Medicare Compliance & Reimbursement

Many health plans and PBMs hope the Rx card opens the door to big 2006 market.

The Department of Health and Human Services has selected 28 companies to sponsor prescription drug discount cards for the general Medicare population, HHS Secretary Tommy Thompson announced March 25. Applications from 29 companies were rejected, with insufficient financing as the most common reason.
 
Some of the companies will offer more than one card, so collectively there will be 30 nationwide cards and another 19 offered in specific geographic areas. In addition, another 43 sponsors will offer cards to enrollees in 84 specific Medicare Advantage health plans.

The law does not require any specific level of discounts, but HHS says Medicare beneficiaries can expect to obtain price breaks of 10-25 percent through the cards. The law also does not specify how much of the discounts that card sponsors negotiate must be passed along to consumers; Senate Democratic leader Tom Daschle (SD) introduced legislation March 25 to require that consumers get 90 percent of the discounts card sponsors obtain.

Pharmacy benefit managers will participate in the "vast majority" of cards, either as sponsors themselves or as administrators for other companies, Mark Merritt, president of the Pharmacy Care Management Association, told reporters in a March 25 conference call.

Being part of the discount card program will allow PBMs to brand themselves with seniors and gain actuarial experience in the Medicare marketplace in preparation for participating in the full-scale drug benefit that starts in 2006, Merritt said.

Merritt noted that the discounts cards are "not viewed as a money maker by our industry ... There's a lot of infrastructure to put it together and then you've got to take it down 18 months later," he explained, referring to the fact that the cards kick in on June 1 and then disappear with the drug benefit's 2006 debut.

Several Medicare Advantage health plans are also offering the cards and, like the PBMs, they seem to be using the opportunity as a way of gaining experience with Medicare drug benefits. Health plans expect to do a lot more business with Medicare prescription drugs in 2006 and beyond.