Medicare Part D-Outlook for 2007

The Medicare Modernization Act's most significant achievement is the introduction of Medicare Part D, a wide-ranging new outpatient prescription drug benefit. The massive increase in the number of Medicare Part D plans in 2007 demonstrates the health insurance industry's commitment to this new program. Lower premiums, zero deductibles, and an expansion of coverage in the coverage gap are all good news for beneficiaries. However, these changes reflect the intense struggle among insurers to gain an advantage in a highly competitive market.

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Ninety percent of Medicare beneficiaries are currently enrolled in a Medicare Part D plan or equivalent. However, the number of Medicare Part D plans will increase sharply in 2007. What strategies are insurers employing to gain a competitive advantage in this market?

The coverage gap is one of the most contentious features of Medicare Part D. Beneficiaries face unaffordable drug prices, and plans offering drug coverage in the gap carry steep premiums. The pharmaceutical industry is not immune to the effects of this initiative. How is the coverage gap threatening manufacturers of branded drugs? Medicare beneficiaries with special needs were historically viewed as an unwelcome liability for health plans. However, the Medicare Modernization Act introduced a risk adjustment model that offers greater rewards for managing an increasing number of chronic disorders through special needs plans (SNPs). What is the projected outlook for SNPs? Which insurers are at the forefront of this trend? The Medicare fee-for-service system is structured and financed to manage acute care episodes, not to manage and support individuals with progressive chronic diseases. However, a demonstration project called Medicare Health Support aims to improve the quality of care for beneficiaries who have multiple chronic illnesses. What are the components of this initiative? What is the outlook for the Medicare diseasemanagement market?

Scope
Medicare Modernization Act: overview and key changes in 2007.
Current trends in available plans: prescription drug plans, Medicare advantage plans, employer-sponsored health plans, special needs plans, and Medicare medical savings accounts.
Disease management: details the development of a demonstration project called the Medicare Health Support Program.
Outlook and implications: how these trends are poised to affect the biopharmaceutical industry.

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