News and Commentary

Pharmacy benefits level off in Medicare HMOs


To stay competitive, Medicare HMOs have added supplemental benefits, including pharmacy, to their basic plans. But last year, the share of Medicare plans offering prescription-drug coverage declined slightly; demand-driven expense has forced many HMOs to re-evaluate the pharmacy benefit. One of the industry's solutions: No Medicare HMOs will have a zero-copayment for the pharmacy benefit next year — a decision that earned the industry a scolding from the White House. The industry shot back: Health Insurance Association of America President Charles Kahn said it took "chutzpah" for the administration to criticize HMOs, given payment constraints they face from the Balanced Budget Act.

SOURCE: KAISER FAMILY FOUNDATION/BARENTS GROUP ANALYSIS OF HCFA DATA, 1999