Dwindling Drug Benefits

There was a time when many older Americans rushed to join HMOs, attracted by generous prescription drug plans that promised to save them money. Now many seniors are suffering from sticker shock, as Medicare HMOs are asking members to pay more for drugs and, in some cases, requiring them to use less-costly generics instead of brand-name medications.

HMOs complain that they had no choice. Drug prices keep rising and doctors are writing more prescriptions at the same time that the federal government gets more frugal in its Medicare payments to health plans. One HMO spokesman said that while U.S. drug costs have been rising more than 10% a year, government reimbursements for drugs under the Medicare program have risen only about 2% a year for the past three years.

There are plenty of examples of the Medicare benefit cutbacks. Last year, for example, Pacificare’s Secure Horizons HMO provided up to $2,000 a year in brand-name drugs to members in Los Angeles County and an unlimited supply of less-costly generic drugs. This year, the total benefit is capped at $2,000, for both brand names and generics. For any prescription, a 90-day supply now requires a $50 co-payment, up from $30 last year.

The situation is different for Secure Horizons members in Orange County. The HMO is providing unlimited access to generic drugs but is providing no coverage for brand-name drugs--meaning members must pay the full cost out of their own pockets. A 90-day supply of a generic medication has an $18 co-payment, up from $14. In some California counties, Secure Horizons now requires members to pay a $50 monthly membership premium; there are no such premiums in Los Angeles or Orange counties.

The changes strike the sickest patients especially hard, including those with Alzheimer’s disease. Consider the cost of four commonly prescribed Alzheimer’s drugs: Aricept, $151 a month; Cognex, $176; Exelon, $151 and Reminyl, $146. There are no generic equivalents for these four medications, so many families now must pay the full tab for medications that their HMOs once paid for. It can be a heavy burden, because many Alzheimer’s patients also have other chronic ailments, such as diabetes and congestive heart failure, that require medications. “Our families are being hurt,” said Peter Braun, executive director of the Los Angeles chapter of the Alzheimer’s Assn.

Officials from the Alzheimer’s Assn. and other advocacy groups met in Sacramento recently to discuss these problems. But money is tight in both the state and federal capitols, so help from the government is unlikely. The groups decided to mount a campaign to promote public awareness of the prescription drug problem for seniors. California is hit hard by this issue because about 35% to 40% of the state’s Medicare recipients belong to HMOs, compared to a nationwide figure of about 14%. Traditionally, California seniors enjoyed rich HMO benefits, with no premiums and virtually unlimited drug coverage.

HMOs traditionally enjoyed a warm welcome in California. Many residents grew up with Kaiser Permanente, the pioneering HMO that dates back to World War II. They were used to receiving care within a tightly controlled network of doctors and hospitals. In addition, federal payments provided to Medicare HMOs in California were generous compared to other U.S. regions. The government provides a fixed monthly payment for each person who joins a Medicare HMO, based on local medical costs. California has comparatively high medical costs, so HMOs received higher payments.

As a result, California became a magnet for aggressive health insurers that sought out Medicare HMO members because, for a time, it was a very lucrative business. As the Medicare business has become less attractive to profit-conscious insurers, the once-rich benefits enjoyed by California seniors are eroding.

Many Medicare beneficiaries are in “a bad situation,” said Clare Smith, executive director of California Health Advocates, a counseling and advocacy group. “The people who are the sickest are the ones who take the most medications.”

Some help is available for consumers. California law says that anyone enrolled in Medicare is entitled to the same discount the state of California pays when it buys drugs under the Medi-Cal program for the poor. Beneficiaries should show the druggist the Medicare card to receive the discount. It is important to increase public awareness. A recent study indicated many people who are eligible don’t know about the program and don’t get the discount.

Under a bill approved last year, SB 696, California is negotiating now with pharmaceutical firms to provide additional discounts on medications for Medicare beneficiaries. State Sen. Jackie Speier, author of the law, also is talking with drug companies about creation of a “Golden Bear” discount card that would include the separate discount programs offered by individual drug makers.

Information on the state’s discount program for Medicare beneficiaries is available at www.aging.ca.gov. On the Web site, look for the line reading, “Californians on Medicare can now get prescriptions at Medi-Cal prices.” Click on this, which takes you to the page with a price calculator to look up the discount for 200 popular drugs.

Savings may be as sizable as 20% off the usual retail price. Health insurance counseling and advocacy organizations provide help with Medicare and insurance questions. The statewide number is (800) 434-0222 and the Web site is www.healthadvocates.org. Individual pharmaceutical companies have discount cards. However, they are limited to people who do not have current drug coverage, meaning HMO members would be ineligible.

Novartis, for example, offers discounts of 25% to 40% on its drugs. Medicare beneficiaries are eligible if they do not have drug coverage. Income limits are $26,000 for an individual and $35,000 for a couple. For information, call (866) 974-2273 or go to the company’s Web site at www.novartis.com/carecard.

Eli Lilly ([877] 795-4559, www.lilly.com), Pfizer ([800] 717-6005 or www.pfizerforliving.com) and GlaxoSmithKline ([888] 672-6436) also have various discount programs.

Another drug maker, Merck Medco, offers a mail-order discount program. Call (877) 733-6765 or go to the company’s Web site at www.yourrxplan.com. The AARP offers mail-order discounts to members. For information, call (800) 456-2277. or go to the Web site, www.aarppharmacy.com.

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Bob Rosenblatt welcomes your questions about coping with the changing world of health care. He can be reached by e-mail at bob blatt@aol.com. Dollars & Sense runs the fourth Monday of each month.