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.

Last 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.

Until 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.

Beginning 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.

In 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 solution.

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.

“I 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.”