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Medicare Drug Plans Strong and Growing

HHS Secretary Mike Leavitt Tuesday announced that more than 1.4 million beneficiaries have enrolled in Medicare's Part D program since June of 2006, bringing the total number of people with Medicare now receiving comprehensive prescription drug coverage to more than 39 million.

"The introduction of this benefit a year ago created an unprecedented opportunity for millions to receive help paying for their medications," Secretary Leavitt said. "Over 90 percent of all people eligible for the Medicare prescription drug benefit are receiving the prescription drug coverage they need and are leading healthier, better lives. It's not surprising that five separate surveys show that more than 75 percent of beneficiaries are satisfied with the program."

December 31, 2006 marked the end of a 45-day open enrollment period, the second successful open enrollment period for Part D. Beneficiaries eligible for the low-income subsidy and those aging into the Medicare program can enroll without penalty in 2007.

The second enrollment period was preceded by a multi-faceted outreach campaign nationally and locally to encourage beneficiaries to compare their 2006 plans with 2007 plan options in order to make a confident decision in health and drug coverage plan selection. This effort included 12,700 events coordinated with 40,000 partners in hundreds of cities across the nation.

About 88.5 percent of all beneficiaries who enrolled in a prescription drug plan for 2007 chose a plan that offers coverage other than the standard benefit, such as no deductible or coverage in the "donut hole." Most beneficiaries who enrolled in Medicare Advantage plans are also getting more comprehensive drug coverage than the standard plan. Enrollment in Medicare Advantage plans has increased by over 900,000, bringing the total number of beneficiaries enrolled in Medicare Advantage plans to 8.3 million. Open enrollment for Medicare Advantage continues through March 31, 2007.

"These strong efforts to get beneficiaries to prepare and compare paid off," said Leslie V. Norwalk, Acting Administrator of the Centers for Medicare and Medicaid Services. "Our tracking surveys conducted this month indicate that 85 percent of seniors were aware of the open-enrollment period and over 50 percent reviewed their current coverage. Among the 600 seniors surveyed, 34 percent reported comparing plans, and over half of these seniors evaluated premium, deductible or copays, and coverage - that is, their comparisons appeared to be thorough."

The survey further noted that while only 6 percent reported switching plans during the open enrollment period, 2 out of 3 switchers reported reviewing their coverage and comparing plans, and 4 out of 5 switchers were satisfied with the process.

Overall, about 2.4 million (10 percent) of Part D enrollees changed plans, including those who selected some coverage in the gap. Of those who changed, 1.1 million were beneficiaries receiving the low-income subsidy (LIS) who were moved so they would not have to pay increased premiums. About 7 percent of all non-LIS beneficiaries enrolled in Part D changed plans. Overall, during the 45-day open-enrollment period, there were about 900,000 enrollments, including 350,000 that were done online.

In addition to strong participation during the enrollment periods, the implementation of the Part D program, with hundreds of thousands of newly-enrolled beneficiaries going to pharmacies for the first time, went smoothly in January 2007. Even before the new year began, CMS officials worked with pharmacies and drug plans to closely monitor the program as it entered its second year.

"After one month, we continue to see operations run smoothly. Whether it's pharmacists at the drug store or beneficiaries filling their prescriptions, very few of the problems people encountered at the program's implementation have been experienced this year," said Norwalk, "And we remain vigilant, working to locate and solve any problems that do arise."

CMS continues to make additional efforts to encourage enrollment among the hard-to-reach low income subsidy eligible population. "Earlier this month, we waived the 2007 late enrollment penalty for low-income beneficiaries who are traditionally harder to reach. We have also been paying close attention to the approximately 632,000 beneficiaries who lost their low-income eligibility status. So far, 35 percent have regained their deemed status or have applied and qualified for the low-income subsidy," said Norwalk.

About 10 million low-income beneficiaries are getting comprehensive drug coverage for little or no cost, including 9.1 million who are enrolled in Medicare Part D.

In addition to beneficiary participation, the program has also excelled in beneficiary savings and reduced cost to taxpayers. Beneficiaries are saving an average of $1,200 a year, with the estimated premiums for 2007 expected to average $22 a month, down from an average of $23 a month in 2006 and 42 percent lower than originally estimated. Moreover, CMS actuaries recently estimated that payments to Part D plans are projected to be $113 billion lower over the next ten years. Importantly, of the $113 billion reduction in cost, $96 billion is a direct result of competition and significantly lower Part D plan bids.

"Despite this solid record, we will continue to improve the program by working with community partners to find, fix, and eliminate any problems as well as to reach out to low income beneficiaries who will save the most with Part D coverage," concluded Norwalk.

Nearly 24 million beneficiaries are enrolled in Part D (PDP or MA-PD); 7 million retirees are enrolled in employer or union-sponsored retiree drug coverage that receives the Retiree Drug Subsidy (RDS); 3 million are in Federal retiree programs such as TRICARE and Federal Employees Health Benefits Plans (FEHBP); and 5 million are receiving drug coverage from alternative sources, including 2 million who have coverage through the Veterans' Administration.

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