Part D Consumer Protections

Asclepios, Medicare Rights Center

June 21, 2007

The companies offering the Part D prescription drug benefit have a financial incentive to deny coverage for expensive medications and to discourage enrollment by people with Medicare who have high drug costs.

That’s not a mistake; that is a fundamental part of how Part D was designed to work. Rather than provide the drug benefit directly through Medicare and using the purchasing power of 43 million people with Medicare to negotiate lower drug prices, Congress handed the benefit over to private companies and put them at financial risk for the drug costs of their enrollees. Financial risk means Part D plans have a strong incentive to keep costs down, including through policies that have the potential to harm the health of their members.

Recognizing that these incentives could hinder access to the medicines people with Medicare need, Congress established some basic consumer protections under Part D. A hearing today by the House Ways and Means Health Subcommittee examines how these consumer protections are working. The testimony from the Medicare Rights Center , the Center for Medicare Advocacy and the Alta Bates Summit East Bay AIDS Center shows that there are serious gaps in protections.

In particular, Congress needs to streamline and inject some basic fairness into the process for appealing when a Part D plan denies coverage for a medicine. After having a prescription rejected at the pharmacy counter, people with Medicare now have to ask their plan twice for coverage before they receive an independent review. Asking the plan the second time to review its decision is almost always a waste of time. People with Medicare need speedy access to an independent review where they have a shot at a fair assessment of their medical needs.

Enrollment protections are also woefully lacking. People with Medicare have no due process rights if they are dropped from their Part D plan. People with Medicare who need expensive medicines in particular are at risk from plans looking for ways to purge their rolls of high-cost enrollees.

Congress should also lift lock-in, which prevents most people from changing plans during the course of the year. This past January, when it was too late to switch plans, scores of people with Medicare found out at the pharmacy counter about changes to their coverage for 2007.

Important as they are, these improvements to the Part D consumer protections are stop-gap measures, however. The real way to protect people with Medicare is to provide them with the choice of obtaining coverage directly through Medicare, the same government-administered program that has provided good, reliable health coverage for millions of Americans for over 40 years.