Medicare to Reassign Some Californians’ Drug Plans
About 270,000 low-income elderly and disabled Californians will be assigned to new Medicare prescription drug plans Jan. 1, raising concern about a resurgence of the coverage glitches that led state officials to bail out the federal program when it was launched this year.
Plan operators promise the switches will be made without complications, but seniors’ advocates say many are upset over confusing signals from the Medicare agency, which initially indicated that nothing would change.
Less than two weeks ago, the agency said in a news release that “in California, 100% of low-income beneficiaries will not need to switch plans to continue to receive this coverage for a zero premium.”
The Medicare drug program delivers its benefits through a variety of private insurance programs. And 4 out of 10 prescription plans serving low-income Californians will not be available in 2007, according to the National Senior Citizens Law Center in Oakland, which discovered the discrepancy. That means many of the estimated 1 million lowincome state residents participating in the Medicare plan will automatically be reassigned to other plans.
“Last year, the auto-assignment process was very disruptive and confusing,” said Jeanne Finberg, an attorney with the center. “We were pleased initially when we heard there wasn’t going to be any disruption, but now we are alarmed that [Medicare] seems to be hiding the ball.”
An executive of a leading drug plan operator said seniors had nothing to worry about.
“I do appreciate all the citizen action groups being concerned, but I want to assure them we have taken extraordinary steps to make sure we represent stability and good service,” said Jackie Kosecoff, chief executive of Ovations Pharmacy Solutions. “I honestly believe this is going to be painless.” Ovations is part of Minnesota-based UnitedHealth Group, which runs the AARP drug plan.
Across the country, hundreds of thousands of low-income seniors will also face such changes, Finberg said.
For low-income seniors and disabled beneficiaries, Medicare pays the full monthly premium. Although these beneficiaries are responsible for some modest co-payments, they are also spared the “doughnut hole,” a coverage gap in the middle of the benefit.
Nonetheless, the insurance companies that provide the benefit must renew their contracts with the government each year, and they are free to withdraw a plan altogether or raise premiums. And if a plan’s cost exceeds certain levels, the government will no longer subsidize it for low-income seniors.
The cutoff point for the subsidy is determined each year according to a complex formula, and it varies across the country.
Such nuances mean a Medicare prescription coverage card is different from a regular Medicare card, which is good for life.
In California, two of the plans offered to low-income seniors -- PacifiCare Saver Plan and United HealthRx -- will be withdrawn in 2007. Two other plans, AARP MedicareRx and Health Net Orange 008, are projecting premiums above the cutoff point for the subsidy, meaning that low-income seniors will have to transfer out.
About 70,000 Californians in the Health Net plan will be transferred into another plan run by the company, said spokesman David Olson.
“If they stay within Health Net, it’s the same system even if their plan changes,” he said. “That’s not going to impact their ability to get a medication.”
An additional 200,000 Californians in AARP, PacifiCare and United plans will be transferred into a plan called AARP MedicareRx Plan Saver.
“While the plan may change, the sponsoring organization won’t change,” Medicare spokesman Jeff Nelligan said in a statement. “So for those beneficiaries, the change will be seamless.”
Surveys have shown that about 80% of seniors are satisfied with their Medicare prescription plan, although a significant proportion -- almost 2 in 10 -- say they have had a major problem trying to use it. Lowincome seniors and those who took more than six medicines a day were more likely to say they had run into problems.
Despite the assurances from plan operators and Medicare, Finberg said there was no guarantee that coverage policies in the new plans would be the same.
“What we have found out before from experience is that any time there is a change, it brings out the worst in the system,” she said.