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HMO drug costs are rising

Finding the right Medicare program can be difficult

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If you're among the more than 6 million older Americans who joined a Medicare HMO to obtain affordable prescription drug coverage, be prepared to pay more next year.

It's no secret that most retirees are digging deeper into their pockets to buy prescription drugs — a benefit not covered by traditional Medicare.

Drug costs are rising nearly 18 percent a year, or about three times more than overall health care spending. But because the government will limit the payment increases it makes to Medicare HMOs to 2 percent next year, plans are being financially squeezed.

As a result, health-care companies will continue their flight from Medicare. In early July scores of companies were poised to announce that, beginning in 2001, they would cut back on the number of Medicare HMOs they operate or drop out of Medicare altogether. The HMOs that remain will most likely raise monthly premiums and reduce drug benefits.

If you are shopping for prescription drug benefits through an HMO, you need to do more than compare the annual premiums and total drug coverage offered by the plans in your area.

Medicare HMOs are adopting a multitude of cost-cutting strategies, and it is becoming harder to compare and pick the best plan for your health-care needs.

Compared with last year, about 3 million fewer Medicare beneficiaries have access to an HMO where they pay only their Medicare Part B payment to obtain health care services (including prescription drugs).

Medicare HMO drug-benefit programs are leaner than they were a few years ago and will become leaner still. More than three-fourths of Medicare HMOs currently restrict what they will pay for enrollees' drugs each year, and many will ask them to pay additional fees beginning next year.

Almost nine out of 10 Medicare HMOs have imposed annual dollar limits on brand-name and generic drugs. In addition, nearly one in three HMOs now caps drug expenditures at $500 or less annually per person.

As recently as 1999, roughly a million enrollees had prescription-drug coverage that didn't require them to make a co-payment when they picked up their prescriptions.

This year, for the first time, all HMO enrollees are making co-payments for their drugs.

For 2001, it's safe to predict that most HMO participants will not be offered the same drug benefit they're getting now, says Alan Mittermaier, president of HealthMetrix Research, in Columbus, Ohio.

NEXT: Questions to ask your Medicare HMO.