Upcoming Changes to Medicare

With the passage of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, there have been some major changes affecting 
all people with Medicare. While the most significant portion of the legislation 
was the addition of the Part D drug benefit, it also establishes the drug 
discount cards and makes other changes to Medicare benefits and costs. 
This fact sheet describes the major components of the new law that affect 
your clients.

Drug Discount Cards 

Starting in June 2004, Medicare approved
prescription drug discount cards will be available to all people
enrolled in Medicare (except those who have prescription drug coverage
 through Medicaid). Each of these Medicare-Approved cards carries the
Medicare seal shown here and a list of the Medicare-approved cards is 
available on the Medicare Web site at www.medicare.gov.

Medicare has contracted with private companies (such as insurance companies,
pharmaceutical companies, and HMOs) to offer the new drug discount cards.
Each card sponsor determines the list of drugs it will discount (its formulary), 
how much of a discount it will offer and its participating network of pharmacies. 
The cards will be available until the Medicare prescription drug benefit becomes
effective in 2006. Enrollment begins in May 2004.

 Goes into effect: June 1, 2004.
(NOTE: For more information about the drug discount cards, stay tuned for our
next Issue Brief)

Prescription Drug Benefit.

The new Medicare bill established Part D
coverage for outpatient prescription drug benefits, effective in 2006. Although 
this benefit is voluntary, there is a 1 percent premium penalty for each month that 
an eligible person delays enrollment (unless they have comparable prescription
coverage from another source, like an employer-sponsored plan or Medicaid).
Initial enrollment begins on November 1, 2005 and will continue for 6 months.

Your clients will pay the first $250 (the annual deductible) and 25 percent of
their costs between $250 (the deductible) and $2,250 in drug spending. They will
be responsible for 100 percent of the total drug costs between $2,250 and
$5,100 (raising their total out-of-pocket spending to $3,600). After your 
clients spend $3,600 out-of-pocket they will pay 5 percent of their drug costs. The
estimated average monthly premium for these plans is $35. But there will be
assistance for people with low-incomes, whose income and assets meet eligibility
requirements.

 Goes into effect: January 1, 2006 
(although enrollment will begin in
2005).


Medicare Preventive Benefits. 
Starting next year, Medicare will cover new preventive benefits, including: 
~Initial routine physical exam for new people who enroll in Medicare within the 
first six months of initial coverage under Part B. The exam will include 
measurement of height, weight, and blood pressure, and an electrocardiogram.
It also will include education, counseling and referral for other preventive 
services covered by Medicare, but will not include any lab tests.
 
~Cholesterol and blood lipid screening tests once every two years. 
Diabetes screening tests and services for beneficiaries who are at high-risk for 
diabetes. 
Goes into effect: January 1, 2005.

Outpatient Rehabilitation Therapy Cap 

The $1,500 therapy caps for physical therapy, occupational therapy and speech-
language pathology services are suspended for 2004 and 2005. However, the caps 
do apply to outpatient therapy received during the three months they were in 
place (September 1, 2003 to December 8, 2003). Your clients are still 
responsible for any expenses exceeding the therapy cap that they incurred during 
those three months. 

Already in effect
Hospice Consultation 

Medicare will cover a one-time hospice consultation by a physician who is either 
the hospice medical director or an employee of a hospice program to evaluate 
your client's pain and symptom management needs. It also includes counseling 
regarding end-of-life issues and care options.
Goes into effect: January 1, 2005.

Part B Deductibles and Premiums

DEDUCTIBLES
For the first time since 1991, the annual deductible for Medicare Part B will 
increase to $110 in 2005 (the current deductible is $100). After that, Medicare 
Part B deductibles are expected to increase each year by the estimated annual 
percentage increase in Part B
expenditures.

Goes into effect: January 1, 2005
PREMIUMS

Currently, all people with Medicare pay the same monthly premium for Part B 
coverage ($66.60 in 2004). This premium represents 25 percent of the estimated 
Part B costs for that year, with the federal government covering the remaining 
75 percent. Beginning in 2007, these monthly premiums will be based on income, 
with higher-income seniors paying
higher premiums. The share your clients will pay and the income thresholds are 
listed below.
*The income thresholds for couples will be twice that for individuals.
Goes into effect: 2007 (Phased-in over five years)

Medicare Advantage Program

Effective immediately, Part C Medicare + Choice plans are now known as "Medicare 
Advantage" plans. These plans will be required to offer an option with Part D 
drug coverage starting in 2006. New regional preferred-provider organizations 
(PPOs) will be established to compete with local Medicare Advantage plans. PPOs 
allow individuals to choose from doctors and providers on a plan's "preferred" 
list, but usually don't require them to get a referral. The regional PPO plans 
must offer at least Medicare Part A and Part Benefits. Name change already in 
effect; drug coverage requirement goes into effect in 2006.

Voluntary Chronic Care Improvement Programs 

The new bill established a voluntary chronic care improvement program that will 
be tested in 10 locations throughout the country over the course of three years. 
The program is available to anyone who has a chronic condition, such as 
congestive heart failure, diabetes, chronic obstructive pulmonary disease, 
stroke, prostrate and colon cancer, hypertension, and other appropriate 
conditions. The program will provide education for people with Medicare, their 
caregivers and family members, as well as providers; coordination of health care 
services;
clinical collaboration among physicians and other providers; and use of 
monitoring technologies. If successful, this program will be implemented 
nationwide.

To be available by the end of 2004 at the 10 locations.

For more information on the
MMA, visit our Web site at
www.MedicareEd.org!
Beneficiary Share Income *
25% (current percentage) Under $80,000
35% $80,000 - $100,000
50% $100,000 - $150,000
65% $150,000 - $200,000
80% Over $200,000

CENTER FOR MEDICARE EDUCATION
2519 Connecticut Avenue, NW
Washington, DC 20008-1520
Phone: 202-508-1210
Fax: 202-783-4266
Email: info@MedicareEd.org
Web site: www.MedicareEd.org
A project of the American
Association of Homes and
Services for the Aging with
funding from the Robert Wood
Johnson Foundation.