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Q: What is the news about Medicare all about?

A: On November 25, Congress passed a large Medicare bill, called the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The President signed it into law on December 8.

Q: How does the bill affect the care of older adults covered under Medicare?

A: The major changes are in prescription coverage, financial support for the medical professionals who treat you, and competition from private insurance plans.

Q: What are the reimbursement changes and how do they help older adults?

A: Medicare reimburses doctors who care for older adults. The bill prevented a 4.5% decrease in the fees paid to doctors that would have hurt many practices that see patients who rely on Medicare. Struggling practices mean less access to medical care for seniors. Instead, the bill increases the reimbursement by 1.5% in 2004 and 2005.

Q: What are the details of the new prescription drug benefit?

A: By April 2004, discount cards should be available. They will be privately offered, but approved by Medicare. The White House believes that retail drug prices for seniors will drop 10 to 25% as a result of the cards.

In 2006, seniors will be able to buy private "drug-only" insurance policies. These policies come with a premium estimated at $35 and a $250 annual deductible. They would cover three-fourths of drug costs between $276 and $2250. Most Medicare beneficiaries would be covered for 95% of their out-of-pocket costs above $3600. Low-income seniors making $13,470 (single) or less would receive even more coverage.

Q: What is the "donut hole" I keep hearing about?

A: This refers to a lapse in coverage. You will need to spend $1,350 if your out-of-pocket drug expenses are greater than $2,250 but under $3,600.

Q: What about people who qualify for Medicare and Medicaid?

A: Medicare will now cover these "dual eligibles." Those with incomes under 135 percent of poverty ($12,123 for individuals; $16,362 for couples) will pay no premium and no deductibles. Their coverage will have no gap in it. They will pay $2 for each generic prescription and $5 for all other prescriptions. They will pay no further co-pays after spending $3,600 out-of-pocket. Those with assets of more than $6,000 ($9,000 for couples) are not eligible.

Seniors earning between 135 percent and 150 percent of poverty will be charged a premium on a sliding scale. They will pay a $50 annual deductible and 15% of costs up to $3,600. After reaching that limit, they will pay $2 or $5 for each prescription. Single people with assets of $10,000 and couples with $20,000 are not eligible.

Q: What about competition from private plans?

A: Beginning in 2006, seniors will have a choice of more types of private plans, including "preferred-provider organizations." These are often less restrictive than HMOs. If you choose a plan that is cheaper than a government-specified amount, you get to keep 75% of the difference. If you chose a more expensive plan, the difference will be your responsibility.

A six-year test of "comparative cost adjustment" is scheduled for 2010. Private plans can offer competing bids against Medicare in six metropolitan areas. Areas selected will need to have at least 25 percent of beneficiaries enrolled in private plans. Those remaining in traditional Medicare would have premium increases of no more than 5 percent per year, and those with incomes under 150 percent of poverty will not be affected.

Q: What is the Health Savings Account?

A: The bill calls for tax-preferred "Health Savings Accounts" (formerly Medical Savings Accounts). They are available to all workers covered by health plans with deductibles of at least $1,000 for individuals and $2,000 for families.

Q: Is help provided for services and tests if I'm not sick or in need of medications?

A: Yes. The legislation also adds preventive services. These include coverage of an initial preventive physical examination when you first become eligible for Medicare, cardiovascular screening blood tests, diabetes screening tests, and improved payment for certain mammography services.

For more information on the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, e-mail us at agspolicy@americangeriatrics.org.

Other sources:

Kaiser Family Foundation:
http://www.kff.org/medicare/rxdrugscalculator.cfm

Ways and Means Committee, U.S. House of Representatives
http://waysandmeans.house.gov/media/pdf/healthdocs/confagreement.pdf