MEDICARE FAMILIES IN HMOS ARE AT RISK OF LOSING BENEFITS
Gore Calls for Norwood Dingell Patients' Bill of Rights and
Medicare Expansion to Cover Prescription Drugs
Washington, DC -- A new report shows many Medicare families relying
on HMOs are facing new limits on their coverage and higher out-of-pocket
costs for prescription drugs, strong reasons for Congress to expand
Medicare to cover prescription drugs, Vice President Al Gore said today,
releasing this new report from the Department of Health and Human
"Too many of America's working families depending on Medicare
cannot depend on their HMOs to deliver the affordable, critical benefits
that convinced them to choose an HMO in the first place," said Vice
President Gore in his remarks today to the American Medical Association
(AMA). "The need for comprehensive Medicare reforms that ensure all
beneficiaries -- whether in traditional care or managed care -- have
access to an affordable prescription drug benefit is clear."
The report, coming at a time when some Medicare managed care plans
are leaving certain areas of the country completely, underscores the
need for Medicare reforms that create a less volatile and more reliable
market for beneficiaries choosing HMOs participating in Medicare. The
Vice President noted that this could best be accomplished with a more
rational reimbursement system that guarantees a meaningful prescription
drug benefit and provides for more protections.
Specifically, today the Vice President:
UNVEILED A NEW REPORT DOCUMENTING THAT HMOS ARE LEAVING MEDICARE
BENEFICIARIES WITH INCREASING OUT-OF-POCKET COSTS AND MORE LIMITED
COVERAGE FOR PRESCRIPTION DRUGS. There are about 6.3 million
beneficiaries in Medicare HMOs, more than double the number four
years ago (3.1 million). The report, which is based on data
submitted by HMOs themselves, highlights that:
Prescription drug benefits for Medicare beneficiaries in HMOs are
becoming more restrictive. While in 1999 only 21 percent of
Medicare managed care plans had annual spending caps of $500 or
less, nearly one-third will in 2000 -- a 50 percent increase in
only one year.
More managed care plans are charging Medicare beneficiaries higher
copayments for prescription drugs. In 2000, no Medicare
beneficiaries will have access to a prescription drug benefit
without any copayments. In 1999, however, over one million
Medicare beneficiaries had access to a prescription drug benefit
where there are no copayments. Moreover, copayments for brand-name
drugs have increased on average by 21 percent.
More Medicare beneficiaries in managed care plans are paying higher
premiums. The number of Medicare beneficiaries who have access to
plans that do not charge a premium for managed care enrollment will
drop by three million in 2000. The number that have access to
plans with the highest premium to enroll in Medicare managed care
(over $80 per month) has quadrupled in the last year, from 50,000
In some states the reductions in benefits have been particularly
dramatic. Many states will have a significant increase in the
number of beneficiaries who no longer have access to managed care
option with prescription drugs, including Delaware, Iowa, North
Carolina and Nebraska.
Rural beneficiaries will continue to have access to few managed
care plans and fewer plans with prescription drugs. Similar to
previous years, only about one-fifth of rural beneficiaries will
have access to any Medicare managed care plan that offers
prescription drugs, compared to over four-fifths of beneficiaries
in urban areas. Of those with access to managed care plans only
about one in four (four percent of all rural beneficiaries) will
be able to access prescription drugs through managed care.
HIGHLIGHTED THE TROUBLING IMPLICATIONS OF THIS REPORT.
Disabled and older Americans are particularly vulnerable to current
volatility in the Medicare HMO market. Because these populations
are disproportionately unhealthy, they are particularly dependent
on the extra benefits that HMOs can provide and are more vulnerable
when they are withdrawn.
Medicare beneficiaries cannot be assured an affordable prescription
drug benefit without a prescription drug option for both
fee-for-service and managed care and explicit financing for it.
This report underscores that because HMOs are not required to offer
a prescription drug benefit and are not compensated for it,
beneficiaries cannot be certain that the benefit they depend on
will always be there for them.
Beneficiaries in rural communities cannot be assured managed care
plans will be offered at all. Because of limited health provider
networks, many managed care plans will not enter many rural areas.
As a result, a prescription drug benefit in the traditional program
is critical to assuring rural beneficiaries can afford needed
Uncertainty about reliability of HMOs undermines confidence and
participation in these options. Those who are forced out of HMOs
are less likely to choose this option again, undermining confidence
and participation in the Medicare+Choice program, which can provide
important benefits and quality care.
UNDERSCORED THAT CLINTON-GORE MEDICARE PLAN ADDRESSES CURRENT
SHORTCOMINGS OF MEDICARE. Specifically it:
Improves payment system to help stabilize managed care. Rates
would be set through competition among plans rather than through a
complicated statutory formula, as they are today. All plans would
be paid their full price through a combination of government and
beneficiary payments. The lower the price, the less beneficiaries
pay since the beneficiary contribution rate declines relative to
the price of the plan.
Provides a prescription drug benefit option for all beneficiaries.
The Administration's plan ends the current inequities of
subsidizing prescription drug coverage only through managed care.
It would add an affordable, voluntary prescription drug benefit for
all beneficiaries to the basic Medicare benefit package. The plan
would explicitly pay managed care plans for offering prescription
drugs to enrollees, and assure that they will continue to provide
Assures beneficiary protections when managed care plans withdraw.
The Clinton-Gore proposal would give enrollees in withdrawing plans
access to all Medigap policies regardless of health status; expand
Medigap open enrollment to newly disabled beneficiaries and those
with end stage renal disease, and allow those with end stage renal
disease to enroll in another plan; mandate a special Medigap open
enrollment period for beneficiaries affected by a plan termination
in January 1999; and increase penalties for violation of the
Medigap open enrollment requirements.
URGED CONGRESS TO PASS A BIPARTISAN PATIENTS' BILL OF RIGHTS THIS
YEAR. The Vice President highlighted the fact that the
Administration and the AMA are united on the patients' bill of
rights and reiterated the call on Congress to pass the
Norwood-Dingell legislation when it is called up for a House vote
on the week of October 4th. He urged the House to reject the
approach taken by the Senate bill that leaves out over 110 million
Americans and does not assure critical protections, such as access
to specialists and a strong enforcement provision. A strong
patients' bill of rights includes critical protections such as:
-- Guaranteed access to needed health care specialists;
-- Access to emergency room services when and where the need
-- Continuity of care protections so that patients will not have
an abrupt transition in care if their providers are dropped;
-- Access to a fair, unbiased and timely internal and independent
external appeals process;
-- Assurance that doctors and patients can openly discuss
-- An enforcement mechanism that ensures recourse for patients
who have been harmed as a result of a health plan's actions.
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