|
|
U.S. Settles on Regions for Dispensing Medicare Drug Benefits
By Robert Pear, The New York Times
December 7, 2004
In the first big step to make prescription drug benefits available to the elderly, the Bush administration announced Monday that it would carve the nation into 34 regions to administer the new Medicare program, which begins in January 2006.
Medicare will rely on private insurers, subsidized by the government, to deliver drug benefits. Premiums for each drug plan will be uniform throughout its region, but they could vary widely between neighboring states in different regions.
The configuration of the regions will be a significant factor in the success or failure of the law, signed by President Bush last December. The regional boundaries will, to a large degree, determine how many insurers participate in the new program.
Leslie V. Norwalk, acting deputy administrator of the Centers for Medicare and Medicaid Services, said the boundaries had been drawn to maximize participation by private insurers in each region.
The White House had originally wanted to establish large multistate regions. Administration officials said that larger regions would force health plans to serve rural areas that they had historically shunned. But many insurers told the administration that it would be difficult or impossible to serve such large areas.
"Initially," Ms. Norwalk said, "our thought was that you could have really large regions for the prescription drug plans."
But, she said, insurers were "very nervous about the amount of risk they would be taking on" in such regions. The elderly are heavy users of prescription drugs, and insurers have almost no experience covering drug costs in isolation from other medical costs.
Tommy G. Thompson, the secretary of health and human services, settled on what he described as a compromise, designating 34 regions.
"We wanted them to be not too big and not too small, but just right," Mr. Thompson said Monday.
Some of the drug plan regions are very large. One, covering all of California, has 4.3 million Medicare beneficiaries. Other large single-state regions include Florida, with 3 million beneficiaries, New York (2.8 million) and Texas (2.5 million).
On the other hand, New Mexico, with just 260,000 beneficiaries, is a separate region, as are Mississippi, with 460,000 beneficiaries, Arkansas (470,000) and Oklahoma (540,000).
Maine and New Hampshire, with a total of 420,000 beneficiaries, are one region, while the other four New England states, with 1.8 million Medicare patients, are a separate region.
Geographically, the largest region consists of seven states in the upper Midwest and northern Plains. The states - Iowa, Minnesota, Montana, Nebraska, North and South Dakota and Wyoming - have 1.9 million Medicare beneficiaries.
The new Medicare law envisions a huge role for private plans. If beneficiaries stay in traditional fee-for-service Medicare, they can get subsidized drug coverage by buying private insurance policies that cover prescription drugs and nothing else. Alternatively, they can join a managed care plan that covers drugs along with doctors' services and hospital care.
On Monday, the Bush administration issued a separate map showing the regional boundaries for preferred-provider organizations, which steer patients to a network of doctors and hospitals. Mr. Thompson established 26 regions for P.P.O.'s, generally following the contours of drug plan regions.
Mary Nell Lehnhard, senior vice president of the Blue Cross and Blue Shield Association, said she and her members were somewhat disappointed with the administration's decision.
"We were hoping for more single-state regions," Ms. Lehnhard said. "Each of our plans has an extensive network of doctors and hospitals in its own state. But it may be difficult for these independent plans, with separate ownership, to work together."
The level of financial risk increases with the size of a region, insurers say, so they need more capital and larger reserves to operate in a multistate region.
Michael B. Unhjem, president of Blue Cross Blue Shield of North Dakota, originally wanted to offer a managed care plan just to Medicare beneficiaries in his state. But he said Monday that he was working with other Blue Cross companies to see if they could offer a drug plan or a preferred-provider plan in the new seven-state region.
Mr. Unhjem said the chances were "better than 50-50" that his company would form a joint venture with other Blue Cross plans to offer both products.
Arizona, with 770,000 Medicare beneficiaries, is a separate region for free-standing drug plans and for preferred-provider organizations.
Regena M. Frieden, a spokeswoman for Blue Cross Blue Shield of Arizona, said: "We are pleased that Arizona was declared its own P.P.O. region. This paves the way for us to consider offering products and services as part of the new Medicare program, a decision we will make once we review the final regulations in 2005."
Mark F. Lindsay, a spokesman for the United Health Group, one of the nation's largest insurers, reacted favorably to Monday's announcement. After seeing the map of Medicare regions, Mr. Lindsay said, "we are more likely to want to participate."
But Alan G. Raymond, a spokesman for Harvard Pilgrim Health Care, a nonprofit insurer based in Wellesley, Mass., said, "This is not the configuration we expected or would have preferred."
His company, Mr. Raymond said, has decided not to offer a free-standing drug plan and is unlikely to offer a preferred-provider plan to Medicare beneficiaries.
|
|
