Medicare Watch

Reports Describe Spending Trends and Competition in Medicare Part D

The Kaiser Family Foundation (KFF) released two reports this month that discuss the role of competition in Medicare spending under the Medicare prescription drug benefit (Part D), as well as proposals to address areas of limited competition, which could yield federal savings in the Medicare program.

According to one report, “Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition,” net spending in Medicare Part D has been about 30 percent lower than initial projections, which were made when the program was first enacted into law. While many argue that the lower-than-expected spending is a direct result of competition among many Part D plans, the KFF report, “Prescription Drug Procurement and the Federal Budget,” finds that in a couple of key areas of the Medicare prescription drug market, competition is actually quite limited. For instance, because Medicare Part D is unable to efficiently purchase drugs for low-income beneficiaries, the program is not getting the best deal on prescription medications. Rebates from drug companies are generally lower under Part D than they are under Medicaid, resulting in higher drug costs throughout the Medicare program. One KFF report suggests that by applying Medicaid rebates, rather than those prices negotiated by Part D plans, to drugs purchased by low-income beneficiaries, the federal government could save over $100 billion over 10 years without shifting costs onto people with Medicare.

According to both reports, lower Medicare Part D spending is more likely attributed to a number of factors other than competition, including increased utilization of generic drugs. This trend may be influenced in part by private plan benefit designs, such as tiered copayments, that restrict beneficiaries’ access to brand-name medications.

Read the KFF report, “Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition.”

Read the KFF report, “Prescription Drug Procurement and the Federal Budget.”

Retail Pharmacies Exhibited Questionable Part D Billing in 2009

Four percent of retail pharmacies nationwide exhibited questionable billing of the Medicare prescription drug program (Part D) in 2009, reports the Office of the Inspector General (OIG) in its new study, “Retail Pharmacies with Questionable Part D Billing.” The study comes on the heels of revelations about various fraud schemes involving Part D, including pharmacies billing for drugs that were never picked up, billing for brand-name drugs when generics were actually dispensed, and paying providers to write unnecessary prescriptions.

For its study, the OIG examined all claims submitted to Part D by retail pharmacies in 2009 and developed eight measures to identify questionable billing habits. According to the report, four percent of retail pharmacies studied exceeded OIG-created thresholds for one or more of the eight measures. For instance, the OIG identified pharmacies that billed a large number of prescriptions ordered from certain prescribers, which could indicate a relationship between pharmacy and provider; at one pharmacy, a single prescriber ordered 85 percent of all of the pharmacy’s prescriptions in the year.

Although the study does not identify actual instances of Medicare fraud, it demonstrates that oversight of the Part D program, managed by a Medicare Drug Integrity Contractor (MEDIC), currently has weaknesses. In its report, the OIG makes recommendations to CMS to improve fraud and waste detection, prevention and investigation. These recommendations include strengthening the MEDIC’s monitoring of pharmacies and its ability to identify pharmacies with questionable billing; requiring Part D plans to report all incidents of potential fraud and abuse for further review by CMS; and strengthening CMS’ audits of Part D compliance plans.

Beneficiaries can contribute to identifying and preventing fraud by reading their Medicare Summary Notices and Explanations of Benefits—summaries of claims that have been submitted to Medicare—to make sure they actually received the listed services, including prescription drugs. To report fraud, beneficiaries can contact 1-800-MEDICARE or the Inspector General’s fraud hotline at 1-800-HHS-TIPS.

Read the OIG report, “Retail Pharmacies with Questionable Part D Billing.”

Medicare Reminder

Medicare will cover emergency ambulance services if:

• The transport is medically necessary, meaning an ambulance is the only safe way to transport you, and the reason for your trip is to receive a Medicare-covered service or to return from a Medicare-covered service;
• You are transported to and from certain locations; and
• The supplier meets Medicare ambulance requirements.

An emergency is defined as a situation in which your health is in serious danger and every second counts to prevent your health from getting worse. Under non-emergency situations, Medicare coverage of ambulance services is very limited.

Medicare may cover non-emergency ambulance services if:

• You are confined to your bed (unable to get up from bed without help, unable to walk and unable to sit in a chair or wheelchair); or
• You need medical services during your trip that are only available in an ambulance, such as monitoring of vital functions.

If an ambulance service is covered, Medicare will pay 80% of its approved amount for the service. You or your supplemental insurance policy will be responsible for the remaining 20%. All ambulance providers must accept assignment, meaning they must accept the Medicare-approved amount as payment in full.

Learn more about Medicare coverage of ambulance services at www.medicareinteractive.org

Spotlight

Last week, the Department of Health and Human Services released its final rule requiring private insurance companies to issue notices with premium rebates that their members may receive. Thanks to the Medical Loss Ratio provision of the Affordable Care Act (ACA), private insurers who offer coverage to individuals and small businesses must spend at least 80 percent of their premium dollars on direct medical costs. Insurers who do not meet this requirement must issue rebates to their members. The aforementioned final rule requires insurers to send a notice to individuals regardless of whether they receive a rebate; the notices will be issued only in the first year of rebates, beginning this July. The notices are meant to educate consumers around the provision of the ACA that entitles them to premium reimbursements.

Read the final rule.

Read the Kaiser Family Foundation’s report on the Medical Loss Ratio.