Prescriptions for Dually Eligibile Beneficiaries May Cost More under Medicare

By Richard Shank prescription drugs

A new Congressional report finds that prescription drugs for Medicare and Medicaid-eligible beneficiaries cost 30% more under Medicare Part D than if Medicaid were to pay the bill. This report also finds that drug manufacturers received extra revenue from Medicare Part D, in excess of $3.7 billion.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required that Medicare Part D, not Medicaid, cover the costs of drugs for people with dual eligibility, which includes many nursing home residents. Supporters of Medicare reform efforts believe the 2003 bill has produced an unnecessary burden on the taxpayer and are seeking to rectify this problem through new legislation.

Unlike traditional Medicare, Medicare Part D is dependent upon private insurers to provide prescription drug coverage. This rule was instituted with the Act of 2003, overturning a previous government-administered program and has been a source of conflict ever since.

The authors of this report compare the drug prices negotiated by the private Part D insurers with drug prices paid by Medicaid. In order to produce these comparisons, the Committee obtained confidential information on drug expenditures for dual eligible beneficiaries from the ten largest Part D insurers and the Medicaid drug prices from drug manufacturers.

Because dual eligible beneficiaries have low incomes, the federal taxpayer pays over 98% of their drug costs under Medicare Part D. If drug manufacturers charged the Medicare Part D program the same prices that Medicaid receives, then drug costs could be reduced by up to $86 billion over the next 10 years.

For more information, see the report at: http://oversight.house.gov.

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