Medicare drug coverage varies by HMO

Drug benefits for enrollees in Medicare health maintenance organizations vary greatly from plan to plan, according to "Analysis of Benefits Offered by Medicare HMOs, 1999: Complexities and Implications," a study released by the Kaiser Family Foundation.

Data for the study came from the Health Care Financing Administration's "Medicare Compare" database, a compilation of information on each of the plans that have contracts with Medicare.

The study revealed that 83% of the plans in the Medicare Compare database offer some type of prescription drug benefit. These benefits have a number of features, including copayments, maximum annual limits and drug formulary restrictions, all of which have implications for out-of-pocket costs.

Of those provided with prescription drug coverage, the study found that a full 24% had an unlimited drug benefit, but another 25% had coverage that amounted to less than $1,000 per year. "On average, beneficiaries with drug benefits are limited to about $1,149 of drugs paid by the plan, above any copayment the beneficiary may be required to pay in 1999," according to the study.

The results go against what had been assumed about Medicare HMOs. Patricia Neuman, director of the Medicare policy project for the Kaiser Family Foundation, said: "I think there was some assumption that if you were in an HMO you would have pretty good drug coverage, and what this says is you may or may not - depending on which HMO you've joined."

But even this spotty coverage may change in the future, according to Neuman. "I think there's some concern and the industry has said that drug benefits will be less generous and that premiums will rise," noted Neuman. "There is some concern that the trends are toward less rather than more coverage with Medicare HMOs."

Neuman cited several reasons why Medicare HMO drug coverage may change in the future, including realignment in the HMO market and efforts by the government to reduce the amount of money Medicare reimburses to HMOs.

"Changes were made in the payment formula for Medicare HMOs that begin to put more pressure on plans financially," said Neuman. "[Health plans] are also concerned because Medicare has begun to implement a risk adjustment system which would, in theory, pay more to plans for their sicker patients, but pay less to plans for their healthier patients. There is some concern that this payment adjustment might give them less profit margin than what, in the past, has enabled them to provide these benefits." PR