Report: State Pharmacy Benefit Programs Cover Only Small Share Of Medicare Beneficiaries; Offers Lessons for Federal Drug Benefit 5/14/2002
From: Mary Mahon: 212-606-3853, e-mail: mm@cmwf.org 917-225-2314 (cell), or Bill Byrne, 212-606-3826, e-mail: bkb@cmwf.org, both of The Commonwealth Fund ADVANCE for release at 12 noon, Thursday, May 16 /ADVANCE/ NEW YORK, May 16 -- According to a new report from The Commonwealth Fund, state pharmacy assistance programs for Medicare beneficiaries help only a small proportion of enrollees-just 3 percent, or 1.2 million out of 39 million nationwide. The report indicates that a federal program is needed to fill this gap in coverage, and that any federal program should coordinate with the 28 state programs currently in place. In State Pharmacy Assistance Programs: Alternative Approaches to Program Design, Kimberley Fox, Thomas Trail, and Stephen Crystal of Rutgers Center for State Health Policy conclude that while there are important lessons to be learned from state programs, "best practices" are still evolving. "Some states have been working for years on reducing the high cost of prescription drugs for low-income beneficiaries," said Karen Davis, president of The Commonwealth Fund. "Their experience shows that designing benefits that meet the needs of beneficiaries and premiums that are affordable are key to participation. Without a Medicare prescription drug benefit, state programs are unlikely to reach significant numbers of those at risk for burdensome out-of-pocket prescription expenses." New Jersey, New York, and Pennsylvania operate among the largest programs, accounting for three-quarters of state appropriations for pharmacy assistance. "The experience gained by the states can be of great value in design of a national program," said Crystal, principal investigator of the study. The report is based on a survey of all state pharmacy assistance programs in place throughout 2000 and interviews with state program administrators. Key findings include: Sources of Funding and Costs -- In 2001, 28 states appropriated $1.5 billion for pharmacy benefit programs, most of it from general tax funds, but some from tobacco settlement, casino, and lottery revenue funding. -- Pharmacy benefit program costs are estimated to be growing at a rate of 15 percent-18 percent per year. -- It is too early to tell whether pharmacy benefit managers help control costs. -- Many states are interested in the possibility of a federal Medicaid waiver to provide pharmacy benefits to low-income individuals, but Illinois and Vermont are the only states that have had such a waiver approved. -- Tax credit programs have not been successful. Two states with a tax credit program are in the process of phasing them out and replacing them with a direct-benefit program. Eligibility -- All states cover Medicare beneficiaries 65 and older (with varying levels of income eligibility), but only half cover disabled under-65 beneficiaries. -- Income eligibility limits vary widely in states, from 80 percent (Arkansas) to 419 percent (New York) of the federal poverty level (FPL). Massachusetts has no upper income limit for those 65 and older, but subsidizes premiums and deductibles on a sliding scale for those under 500 percent of FPL. -- Few programs adjust eligibility levels for those with catastrophic drug expenses. Those that do this define catastrophic costs anywhere from 3 percent to 40 percent of income. -- Most states do not have an asset test. -- Many programs have increased eligibility levels recently, contributing to growing program costs. Drugs Covered -- Most states use open formularies, following the Medicaid model, but some states are starting to use restrictive formularies. Cost-Sharing -- All states require some cost-sharing. -- Few states have monthly premiums, which can limit enrollment in plans. -- Most states require copayments, ranging from $1-$2 to as much as $25 per prescription. Some states require higher co-payments for non-generic drugs or for those persons with higher incomes. -- Some states require participants to pay a percentage of the drug's cost, ranging from 10 percent in Florida to 85 percent in Rhode Island for higher-income participants. Type of Benefits: Catastrophic vs. Caps -- Some states provide coverage up to a cap, leaving some beneficiaries with high uncovered costs. This type of plan allows states to calculate maximum program costs and limits adverse selection. -- Some states do provide catastrophic coverage, but this can make it difficult for states to predict program costs. This type of coverage helps the most heavily burdened, but may also attract sicker people to the program. -- Benefit caps range from $500 to $5,000 per year in states that have them. Many state officials say that caps are undesirable because they provide only a limited benefit for those with catastrophic costs. Program Administration and Start-Up -- The majority of state programs are operated by the state agency that administers the Medicaid program because these agencies have experience in eligibility determination. -- Most programs need about six months to a year to get started. -- State administrators suggested that a federal benefit program should support and enhance state programs. The Commonwealth Fund is a private foundation supporting independent research on health and social issues. To order publications, visit the website at http://www.cmwf.org, or call 1-888-777-2744 |