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Health-Care Plans Apply in Droves to Join Medicare's Prescription Drug Program

Posted on: Tuesday, 2 August 2005, 15:00 CDT

Jul. 31--You're a company and you want to expand.

The federal government says, "Look. We have a bunch of money to give companies like you who can serve our 42 million customers. Why don't you apply?" Thus the stampede of health plans rushing to be part of Medicare's prescription drug program that starts Jan. 1 and will cost $720 billion over the next 10 years. For the first time since Medicare was enacted in 1965, prescription drug coverage will be offered to all 42 million senior and disabled Americans enrolled in the program.

That number is expected to grow to 53 million over the next 10 years.

Health Net, PacifiCare, Aetna, Humana and United -- familiar to millions of Arizonans -- are some of those that have received conditional approval to participate in the prescription drug program and are entering negotiations with Medicare.

They are joined by a flurry of newcomers. Fox Insurance Co., Scan Health Plan and Abrazo Advantage Health Plan are some of the plans bidding for all or part of Arizona's Medicare market.

"How can a company afford to ignore the aging of America?" asked Tyler Mason, spokesman for PacifiCare, now the largest provider of Medicare managed-care plans in the country, which hopes to go national next year with several prescription drug plans.

"It's that simple, whether you're building retirement communities or putting together a prescription drug plan." Mid-September OK expected Medicare is in the process of reviewing hundreds of applications from companies that want to offer Medicare "Part D" coverage either as part of a comprehensive health plan or as a stand-alone benefit. The federal agency expects to announce its decisions by mid-September. But by Oct. 1, the chosen health plans will begin marketing to beneficiaries who can sign up starting Nov. 15.

The larger companies expect to offer Medicare Advantage plans with built-in prescription drug plans -- called MA-PDs -- in Maricopa, Pima and some other counties in Arizona. Health Net, PacifiCare and United are among those companies.

Those three also plan to offer new "stand-alone" prescription drug plans, called PDPs, that can be used in combination with traditional Medicare or other insurance.

Fox Insurance Co. -- a subsidiary of Fox Systems, which does consulting for the Arizona Health Care Cost Containment System and other state Medicaid programs -- expects to offer stand-alone drug plans in Arizona and 11 other states next year, from Maine to Oregon.

"We saw this as a new opportunity for Fox," said Bill Larkin, Fox Insurance Co.'s chief operating officer. "It's kind of a large social experiment, and we're all learning from it." Little time to study the plans Beneficiaries will have the most to learn, and little time to learn it. Medicare will not allow companies to disclose any details about their prescription drug plans until Oct. 1 -- just six weeks before beneficiaries can start signing up. Companies have launched campaigns to educate the public about Medicare's prescription drug program.

United Health Group's 24-page "Show-Me Guide" and Humana's "Let's Talk" are brochures that offer basic information -- something that's difficult to do when the topic is as complicated as Medicare. They also put the company's names in front of consumers without crossing the line into advertising.

Humana sales representative Dan Miller was at Sam's Club in Tucson earlier this month giving out "Let's Talk" brochures and offering to answer questions about currently available Medicare Advantage plans and the upcoming prescription drug coverage.

Husband and wife Tom DeLoughary and Beverly McGowan were unimpressed.

DeLoughary is a General Motors retiree and -- for now, at least -- the couple can get three-month supplies of their prescription drugs for $5 each.

"If you can beat that, I'll buy it," McGowan told Miller.

New plans introduced Aetna and PacifiCare also are introducing new health plans in Arizona this summer; Aetna's Medicare Advantage HMO was launched July 1, while PacifiCare's Secure Horizons Direct fee-for-service plan, which looks more like traditional Medicare, will start Sept. 1.

While marketing those plans, Aetna and PacifiCare are not supposed to use them as a lure to the prescription drug coverage that starts Jan. 1. But anyone who is with a Medicare Advantage plan will be among the first to get that company's invitation to join a prescription drug plan.

In fact, PacifiCare will send a letter to its Secure Horizons members telling them they will be automatically signed up for one of the new prescription drug options.

"Today they have a benefit but tomorrow they'll have a better benefit," said Jackie Kosecoff, PacifiCare's executive vice president. "The world should not be too disruptive for them." But Pima Council on Aging ombudsman Stewart Grabel is worried about consumers who won't read the letter -- or will miss the part that says, "If you don't want this coverage, let us know."

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Copyright (c) 2005, The Arizona Daily Star, Tucson

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Source: The Arizona Daily Star

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