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Medicare Compliance & Reimbursement

MEDICARE DRUG CARDS:

Analysts Dissect The Drug Card

Published on Thu Jun 10, 2004

Will they save seniors money?Are they a waste of money? The reviews are mixed.

The Medicare prescription drug discount card program officially began June 1, but whether that's a good thing is a debatable point.

Not surprisingly, the issues raised by Rx program were front and center at a June 1 health reporters'break-fast featuring Marilyn Moon of the American Institutes of Research, Project Hope Senior Fellow Gail Wilensky and Commonwealth Fund Vice President Tricia Neuman.

  • Are the discounts 'real'? Left-leaning analysts tend to think that the discounts are more window dressing than a real response by pharmaceutical companies to Medicare beneficiaries'new ability to bargain in groups.

    "Manufacturers will play good guys for a couple of years to try to stave off more federal intervention" on prices, said Moon. The level of discounts currently offered by the cards doesn't represent any particularly painful market concessions by drug-makers, she said.

  • Not just prices, but value judgments needed. Many analysts say price information, such as that provided for the discount cards on the Centers for Medicare and Medicaid website, is not enough. Even many observers on the right bewail the lack of funds for comparative-effectiveness studies of treatments. The new Medicare law authorized $50 million in new spending for such programs, but even that amount, which most call inadequate, thus far hasn't materialized in fiscal year 2005 budget plans.

    To start paying for the right treatments, "we are talking at the very least about hundreds of millions" of dollars, said Wilensky. And to ensure that Medicare is really getting value for its money, all kinds of treatments, not just drugs, should be studied, she said. "If there were a way to prevent this wholesale substitution of new products," regardless of their value or cost compared to older treatments, price comparisons per se "wouldn't matter as much," Wilensky said.

    Nevertheless, "I don't see aggressive action" by either Democrats or Republicans to fund development of value information, a fact that leaves her "frustrated," Wilensky said.

  • How about price transparency? Will the discount cards, and the fuller Medicare coverage of prescription drugs that begins in 2006, actually increase pricing transparency in the market, as Bush administration officials say they are confident will happen? Analysts tend to be skeptical.

    Said Wilensky: Medicare has covered medical devices "for years. And it has not happened." Based on that analogy, "it's not going to happen," she said.

    The device analogy may not speak to the precise point, however. Medicare beneficiaries have insurance coverage for device-based treatments, a fact that shields consumers from knowing -- and, most likely, from caring -- about price comparisons. Under the discount drug card and, to a lesser extent, under the drug benefit that begins in 2006, beneficiaries will still pay for prescription drugs on their own, potentially making it more likely that consumer pressure could force more transparency.

  • Then, a year and a half from now ... fugged-aboudit.

    One big educational problem facing CMS, according to Neuman: The agency will have 16 to 18 months to educate beneficiaries about the drug discount card, including communicating the early-stage recommendation that they wait a bit until prices have settled to choose the best card for them.

    Then, when 2006 rolls around, the card will vanish, and beneficiaries will have to take in several new messages, including this opposite injunction: Forget the "watchful waiting" that was recently recommended as a way to ensure one purchased the drug card that would offer the best prices for a particular list of prescriptions. When it comes to a prescription-drug coverage plan, sign up right away, because delaying enrollment incurs a lifelong penalty.

    Perhaps the biggest culture shock for beneficiaries in all this, according to Neuman: "They're actually used to Medicare being relatively user friendly."

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