Medicare managed care: policy concerns

This paper briefly reviews the extent of current drug coverage for Medicare beneficiaries and describes the most important issues faced by aged beneficiaries who receive or seek drug coverage through a Medicare managed care plan. Changes in payment rates to these plans as a result of the Balanced Budget Act of 1997 may result in plans reducing or eliminating drug coverage. Under current law beneficiaries in these plans will have severely limited options for replacing drug coverage; as a result, many will not be able to obtain this coverage either through Medigap or previous retiree coverage. In the absence of any change in current law, one approach to addressing these issues is to refocus Medicare managed care plans on managing the total cost of caring for patients over time and across settings. Only through such an integrated approach will Medicare managed care plans have the tools to function within the new payment rates and realize the value of the pharmaceutical benefit to the plan and the patients.