Benefit Bulletin: August 2014

Benefit Bulletin: August 2014

How Medicare Can Save Billions:

Stop Assigning Seniors To The Wrong Drug Plans

A new study finds that Medicare is spending billions of dollars more than necessary because low-income seniors are randomly assigned to drug plans.  If Medicare assigned people to drug plans based on the actual drugs they took, instead of randomly doing so, it could save seniors money, and potentially save the government billions.

About 10 million low-income Medicare beneficiaries receive "Extra Help," a Medicare program that helps cover premiums, deductibles, and cost-sharing in Part D drug plans.  Most low-income enrollees are randomly assigned a plan that costs less than the average for the area where the enrollee lives.  The study found that even though the plan premiums cost less, the plans wind up costing the government and beneficiaries more because of higher cost-sharing that the government covers for most low-income beneficiaries.  Researchers calculated that if Medicare had matched beneficiaries to drug plans based on the drugs they actually took, rather than random assignment, the government would have saved $5 billion in 2009.

When low-income seniors are assigned to drug plans that don’t cover their prescriptions, or limits quantities, they can be forced to pay the full out-of-pocket costs.  Many have to go back to their doctors for authorization to use specific drugs, or specific quantities in order to obtain coverage from their plan.  This comes at a higher cost to Medicare for "non-preferred" drugs.  Meanwhile other drug plans are generally available that may cover the same prescriptions at a significantly lower out-of-pocket cost and less hassle.

Random assignment to drug plans has never made sense for beneficiaries or tax payers.  It supposedly ensures no one plan receives a disproportionate number of very sick beneficiaries, but TSCL believes that there's little evidence to support this concern because most plans have widely-different formularies.  TSCL supports "rational" assignment — using the Medicare Drug Plan Finder.  Seniors who qualify for Extra Help should be assigned to a Medicare benefits counselor who can help seniors find and enroll in the Part D plan which is best suited for them.  Changing the way Medicare assigns low-income beneficiaries to drug plans would save money for all.


Sources: "Medicare Could Save Billions By Scrapping Random Drug Plan Assignment," Julie Rovner, Kaiser Health News, June 2, 2014.