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Making Sense of Medicare Changes

New Medicare benefits may not mean much to federal retirees

Changes to Medicare that are set to kick in starting in 2006 may not be the best option for retirees living in the area. That’s because the Washington metropolitan area is peppered with former government workers who have Federal Employee Health Benefits that already offer excellent coverage.

Leslie Norwalk, the Acting Deputy Director of CMS (Center for Medicare and Medicaid Services), a division of Health and Human Services, said, “Federal employee health benefits will not change but this program may not be the best for them because they’ve already got great coverage.” Norwalk added, “This is voluntary but everyone should take a look at it, see what their benefits would be and make a decision after taking a careful look at it.”

Steve Hahn with AARP said, “Federal retirees already have a generous plan. They probably won’t want to opt in to this. The Federal retiree package covers more for less. It’s a cafeteria-style plan where they can pick and choose. The Federal retiree plan has been a model for other plans because of its strength. There will probably be little interest for them in Medicare part D.”

Congressman Frank Wolf (R-10th) held a forum in McLean last week to describe the changes to Medicare and explain the benefits to residents. Norwalk and representatives from the AARP were also on hand to explain the new Medicare parameters. “We want to make sure [people] have all the information they need because this decision is very important,” said Wolf. “There are a lot of people having a difficult time. It’s a good benefit that helps a lot of people. Also, it’s a voluntary program. You don’t have to participate but it’s a very necessary program,” said Wolf.

Although Wolf added, “The more information you have to work on, the better,” regarding the new plan, the two dozen people attending the forum expressed concern over the complexity of the law and the ability of seniors to decipher the benefits.

One senior who asked not to be identified said, “Some of the information is still very hazy even after this [forum]. A 600 page bill is too much for a senior citizen to understand.”

Starting in May seniors can begin enrolling in a discount card program that will help pay for some drug costs. That program, however, is temporary and will be phased out when the Medicare drug benefit goes into full effect on Jan. 1, 2006.

The basic elements of the Medicare plan are that it allows for immediate savings for seniors through the prescription drug discount card; that there are universally available prescription drug benefits; low-income assistance is available for the neediest seniors; and preventative care and disease management are offered.

During the forum several seniors said it was easier and cheaper to purchase their drugs in Canada than here in the United States. One resident said, “I just get them there. To tell the truth, I’d like to go to Canada where it’s cheaper. Just move to Canada.” After that sentiment was echoed by many in the audience, Norwalk responded, “What do you do for all the people who are never going to go to Canada?” She added, “Neither the current Secretary or the previous Secretary under Clinton, would say it’s safe to import drugs from Canada.”

WHILE THAT SOUNDS EASY ENOUGH, each segment has a subset of rules that begin to be complicated very quickly. For example, the prescription drug benefit becomes “enhanced” in 2006, has a $35 monthly premium with a $250 annual deductible. Medicare will pay 75 percent of the cost of drugs up to $2,250 and offers Catastrophic Coverage that pays 95 percent of drug costs over $3,600 in yearly out-of pocket-expenses.

“For the first time Medicare will cover catastrophic costs,” said Norwalk.

So many figures leave seniors wondering exactly how much they will ultimately pay. Norwalk told seniors attending the forum who were dismayed over the complexity of the program, “No one knows more than I do how complicated this can be. I live it and breath it every day. We’re trying to make it as simple as possible.”

To that end, several Web sites and toll-free numbers have been set up to help seniors determine their benefits. On April 29, www.medicare.gov will be up and running. The purpose of the site is to enable those enrolled in the drug plan to do a price comparison before leaving the house. “If you don’t have access to the Internet you can call us at 1-800-MEDICARE. We’ve added 1,000 more operators on that line to answer questions,” said Norwalk. The AARP has also created a benefit calculator on its Web site, www.AARP.org.

THE PRESCRIPTION DRUG CARD will begin enrolling on May 3, but the Web site is available April 29 to help seniors determine which plan best fits their needs. Eligibility for the card is for Medicare beneficiaries enrolled in Part A or B that don’t receive outpatient drug benefits via Medicaid.

For those living at 135 percent of the poverty line, there is a stipend of up to $600 per year toward prescription drugs. The government defines that requirement as $12,123 for single individuals and $16,362 for married individuals.

The drug card cannot be combined with other benefits or cards. It will cover the 209 drugs most commonly used by the drug companies for seniors, according to Norwalk. The card however, is not a card for the manufacturers, just companies participating in the plan. Norwalk used the analogy of pricing at COSTCO to explain that segment of the card. “That’s the concept of the drug discount card.” She explained that there will be pricing transparency because drug prices will be updated every week.

Norwalk also explained the drug card as being similar to a coupon. “It’s like a coupon, typically, you only use one at a time. So you can say to the pharmacist, pick one, whichever is cheaper.”

In essence, seniors won’t be paying retail for their drugs. There will be bulk buying power behind prescription drug prices for those using the card.

WOLF SAID THAT one of the reasons he’s holding forums across the state for the drug plan is because women are the hardest hit by the price of drugs. “There are people who, literally, at the end of the month have to make a decision on whether to eat or take their drugs. This is especially true of women,” said Wolf.

A statement released by Wolf explains that senior women outlive men by more than five years, are a majority of the Medicare population, have significantly less income than men, spend more money on health care than men, and suffer from a broader range of chronic illnesses.

Under the new plan, half of senior women will be entitled to complete drug coverage because their incomes are less than the 135 percent of the federal poverty level. They will also receive the most help from the new Medicare bill because statistically they are paying 18 percent more out-of-pocket on less income, with more chronic illnesses.

The Wolf analysis suggests that senior women will save as much as 25 percent off their drug costs under the prescription drug discount card and 60 percent through Medicare drug benefits.

There are three benefits in the new Medicare law that are free for seniors. They are entitled to a one-time preventative physical exam, diabetes screening and cardiovascular screening.

Choice is the hallmark of the new Medicare plan. For example, there are a variety of plans that starting in 2006 seniors will be able to select from. These include HMOs, PPOs and traditional Medicare. If a senior is happy with the coverage and benefits they currently have they do not need to enroll in any of the programs.

The Congressional Budget Office has calculated the average premium for the new drug coverage to be approximately $35 a month beginning in 2006. That premium, however, is not legislated. Wolfs statement explains, “Like any private health plan that offers a new benefit, premiums may rise to offset some of those costs.”