How Changes In Medicare Affect Patients

The Wall Street Journal

By ANNA WILDE MATHEWS and JANE ZHANG

July 17, 2008; Page D1

The major goal of the new Medicare law passed this week was to block a scheduled cut in fees paid to doctors. But there's also plenty in the law that directly affects Medicare beneficiaries.

Participants in the federal insurance program for older and disabled Americans will have lower out-of-pocket costs for mental-health services. Some widely used anti-anxiety and sleep drugs that Medicare previously didn't pay for will be covered. And the law aims to boost preventive health care, including making it easier and cheaper for new Medicare participants to get a physical checkup. Most of the new benefits will be phased in over several years.

There also are cutbacks. Consumers who relied on certain private insurance plans sold under the name Medicare Advantage could face tougher restrictions on which doctors they will be allowed to see. Another change: Doctors will be strongly encouraged to begin sending prescriptions to pharmacies electronically, rather than writing them by hand.

"There are some important changes in here," says Kirsten Sloan, an official with AARP, the lobbying group for older people. "It's meaningful."

Congress approved the Medicare law late Tuesday after months of wrangling. With votes of 70 to 26 in the Senate, and 383 to 41 in the House, the bill garnered enough votes to override a veto by President Bush, whose opposition centered on some of the cutbacks to the Medicare Advantage program. The Medicare bill has a total cost estimated at around $20 billion, spread over five years.

Medicare participants getting mental-health treatment, such as visits to a psychiatrist, currently must pay 50% of the cost out-of-pocket. That compares with a co-payment of 20% for other doctor visits. The new law cuts the co-pay for mental-health services also to 20%, although the reduction phases in gradually, ending in 2014.

That change could make a big difference for Medicare beneficiaries like Karen Geer, who lives near Indianapolis. Ms. Geer, 46, spends more than $4,000 a year on therapy for her bipolar disorder, mostly on visits with a social worker that cost $80 a session. She says the therapy has helped her manage the disorder well, and she now does volunteer work in the community. But to help pay for it, Ms. Geer says she has given up getting Pap smears and other medical care.

Ms. Geer figures she'll save at least $2,500 a year if her Medicare co-payments are reduced to 20% from 50%. "I think it will make a difference," she says. "I'll have more money to use on other services I need."

Some Medicare beneficiaries have not sought needed mental-health treatment because of the high out-of-pocket cost, says Dale Klatzker, president of The Providence Center, a community mental-health clinic in Providence, R.I. The clinic, which relies heavily on public funding, sometimes can't collect the 50% co-payments from Medicare patients when they can't afford it, he says. He expects the new Medicare law to boost patient visits and their ability to pay.

The American Psychiatric Association, a professional group, says the increase in coverage should attract more psychiatrists and other mental-health-care providers into Medicare. "It's a huge step forward," adds Andrew Sperling, director of federal legislative advocacy for the National Alliance on Mental Illness, a patient advocacy group. The change to the mental-health co-payment comes as Congress aims to pass another bill later this month that would require employers and private insurers to put mental-health coverage on par with that for physical maladies.

The new Medicare law also will add two widely used classes of medicines to the Medicare drug benefit, although the change won't take effect until 2013. One class is benzodiazepines, a group of drugs often prescribed for anxiety that includes Xanax and Valium. Last year, about 51 million benzodiazepine prescriptions were written in the U.S., according to research firm IMS Health. The other drug class is barbiturates, sometimes used as sleep aids. Medicare will cover these drugs only for patients suffering from certain conditions, including a chronic mental-health condition, cancer or epilepsy.

The new law also takes a modest step toward encouraging some preventive care. Currently, Medicare will pay for new participants to get a "welcome-to-Medicare" physical within six months of joining the program. That period is being extended next year to 12 months, making it more convenient for many people. What's more, the cost of the initial physical will no longer be counted against a participant's annual deductible. Medicare's standard annual deductible is currently $135. Medicare doesn't cover routine physicals after the one you get when you first enroll.

Congress also laid the groundwork for Medicare to add future preventive or screening services. In the past, such benefits, including mammogram screenings, required a special act of Congress to be included in Medicare coverage. Now, Medicare will be able starting next year to decide on its own whether to add certain preventive treatments. Some treatments the program is expected to consider adding are intense weight-loss counseling for obesity and certain genetic tests for breast cancer. "It really embeds prevention into the Medicare program in a way that it hasn't been in the past," says Timothy Gardner, president of the American Heart Association.

Much of the new law's cost will be paid through reducing outlays for the private Medicare Advantage plans. These plans, which can have richer benefits or lower co-payments than traditional Medicare, are offered directly to consumers by private insurers. They also are generally more expensive for the government than traditional Medicare, government analysts say.

The cutback most likely to be noticed by consumers affects a type of Medicare Advantage plan called private fee-for-service, which gives consumers access to a wide range of doctors. These plans are sold under names such as Humana Inc.'s Gold Choice and UnitedHealth Group Inc.'s SecureHorizons MedicareDirect Plans.

Under the new law, starting in 2011, fee-for-service plans will have to bring doctors who accept the plans into a network, similar to the way that health maintenance organizations, or HMOs, and preferred provider organizations, or PPOs, now do. Currently, the plans allow consumers to access any doctor, although individual physicians may choose not to accept a particular plan. The network requirement will apply only in geographic areas where consumers have at least two other Medicare Advantage plan options.

America's Health Insurance Plans, an industry group, estimates the change could affect around 80% of the 2.2 million people currently enrolled in private fee-for-service plans. But a House Democratic aide says enrollment in the rejiggered plans is still expected to grow. In his veto message, President Bush said the new Medicare law will "harm beneficiaries by taking private health plan options away from them," particularly with the new restriction on the private fee-for-service plans.

Having to stick with a network looks like a disadvantage to Ernest Matthews, an 80-year-old retiree in Athens, Pa., who has a private fee-for-service plan from a unit of Universal American Corp. Mr. Matthews says a big reason he likes the plan is because it allows him to go to doctors at the Geisinger Medical Center in Danville, Pa., for his cancer treatments. "I would rate the ability to pick and choose as the No. 1 issue," he says.

A Geisinger spokeswoman says the hospital does treat patients covered by traditional Medicare.

The Medicare law encourages more doctors to write electronic prescriptions. In a carrot-and-stick approach, the law initially boosts Medicare payments to physicians who make the change. Then, in later years, it docks doctors' fees if they fail to adopt the technology. One challenge: Although around 70% of all pharmacies can receive digital prescriptions, only 31% of independent drugstores now do so, according to SureScripts-RxHub LLC, which operates the main e-prescribing network. Only about 40,000 U.S. doctors currently prepare their prescriptions digitally.

Write to Anna Wilde Mathews at anna.mathews@wsj.com and Jane Zhang at Jane.Zhang@wsj.com