Final rules issued for Medicare drug plan

WASHINGTON – The Bush administration issued final rules Friday for implementing Medicare’s new voluntary prescription-drug benefit, which begins in 2006 and will pay roughly 75 percent of the drug costs of most people who enroll.

The drug benefit, which will be delivered through private insurers subsidized by the government, will cut $8 billion in state drug spending for low-income seniors over its first five years, said Mark McClellan, the Centers for Medicare and Medicaid Services administrator.

In addition, 6.3 million low-income Medicare enrollees who also qualify for Medicaid, so-called “dual eligibles,” will be enrolled in the new drug benefit automatically to avoid a possible lapse in coverage, McClellan said. Dual eligibles, who now receive drug coverage through Medicaid, are poorer than most Medicare and Medicaid enrollees and more likely to have multiple chronic illnesses that require costly long-term drug treatments.

McClellan’s reassurances were aimed at two concerned constituencies: state officials, who fear they’ll be forced to pick up new costs, and advocates for low-income clients, who fear they’ll face new costs or get lost in the shuffle as the new program gets under way.

Under the plan, dual eligibles will pay no premiums or deductibles and their co-payments won’t exceed $3 per prescription. That amounts to 98 percent of their drug costs, McClellan said.

The final rules, which encompass more than 2,000 pages, also call for Medicare to pay employers 28 percent of retired workers’ annual drug costs. That’s meant as an incentive to employers to continue covering retirees. With tax breaks, the incentive to companies could be worth $1,000 per retired worker.

The guidelines also, for the first time, offer Medicare recipients the option of getting all their Medicare benefits through a preferred provider organization, the most popular managed-care plan for people under 65.

The rules, which were published Friday in the Federal Register, were required as part of the Medicare Modernization Act, which President Bush signed into law in December 2003. They reflect the Bush administration’s push to use private competition as a way to cut costs for Medicare, the national health plan for seniors.