Physician's Capitation Trend-Pharmacy capitation offers edge downward
Physician's Capitation Trend-Pharmacy capitation offers edge downward
The hottest thing going with marketing capitation to seniors has been the addition of prescription drug coverage — in some cases, fully covered drugs. Add the rich drug benefit and the much lowered basic price of an office visit — as opposed to the fee-for-service approach — and you see major cost shifting. The hottest feature in marketing becomes the coldest disaster of physicians straining under drug-included capitation arrangements.
But the "freebie" drug benefit that had been so characteristic of Medicare+Choice (M+C), which is Medicare's capitated system, is declining. The question is whether this decline will continue, or if it's a blip on the radar screen, according to a recent report by the Medicare Payment Advisory Committee (MedPAC). MedPAC is Congress' chief research and advisory group for Medicare and Medicaid policy decisions. In 1999, 65% of Medicare beneficiaries had access to a plan with drug coverage. In 2000, that percentage dropped to 64%. In 1999, about 54% had access to a zero-premium drug plan with drug coverage, and in 2000, the proportion dropped to 45%.
Medicare beneficiaries have access to a M+C plan with rather extensive drug benefits. For example, the typical Medicare capitation plan offered an annual cap of $500, generic copayments of no more than $15, and brand copayments of no more than $20.
Managed care plans may be cutting back their generosity in drug coverage to seniors, given the intense rise in expenditures in that area. But at the same time, public pressure is building for lawmakers to broaden Medicare's coverage of drugs. The demand is huge. In 1968, seniors spent an average of $64 annually on drugs, compared to $848 in 1998. At the same time, out-of-pocket expenditures have reversed. In 1968, seniors paid about 87% of their drug costs themselves, compared to 28% in 1998.
"This decline in patient liability for prescription drug costs has been one of several factors that have contributed to a 200% increase in total real drug spending per person in the same year," MedPAC stated.
According to MedPAC's analysis, Congress has a long way to go before deciding on the vast array of options for beefing up Medicare's pharmacy benefits. Here are a few options they care considering:
• Voluntary vs. mandatory pharmacy benefits
• Subsidies
• Changing deductibles, out-of-pocket maximums and benefit limits
• Adding an extensive benefits management component to Medicare's administration
• Tax credits, vouchers, and deductions
Congress will address these mammoth tasks again this summer.
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