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![Page 1: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/1.jpg)
Translating “Legislative Sausage” into Understandable Choices of
Beneficiaries
Presented byTricia Neuman, Sc.D.
Vice President and Director, Medicare Policy ProjectThe Henry J. Kaiser Family Foundation
for
AcademyHealth
June 27, 2005
![Page 2: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/2.jpg)
Four Key Policy Decisions that Set the Legislative Sausage Machine in Motion
1. Beneficiaries would have access to drug coverage offered by competing, private at-risk plans
– Strong philosophical tilt toward private, market-based approach, rather than big government program
– Prescription drug benefit would be integral to Medicare, unlike other benefits
2. The new Medicare drug benefit would be voluntary– Unlike Part B, however, people would “opt-in”, rather than opt out
3. The total federal cost over budget window would be $400 billion– Even if it resulted in less than-typical-benefit with doughnut hole
4. Additional help would be provided to those with low incomes and/or catastrophic costs
– Introducing means-testing to Medicare, including new asset test– Requiring administrative roles for SSA and states/Medicaid
Exhibit 1
![Page 3: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/3.jpg)
Four Key Policy Decisions that Set the Legislative Sausage Machine in Motion
1. Beneficiaries would have access to drug coverage offered by competing, private at-risk plans
– Strong philosophical tilt toward private, market-based approach, rather than big government program
– Prescription drug benefit would be integral to Medicare, unlike other benefits
2. The new Medicare drug benefit would be voluntary– Unlike Part B, however, people would “opt-in”, rather than opt out
3. The total federal cost over budget window would be $400 billion– Even if it resulted in less than-typical-benefit with doughnut hole
4. Additional help would be provided to those with low incomes and/or catastrophic costs
– Introducing means-testing to Medicare, including new asset test– Requiring administrative roles for SSA and states/Medicaid
• Benefit should be user-friendly; relatively easy for beneficiaries to understand and manage
– Especially for large number with special needs
Exhibit 1
![Page 4: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/4.jpg)
18%
29%
6%
14%
17%
27%
35%
39%
27%
Percent of total Medicare population:
SOURCE: All data from Medicare Current Beneficiary Survey 2002 Cost and Use File 2002 except income data from March 2004 Current Population Survey.
Exhibit 2
Lacks Drug Coverage
Low-Income <150% FPL ($14,355 in 2005)
Enrolled in Medicaid (“Dual Eligibles”)
Cognitive/Mental Impairment
Nursing Home Resident
45%Full Year
3+ Chronic Conditions
Under-65 Disabled
Characteristics of the Medicare Population
Part Year
Fair/Poor Health
![Page 5: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/5.jpg)
Decisions for Medicare BeneficiariesExhibit 3
To D or Not to D?
![Page 6: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/6.jpg)
Decisions for Medicare BeneficiariesExhibit 3
![Page 7: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/7.jpg)
Decisions for Medicare Beneficiaries
Enroll in Part D PlanDo Not Enroll in Part D Plan
Exhibit 3
![Page 8: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/8.jpg)
Decisions for Medicare Beneficiaries
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Exhibit 3
![Page 9: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/9.jpg)
Decisions for Medicare Beneficiaries
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Exhibit 3
![Page 10: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/10.jpg)
Decisions for Medicare Beneficiaries
Medigap (but not “creditable” so penalty for late
enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Exhibit 3
![Page 11: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/11.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Exhibit 3
![Page 12: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/12.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
MedicareAdvantage
Exhibit 3
![Page 13: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/13.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
Exhibit 3
![Page 14: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/14.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
Exhibit 3
![Page 15: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/15.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
Exhibit 3
Decisions to be Made:• Premiums
![Page 16: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/16.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs
![Page 17: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/17.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 18: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/18.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
Apply for Low-Income Subsidy?
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 19: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/19.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
If Dual Eligible Auto-enrolled
Apply for Low-Income Subsidy
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 20: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/20.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
MedicaidSocial
Security
If Dual Eligible Auto-enrolled
Apply for Low-Income Subsidy
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 21: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/21.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
MedicaidSocial
Security
If Dual Eligible Auto-enrolled
Apply for Low-Income Subsidy
If meet income and asset test, qualify for subsidy:
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 22: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/22.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
MedicaidSocial
Security
If Dual Eligible Auto-enrolled
Apply for Low-Income Subsidy
Below 100% FPL ($9,570 in 2005)
Below 135% FPL ($12,920 in 2005)
Assets $6,000/single; $9,000/couple
Below 150% FPL ($14,355 in 2005)
Assets $10,000/single; $20,000/couple
If meet income and asset test, qualify for subsidy:
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 23: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/23.jpg)
Decisions for Medicare Beneficiaries
Medigap Coverage (but not “creditable”
= penalty for late enrollment)
“Creditable” Employer Plan (no low-income
subsidies)
No Prescription Drug Coverage
(penalty for late enrollment)
Do Not Enroll in Part D Plan
Enroll in Part D Plan
Traditional Medicare
• Prescription Drug-Only Plan (PDP)
MedicareAdvantage
• HMO
• PPO (regional)
• Private Fee-for-Service
MedicaidSocial
Security
If Dual Eligible Auto-enrolled
Apply for Low-Income Subsidy
Below 100% FPL ($9,570 in 2005)
Below 135% FPL ($12,920 in 2005)
Assets $6,000/single; $9,000/couple
Below 150% FPL ($14,355 in 2005)
Assets $10,000/single; $20,000/couple
If meet income and asset test, qualify for subsidy:
Exhibit 3
Decisions to be Made:• Premiums• Covered Drugs• Cost-Sharing
![Page 24: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/24.jpg)
Employer-Sponsored Coverage
Indian Health Service
MedigapMedicaid
Veterans Admin.CHAMPUSTRICARE
State Pharmacy Assistance
ProgramNo Drug Coverage
Medicare Advantage
Medicare-Approved
Drug Discount
Card Holder
Medicare Savings
Programs
The “Right” Choice Will Depend on Many Factors, Including Current Source of Coverage
Exhibit 4
![Page 25: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/25.jpg)
Under the MMA and final rules:
– Medicaid stops paying for Rx December 31, 2005
– “Duals” auto-enrolled in Medicare Rx plans by HHS - Fall 2005
• Assigned to plans at or below average premium
– Coverage under Medicare Rx plans begins January 1, 2006
Key Issues
– Gaps in coverage?– Will their drugs be covered? – What plans will be available?– Will states wrap?– Education and outreach to duals?
Exhibit 5
Special Challenges: Dual Eligibles (6.3 million)
3%
45%
17%
26%
61%
19%
71%
34%
25%
52%
Less than HSEducation
Reside inLTC Facility
FunctionalLimitation
MentalDisorder
Fair/PoorHealth Status
Dual Eligible Medicare BeneficiariesOther Medicare Beneficiaries
SOURCE: MCBS 2002 Access to Care File.
![Page 26: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/26.jpg)
Not Well At All38%
Not Too Well30%
Somewhat Well18%
Very Well11%
Seniors’ Understanding of the Medicare Prescription Drug Benefit
* Don’t know responses not shown. SOURCE: Kaiser Family Foundation Health Poll Report survey (conducted March 31 – April 3, 2005).
68% of seniors say they do not understand the
drug benefit
Exhibit 6
![Page 27: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/27.jpg)
53% 55%59%
55%
68%
29%
60%
43%40%
43%45%
39%
0%
10%
20%
30%
40%
50%
60%
70%
Feb-04 Apr-04 Jun-04 Oct-04 Dec-04 Apr-05
Not too well /Not at all
Very /Somewhat well
Seniors’ Understanding of New Medicare Law - Trend
AMONG SENIORS: As you may know, beginning in 2006 there will be a new prescription drug benefit that will give all people on Medicare the option of enrolling in a Medicare drug plan. How well would you say you understand this new benefit?*
*Note: Question wording before April 2005 referred to the “new Medicare law.” Don’t know responses not shown.Source: Kaiser Family Foundation surveys.
Exhibit 7
![Page 28: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/28.jpg)
45%
34%21%
Seniors’ Impression of the Medicare Drug Benefit
AMONG SENIORS: Given what you know about it, in general, do you have a favorable or unfavorable impression of the new Medicare prescription drug
benefit?
SOURCE: Kaiser Family Foundation Health Poll Report survey (conducted March 31 – April 3, 2005).
Unfavorable
Neutral/Don’t Know
Favorable
Exhibit 8
![Page 29: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/29.jpg)
34%
28% 29% 29%33%
45%
21%
42%44%48%47%
55%
25% 25%27%
27%
24%
17%
0%
10%
20%
30%
40%
50%
60%
Feb-04 Apr-04 Jun-04 Oct-04 Dec-04 Apr-05
Unfavorable
Neutral/Don'tknow
Favorable
Seniors’ Impressions of New Medicare Law - Trend
AMONG SENIORS: Given what you know about it, in general, do you have a favorable or unfavorable impression of the new Medicare drug benefit?*
*Note: Question wording before April 2005 referred to the “new Medicare law.”Source: Kaiser Family Foundation surveys.
Exhibit 9
![Page 30: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/30.jpg)
7%
9%
37% 47%
Yes, will enroll
Have not heard enough to
decide
No, will not enroll
Don’t Know/Refused
Seniors’ Plans to Enroll in a MedicareDrug Plan in 2006
SOURCE: Kaiser Family Foundation Health Poll Report survey (conducted March 31 – April 3, 2005).
Exhibit 10
![Page 31: Translating Legislative Sausage into Understandable Choices of Beneficiaries Presented by Tricia Neuman, Sc.D. Vice President and Director, Medicare Policy.](https://reader035.fdocuments.net/reader035/viewer/2022070305/5514e957550346935c8b5a22/html5/thumbnails/31.jpg)
Challenges for Beneficiaries and CMS; Opportunities for Researchers
• Examine costs/savings attributable to general approach
• Monitor quality of pharmacological care
• Assess impact on beneficiaries’ out-of-pocket costs
• Track role of private plans
• Assess variations in benefits, premiums, cost-sharing and formularies
• Examine how well beneficiaries respond to choices
Exhibit 11