Private insurers vie for Medicare deals

Agency finished accepting bids on prescription plans for seniors this week

June 11, 2005|By Ricardo Alonso-Zaldivar | Ricardo Alonso-Zaldivar,LOS ANGELES TIMES

WASHINGTON - Medicare has received a stack of bids from private health plans vying to offer prescription coverage to its 42 million beneficiaries, easing fears that seniors will face a lack of choices when the program takes effect next year.

Industry officials say 10 major insurers have submitted bids to offer plans in all 50 states, and a number of other companies are competing to provide benefits in various regions of the country.

Medicare spokesman Gary Karr said the agency is not ready to release specifics, but "we are getting a robust amount of interest from prescription plans."

This week was the deadline for companies to submit their offers, and Medicare has until Sept. 14 to pick the participants. Insurers will begin marketing their plans in October. Elderly and disabled beneficiaries can sign up beginning Nov. 15 for outpatient drug coverage that starts Jan. 1.

Separately, Medicare announced yesterday that "all or substantially all" drugs in six key categories must be provided by the private plans that will administer the prescription benefit.

These include cancer drugs, HIV/AIDS medications, antidepressants, antipsychotic drugs, anti-convulsive medications for epilepsy and other illnesses, and immunosuppressants, including those used by organ transplant patients.

The agency's ruling was intended to reassure advocates who fear that some seriously ill patients may be denied access to costly medicines. But it is unlikely to dispel all the concerns.

Drugs introduced after Jan. 1 in each of the six categories will not be subject to the same requirement. Plans will be able to evaluate the drugs and use their discretion on whether to offer them.

The fact that insurers are flocking to enter the program underscores demographic and economic realities. America is graying as a nation, and the elderly are the biggest consumers of prescription drugs.

While many Democrats and some advocates complain that the new Medicare drug benefit comes with onerous cost-sharing requirements, insurers are clearly motivated to get a piece of a program expected to spend $724 billion over the next 10 years.

Companies "want to become involved and equated with the program so they don't get left behind in years to come," said Mark Merritt, president of the Pharmaceutical Care Management Association, a trade group representing drug plans used by many large employers for their workers.

Competition among insurers could work to the advantage of the government and elderly beneficiaries.

Many companies are proposing a range of coverage options. While the different plans would have the same insurance value, they could be tailored to suit the preferences of individual consumers.

Seniors who are willing to pay somewhat more out of pocket, or limit their use of brand-name drugs, could get a plan that would shrink the standard plan's $250 annual deductible, as well as a coverage gap dubbed the "doughnut hole."

"We can lower premiums, eliminate the deductible and offer better drug coverage options that will allow seniors to select for themselves," said Howard Phanstiel, CEO of PacifiCare Health Systems, which is bidding to become a national provider.

Phanstiel said PacifiCare is proposing to offer five options, ranging from a plan for people who don't need many medications, to "a very rich design for those who haven't met a drug they don't like." Seniors who sign up for the coverage will save about $465 on prescriptions next year, according to a congressional analysis.

The Los Angeles Times is a Tribune Publishing newspaper.

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