A new study recently found that insurance companies are inadequately reimbursed for drug coverage of Medicare patients with low-income subsidies.
To address this issue health insurers have chosen to increase premiums for their Medicare Part D prescription drug benefit plans. The design is to ensure these Medicare premiums are too expensive for low-income Medicare beneficiaries, so says a study that is expected to be published in the upcoming December issue of Health Affairs.
Apparently the purpose is for Medicare insurers to price themselves right out of the low-income segment of the Medicare market, suggests Alan Weinstock, insurance broker at http://www.MedicareSupplementPlans.com.
New Study on Medicare Patients with Low-Income Subsidies
The study indicates that Medicare Part D was designed to encourage competition and subsidize prescription drug care for poor Medicare patients. What he found instead is that millions of seniors have been forced to move to different Medicare prescription drug plans because Medicare payments do not adequately reimburse insurers for the relatively high medication use among the low-income Medicare population.
The problem, according to the study, is that reimbursements to insurers who cover low-income Medicare beneficiaries are lower than the total costs incurred by the insurers. Ultimately what you create, notes Weinstock, is a disincentive for insurance companies to participate in the Medicare Part D low-income program.
Steps Need to be Taken to Improve Medicare Part D Payments
What does it mean for seniors? According to information from the study, last year, 8.1 million seniors received a subsidy and another 1.5 million received a partial subsidy. Insurers eligible to accept subsidized seniors are required to have premiums below a set threshold. This threshold is based on the average regional premium.
To stay with an insurer with premiums that are too high to accept a subsidized Medicare beneficiary, low-income seniors are required to come out of pocket or to switch plans. The least expensive response is to switch plans, and according to the report that is what most low-income Medicare beneficiaries do. These new plans could ultimately have different drug formularies which then might require seniors to switch their medications.
What the researchers argued is that historical data on prescription drug use might improve Medicare payment. So they tested this theory by incorporating information on prior prescription drug use into the risk-adjustment formula. While it improved the situation, a corrective multiplier was still needed.
Ultimately, the study recommends that Medicare Part D payments be revised and that subsidies for coverage of low-income patients be increased or that the accuracy of Medicare’s risk and subsidy adjustments be improved.
