CMS seeks to clarify, simplify Medicare drug benefit for 2007

April 1, 2006

As the Centers for Medicare and Medicaid Services (CMS) tackles a host of start-up problems for the new Medicare prescription drug program, Administrator Mark McClellan, MD, is looking for ways to improve the system for next year. CMS has revised policies and updated information systems for Prescription Drug Plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) in preparation for the 2007 contracting process, which begins in June.

As the Centers for Medicare and Medicaid Services (CMS) tackles a host of start-up problems for the new Medicare prescription drug program, Administrator Mark McClellan, MD, is looking for ways to improve the system for next year. CMS has revised policies and updated information systems for Prescription Drug Plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) in preparation for the 2007 contracting process, which begins in June.

What remains to be seen is whether CMS takes action to bring about consolidation more quickly than might occur if left solely to market forces. In a memo to insurers in February, CMS asked for comments on a proposal to allow sponsors to offer only two Medicare drug plans-basic and enhanced-instead of the three plans per region now permitted. CMS has been surprised, and seniors overwhelmed, by the abundance of coverage choices offered this year; some markets have more than 40 coverage options from national and regional PDPs as well as regional and local MA-PDs (see sidebar).

Sponsors may, in fact, decide to drop some of their less-popular plan options, but they want to make such changes based on their own market assessments. While some marginal operators may exit the market, most insurers do not expect major consolidation for another year; most plans will stay through 2007 to have an opportunity to work out problems and build plan enrollment.

Dr. McClellan said at the forum that he will consider such comments in deciding the best strategies for making the program more efficient and less confusing to elderly patients. CMS Deputy Administrator Leslie Norwalk suggested that an insurer might be allowed to sponsor a third plan, provided it can demonstrate how it fills a different market need. It's important for beneficiaries to be able to have choice, Norwalk commented, and it may be better "if industry reduces the confusion in the marketplace on its own."

All this talk about program simplification and consolidation also reflects an effort by CMS and insurers to prepare the public for changes in coverage as a certain number of plans exit the drug benefit program. No one wants this development to resemble the wave of plan drop-outs that plagued earlier Medicare managed care programs; streamlining and consolidation are the preferred terms.

MONITORING PLANS

Meanwhile, CMS is developing more guidance and clarifying rules to make the drug benefit operate more smoothly. CMS will be monitoring plan performance more closely to ensure that they can perform well in key areas: