Average monthly premiums for Medicare Prescription Drug Benefit Basic Coverage will increase to $25 in 2008, CMS says

Aug 14, 2007--CMS on Monday announced that average monthly premiums for the Medicare drug benefit will increase to $25 in 2008, up from $22 in 2007, the Baltimore Sun reports (Baltimore Sun, 8/14). About 87% of beneficiaries will have access to prescription drug coverage at the same cost or less in 2008 than in 2007, according to CMS (CQ HealthBeat, 8/13).

Beneficiaries can access prescription drugs with premiums at the 2007 level by enrolling in a different drug benefit plan during the open enrollment period, which begins Nov. 15 (AP/Detroit Free Press, 8/13).

Beneficiaries enrolled in private Medicare Advantage plans will see an increase in savings compared with beneficiaries in stand-alone plans in 2008, according to CMS. Beneficiaries in MA plans in 2007 paid $7 less each month for drug coverage premiums than beneficiaries in stand-alone plans; in 2008, beneficiaries in MA plans will pay $11 less for drug coverage (CQ HealthBeat, 8/13).

The increase in premiums primarily is a result of technical adjustments required by law, not because insurers estimated it will cost more to provide drug coverage for beneficiaries (AP/Detroit Free Press, 8/13).

Herb Kuhn, acting deputy administrator of CMS, said that the monthly premiums are able to stay below $41 -- the monthly premium predicted in 2003 when the program was created -- because of "slower-than-expected growth in prescription drug costs generally, in part because of increased generic usage, effective plan negotiation and strong competition" (CQ HealthBeat, 8/13).

GAO Report
In other Medicare news, a Government Accountability Office report finds that CMS audits of MA plans -- intended to ensure the plans offer the proper amount of benefits -- are too few in number and take too long to occur, CQ HealthBeat reports. CMS is required each year to audit one-third of the contract bids filed by managed care companies seeking to offer MA plans. The bids outline which benefits the plans will offer to beneficiaries and estimate how much the benefits will cost.

The GAO report found that the percentage of bids audited ranged between 18.6% and 23.6% from 2001 to 2005. In 2006, CMS audited 13.9% of bids, when the number of participating MA plans increased sharply, according to the report. GAO also found that CMS "does not plan to complete the financial reviews until almost three years after the bid submission date each contract year," which "will affect its ability to address deficiencies in a timely manner." When too few audits are conducted or when audits are conducted years later, the "intended oversight is not achieved and opportunities to determine if organizations have reasonably estimated the costs to provide benefits to Medicare enrollees are lost," according to the report.

In response, CMS said it would create final plans that address how to meet the one-third audit requirement and how to deal with problems uncovered during audits prior to approving the following year's bid. CMS also said it will include contract language stating its intentions to pursue financial recoveries or to seek legislative authority to do so if necessary, which GAO encouraged in its report (Reichard, CQ HealthBeat, 8/13).