StrengtheningStrengtheningMedicare Part DMedicare Part D StrengtheningStrengtheningMedicare Part DMedicare Part D

John Rother John Rother DirectorDirector

Policy & StrategyPolicy & StrategyAARPAARP

Washington, DCNovember 5, 2007

AARP Goals for 2003 Conference CommitteeAARP Goals for 2003 Conference Committee

1. Do no harm –protect underlying Medicare fee-for-service program

2. Get Rx coverage for all 65+ now without it

3. Provide generous support to low-income beneficiaries

4. Prevent erosion of employer-based retiree health plans

5. Contain pharmaceutical prices effectively

Millions more 65+ are coveredMillions more 65+ are covered

77%

93%

40%

60%

80%

100%

2004 2006

Sou

rce:

Unp

ublis

hed

prel

imin

ary

rese

arch

: H. L

evy

& D

. W

eir,

Uni

v. o

f Mic

higa

n,

“Tak

e-U

p of

Med

icar

e P

art D

and

the

SS

A S

ubsi

dy:

Ear

ly

Res

ults

from

the

Hea

lth a

nd R

etire

men

t Stu

dy,”

Pre

sent

ed A

ug 2

007

at th

e R

etire

men

t Res

earc

h C

onso

rtiu

m

Ann

ual J

oint

Con

fere

nce,

Was

hing

ton,

DC

2. Rx coverage for 65+

Current Part D Enrollment 24 Million Current Part D Enrollment 24 MillionStand-Alone Rx Plans 11,000,000

Medicare Advantage w/Rx Drug (Includes .5 million Duals)

6,700,000

Dual Eligibles in PDP’s (Auto-enrolled) 6,300,000

Estimated Creditable Coverage=VA, Indian Health Service, employer plans w/o retiree subsidies, active workers, and state pharmaceutical assistance programs

4,900,000

Employer/Union Ret. CoverageFEHB Feds retiree coverage --includes dependents

TriCare Military retirees

10,300,000

No Creditable Coverage 4,000,000 (GAO = 4.7 million)

Source: HHS, January 30, 2007

What’s Part D coverage worth?What’s Part D coverage worth?

CMS 2007 EstimatesAverage worth per person

►$3,353 in 2007 for a low-income enrollee August 2007 Press Release

►$1,200 for a mid-income enrollee June 2007 Press Release

..

3. Generous Support for Limited-Income Enrollees3. Generous Support for Limited-Income Enrollees

Number of eligibles not enrolled in LISNumber of eligibles not enrolled in LIS

CMS estimated 14.4 million would enroll, yet only 9 million so far

Also, there are those who would qualify but for the asset limits --- estimated by KFF at 2.3 million

Why people fail to enroll:Why people fail to enroll:

Lack of knowledge -Nearly half of LIS eligibles not enrolled reported they were “not aware” of program (2006 National Survey of Seniors and Rx Drugs- KFF)

Welfare stigma from required place of enrollment and asset test

Don’t want or know how to answer asset questions at enrollment i.e. burial plots, life insurance, in kind support

Targeting: Key strategies for face-to-face enrollmentTargeting: Key strategies for face-to-face enrollment

Need IRS to share income data with SSA

Need funding for outreach and enrollment at community level

RxRx Rely heavily on formularies

Works for most enrollees, but LIS enrollees exempt

Duals will be forced into most restricted plans next year

Need comparative-effectiveness studies to assure most effective drugs are available

Drug cost-containment measures

5. Reduce the Rise in Rx Drug Prices

Friction PointsFriction Points

Marketing abuses Problems with appeals, since many plans

give people no info at the pharmacy when refusing to cover a drug

LIS reassignments: real problem being inclusion of MA plans in benchmark

Inaccurate and misleading data on Medicare plan finder

Too many choices! Standardization and simplification needed

Immediate Steps to Strengthen Part DImmediate Steps to Strengthen Part D

Strengthen limited-income protections

Substantially raise or eliminate asset test

Simplify LIS application

Permit enrollment in MSP at SSA offices

Bring Medicare Savings Program to LIS level

Change formula to avoid "ping-ponging“ of LIS enrollees each year

Immediate Steps to Strengthen Part DImmediate Steps to Strengthen Part D

Quality and Cost Improvements

More aggressive oversight of plan performance Substantially fund comparative-effectiveness

research Require physicians to E-Prescribe

StrengtheningStrengtheningMedicare Part DMedicare Part D StrengtheningStrengtheningMedicare Part DMedicare Part D

Washington, DCNovember 5, 2007