JANUARY 1999 - HMOs Cap Pharmacy Benefits - In
October, Harvard Pilgrim Health Care, Tufts Health Plan, Fallon
Community Health Plan, and Blue Cross / Blue Shield of Massachusetts
announced that they would begin to set a dollar limit for their
prescription drug coverage under Medicare, starting January 1, 1999.
Noting the number of phone calls and letters received by the
Association over the past two months, it would appear that members keep
close tabs on health insurance issues.

it must be emphasized that public retirees, who are enrolled in the
group health plans offered by the state, counties, or municipalities,
are not effected by the change. These plans tend to be self insured
with the benefit levels determined by the state or local community.

glad that our members pay such close attention to health care news, but
they should not worry about their benefits. This decision does not
affect them at all,” said Association Insurance Coordinator Cheryl
Stillman. “There are many items to keep a watchful eye on in our plans
and prescription coverage is one of them. However, no one is talking
about reducing the coverage.”

Federal Law Changed

spring, several Massachusetts-based HMOs began to discuss the option of
instituting a cap on the dollar amount of prescription coverage they
offer. The insurance companies claim that they can no longer afford to
offer the unlimited benefit. Of the 199,221 seniors enrolled in
Medicare in Massachusetts, about 19,000 are estimated to be effected by
the drug cap.

Massachusetts had
attempted to block the pharmacy cut by taking its case for jurisdiction
into federal court. On October 30, Judge Richard H. Stearns struck down
the Massachusetts law which mandated the benefit. Judge Stearns cited
the Balance Budget Act of 1997, as having granted the exclusive right
to determine Medicare benefits to federal, not state, agencies. Federal
law allows the prescription cap to be set by the insurer.

recently, federal law allowed the states to set their own rules as to
what types of benefits HMOs had to offer as part of their Medicare
supplement plans. Massachusetts was the only state in the nation to
require the HMOs to provide an unlimited prescription drug benefit.

in January, Harvard Pilgrim will allow $200 a quarter for medications,
with Blue Cross allowing $125, and Tufts offering $150. In other words,
a retiree insured through one of these HMO plans will have to pay
out-of-pocket for any cost above the allowable amount. Standard
co-payments will still apply.

Legislative Relief Pending

a bi-partisan effort to address the issue of 19,000 seniors suddenly
being forced to pay out-of-pocket for their much needed prescriptions,
Republican Governor Paul Cellucci and Democratic Senator Edward Kennedy
have joined forces to find a solution. Both Cellucci and Kennedy have
called on the state’s HMOs to continue the unlimited benefit for one
year, while the state and federal governments work on a permanent

Reports have indicated
that Blue Cross, Tufts, and Fallon were willing to meet the Cellucci /
Kennedy request. However, Harvard Pilgrim, the state’s largest Medicare
HMO carrier, declined to continue the benefit. Harvard Pilgrim argues
that they simply cannot afford to continue the current benefit
structure. As a result, the other insurers changed course and decided
to drop the benefit saying they had to remain competitive with other
area HMOs.

As of press time,
political leaders on Beacon Hill are planning to expand the current
Senior Pharmacy Benefit (funded through tobacco taxes) to the 19,000
seniors hit the hardest by the drug cut. In Washington, Senator Kennedy
is expected to push for a change in federal law to require the HMOs to
once again offer unlimited drug benefits.

expect health care issues to dominate the agenda on Beacon Hill for
much of this year. There is no question that the system is in dire need
of reform,” added Association Legislative Liaison Shawn Duhamel. “The
challenge is how to go about fixing the system in a constructive way
that does not do more harm than good. There are many complex issues at
work here, with no simple solutions.”