This looks like a pretty good summary of the prescription drug planned which just passed.
Details of the Medicare bill explained
By LEE BOWMAN
Scripps Howard News Service
November 26, 2003
knoxstudio.com
WASHINGTON - Congress' six-year struggle to approve legislation that would help people on Medicare pay for prescription drugs has reached a milestone, but almost everyone involved doesn't think the fight is over.
Even though the House and Senate narrowly passed a landmark Medicare bill, the squabbling will continue because the compromise plan leaves no one entirely satisfied. Many of the details of how the program will be set up in the next several years are left in the hands of Medicare administrators and private insurers.
Besides paying for prescription drugs, the package goes to great lengths to encourage private health plans and insurers to participate. Private plans and insurers are presumed to be more efficient than the private government contractors who largely administer Medicare now. And, for the first time, the legislation establishes asset and income tests to determine if seniors are eligible for some subsidies.
Most experts who follow the details of Medicare predict that even if next year's elections don't change the power equations in Washington, Congress will tweak the program further before the actual drug benefit begins in two years.
For now, here are the highlights of the new Medicare plan, in Q&A format.
Q: If the drug benefit doesn't start until 2006, what sort of immediate help does the bill offer?
A: Every Medicare patient will be able to buy one prescription-drug discount card from a Medicare-approved sponsor, including insurance companies, retail pharmacies and health plans. The cards will cost no more than $30 a year and are supposed to provide price breaks of 10 percent to 25 percent off a list of approved drugs. The cards are expected to be available by April or May of next year.
In addition, people on Medicare with incomes below 135 percent of the federal poverty line ($12,123 for an individual) will get a free discount card along with a $600 subsidy toward drug purchases in 2004 and 2005.
Q: What will the drug benefit look like in 2006?
A: The government will be setting up about 30 regions across the country where private insurers would bid to provide prescription-drug coverage to Medicare patients, either through a drug-only plan or a comprehensive health plan. If no private plans bid to serve a region, then a government-sponsored plan would provide coverage in that area. Enrollment in coverage will be voluntary, but beneficiaries who don't sign up in the first year will pay a penalty if they enroll later.
Drug-plan sponsors must offer coverage that is at least equal in value to a standard benefit, but some details may vary from plan to plan. The standard includes: a monthly premium of about $35, a yearly deductible of $250 and 75 percent coverage up to $2,250. There is no coverage for expenses between $2,250 and $3,600. Above $3,600, coverage of up to 95 percent would kick in.
If a patient, family member, Medicaid or a state pharmacy program spends over $3,600 on drugs a year, the patient would have to cover no more than 5 percent of the drugs above $3,600.
Co-pays for generic and preferred drugs would be $2. Payments for all other drugs would be $5.
To put things in perspective, the $400 billion cost of the bill over 10 years equals only about a fifth of the $1.9 trillion that seniors are expected to spend annually on prescription drugs in the United States during the next decade.
Q: How will the subsidies for low-income patients work?
A: Aside from the income restrictions, to qualify for the subsidy an individual would be allowed to have no more than $6,000 in liquid assets (excluding house, car and personal property); a couple could have no more than $9,000. Seniors would go to state offices or Social Security offices to determine eligibility.
In the lowest income group - those now eligible for Medicaid - the asset test would not apply and patients would pay no premiums, no deductibles and co-pays of $1 for generic and preferred drugs, $3 for all others. They would be exempt from the coverage gap. Asset allowance would continue to be based on state Medicaid guidelines.
Patients who meet the savings test and earn below $12,123 for individuals, $16,352 for couples (135 percent of the federal poverty line), would pay no premium, no deductible and have no coverage gap, with co-pays of $2 for preferred drugs, $5 for all others.
A third group - with individual incomes of no more than $13,470 for individuals and $18,180 for couples, or 150 percent of poverty - would be allowed to have savings assets of no more than $10,000 individually, $20,000 per couple. They would pay some premium on a sliding scale up to $35, have a $50 deductible, coverage that paid 85 percent of costs up to the $3,600 limit and co-pays of $2 or $5 per prescription, or 5 percent, after that limit is reached.
Q: If I'm already getting prescription-drug coverage under Medicare from my HMO or through my former employer's health plan, what happens under the new program?
A: The HMO coverage would continue provided your plan or a successor continues offering coverage in your area through Medicare. The bill contains major payment reforms and incentives to encourage more preferred provider networks, HMOs and other health plans to serve Medicare patients in all parts of the country with coverage that would include prescription drugs.
Employers have several options. They could decide to drop retiree coverage and leave it entirely to Medicare. Or they could redesign their retiree drug benefits to wrap around the new Medicare benefit, just as they do now with medical benefits. Or, they could continue their own coverage and claim a subsidy for drug costs.
Q: What about the Medicare competition projects that are part of the plan?
A: Beginning in 2010, traditional fee-for-service Medicare would face competition from private health plans already serving Medicare patients in six metropolitan areas around the country.
Medicare officials would choose the areas, which would be required to have at least two plans together serving 25 percent of all beneficiaries. Also, the test sites have to be geographically distributed around the country and are subject to other rules yet to be written. Officials want to see if private plans could woo more patients with lower premiums and enhanced benefits than standard Medicare. The test programs would last six years.
Q: What changes are coming in the Part B premium - the portion of Medicare that pays for doctors and out-of-hospital coverage?
A: For everyone in this program, the deductible would rise from $66 now to $110 in 2005 and be adjusted based on growth in spending in the program each year afterward.
Patients would continue to pay 25 percent of the monthly Part B premium, provided their yearly incomes were not above $80,000 for an individual or $160,000 for a couple. Above those thresholds, the premium scale would work this way, phased in over five years starting in 2007:
Pay 35 percent if earning between $80,000 and $100,000.
Pay 50 percent if earning between $100,000 and $150,000
Pay 65 percent if earning between $150,000 and 200,000.
Pay 80 percent if earning over $200,000.
Q: What other benefit changes are in the bill?
A: For the first time, Medicare will pay for a comprehensive physical when a patient first enrolls in the program. New screening tests for diabetes and heart disease are covered, along with improved payments for mammograms. A disease-management program for patients with chronic illnesses is also covered for the first time.
On the Net: www.medicare.gov
waysandmeans.house.gov
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