Summary

More than 90 percent of the 6 million beneficiaries enrolled in Medicare+Choice have outpatient drug coverage. However, beneficiaries may not be aware before they enroll in Medicare health maintenance organizations (HMO) of how the HMOs manage the cost of providing drugs through formularies, or lists of drugs that they prefer that their physicians prescribe. Comparing HMO plans is difficult for beneficiaries because the plans vary widely in the drugs they cover in their formularies, how they manage them, the copayments they require, their annual coverage limits, and the methods they use to notify beneficiaries of formulary changes and to consider exceptions from formulary changes. Beneficiaries in some plans may not learn about formulary changes until they are at the pharmacy counter. Some plans also make it difficult for physicians to obtain an exception to allow patients to remain on their existing medication at no additional cost if it is dropped from the formulary. This testimony summarizes the July 1999 report, GAO/HEHS-99-166.

GAO noted that: (1) evaluating the prescription drug benefits Medicare HMOs offer is an important but challenging undertaking for prospective enrollees; (2) to determine which plan best meets their needs, beneficiaries need to assess how HMOs' use of formularies can affect their drug benefit; (3) comparing plans can be difficult because the types of formularies HMOs use and the way in which they are managed differ considerably; (4) the choices beneficiaries make can have a significant impact on the value of their drug benefit and their out-of-pocket costs; (5) plans vary widely in the drugs they cover on their formularies, the copayments they require beneficiaries to make, and the annual limits they set on the beneficiaries' coverage; (6) further, beneficiaries in some plans may not learn about formulary changes until they are at the pharmacy counter; and (7) some plans also make it difficult for physicians to obtain an exception to allow patients to remain on their existing medication at no additional cost if it is dropped from the formulary.