Jun 09, 2009 - 0 Comments - healthcare, politics -

How politics made the hole in Medicare Part D



The roots of Medicare’s troubles go back farther than the early 1980’s when changes in payments, classifications of procedures, and integrative approaches on health care insurance side were proposed. Medicare recipients originally have had a fee for service arrangements with doctor’s, hospitals and critical home-infusion care facilities.

Medicare part D is a privatized prescription benefit plan enacted in 2006 whereby the Centers for Medicare and Medicaid Services contracted out the new prescription drug plan on the basis of cost and coverage to an inordinate number of health insurers. This break with the traditional fee-for-service arrangements with seniors under Medicare part A and Medicare part B may have had its seeds planted in the early 1980s under the Reagan administration. And again in 1992 when the Tax Equity and Fiscal Responsibility Act of 1992 or TERFA act was issued.

A second bill introduced in 1984 began the binding of prescription drug purchases by seniors, the new HMO plans, through the incentives of the TERFA act and Medicare. This act known as the Hatch-Waxman Act targeted generic class drugs’ and pharmacological equivalents. It allowed the referencing of materials used in the promotion of their brand name drug counterparts as well as allowed the generic manufacturer to test the copy of the brand before the brand name drug’s patients expired. In addition, it allowed the generic drug maker to use specific research that was previously used in the clinical trials of the brand name drugs, as well as text the copy of the brand before the brand name drugs patents expire.

This created an incentive for the federal government to see the marketplace as a vehicle to reduce drug costs if Medicare part D was enacted. Market theory would dictate a shift of purchases toward generics due to lower cost at similar quality. There were also provisions for brand name manufactures to protect their patents on their drugs and for the contesting of generic manufactures legality on bringing a copycat drug to the market, as well. They of course did so and with, some would say, a large measure of exploitation in the process.

In 1988, The Omnibus Budget Reconciliation Act or OBBRA which congress passed through was significant as well, because it made detailed modifications on how Medicare and Medicaid interacted with long-term health care facilities. These changes in Medicare and Medicaid affected how they would pay for services rendered in nursing homes to their residence. These provisions included hospices, specialized nursing units, as well as intensive nursing home procedures and. Specifically in the OBRA bill was the broadening of how skilled services in these facilities are classified. In short, they liberalized the payment processes so greater quantities of services could be re-reimbursed under Medicaid and Medicare in these units. The result was a shift from Medicaid’s share of what could be billed to what would be reimbursed under the higher rates of Medicare. This liberalization of payment created greater protection for seniors from catastrophic medical bills, but increased the capacity for nursing homes to accept new residence.

This was a very much-needed positive result, though it created difficulties in the long run once Medicare part D was enacted. These difficulties were in part because most nursing home residence were on long-term stable medication regimes before Medicare part D was enacted. With Medicare part D privatization though, HMO contracting formularies were used.

The end result was such that many were forced to alter their prescription medication regimes in order to stay within the formularies they were now bound too. They had maintain their total prescription drug costs under 2,250 dollars each year, less they the total prescription cost when they ender the gap or the donut hole This sentence needs work? What is disconcerting is that these long-term residence are possibly the least able to advocate for their medication regimes, unlike younger ambulatory, non-residential seniors or pre-retirement seniors.

Medicare part D overall was a benefit to seniors that did not have prescription Medication coverage which was effectively a large majority of Medicare recipient unless they received coverage through their previous retirement befits package. For low income recipients Medicare part D stabilized the out-of-pocket amount they much pay for their medication regimes and could now go to any pharmacy they wished too because they not had an HMO benefit plan for prescriptions. Although for those seniors who are 15% or above the poverty line, they generally have a greater amount of the costs from increased premiums, fees and other expenses because of to the way Medicare part D was enacted. This also included the large coverage gap in which they would pay in full for their prescriptions until they reached the catastrophic coverage point.

For all intense purposes part D coverage was rolled out Nation-wide and was geographically extensive. In fact there was too much of an overlap in competing plans making it difficult to sort through the fine minutia of each of the various option each HMO’s offered a senior. In 2006 there were a total of 266 companies offering HMO Medicare part D products with multiple plans. but only ten of these companies were major enrollers of seniors in the part D program.

These ten companies enrolled 72% of all seniors in the Medicare part D program who actively desired to enroll. Many of these were bundled with parts A and B. These facts emulated the market of HMO insurance before part D existed. Medicare part D enactment and roll out expanded previous Medicare HMO enrolment, which at the very least strengthened the stability of these HMO offerings to seniors as well expanding where seniors can receive services. One study found that medication use for seniors increased after part D increasing national medication costs but this could overall lower health care bills because chronic conditions could be more under control.

After three years of Medicare part D and twenty years of back history, before part D’s birth what we can conclude is it overall a positive benefit to American seniors but a lesser mixed bag of results must be included with the benefit. Seniors who have accepted part D coverage, for the most part are satisfied with their coverage as a poll from AARP conducted in 2007 can attest too. In this poll, eight in ten senior respondents thought they made a good choice on the type of Medicare part D plan they eventually decided on. Sixty percent of those polled said they were extremely or very satisfied with their coverage while another 32% said they were very satisfied.

However, the mixed bag is ever present, the donut hole. Six in ten respondents said they did not have gap coverage, those with gap coverage about half of those surveyed knew of the low income provisions in Medicare part D, but only ten percent considered themselves qualified to have the hole filled due to their income. Perhaps in time, the whole will be filled by congress and the donut with the hole may become filled like a Boston cream. Remember even policy gets stale real fast.

The AARP does a lot of research in their own right, click here to find out about it here.

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