THE WHITE HOUSE

Office of the Vice President

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 Services.

"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 to 207,000.
• 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 medications.
• 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 this benefit.
• 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
          arises;
     --   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
          treatment options;
     --   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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