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 What to Tell Your Patients About the New Medicare Drug Cards

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Cover Story -- June 2004  

By Walt Borges
Associate Editor  

Have you heard this one yet? "Tell me about the Medicare drug discount card."

If you haven't, you're probably not a primary care physician with Medicare patients. It's the question of the month for Texas doctors who continue to treat seniors and Texans with disabilities enrolled in Medicare. (See " The Basics of Discount Drug Cards.")

Medicare drug discount cards became active June 1, beginning a 19-month interim program leading to a permanent drug benefit program in 2006. With drug costs soaring and a real need for relief among many Medicare enrollees, they want answers … now !

So do many physicians. Granted, the drug discount program is a benefit for patients, not for physicians. But doctors want to help patients find affordable drugs, and patients turn to their doctors for information.

And physicians do get some help from the drug discount program, says Lewis Foxhall , MD, chair of Texas Medical Association's Council on Socioeconomics.

 "The drug card program helps relieve physicians of the ethical quandary of prescribing drugs that at times their patients can't afford," Dr. Foxhall explained. "With the rising price of many drugs, that's been an increasing concern for many physicians caring for Medicare beneficiaries. This may provide at least partial relief."

About 7.3 million of the 41 million Medicare enrollees are expected to take advantage of the optional drug card benefit, the federal government estimates.

The Bush administration predicts some benefits for the general public as well. The discounts will reveal the pricing of drugs on a national scale, administration officials point out. Drug prices vary because benefits vary from health plan to health plan, but secretive pricing deals keep consumers from evaluating the differences. Comparison shopping will become more common as consumers browse a government Web site that compares drug prices across the nation and within their own ZIP code.          

What Doctors Think  

TMA does not have specific policy on the discount program, but the American Medical Association supported the discount drug card program. AMA warned, however, that the cards will offer restrictive formularies that will not serve the needs of all patients.

Discounts are available only for the drugs that each card sponsor has on its list in 209 therapeutic categories specified by the Centers for Medicare & Medicaid Services (CMS). The sponsor must offer three drugs in each category. At least one drug in each category must be discounted from the retail price.

AMA Executive Vice President Michael Maves , MD, told AmericanMedicalNews.com that some sponsors could use the minimum standard as a ceiling for their discount programs. Patients might not get discounts on the most appropriate drug, he suggested.

"Drug formularies that are too restrictive can have negative consequences on enrollees' health," Dr. Maves said. "There may be subsets of patients who do not respond optimally to a formulary drug or for whom a formulary drug is contraindicated."

Medicare beneficiaries may have only one drug discount card at a time. Patients will have to find the one that offers the best deal for the whole range of drugs they are taking. Non-Medicare-approved drug discount cards, usually offered by the drug manufacturers themselves for discounts on their products, can be used to supplement the Medicare discount cards. That allows an enrollee more flexibility to customize the non-Medicare discounts to each drug prescribed.

CMS acknowledges that choosing the right card requires a complex analysis by a Medicare patient, especially if he or she takes drugs for multiple medical problems. To help patients make that evaluation, CMS established a Web site ( www.medicare.gov ) that allows Medicare seniors to compare discounts for various drugs they use. The site compares only the prices for the 28 sponsors offering discount cards to the fee-for-service Medicare population. The site does not compare drug discount cards offered by Medicare managed care plans.

Enrollees without Internet access can make the same comparisons over the telephone. CMS maintains a toll-free number at (800) 633-4227 for questions about the discount programs.

CMS recognizes that some Medicare patients may be tempted to drop health insurance with drug benefits in favor of the Medicare drug discount card, which has a maximum annual fee of $30. "The Medicare-approved drug discount card isn't insurance, and it isn't a substitute for any other health insurance you already have that covers prescription drugs," CMS warns patients in one publication. "You shouldn't drop your current prescription drug coverage for a discount card."

Critics, including consumer-advocacy groups such as Consumers Union and the Medicare Rights Center, insist the savings will be minimal, if any at all.

More than 100 organizations have applied to CMS to become card sponsors. Applicants include trade organizations such as the National Association of Chain Drug Stores, advocacy organizations such as AARP (the new official name of the American Association of Retired Persons), Medicare HMOs, and pharmacy benefits managers.

In April, CMS approved 43 Medicare HMOs and 28 private drug discount plans as sponsors of the cards. CMS says at least 24 sponsors will offer drug discount cards in Texas. (See " Discount Drug Card Sponsors .")


Warning From the Feds  

The government is moving to undercut possible conflicts of interest before they emerge. In April, some of the private sponsors asked CMS if they could pay incentives to pharmacists to sign up Medicare beneficiaries for the company's drug card. The Department of Health and Human Services' Office of Inspector General (OIG) warned them that paying pharmacists to recommend their cards could violate fraud and abuse laws.

The OIG's chief concern "is that financial incentives could distort or inhibit the flow of information to beneficiaries, and thereby convert the education process into a mechanism for steering beneficiaries to a particular drug card without regard for the beneficiaries' best interests.

"In our experience, payments tied directly or indirectly to the volume or value of business actually or potentially generated can result in the steering of patients based on the financial self-interest of the party receiving the payments rather than the patients' best interests," the OIG guidance notice said.

Physicians should take note, says TMA Board of Councilors Chair Al Sanders, MD. Doctors have an ethical duty to act in the best interest of their patients, and even if the recommended card is the best one for the patient's particular prescriptions, accepting incentives casts the physician in a dim ethical light, he says.


The Basics of Discount Drug Cards

For physicians who need information about the Medicare discount drug cards to give their patients, here's a list of questions and answers.

Who can apply for the card? 
Anyone enrolled in Medicare, except enrollees who already have outpatient drug coverage through Medicaid. Those enrolled in Medicare HMOs may sign up only for the drug discount card offered by their HMO, if one is offered. If the HMO doesn't offer a drug discount card, the enrollee may join any private sponsor's card plan.

How long will the interim drug card program last?
Drug discount cards will be used for 19 months as a bridge to the permanent Medicare drug discounts that will kick in on Jan. 1, 2006.

What are the basic benefits of the program?
There are two. The first is the drug discounts. The Bush administration says the discounts will save Medicare seniors and disabled enrollees 10 to 25 percent on their prescriptions. The annual fee for a discount card may not exceed $30.

The second is a $600 drug-purchasing credit for low-income Medicare recipients. The government defines low-income enrollees as a single person with an income of $12,569 or less per year, or a married couple whose income is $16,862 or less. The annual fee is waived if an enrollee qualifies for the credit.

The government predicts 4.7 million Medicare recipients will qualify for the $600 credit, which will be entered on their drug discount cards. The cards will act as debit cards for low-income enrollees; they can be swiped through an electronic reader at the pharmacy filling the prescription, deducting the cost of the prescription from the balance on the card.

Are there any limitations on who can apply for the low-income credit?
The low-income credit is restricted. Medicare enrollees cannot apply for the credit if they receive outpatient drug benefits from Medicaid, military health insurance, federal retiree health insurance, or an employer group health plan. Some Medicare managed care plans fall into the latter category.

Can enrollees switch cards to get a better deal?
Switching cards is difficult, given the short time frame for the interim program. Once a Medicare patient applies for a drug card and is accepted, he or she must wait for the open enrollment period from Nov. 15 to Dec. 31, 2004, to switch cards.

What exceptions will allow a switch outside the open enrollment period?
In some situations, Medicare patients will be allowed to switch cards outside the enrollment period. They may switch cards if they move to another state where the card is invalid or if they join or leave a Medicare managed care plan offering a drug card. Switching cards is allowed any time a card sponsor stops offering the discount card, or when the patient enters or leaves a long-term care facility such as a nursing home where in-patient drug benefits are provided. In all cases, when a patient signs up for the card, the patient will have to pay the full annual fee for the card.

What happens if a physician changes a prescription to a drug not discounted on a drug card?
If the newly prescribed drug is not discounted, the patient will pay the nondiscounted price. But CMS recommends the patient give the discount drug list to his or her physician before the prescription is written to allow the physician to substitute a cheaper proprietary or generic drug when appropriate.              

Because the discount card sponsor can change the drugs on its discount list at any time, and the amount of the discount as well, how can a patient find out what he or she is going to be paying?
"The company will give you information about, and changes to its discount drug list if you ask for them," CMS notes in its Guide to Choosing a Medicare-Approved Drug Discount Card . "It will also put these changes on its website (if it has one). Each company will have a toll-free number for you to call with questions."

CMS officials in Texas say the rules governing the program do not require that enrollees be notified when changes are made. But sponsors are required to inform CMS, which will update its price comparisons on its Web site. Enrollees also would do well to request that the sponsor give them updated information on the changes related to the drugs they are taking.

Can a sponsor use a large discount to entice a patient to sign up for a discount card, then lower that discount later?
CMS officials acknowledge that it's possible, but they say all sponsors have been vetted as part of the approval process. Reliability to their customers was part of that consideration.

Texas CMS officials say they will monitor price changes. Those based on wholesale drug price changes will certainly pass muster, but CMS can step in with sanctions if it determines a sponsor is using unfair or deceptive practices to build card membership.

Can discount cards be used at any pharmacy?
No. Medicare enrollees must use a Medicare-designated pharmacy or forego the discount. While it is unlikely to create few problems in urban areas, finding an approved pharmacy in rural areas of Texas may be difficult or, at the least, require a long drive to secure the necessary drugs at a discount.

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Discount Drug Card Sponsors

The Centers for Medicare & Medicaid Services approved 28 private sponsors and 43 Medicare managed care plans for Medicare drug discount cards. Some of the sponsors offer cards that can be used nationally, while others are specific to the state where the patient lives.

The following companies are the 24 sponsors that may offer discount cards to Medicare enrollees in Texas. Private sponsors must offer the cards to all recipients statewide, but the cards offered by the Medicare HMOs are available only to HMO members in the regions where the HMO operates.

Private Sponsors  

Aetna Health Management National
AdvancePCS Health National
Argus Health Systems Inc.  National
Caremark Advantage Inc. National
Catalyst Rx   National
Computer Sciences Corp.   National
Express Scripts Inc.    National
First Health Services Corp. State
Long Term Care Pharmacy Alliance National
Medco Health Solutions Inc. National
PBM Plus Inc.  National
PharmaCare Management Services   National
Pharmacy Care Alliance Inc.  National
Prime Therapeutics Inc. State
Scrip Solutions  National
Sierra Health and Life Insurance State
SXC Health Solutions Inc. National
United Healthcare Insurance Co. National
WellPoint Pharmacy Management   National
WHP Health Initiatives Inc.  National

Medicare Managed Care Sponsors  

Humana Health Plan of Texas Inc. State
Humana Insurance Co.      State
PacifiCare of Texas Inc.  State
SelectCare of Texas  State

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