Skip to content
Jumping the gun on Medicare
The nation's largest health plans are teaming with chains like Walgreens and Wal-Mart to launch in-store educational campaigns about the Medicare drug benefit as early as this week--10 weeks earlier than government rules allow them to start marketing their plans.
Critics contend new in-store campaigns targeting seniors are largely promotional, using an "educational" moniker to skirt the rules, allowing major insurers to get a leg up on Medicare's new $720 billion drug benefit.
Drugstore chains and major health plans like Humana Inc. and UnitedHealth Group deny they are violating Medicare's rules on marketing drug benefits to seniors because they are not revealing product- or plan-specific benefits, which cannot be discussed or marketed with seniors until October.
In fact, they say they were encouraged by the Bush administration to brand materials and provide education amid confusion and lack of awareness about the drug benefit being added in January 2006 to Medicare, the federal health insurance program for 41 million elderly and disabled in the United States.
The drug benefit, estimated to cost $720 billion over 10 years, is expected to provide seniors on average $1,300 in annual drug benefits at a projected monthly premium of $37.
Though the benefit was announced in 2004, the government estimates up to 50 percent of the nation's Medicare recipients still don't know that it's coming.
While the word may need to get out, critics say health plans are stamping their company names and logos on educational brochures, setting up booths at retail outlets and planning community meetings or coffees to woo seniors into the health-care industry's biggest moneymaking opportunity in decades.
"The companies are calling it educational outreach, but I call it premarketing because the health plans and pharmacies obviously are trying to get their foot in the door to attract the attention of the seniors," said Lynda DeLaforgue, co-director of consumer group Citizen Action Illinois. "They want to plant that image of a Humana and a Wal-Mart into the minds of seniors. It goes to show you the amount of money that is going to be made off of this for the big insurers and the pharmacies."
Humana and Wal-Mart were among the first to announce their partnership to educate the nation's seniors. Similar partnerships involve Deerfield-based Walgreen Co., which has teamed with UnitedHealth Group.
Insurer Aetna Inc. has said it is developing programs with drugstore chains CVS Corp. and Rite-Aid to help consumers understand their new prescription coverage.
Last week Humana began setting up what it called an "end cap" display in Wal-Mart stores that will contain Humana-branded brochures and additional information such as the Social Security Administration's application for low-income beneficiaries, the Louisville-based health plan said.
Beginning Aug. 15 Humana will put company representatives at tables near pharmacies located in Wal-Mart and Sam's Club stores, and expects to have 2,600 stores staffed by Nov. 1.
"We have been encouraged by CMS [the Centers for Medicare & Medicaid Services] to do this . . . and a lot of times our representatives are side-by-side with representatives from the Social Security Administration," said Rob Hitchcock, regional president for Humana's Chicago-based Upper Midwest senior segment. "We have to put our logo on so seniors understand that it is Humana and not CMS."
The Bush administration says it has no problem with educational materials as long as companies "avoid discussing product-specific or plan-specific benefits," a CMS spokesman said.
More detailed marketing materials, including costs of deductibles, drug co-payments and other costs won't be available until Oct. 1 and even then they must be approved by CMS.
Humana's brochure on "Questions and Answers" about Medicare prescription drug coverage includes Wal-Mart and Sam's Club logos and a tag line beneath the Humana name that reads: "Guidance when you need it most."
It does not include prices or cost figures, but basic information on the drug program, enrollment dates and deadlines and a toll-free company-sponsored "prescription drug information line."
Although estimates vary widely from the government and health plans, the so-called "Medicare Part D" drug benefit could draw more than 20 million senior customers to companies that offer coverage, including 15 million to 17 million who do not have drug coverage.
Given the large numbers of people unfamiliar with how drug benefits work, the Bush administration is supportive of educational efforts, especially given surveys showing that seniors are confused or unaware of the coming changes.
"Most seniors are aware that some changes are coming but they may not have a clear idea of what is changing when," said Dr. Mark McClellan, head of the Centers for Medicare & Medicaid Services.
But some seniors and consumer groups who advocate on behalf of seniors say the educational blitz is somewhat premature. Essential details about the program won't be available until October, or about a month before Nov. 15, the date seniors can sign up for drug coverage, which begins Jan. 1, 2006.
Further, some seniors and their advocacy groups are upset that the information they are getting does not include basic information about costs such as how much a typical co-payment will be or what certain deductibles are.
"They are trying to get people to sign up for something which basically has no writing on it yet," said 83-year-old Sydney Bild of Chicago's Hyde Park neighborhood. "Nobody knows exactly what drugs any given [plan] is going to cover. Seniors want to know whether the drugs they are on are going to be covered in any given plan and there is no way to know that because that negotiation has not been accomplished yet."
Health plans and pharmacy chains take a different view. Their own analyses indicate that seniors are confused and that any early marketing will benefit both seniors and companies.
"I don't even think we need to do studies of the confusion among seniors or lack of knowledge of the new benefit because our pharmacists see it every day," said Michael Polzin, a Walgreens spokesman. UnitedHealth and Walgreens this week will begin putting out 2.5 million 24-page "Show-Me" guides in the drugstore chain's more than 4,800 stores across the country.
The guides do not give specific details of plans but walk seniors through sample scenarios describing how drug co-payments and deductibles work and provide a glossary of terms.
By partnering with pharmacies to educate seniors, health plans say, they are turning to a trusted relationship the elderly already have with their neighborhood pharmacist.
Aetna Chief Executive Dr. John Rowe told Wall Street analysts last week the company would spend about $50 million this year to prepare for the launch of the Medicare program next year.
It would not disclose specific spending on marketing.
Such spending may be necessary, analysts say.
"You definitely don't just want the people who use the very high amount of prescriptions--you want to get as many people in the program that you can get into the program to spread the risk," said Brad Ellis, a health insurance industry analyst for Fitch Ratings."