Ethics Toolbo: Medicare Part D, Healthcare Literacy, and the Consumer


July / August 2005

Ethics Toolbox

Medicare Part D, Healthcare Literacy, and the Consumer

The complexity of the Medicare Part D drug benefit can be grasped when one tries to navigate the hundreds of pages available on the Centers for Medicare & Medicaid Services (CMS) Web site. In planning the Part D benefit, CMS has underestimated the burden on beneficiaries and providers to effect this change in a safe and timely manner. We foresee significant challenges in the coming years.

January 2006 will herald the start of this new Medicare benefit, which will dramatically impact the entire healthcare system. Significant healthcare information overload will send many of the over 26 million beneficiaries to their physician’s office for help. Physicians will have an unprecedented burden to review medications, adjust treatment regimens, and write new prescriptions for patients. Ironically, this overload occurs even though the AMA, IOM, and JCAHO have highlighted the importance of healthcare literacy issues, which have been essentially ignored in this legislation. Controversy is already brewing in anticipation of potential problems.

Eager to apply marketplace models to healthcare, CMS is gearing up. Hundreds of new employees have been hired to scrutinize each Part D formulary submission to ensure it contains a suitable range of drugs across multiple medication classes. CMS Webcasts with state governments and Medicaid programs have already begun. However, speed and deftness are not in the lexicon of a government that develops policies replete with problems that they do not see as acute, emergent, debilitating, or life-threatening. For policymakers, time and trial and error are used to iron out the wrinkles. Meanwhile, clinicians in the trenches have only seconds to deal with life and death issues. When we have an emergency in the hospital, we use the stairs rather than waiting for the elevator. Time is of the essence in making Part D work right the first time.

One of the more shortsighted elements of this transition involves restructuring the appeals process. Beneficiary access will be challenged, as administrative hearings will be consolidated from the current 140 Social Security offices to five national centers. One would think that in light of anticipated increases in appeals with Part D, government would ensure rather than thwart access. Not all patients will have access to videoconferencing and the Internet. With such radical change involving those who are most fragile and at the highest risk, we should increase, not reduce access for timely resolution of issues. Part D plans will need to resolve appeals in a timely manner while rolling out this extensive benefit. Let us hope this transition was not driven solely by cost.

Questions about Part D and appeals about medications are going to be significant. Patients’ current rates of medication non-compliance and failure to fill prescriptions are significant. Many already have trouble navigating the intricacies and layers of the healthcare delivery system. Few patients will know the system well enough to fine-tune their choices of a Part D program. Now, we expect the patient who doesn’t eat breakfast and is unsure of when to take the first dose of medication taken “one hour before meals” to understand the differences between various plan formularies. Assuming that the average patient will be able to make an informed and knowledgeable choice about the formulary is unrealistic, if not absurd! It’s one thing to click on a Web site to decide whether you’re going to spend $49 or $79 to fly to Orlando. It’s an entirely different process for patients with limited health literacy to click through a Web site to review medications and make a decision about the benefits, side effects, potential drug-drug interactions, and cost implications of various therapeutic regimens. Formularies are complex processes, which can range from transparency and easy access to rigid and secretive opacity. Will patients know that chemotherapy and biologicals infused in the physician office are covered by Part B and may not be included on the Part D formulary? Will patients know how to venture through the intricacies of their Part B plan’s Local Coverage Determination policy to determine coverage of specific drugs? Does CMS expect physicians will have enough time to assist patients through this transition? Perhaps those at CMS who have been driving this transition need a reality check.

Reimbursement Discrepancies
Our current reimbursement methodology is flawed. We inadequately reward physicians for providing those cognitive services to keep people well. Meanwhile, Medicare encourages the system to keep people sick by paying for diagnostic tests and surgical procedures in a manner that rewards inefficiencies and higher cost settings. To date, CMS and most insurers have refused to recognize the cognitive contribution of pharmacists who are best equipped to address the literacy issues and counsel patients through this transition. Medicare does not pay for beneficiaries to receive services in infusion centers, which can offer a safe and high-quality alternative to costlier services in the outpatient hospital setting. Part B does not pay for pharmacists to provide medication therapy management services for patients receiving highly complex and often toxic medications.

The safety issues attendant to continuity of pharmaceutical care and the difficulty of ensuring rapid appeals cannot be underestimated. If patients are overwhelmed and the system is overtaxed, errors and omissions will occur, putting people at discomfort if not at a grave disadvantage. Change is tough, and complex change is tougher. Those who have been well managed for years may need to be switched and adjusted on new medications due to the patient’s Part D formulary design. Physicians will need to become adept at knowing which drugs contribute to the True Out of Pocket Costs (TROOP) for each patient and at what price. Perhaps this will be the carrot that encourages the widespread adoption of e-prescribing and electronic health record initiatives.

When one considers the impact of the 6.5 million dual eligibles, the potential for complications accelerates. Millions of these dual eligible Medicaid-Medicare patients reside in nursing homes and have behavioral health issues and/or low healthcare literacy and competency. An estimated 2.4 million Medicare beneficiaries with incomes low enough to qualify for additional subsidies under Part D will be deemed ineligible for subsidies — 46 percent of these beneficiaries are widows or widowers. Most patients are pharmaceutically challenged, due to their lack of sophistication about the intricacies of the healthcare delivery system. Who will look out for these people?

Biotechnology drugs pose further challenges. Drugs that are administered in a physician’s office are covered under Part B, while similar agents in the same therapeutic class that are self-administered are covered under Part D. There is no formulary process for drugs covered under Part B. There is no process for “case managing” a standard Medicare beneficiary to assist them to determine the safest and most cost-effective setting to receive a medication. The Medicare reimbursement methodology is flawed by counting the costs of these physician-administered medications that have far outpaced growth in actual services provided by physicians against payments available to healthcare professionals. With hundreds of biotechnology agents scheduled to come to market by the end of this decade, representing a more than $50 billion per year hit, the burden to the payment methodology cannot be sustained. These issues need to be addressed now by Congress.

Our goal is not to be rabble rousers. Physicians and employers need to be aware of these issues in order to prepare for the Part D benefit. Patient education regarding the Part D benefit needs to begin as soon as possible. Employer benefit retiree plans, stand-alone Part D plans, and Medicaid need to tackle these challenges with sensible and timely strategies for moving forward. Good planning supersedes luck. There is an opportunity to do good for our patients, which we must approach in a coordinated, not piecemeal, manner.

Dennis Robbins ( is a healthcare innovator, author, and thought leader. He is president of Integrated Decisions, Ethics, Alternatives, and Solutions (IDEAS) and co-founder of the Policy Group. Robbins has worked extensively on the interface of ethics with quality, liability, payment systems, health law, and health policy. He has served as an advisor on ethics and related issues for major national organizations, associations, law firms, hospital systems, and government. Robbins holds a PhD in philosophy from Boston College and a postdoctoral master’s degree in public health from Harvard. He is a member of the Editorial Advisory Board for Patient Safety and Quality Healthcare.

Joel Brill (, is chief medical officer of Predictive Health, LLC. Brill is nationally recognized for his expertise in coding and reimbursement methodologies coupled with service on national technology assessment and pharmacy and therapeutics committees. He has over a decade of experience in clinical medicine, medical management, predictive modeling, and pay-for-performance systems with employer groups, health plans, and medical groups. He is an advisor to the AGA on reimbursement issues, the American Medical Association (AMA) RBRVS Update Committee (RUC), the CPT Editorial Panel, the Practice Expense Review Committee (PERC), and the AMA Physician Consortium for Performance Improvement.