Medicare Prescription Drug Discount Cards (and Other Changes to Medicare)

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Jacques Chambers, CLU, Benefits Consultant

The Medicare Modernization Act of 2003 which was signed into law last December provides the most sweeping revision of the Medicare program since its inception in 1965. Many of the changes are administrative changes that will not be easily noticed by people on Medicare. For example, more funding is being provided to rural areas to increase access to Medicare providers.

The Medicare + Choice programs are now called Medicare Advantage and there are additional incentives to encourage more private insurer participation through expanded choices to fee-for-service (original) Medicare in the form of PPOs, HMOs, and other types of coverage, including some pilot programs to explore new alternatives for delivering health care to Medicare beneficiaries. These changes will take place in the coming months and years.

There are some changes occurring, however, that will have a direct impact on people using Medicare to treat HCV infection.

Chronic Care Improvement Program
One new program from the legislation that may have an impact on people with HCV is the Chronic Care Improvement Program. This program will be initially run as a pilot program with plans to expand it nation-wide if it lives up to expectations. The plan is to offer self-care guidance and support to persons with chronic illnesses. Through a type of case management, it will help patients manage their health and collaborate with their medical providers to provide better communication and coordination of treatment.

The goal is to provide better care more efficiently. It hopes to reduce unnecessary hospital stays and emergency room visits, and to help patients avoid medical complications that would be both debilitating and expensive.

Note that the goal is to save money, which is the goal of many of the changes in the law. Whether or not they will succeed won’t be known for some years. In all honesty, Medicare’s track record for improving efficiency and reducing costs has not been particularly successful.

Prescription Drug Benefits
The change that is receiving the most attention is the future addition of prescription drug benefits.

When Does The Coverage Start? The actual prescription drug program (Medicare – Part D) won’t take effect until January 1, 2006. The delay allows the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers those programs, to prepare the regulations and contract with the necessary staff to run the program. Of course, postponing the start date also saves the government some money.

Medicare Discount Care (Medicare – Part C). In the interim, the law has established “Medicare Approved” drug discount cards which are available for purchase now and will become usable beginning June 1, 2004.

There are many opinions about the value of the cards, so this article will attempt to give you the information you need to decide whether you will benefit from purchasing a discount card.

Eligibility. The discount cards are available to all Medicare beneficiaries, including those on Medicare due to disability who wish to purchase them. One exception is that people already receiving drug coverage from their state’s Medicaid program are not eligible to purchase the card. Also, people that have a Medigap (Medicare Supplement) coverage that covers prescriptions (Plans H, I, or J) cannot keep that coverage and have a discount drug card at the same time.

The drug discount cards will be sponsored not by Medicare directly but by private groups such as drug manufacturers, health insurance companies, drugstore chains or associations, and managed care companies licensed by CMS to offer the cards. As of the end of April, there were 39 national drug card sponsors and another 33 local and regional sponsors.

What the Card Does. The cards will offer a discount off the retail price of prescription drugs purchased at participating pharmacies. The discounts will average 10 to 15% with some savings as high as 25%. Each drug card sponsor will develop and maintain its own network of participating pharmacies that will accept its cards. Each sponsor may elect to offer discounts on an “open formulary,” and will also have the right to develop and use its own formulary. The formulary would list what drugs will be offered and the size of the discount.

One of the conflicts in the discount card design is that purchasers may only switch from one card sponsor to another once, at the end of 2004. However, the drug card sponsors can change formularies and prices weekly. It is possible that you may purchase a card because of the discounts it offers on the medications you take only to find the discounts reduced at a later date.

Cost. The law limits the cost that the sponsors can charge to no more than $30 per year.

Low-income Beneficiaries. Persons with low incomes will not have to pay $30 for the card and, in addition, will receive a $600 credit per year toward the purchase of medications. The credit will pay up to 90 – 95% of the cost of medications, leaving the remainder to be paid by the beneficiary.

To qualify as low-income in this program, the 2004 income cannot exceed $12,569 for singles or $16,862 for a married person. There is no asset test to qualify for this program.

The low-income credit is not available to anyone who has any other type of drug coverage, such as other health insurance, military or veterans’ health insurance or the federal employees’ health program.

Do I need the card? If you have access to drug coverage through any other means, you probably do not need this discount card. If you do not have other means to purchase medications and think you are interested in purchasing one of the new discount cards, check other possibilities before purchasing one. Some have questioned whether the discounts they offer will justify even the low $30 cost.

One study by the Minority Staff of the House Committee on Government Reform found that persons could purchase drugs from on-line pharmacies, such as Drugstore.com, or from Canada for prices well below the price people would pay using the drug discount cards.

How do I find the right card for me? One of the goals of the discount drug card program is to provide information about the cost of drugs through various programs in order to help you decide which card is best for you based on the medications you use. One side benefit to this process is that the more open and available drug costs are, the greater the chance that the marketplace will cause some medications to drop in price.

The primary resource for comparing drugs costs with the discount cards is at http://medicare.gov. Click on the section labeled NEW! Find available Medicare-approved drug discount cards, and compare prices for your prescriptions. Then enter your ZIP code and the medications you currently take. The screen will then display a comparison by drug cards in your area of the various prices using the discount card.

AARP has created an “Rx Worksheet,” which can be used to compare prices under the various discount cards. It is available at http://www.aarp.org. Also
http://www.medicarerights.org, the website of the nonprofit Medicare Rights Center, has a fact sheet called “76 Things You Should Know” about the new discount cards.

Other sites such as familiesusa.org and WebMD.com have developed comparison charts to assist in your decision as well.

Beware of Fraudulent Discount Drug Cards. As often happens with any new program directed to unsuspecting people, there are already fraudulent cards being sold. The Medicare site shows the “Medicare Approved” logo. If you suspect a card may not be Medicare approved, check the Medicare website or call 1-800-MEDICARE.

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[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at jacques@helpwithbenefits.com or through his website at: http://www.helpwithbenefits.com.]

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