Medicare Prescription Drug Premiums to Rise in '09

By Steven Reinberg
HealthDay Reporter

THURSDAY, Aug. 14 (HealthDay News) -- The average monthly premium for Medicare's prescription drug plan will increase to an estimated $28 in 2009, three dollars more than this year's monthly premium, Medicare officials announced Thursday.

That 2009 figure is 37 percent lower than originally projected when Medicare's so-called Part D drug coverage was introduced in 2003, the officials added. The Part D program offers prescription drug benefits to Medicare beneficiaries.

"Part D continues to come in under budget, achieve consistently high satisfaction rates, and with it millions of Americans are living healthier, better lives," Kerry Weems, acting administrator of the U.S. Centers for Medicare and Medicaid Services, said during an afternoon teleconference.

But, he added, "most beneficiaries will see a premium increase in their current plan. There will be some significant increases."

There are three reasons behind the premium increase, Weems said.

"First, there is a trend in prescription drug cost growth generally -- prices tend to increase because of price increases for existing drugs, the growth in the average number of prescriptions per person, and the introduction of new drugs," he said.

Second, the 2008 premiums were calculated as part of a demonstration project that has now expired. This project resulted in premiums being 50 cents less in 2008 than had been projected.

"That change is now reflected in the 2009 premium," Weems said.

Third, drug distributors participating in Part D have found coverage for catastrophic care to be higher than expected. "So they have adjusted their 2009 bids to reflect those higher-than-anticipated costs," Weems said.

There are steps Medicare beneficiaries can take to reduce the impact of premium increases, Weems added.

In 2009, Medicare beneficiaries will continue to have access to what's known as enhanced drug coverage, which allows people to pay additional premiums to cover gaps in their drug coverage. Some low-income beneficiaries will be able to have their gap coverage at minimal or no cost, Weems said.

"In addition, 97 percent of people in stand-alone prescription drug plans will have access to a 2009 plan with equal or lower-cost premiums than their 2008 plan," Weems said. "Moreover, many Medicare beneficiaries will have access to a Medicare Advantage plan that offers lower prescription drug premiums than a stand-alone plan."

Currently, 24.4 million Medicare beneficiaries are enrolled in the Part D drug plan.

In a related development, Medicare officials announced Thursday that 10 doctors-group practices participating in Medicare's Physician Group Practice Demonstration project showed improved quality of care for patients with congestive heart failure, coronary artery disease and diabetes.

Based on these improvements, the 10 groups involved in the project are being paid $16.7 million in incentives designed to reward health-care providers for improving results and coordinating the health care needs of Medicare patients.

"We are paying for better outcomes and we are getting higher quality and more value for the Medicare dollar," Weems said in a prepared statement. "And these results show that by working in collaboration with the physician groups on new and innovative ways to reimburse for high quality care, we are on the right track to find a better way to pay physicians."

More information

To learn more, visit the U.S. Centers for Medicare and Medicaid Services.