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Medicare Part D: Enrollment and Implementation
On September 23rd, the Centers for Medicare and Medicaid Services (CMS) announced the plan options available to Medicare beneficiaries who choose to enroll in the Medicare prescription drug benefit. The enrollment period for prescription drug coverage begins November 15th and continues through May 15th, after which enrollees will incur a penalty for late enrollment. Ten companies will offer national stand alone plans. CMS also approved a number of regional plans ensuring that every beneficiary will have a choice of at least 11 stand alone plans, with many more options available in certain areas.1
The drug plans differ in terms of the range of premiums, deductibles, co-payments, and the medications included in the different formularies. Forty-nine states have options with monthly premiums below $20, the average premium being about $40. Some plans have flat copayments, while others have tiers. Additional savings could be provided through certain Medicare Advantage plans by potentially eliminating monthly drug coverage premiums or providing some fill-in coverage.2
The wide variety of options increases the likelihood that beneficiaries can find a plan that suits their needs. Yet, the very number and complexity of choices may be overwhelming for some. A survey conducted in late September by USA Today/CNN/Gallup Poll indicates that 61% of seniors say they don’t understand the program even after months of education efforts. As a result, according to the same poll, only 24 percent of seniors plan to join the program; 54 percent do not plan to join, and 22 percent were still not sure.3 The plethora of plans with varying levels of coverage, cost sharing and premiums are at best confusing to beneficiaries and, worse, a potential barrier to electing coverage.
In order for Medicare to meet its coverage goals for beneficiaries, CMS and the drug plans must provide appropriate information so beneficiaries feel comfortable enrolling and choosing among plans. It is important to know how seniors use information, what factors affect plan choice, and how health care decisions are made. Several HCFO projects address these issues and could provide valuable insight into factors that will affect Medicare Part D enrollment and implementation.
HCFO grantee, Cindy Parks Thomas, Ph.D., at Brandeis University, is examining how the design of prescription drug benefits for seniors affects drug benefit enrollment, use, and costs. By comparing two state-level SeniorCare prescription drug assistance programs, this project is assessing the impact of differing key features, including enrollment approaches and cost sharing. Preliminary findings show that the differences in plan design in the Wisconsin and Illinois SeniorCare programs do in fact result in differences in prescription drug utilization for enrollees. Jack Hoadley, Ph.D., at Georgetown University’s Health Policy Institute, another HCFO grantee, is also looking at state experiences providing drug benefits to seniors by studying state pharmacy assistance programs serving Medicare beneficiaries. Hoadley and his colleagues found that many state pharmacy assistance programs are reconfiguring their programs in light of the Medicare prescription drug benefit.
Two other projects sponsored by HCFO are looking at the impact of information on health plan and health care choices. Katherine Harris, Ph.D., of RAND Corporation, investigated the impact of health status on consumers’ use of quality information in making health plan choices. Her work found that there is substantial variation in the degree of consumer activism across patient subgroups highlighting the importance of decision support tools.4 While not focusing directly on beneficiary choice of drug plans, Judith Hibbard, Ph.D., of the University of Oregon, is examining the factors that influence consumer activism. In particular, she is focusing on consumer activism in CDHPs by comparing patients who choose CDHPs and more traditional PPO participants over time. Hibbard has published preliminary results that show patients become “activated” to participate in health care decisions in four stages, 1) believing the patient role is important, 2) having the confidence and knowledge necessary to take action, 3) actually taking action to maintain and improve one’s health, and 4) staying the course even under stress.5
The many organizations and policymakers involved in implementing the Medicare prescription drug benefit can use information generated from these types of projects to guide their efforts to effectively communicate to beneficiaries, consider the effects of different plan designs, and motivate seniors to actively participate in their healthcare.
HCFO Funded Research:
Title: The Role of Benefit Design in Enrollment, Use and Spending in State Prescription Drug Assistance Programs for Seniors – Lessons for Medicare
Institution: Brandeis University
Time: March, 2004 - February, 2006
Principal Investigator: Cindy Parks Thomas, Ph.D.
How does the design of a prescription drug benefit for seniors – either under Medicare or in individual states – affect drug use and costs? Building on evaluations currently underway for CMS, the researchers are comparing the SeniorCare prescription drug assistance programs in Illinois and Wisconsin to assess the impact of different key features, including enrollment approach and fees, and the use of a PBM or not. The scope of the CMS evaluations of the Medicaid 1115 waivers in each state does not permit direct comparison of the programs to assess the impact of the different design features. The researchers plan to: 1) compare enrollment selection between the two programs; 2) compare utilization and spending patterns for enrollees; 3) assess the impact of Illinois’ ‘soft cap’ and Wisconsin’s deductible on drug use and spending; and 4) compare patterns of use for specific diseases (COPD/asthma, congestive heart failure, diabetes, and arthritis) and drug therapeutic classes in each of the states.
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Title: State Experience with Pharmaceutical Assistance Programs
Institution: Georgetown University
Time: January, 2004 - September, 2005
Principal Investigator: Jack F. Hoadley, Ph.D.
What has been the state experience in implementing pharmaceutical assistance programs serving Medicare beneficiaries? Through a series of case studies the researchers will gather information on issues such as communicating with enrollees, administering eligibility and cost sharing, and managing drug costs. The objective of the project is to reveal best practices and lessons learned that are useful to policymakers considering a Medicare prescription drug benefit and those in states implementing or modifying pharmaceutical assistance programs.
Publications:
Goodell, S., Hoadley, J. et al. “State Pharmacy Assistance Programs vs. Medicare Prescription Drug Plans: How Do They Contain Costs?” Changes in Health Care Financing and Organization Issue Brief, AcademyHealth, October 2005.
Williams, C., Hoadley J. et al. “State Pharmacy Assistance Programs at a Crossroads: How Will They Respond to the Medicare Drug Benefit?” Changes in Health Care Financing and Organization Issue Brief, AcademyHealth, July 2005.
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Title: The Impact of Quality Information on Consumer Plan Choices: Does Health Status Matter?
Institution: RAND Corporation
Time: July, 2001 - June, 2002
Principal Investigator: Katherine M. Harris, Ph.D.
What is the impact of health status on consumers' use of quality information in making health plan choices? Using an Internet-based survey, researchers at RAND will build on a dataset collected as part of an AHRQ-funded small grant to include a series of health status and service use measures. They are addressing the following research questions: What is the effect of health status and experience with the health care delivery system on (1) the overall impact of quality information on plan choices, (2) the relative impact of various forms of information on plan choices, and (3) the trade-offs between provider access and quality that consumers make in choosing health plans? The objective of the study is to inform policy makers and employers whether the substantial investment in the collection and dissemination of plan performance measures which is designed to support consumers’ plan choices also meets the needs and concerns of those in poor health status for whom the consequences of plan choice are the greatest.
Publications:
Harris, K. “How do Patients Choose Physicians? Evidence from a National Survey of Enrollees in Employment-Related Health Plans,” Health Services Research, Vol. 38, Iss. 2, April 2003.
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Title: How Valid are the Assumptions Underlying Consumer-Driven Health Plans?
Institution: University of Oregon
Time: May, 2004 - April, 2007
Principal Investigator: Judith Hibbard, Ph.D.
How valid are the assumptions underlying consumer-driven health plans? The researchers propose to use both qualitative and quantitative methods to examine the key assumption underlying consumer driven health plans: if consumers are given financial incentives, choices and information to support these choices, they will take charge of their health and health care and make prudent choices. Working with Definity Health Plan and a large employer (which offers their employees a choice of Definity and a PPO option), the researchers are following one cohort of employees who enroll in Definity and another cohort who enroll in a PPO plan. The objective of the study is to compare the knowledge, use of information, satisfaction with care, cost-effective utilization, and cost of care for persons enrolled in Definity and the PPO over time.
Publications:
Hibbard, J., et al. “Development of the Patient Activation Measure (PAM): Conceptualizing and Measuring Activation in Patients and Consumers,” Health Services Research, Vol. 39, Iss. 4, August 2004.
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__________________________________________ 1. “Medicare Prescription Drug Plan Approvals,” Centers for Medicare and Medicaid Services, September 23, 2005. (updated September 30, 2005). Also see www.cms.hhs.gov/map/map.asp.
2. “New Drug Coverage Includes Options for Additional Benefits and Saving Money,” Centers for Medicare and Medicaid Services, September 30, 2005.
3. Wolf, Richard. “Medicare Drug Plan Stumps Seniors,” USA Today, October 4, 2005, p. 3A.
4. Harris, K. “How do Patients Choose Physicians? Evidence from a National Survey of Enrollees in Employment-Related Health Plans,” Health Services Research, Vol. 38, Iss. 2, April 2003.
5. Hibbard, J., et al. “Development of the Patient Activation Measure (PAM): Conceptualizing and Measuring Activation in Patients and Consumers,” Health Services Research, Vol. 39, Iss. 4, August 2004.
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