
The law prohibits Medicare from bargaining with drug companies for lower prices. This makes drugs more expensive in Medicare than in other federal programs like Medicaid. This of course benefits drug companies, but not people with Medicare.
The fingerprints of the drug and insurance companies are all over the law. For example, the MMA allows only private insurance companies, not Medicare itself, to offer Part D coverage. There is no way to receive drug coverage through Medicare. And the MMA prohibits Medicare from bargaining with drug companies for lower prices. This makes drugs more expensive in Medicare than in other federal programs like Medicaid. This of course benefits drug companies, but not people with Medicare. Since Medicare cannot negotiate lower prices for drugs, people pay more and reach the coverage gap (see below) faster.
While Part D does not cover all drugs, its drug plans must cover HIV drugs without limitations. For example, plans may not require a doctor to get permission from the plan before prescribing a drug. This is an important consumer protection. HIV drugs often cannot be switched, and changes in treatment may allow the virus to become resistant or lead to side effects.
But a 2007 survey by the American Academy of HIV Medicine showed that, despite this protection, many people with HIV faced problems getting their drugs fully covered. The protection existed only as an administrative guidance from the federal government. Advocates worked quickly to ensure that Part D plans actually complied with the protection by having it added to recently passed "Medicare Improvements for Patients and Providers Act" (MIPPA).
The Donut Hole
Once a person with Medicare and the drug plan spends $2,510 on prescription drugs, he or she reaches the "donut hole" and must pay for all drugs until out-of-pocket costs reach $4,050.
Once a person with Medicare and the drug plan spends $2,510 on prescription drugs, he or she reaches the coverage gap (known as the "donut hole") and must pay for all drugs until out-of-pocket costs reach $4,050. Then, "catastrophic coverage" kicks in. After catastrophic coverage starts, people pay $2.25 for a generic and $5.60 for a brand-name drug, or a flat 5% coinsurance, whichever is greater.
Like much of Part D, however, management of the donut hole requires people to avoid numerous trap doors. For example, not all drug expenses count toward a person's total out-of-pocket payment (TrOOP). Only drugs that are paid for by the Medicare client, a family member, a state pharmaceutical assistance program, or some charities count towards TrOOP. Drugs paid for by AIDS Drug Assistance Programs (ADAPs -- see The Politics of ADAP) do not. As a result, people may have to spend more money in the donut hole while waiting to reach catastrophic coverage.
ADAPs provide coverage for anti-HIV drugs and drugs that treat HIV-related infections. But they do not cover drugs for other illnesses that people with HIV often have, such as high blood pressure and heart disease. This can be a big problem, because people on Part D who are also covered by ADAP often fall into the donut hole by March of each year. This means they must pay the full cost of non-ADAP drugs for the rest of the year. Often people cannot afford to pay for their drugs and stop taking them or get samples, which means they can remain in the donut hole and never reach catastrophic coverage.
In addition, ADAPs do not have enough funding to provide coverage to everyone in need. Some states assist people with ADAP with the cost of Part D copayments, deductibles, and premiums, but many states do not. If the Medicare law was changed and ADAP expenses counted toward TrOOP, it would save ADAPs between $25 and $44 million, since people would reach catastrophic coverage faster. ADAPs could then use the savings to eliminate the waiting lists that exist in some states.
While anti-HIV drugs must always be covered by Part D plans, some drugs are not allowed to be covered, such as some "off-label" drugs. Off-label drugs are drugs that are used to treat an illness or symptom for which they have not been approved by the FDA. Part D plans do not cover off-label usage unless it is listed in specific databases, even if it has been reported to be safe and effective in well-respected medical journals. This problem commonly occurs when a person with HIV seeks coverage for drugs like Marinol (for wasting), Lyrica (for peripheral neuropathy), and Zofran (for nausea). This exclusion is not contained in the Medicare law, but is included in its regulations. The Medicare Rights Center is challenging this regulation in federal court.
The recent Medicare Improvements Act makes an important change to off-label coverage. Part D will now cover off-label anticancer drugs if there is support for this use in well-respected medical journals. While the change is limited, it is an important first step. Advocates should let Congress know how this limitation affects people with HIV and why it is important to expand access to off-label drug coverage in other circumstances.
While the Medicare prescription drug program has improved access to drugs for millions of people, there are still improvements that need to be made.
A key reform would be to allow Medicare to bargain with drug makers for lower prices and to allow people with Medicare to obtain their drug coverage from Medicare itself.
A key reform would be to allow Medicare to bargain with drug makers for lower prices and to allow people with Medicare to obtain their drug coverage from Medicare itself. This would result in lower prices and a more stable program with consistent rules and coverage. Senator Richard Durbin and Representatives Jan Schakowsky and Marion Berry have introduced the Medicare Prescription Drug Savings and Choice Act of 2007 (HR3932 in the House and S2219 in the Senate). This bill would create a drug coverage option under Medicare.
The Medicare Rights Center has published a handbook that offers some helpful tips and suggestions on how to build partnerships and do grassroots organizing. The handbook offers ideas on media outreach, and how to educate elected representatives about the problems with Medicare Part D. It is available online at medicarerights.org. For information about how you can obtain Medicare, go to medicareinteractive.org.
People with Medicare who are experiencing difficulty obtaining medications can download the Medicare Rights Center Part D Appeals Manual at medicarerights.org/partd_appeals_manual.pdf.
Robert Hayes is President and General Counsel of the Medicare Rights Center. Michealle Carpenter is Deputy Policy Director and Counsel for the Medicare Rights Center.
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