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Cost of Medicare Rx benefits expected to fall

By Chelsey Ledue

According to the Centers of Medicare & Medicaid, the projected cost of providing Medicare beneficiaries with a prescription drug benefit through private health plans has come down again, according to fiscal year 2009 budget documents that will be released this week.

The overall projected cost of the drug benefit is $117 billion less over the next 10 years than was estimated last summer. The decline is due to the slowing of drug cost trends, lower estimates of plan spending and higher rebates from drug manufacturers.

"As we enter the third year, Medicare's prescription drug benefit is proving a resounding success," said U.S. Health and Human Services Secretary Mike Leavitt. "Enrollment continues to rise, customer satisfaction remains very high, and costs for beneficiaries and taxpayers are considerably lower than original projections."

Compared to original Medicare Modernization Act projections, the net Medicare cost of the new drug benefit is $243.7 billion (38.5 percent) lower over the 10-year period (2004-2013) used to score the MMA.

The third open enrollment season for the prescription drug program brought 1.5 million more enrollees to Part D, bringing the number of beneficiaries enrolled in Part D to 25.4 million. The number of Medicare beneficiaries with drug coverage now stands at about 39.5 million.

"Medicare's Part D prescription drug program is becoming a stable and familiar part of the nation's healthcare landscape," said Kerry Weems, CMS' acting administrator. "At the same time, we remain committed to finding and enrolling people eligible for the low-income subsidy and will continue to work with partners throughout 2008 to encourage eligible beneficiaries to apply for the subsidy. Moreover, LIS-eligible beneficiaries can enroll in a Medicare drug plan at any time throughout the year and not wait until the next open enrollment period, nor incur a late enrollment penalty."

Results from CMS tracking surveys indicate 85 percent of people with Medicare were aware of the open enrollment period, and more than two-thirds reviewed their current plan for cost and coverage changes.

"People with Medicare are increasingly knowledgeable about the prescription drug benefit, and they used the information and resources provided by CMS to compare the available plans," Weems said. "As informed consumers, many beneficiaries decided to remain with their current plan, but others took this opportunity to enroll in a different plan that, in their judgment, better meets their needs in 2008."

CMS data indicates that in 2008, about 3.1 million Part D enrollees (12 percent) changed plans. Of those who changed their plans, 2.1 million were beneficiaries receiving the low-income subsidy who were reassigned so they would not have to pay a premium.

About 90 percent of the nation's 44 million Medicare beneficiaries have drug coverage from Medicare or another source, according to the CMS. Approximately 25.4 million are enrolled in Part D, 6.6 million retirees are enrolled in employer or union-sponsored retiree drug coverage that receives the Retiree Drug Subsidy (DS), and 7.5 million are receiving drug coverage from other credible sources such as TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans' Affairs or their employers.