Medicare Compliance & Reimbursement

But many critics disagree as seniors begin to enroll.

Medicare beneficiaries using the new Medicare-endorsed prescription drug discount cards can save 10 to 17 percent on brand-name drugs, and 30 to 60 percent on generics, compared to the average prices paid by all Americans, the Centers for Medicare & Medicaid Services said in May 5 analysis.
 
The analysis is meant to counter Democratic claims such as in an analysis released by Rep. Henry Waxman (D-CA) last week that the cards don't provide significant discounts beyond those already available.
 
CMS calculated the savings by selecting the most advantageous Medicare cards for several illustrative beneficiaries in different regions, then comparing prices under the cards with national retail price information compiled by IMS Health. "The average prices for Americans used in this report include discounts available through private health insurance, Medicaid plans, and other sources of discounts," says CMS.

Democrats had attacked previous administration estimates of the discount-card savings because they had been phrased as comparisons to the "average wholesale price," an industry reference price widely acknowledged to be artificial.

CMS also said mail order prices available through the cards offered discounts of up to 12.9 percent off mail order prices available at Drugstore.com and Costco.com.

Cards Generate Web Hits, Phone Calls

Price information is posted on the Medicare.gov Web site every Monday, and as of May 3, 56 of the 73 cards approved for beneficiaries outside of Medicare health plans had price information posted. Administrator Mark McClellan told health reporters May 5 that the Web site got over a million hits on May 3, and the 1-800-MEDICARE phone number, through which beneficiaries can also receive card information, fielded a record 407,000 calls on the same day.

Speaking May 6 to the pharmacy benefit managers' group Pharmaceutical Care Management Association, McClellan said "tens of thousands" of beneficiaries had signed up for a specific card on May 3, the first day they could do so. McClellan cited this figure as evidence of beneficiaries' excitement about the cards, but it could point to a potential problem. McClellan and other administration officials have been urging seniors to "window shop" for a while before signing up, because they believe that many card sponsors will lower prices in coming weeks as they try to beat competitors' discounts.

Beneficiaries may only switch cards once during the 18-month lifespan of the program, at the end of this year. Thus, those who sign up early will be unable to switch to another card that later offers a better deal at the end of the virtuous cycle of discounts the administration envisions. Nevertheless, McClellan rejected a Democratic proposal to allow a thirty-day grace period for beneficiaries to change their selections.

CMS is working with card sponsors to resolve concerns that prices on the Web site were higher than those sponsors actually provide, McClellan says. CMS must post prices beneficiaries are guaranteed to receive, no matter what sizes or packaging of a particular drug a pharmacy has available when a customer visits. Different bulk packaging can substantially raise or lower unit drug prices.