Rx for fixing Medicare Part D

As Medicare will undoubtedly surface in upcoming budget negotiations, now is the time for Congress to strengthen the decade-old prescription drug benefit. Commonsense solutions to secure better prices on prescription drugs would save billions in excess costs. Still, some suggest that Part D reforms should be off limits, citing a recent survey that finds 90 percent of beneficiaries are satisfied with their coverage.

This rationale sets an unreasonably low bar. In 2011, 47 percent of Medicare spending on Part D was concentrated among only 10 percent of beneficiaries. A truer test of Part D success would be to evaluate how well it serves these high-need beneficiaries, in effect the actual users of the drug benefit. Similarly, the cost of Part D and the drugs it covers must be examined. In this time of budget restraint, complacency on drug prices is foolhardy. Coupled with calls to shift higher health care costs to people with Medicare, this complacency is altogether unacceptable.

{mosads}We know firsthand how people fare under Medicare’s costly prescription drug maze. Our national helpline answers 15,000 calls from people with Medicare, family caregivers and health care providers annually. Several thousand of these calls come from beneficiaries who struggle with Part D.

We often hear from callers like Joyce, an 83-year grandmother who manages chronic depression, diabetes and heart disease with twelve medications. She is among the one quarter of beneficiaries who fall into the doughnut hole, with out-of-pocket costs well above $3,000 annually. Affordable Care Act (ACA) provisions to gradually close this gap offer some relief, but high cost prescriptions strain Joyce’s modest income of $17,000 and lifetime savings of only $4,000. During the Medicare annual enrollment period, now in full swing, Joyce must select among 62 drug and health plans. To select the best plan, she must compare a complicated set of variables to ensure she can afford the plan premium and cost sharing.

Joyce must learn if her prescriptions are on the plans’ formulary and where they fall on five cost sharing tiers: preferred brand, non-preferred brand, preferred generic, non-preferred generic and specialty. She must weigh how the plan employs restrictions, like prior authorization and quantity limits. Joyce must also determine whether her pharmacy is a preferred in-network pharmacy, a non-preferred in-network pharmacy, is out of network, or whether she can use a mail order service. The cost of Joyce’s medications had become unaffordable. Paralyzed by the annual process of selecting a plan, she had not taken advantage of Medicare open enrollment for many years.

A recent Kaiser Family Foundation study suggests, and our helpline data confirms, that Joyce’s plight is far from unique. Among Medicare beneficiaries not enrolled in low-income assistance, 87 percent never switched prescription drug plans over four consecutive years, despite annual changes to premiums, covered drugs and cost sharing. For a health program predicated entirely on the notion of choice, that so many do not choose should be cause for alarm, raising questions about how well Part D works for retirees and people with disabilities.

Proposed legislation would implement needed Part D reforms. Among the most straightforward is the Medicare Drug Savings Act (S. 740/H.R. 1588) which would restore drug manufacturer discounts for low-income Medicare beneficiaries, an approach endorsed by President Obama. Allowing Medicare to benefit from the same rebates available to Medicaid, the very same discount afforded to Medicare prior to the creation of Part D, would save $141 billion over ten years without compromising beneficiary budgets or access to needed medicines.

A lesser-known bill, the Medicare Prescription Drug Savings and Choice Act (S. 408/H.R. 928), offers a template for securing savings while also improving drug coverage. This legislation would create a public drug benefit, allowing Medicare to administer prescription drug formularies, negotiate drug prices, and more. In addition to promised savings, a public drug benefit would diminish confusion among beneficiaries who must navigate a complex web of private health plans.

Despite known suffering and wasted taxpayer resources, some members of Congress may be content to give Part D a pass, wrongly assured by satisfaction surveys. Contrary to prevailing opinion, the real test of Part D is in its service to Joyce and the millions like her. Not only should Congress do more for people with Part D, it should save money for American taxpayers by allowing Medicare to secure a better price on prescription drugs.

Baker is president of the Medicare Rights Center, a national non-profit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities.