WASHINGTON - For two years, health policy experts have been warning that Medicare beneficiaries might be confused by complexities of the new prescription drug benefit. Now it turns out that Medicare officials were also confused, not just about the drug benefit but also about other options.
The Bush administration is revising the 2006 Medicare handbook - the main tool for educating beneficiaries - after discovering that many statements in the first draft of the document are inaccurate, misleading or incomprehensible, even to people who have worked on the program for decades.
Members of Congress, insurance companies, advocates for beneficiaries and state insurance regulators all told the administration that the new handbook was flawed.
For example, in describing the drug benefit, the handbook says, "After you meet the deductible, you pay part of the cost of covered prescription drugs, and the plan pays part."
The handbook does not mention that beneficiaries face a gap in coverage. After the beneficiary pays a $250 deductible, Medicare pays three-fourths of the next $2,000 in drug costs. But then the beneficiary is normally responsible for all of the next $2,850; Medicare pays nothing.
Moreover, the handbook lumped together the traditional government-run Medicare program, which covers 36 million people, and tiny private fee-for-service health plans, in which fewer than 100,000 beneficiaries have enrolled. Both, it says, are "fee-for-service plans, available nationwide."
In fact, the two are fundamentally different. Private fee-for-service plans are available in selected counties from private insurance companies under contract to Medicare, with premiums and co-payments set by the insurers.
By contrast, traditional Medicare is offered throughout the country, with uniform premiums and co-payments set by law. Beneficiaries may have to pay more in some private fee-for-service plans than in traditional Medicare.
Vicki Gottlich, a lawyer at the Center for Medicare Advocacy, a nonprofit group that counsels beneficiaries, said it was "inaccurate and misleading" to emphasize the similarities between traditional Medicare and the private fee-for-service plans.
Insurers agree. In written comments, the Blue Cross and Blue Shield Association told the government: "There is no need to have pages and pages on the private fee-for-service option. Most people will think you are talking about traditional Medicare when you use that term."
Gary R. Karr, a spokesman at the Centers for Medicare and Medicaid Services, said the agency was revising the 106-page handbook to address such concerns. The handbook, he said, will include "a more detailed description" of the new drug benefit, including the gap in coverage, and will clarify the differences between traditional Medicare and private plans. The final version will be mailed to beneficiaries this fall.
"It's a real challenge, to describe things accurately and completely while not giving so much detail that you overload and confuse the beneficiaries," Karr said. "It's a balancing act."
A major goal of the 2003 Medicare law was to create a competitive insurance market so beneficiaries would have more options. But as options proliferate, it becomes more difficult to explain them, especially because the terminology has changed three times in eight years.
In 1997, Congress established the Medicare(PLUS)Choice program to foster the growth of health maintenance organizations and other private plans. In 2003, Congress overhauled the program and renamed it Medicare Advantage. That name, widely used in this year's handbook and in marketing materials, disappears from the draft of the 2006 handbook. HMOs and preferred-provider organizations are called simply "Medicare health plans."
Traditional Medicare is also called a plan, the "original Medicare plan."
The AARP, the lobby for older Americans, strongly supported the 2003 law but now points to research suggesting that "too many options can produce paralysis."
In a poll on health issues by the Kaiser Family Foundation in April, two-thirds of those 65 and older said they did not understand the new drug benefit. Nine percent of the elderly said they would sign up for drug coverage, 37 percent did not intend to enroll and 54 percent said they did not know or had not heard enough to decide.
John C. Rother, policy director of the AARP, said his group had met several times with Medicare officials to express concerns about "the accuracy, understandability and balance" of information in the handbook.
The handbook repeatedly suggests that private plans offer a better value than the traditional Medicare program. Those plans - HMOs and PPOs - "give you more health care coverage choices and better health care benefits," it says.
Likewise, it says, the new drug benefit will be superior to the coverage available under existing insurance policies that supplement Medicare.
The National Association of Insurance Commissioners, which represents state regulators, has criticized these statements, but the administration insists that they are accurate.