Medicare Part D Policy Analysis - Term Paper Example

? Medicare Part D Policy Analysis al Affiliation: Medicare Part D Policy Medicare part D policy also referred to Medicare prescription drug coverage is a prescription drug benefit program that was created by the United States government to help beneficiaries pay for prescription drug costs. The program was created through the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and started providing coverage to users on January 1, 2006(Salzman, 2004). The prescription drug coverage is provided by private firms with Medicare through stand alone programs, PPOs and PFFs. The program has received praises because it more affordable than the other Medicare programs; the program cuts into half the drug expenditures of beneficiaries. Like Medicare part B, Medicare part D is not mandatory. It is optional and has a cost that is to be paid by the beneficiaries on a monthly basis. Each beneficiary pays 25 percent of the coverage cost and federal government pays the remaining 75 per cent of the premium (Dallas, 2006). However, if a person initially rejects the program, he or she pays a late enrollment penalty to begin the program later. Medicare part D program provide a large list of approved drug plans for the beneficiaries to choose from. However, the plans do not cover all prescription drugs, thus it is important that the users choose a program that meets their needs. Goal One of the major goals of Medicare part D policy was to rely on the competition among private plans to control drug prices and drug spending. This was aimed at lowering the cost of prescription drugs in favor of the beneficiaries. However, although the program was developed with an aim of making medication more affordable, it is yet to achieve this goal because about half the total number of beneficiaries still complains of high costs of medications. Moreover, with the program having no authority to negotiate the prices with the drug agencies, this does not seem to be achievable (Neuman, Cubanski and Kimberly, 2008). Target Population of the Policy The Medicare part D policy or program targets all citizens of the United States of America who are above 65 years of age. However, those below 65 years can also be considered for the program but under certain critical medical conditions. For example, persons who need kidney transplant due to kidney failure (Medicare.org 2011). Enrollment To be eligible in part D plan, beneficiaries must affirmatively enroll for the program. Enrollment is done annually and it last from 15th October to 7th December. Eligible Medicare beneficiaries who fail to enroll during this enrollment period pay a late enrollment penalty in order to receive the part D coverage. The penalty is often calculated from the national average premium and number of full calendar months they were not enrolled (Salzman, 2004). Eligibility People who eligible for Medicare part D are those already enrolled in both part A and B due to three different factors. One of the factors is the End Stage Renal Disease (ESRD) which requires anyone suffering from such a disease to apply for Medicare part D coverage. Second is the age factor which argues hat part D applicants should be 65 years and above (Fincham, 2007). Lastly is disability factor which allows individuals with total disability to apply for the coverage. Generally, any person who is 65 years of age or above and has been a legal resident of the United States of America for at least five years is eligible for the Medicare part D coverage. People who have disabilities and are below 65 years may also be eligible if they receive Social Security Disability Insurance Benefits. However, if they stop receiving Social Security Disability Insurance, they lose eligibility to the part D Medicare (Barry, 2008). There are also particular medical conditions that may also enable people become eligible to enroll for the part D Medicare coverage. Persons eligible to prescription drug coverage under this plan must also be entitled to benefits under Medicare part A and B. Part D provides two types of prescription drug coverage programs: PDPs and Medicare Advantage Plans which pay for prescription drugs. The Prescription Drug Plan (PDP) covers drug and the Medicare Advantage Plan covers medical services and drug prescriptions (Medicare.org 2011). What is covered under part D In general, private firms that provide part D coverage program are allowed to develop their own benefit plans as long as they outlined in the 2003 Medicare Act. The firms offer different plans with different lists of covered medicines at different costs. Therefore, before the beneficiaries settle on a given plan, they should compare the different drugs plans available and pick the one which suit there needs (Medicare.org 2011). The drugs that are not covered by the Medicare part D include cosmetic and hair growth drugs, fertility drugs, drugs for weight loss and gain, drugs covered under part A and B, and erectile dysfunction drugs. Medicare part D coverage gives the Medicare beneficiaries more access to medication which is more relevant to them. The coverage requires the beneficiaries to pay monthly premium for them to sustain the coverage. Part D coverage also covers most of the advantages found in Medicare plans thus making it more beneficial than other parts (Fincham, 2007). Benefits Medicare part D coverage partly or wholly covers the prescription medications of the users. The beneficiaries are covered for a substantial 75 per cent of their premiums, provided they are above the relatively low threshold of USD 250 per year. Beneficiaries cover all prescription drug costs by themselves when the costs reach a threshold of USD 2250 (Salzman, 2004). However, when the costs reach USD 5100, all prescription drug costs are covered by the Medicare part D plan. The patient beneficiaries are to be provided with a coverage gap aimed at more efficient benefits. Medicare beneficiaries with this coverage are substantially more likely afford prescribed medications than those who are not covered by the program. Those who pay their prescription drugs out of pocket, co-payments, deductibles and other cost sharing strategies are less likely to purchase prescribed medications. The standard benefit which the part d policy offers, is among the common benefits provided by Medicare part D. Its benefit is defined in terms of structure as opposed to in terms of drugs covered (Fincham, 2007). Criticisms The program does not permit the federal government with drug firms to negotiate on the prices of drugs, as federal agencies do with other programs. This therefore makes Medicare part D pay more for drugs than other agencies (Wessel, 2009). For example, the Department of Veteran Affairs which is allowed to negotiate on the prices of drugs pays about USD 520 for the supply of Lipitor yearly whereas Medicare part D pays about USD 785 for the same drug yearly. The program has also been criticized for its rate of premiums. Most people argue that the program is supposed to cater for both the haves and the have-nots but the premium rates are no where near to be afforded by the poor (Wessel, 2009). In addition, it is also argued that the program excludes many new drugs and makes use of old drugs so as to cut down on cost of coverage. Consequently, this leads to provision of poor services thus medical beneficiary satisfaction not met. Medicare part D policy administration Medicare does not provide a direct administration of part D but gives contract to private companies. The structure and management of part D benefit has features that impose an important administrative challenge. The private entities are referred to as drug plan sponsors that enter into contract with Centers for Medicare and Medicaid Services (CMS) so as to provide prescription drug programs for part D. According to Fincham (2007), at the department level the CMS retains the primary responsibility in implementation and administration of part D. However the Medicare part D administration is depended on an extensive coordination as well as sharing of information among agencies of the federal and state government. It is also depended on health care providers, drug plan sponsors, third party players and contractors. Part D policy is thus administered by private companies which are permitted to sell the part D insurance coverage. This policy offers a prescription drug benefit voluntarily for the Medicare eligible beneficiaries. This coverage is administered through different private plans which provide an insurance coverage on monthly premiums for prescription drugs. In administering the part D plan, the CMS along with the department of Labor and the treasury ensure the implementation of the insurance refom provided by the Health Insurance Portability and Accountability Act of 1996 according to Congress (2002) .There is a social security administration which determines eligibility in Medicare as well as the processing of Medicare program premium payments. This shows the advocacy of the CMS in administering health insurance coverage. The Centre for Medicare and Medicaid Services upholds the issue of efficiency and equity in its administrative duties of the Medicare part D. In the administration system there is the Chief Actuary under CMS which provides account information as well as projection of cost which helps the Medicare Board Trustees to assess the programs financial stability. According to Salzman (2004), the Chief Actuary ensures efficiency of operations within the administration. The contracted private companies work as the intermediary between the medical providers and the government thus ensuring equity of duties. The contractors in most cases are in the insurance area or the health care area. The contractors are supposed to administer issues like compensation claims, call center services, fraud investigations, payment processing as well as clinical enrollment. There is always a variation with the list of prescription drugs covered under this part fro the purpose of efficiency. However drug lists which are maintained by individual plans must be administered to certain categories of drugs as well as biological. The administration statute specifically advocates that part D plans have a minimum of two drugs in each unique therapeutic class which can be subjected to certain exceptions as suggested by Fulda and Wertheimer (2007). The Medicare part D administration is logical as it covers even Medicare patients who obtain drugs under retail coverage. There are trained social workers who can provide information about Medicare part D. The social workers are placed at the dialysis centre and are experts in handling insurance enquiries. However it is incongruent for the beneficiaries to inquire drug administration issue from social workers as they are not familiar with this aspect. Whether in need of enrolling for the coverage or filling paperwork or any insurance issue, the social workers are always available in to give their assistance. Part D Policy Funding Most of the Medicare part D operations are funded by the grant community and the government as well. This is due to the increased cost of administering the Medicare part D plans which has faced constant financial challenges. The hospital insurance fund which has been funding Medicare part D sometimes runs out of cash as reported by the Medicare Board of Trustees. The government in financing Medicare part D plans it draws funds from revenue sources according to the Congress (2009). These sources include Medicare payroll tax, federal income tax, and beneficiaries’ premiums among others. The beneficiaries also contribute to the funding through paying for their Medicare covered services. Medicare part D is also partly financed by payroll taxes that are imposed Self-Employment Contribution act and also the Federal Insurance Contribution Act. This provides for equity in cost sharing between the service provider and the beneficiary. Funding is done through two trust fund accounts that are the Hospital Insurance trust fund and the supplementary medical insurance trust fund. For more efficiency and adequacy additional charges can be made on the beneficiaries. On the same issue the beneficiaries also pay are required to pay for other services not covered in Medicare part D coverage for more efficiency. Interest on loans is ensured on trust funds so as to cater for future funding. Medicare part D funding requires more social welfare improving due to the drug price since they do increase the programs social returns as suggested by Kathleen (2009). According to the social worker values, the Medicare part D welfare gain should equal the social cost of the plan which is not usually the case. For efficiency and adequacy purposes the Medicare Board of trustees is required by law to produce annual reports indicating the financial status for part D Medicare trust funds. A statement of actuarial opinion which is issued by the Chief Actuary provides for more efficiency. Conclusion The Medicare part D program has been criticized to have a complex plan especially when it comes to the beneficiaries. This is as a result of the many processes required in obtaining the coverage. For Medicare beneficiaries who are not in access of computers and the internet services the completion of the required details becomes a challenge in the efficiency of work to the administration. The federal government though part of administration is not allowed to participate in negotiation of the price of drugs with the manufacturing companies as it is done by the federal agencies. Some critics argue that Medicare part D has a high mortality rate compared to that of traditional Medicare. According to the financial reports of Medicare part D policy, the Medicare spending is predicted to increase rapidly in the decades to come as suggested by Hudson (2010). This is due to the fact that demographic trends affecting other social factors such as social security are most likely to Medicare programs. The predicted future growth will thus project the spending that will be needed in the federal government. This also predicts a higher cost on the side of the beneficiaries instead of increasing the number of beneficiaries. However the establishment of the Medicare part D lessened the amount of money individuals used to pay for treatment of most of the expensively treated diseases like diabetes. Entitlement to benefits is also depended on the contribution record to the Medicare funds. This leads to some people paying more funds than the services they receive. As a result the government is required to address the problem of Medicare funding as a major priority. Although most of the part D benefit activities are supposed to be conducted by MEDICs thus CMS contracted a functioning MEDIC. Recommendation The Medicare part D policy has made a big step in as far as health services are concerned in the United States and thus there is the need for the public to recognize these benefits. The Center for Medicare and Medicaid services should embark on more realistic goals which are in line with the current technology. For instance the use of computerized operation will be more important for efficiency. The Medicare part D needs to put into consideration the social work values so as to uphold welfare of the beneficiaries. The government also needs to consider the potential impact of coverage on the targeted population. CMS needs to provide an additional analysis so as to sustain fraud, abuse and waste prevention activities. Since revenues on social security tax are projected to fall below benefit payments this has to draw the attention of the CMS so they can reduce the gap between expenditure and revenues or make the revenues to increase. References Congress (2002). Congressional Record, V. 148, Pt. 9, June 27, 2002 to July 15, 2002. Washington, DC: Government Printing Office. Congress. (2009). United States Code 2006, Volume 23. Washington, DC: Government Printing Office. Fincham, J. E. (2007). The Medicare part D drug program: making the most of the benefit. Sudbury: Jones & Bartlett Learning. Fulda, T. R. & Wertheimer, A. I. (2007). Handbook of pharmaceutical public policy. London: Routledge. Hudson, R. B. (2010). The New Politics of Old Age Policy. Maryland: JHU Press. Salzman, C. (2004). Clinical geriatric psychopharmacology. Maryland: Lippincott Williams & Wilkins. Kathleen, M. (2009). Medicare Part D: Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse Programs, and CMS Oversight Has Been Limited. Pennsylvania: DIANE Publishing. Barry Patricia (2008). Medicare Prescription Drug Coverage for Dummies. For Dummies: New York. Dallas Michael (2006). The Courage to Retire: The Must-Have Money Book for People Over 55. Alexander & Watson: Fincham E. Jack (2007). The Medicare Part D Drug Program: Making the Most of the Benefit. Jones & Bartlett Learning: Washington D.C. Medicare.org (2011). Medicare Part D. Retrieved on 11th may, 2011 from http://www.medicare.org/medicare-basics/part-d.html Neuman T., Cubanski J. and Kimberly (2008). Prescription Drug Benefit under Medicare. Retrieved on 11th may, 2011 from http://www.kaiseredu.org/Issue-Modules/Prescription-Drug-Benefit-Under-Medicare/Background-Brief.aspx Salzman Carl (2004). Clinical Geriatric Psychopharmacology (4th edition). Lippincott Williams & Wilkins: Atlantic City. Wessel David (2009). The Lessons of Medicare Part D. Dow Jones & Company, Inc: Washington D.C. Read More