Last year, Medicare set up a new demonstration project — authorized under Section 641 of the new Medicare legislation — that had all the makings of a wildly popular drug subsidy. Informally called the “Section 641 demo” (from Section 641 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003), the Medicare Drug Replacement Demonstration (MRDD) sought to help some beneficiaries get a jump on the Medicare Part D drug benefit that kicks in on Jan. 1, 2006.
The Centers for Medicare and Medicaid Services chose three major disease categories — cancer, multiple sclerosis, and rheumatoid arthritis — and began assembling a list of self-injectable drugs that could immediately replace the physician-administered medications currently provided as a Part B benefit. Qualified beneficiaries who signed up through their physicians and who used one or more of these drugs would be entitled to the same benefit to become available for other medications in 2006.
Medicare sought strict limits on the program, however, capping the number of people who could sign up and the amount of money that could be provided.
“A lot of people thought we would be inundated with these folks,” says a Medicare official, speaking on condition of anonymity. It wasn’t an unreasonable assumption, considering that the drugs covered by the demonstration included some of the most expensive biotech agents on the market — exactly the kind of products that have prompted many beneficiaries to plead for assistance.
From Medicare’s perspective, the Section 641 demo is a winner despite the slower-than-expected stream of patients who are signing up.
Over the protests of patient advocates in all the disease areas, Medicare officials ultimately decided to cap the program at 50,000 with a $50 million budget. They relented on a key point: rather than forbid off-label drug use, Medicare agreed to reimburse for all indications covered by standard drug compendia.
Medicare also created a lottery to allow random selection of applicants. The lottery ultimately would be cast on the agency’s shelf, however, because the expected onslaught of patients in need failed to materialize.
ABOUT 40 PERCENT
Rather than finding itself besieged with patients, sign-up hit about 20,000 by March. The Medicare official says they’re coming in at a rate of about 500 a week — a trend that would put enrollment at roughly 35,000 by early September, with only four months left before Part D kicks in.
From Medicare’s perspective, the program is a winner despite the slower-than-expected stream of patients signing up. After all, people who otherwise would have to wait now get a federal benefit. As for the difference between the sign-up rate and the cap: Medicare was journeying into terra incognito.
“We don’t know how many people are taking these drugs and are eligible,” says the Medicare official. “We really don’t have a good feel for that. There are a lot of unknowns out there.”
Explanations are speculative.
Medicare purposely avoided mass advertising for the demonstration project. With a big campaign going intended to steer people to drug-discount cards, the official says, a media campaign would have confused the over-whelming majority of beneficiaries who did not need the demonstration project. Nevertheless, Medicare did put the word out through advocacy groups, physicians and others.
One manufacturer’s MRDD experience
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Section 641 demo coverage, copayments, and deductibles
The MRDD is subject to the same coverage limitations and out-of-pocket expenses equal to those for the Medicare Part D drug benefit, as illustrated below. The deductibles and coverage limits below are prorated to the date coverage begins. ▪ Beneficiary out-of-pocket spending.
FPL=Federal poverty level.
SOURCE: CENTERS FOR MEDICARE AND MEDICAID SERVICES
In many cases, he continues, people evidently had a good drug program and were reluctant to switch. Several pharmaceutical-assistance programs offer the same drugs for free, and those patients would not be attracted to a program with potentially big out-of-pocket expenses.
Patient advocates are also at something of a loss to explain what has or hasn’t happened.
“To our surprise, folks have not signed up as much as we might have expected,” says George Dahlman, vice president of public policy for the Leukemia and Lymphoma Society. “Since this became obvious, we have launched an outreach effort to let people know that this is available.”
David Price, senior vice president of legal affairs for the Washington Legal Foundation and a chief protagonist for patients groups in the lead-up to the MRDD, agrees that enrollment levels are puzzling. “Certainly, the number of people who could benefit exceeds 20,000,” he says.
Dahlman speculates that the tepid response is attributable to varying factors. Some thought the sign-up forms were too complicated. Yet, TrailBlazer — the contractor responsible for sign-ups — arranged to walk patients through the process via phone.
It could be that the public education effort for the project just fell short. Most of the alerts for the program have been online, which may not be effective for elderly patients needing the subsidy.
But the ramifications could run deeper than the demo itself. Considering that both the demonstration and the drug-discount card programs have drawn a fraction of the expected response, Dahlman points out, the initial sign up for Part D benefits also may fall below expectations.
On the other hand, he adds, expectations for Part D still are likely to run high. A much higher number of beneficiaries are aware of the benefit’s congressionally mandated 2006 start date.
MONEY ON THE TABLE
There’s no doubt that patients on many of these drugs are being offered a huge financial lure. For patients with chronic myelogenous lymphoma, Section 641 offers to pay 90 percent of the $40,654 annual expense. Patients with multiple sclerosis can save 75 percent, or $12,260 of $16,298, in average treatment costs. With rheumatoid arthritis, the savings can be $31,255 of $36,136.
The program just got off to a bad start, says Jayson Slotnik, the director of Medicare reimbursement and economic policy for the Biotechnology Industry Organization, “Psychologically, lottery was a poor choice of words,” he says.
In recent weeks, there’s been a good uptake of new members into the MRDD, though it was probably too great an expectation that patients would suddenly flock en masse for help. “It was clinically unrealistic to expect a bunch of patients and physicians to switch suddenly,” Slotnik explains. “It doesn’t happen.”
Slotnik views the demonstration as a success: “The biggest value of the program is as a teaching tool in enrolling patients into Part D.” CMS, he says, has had a chance to learn from it, hone its communication, and get ready for greater participation in Part D come Jan. 1.