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Posted: July 29, 2008

How New Medicare Changes Impact Elderly

While much of the attention surrounding the new Medicare bill, which first was vetoed by President Bush and then overruled by Congress into law, centered on eliminating cuts in doctor payments, the directive also improves certain areas of coverage for the nation’s elderly while cutting back in others.

The improvements generally will be phased in over several years. They include lower out-of-pocket costs for mental-health services, first-time payment coverage for some widely used anti-anxiety and sleep drugs, and a focus on preventive health care that includes making it easier and less expensive for participants in the federal insurance program to get a physical checkup.

On the minus side, Medicare beneficiaries who have counted on private insurance plans under the Medicare Advantage umbrella will see a reduction in the number of doctors they’re allowed to see.

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The Medicare bill became law this month when Congress overrode a veto of the bill by President Bush. The President opposed the bill primarily because of the cutbacks in the Medicare Advantage private insurance program. Overall, the new law is expected to add about $20 billion in federal expenditures over the next five years.

In a nutshell, here are the major improvements included in the plan:

Mental Health Coverage. The co-pay for mental health coverage will gradually drop over several years to 20% from the current level of 50%. At 20%, mental health coverage, including therapy, will be on a par with medical doctor visits.


Drug Coverage. The elderly will see two new categories of drugs added to their Medicare drug benefit. While the change still five years off, taking effect in 2013, seniors then will have coverage under certain conditions for anxiety and sleep-aid drugs. One category is benzodiazepines, a class of widely used anxiety drugs that include Xanax and Valium. The other category to gain coverage is barbiturates, which are typically prescribed as sleep aids and anti-convulsants. But there’s a catch -- Medicare coverage in these categories will be limited to patients suffering from conditions such as cancer, epilepsy or a chronic mental-health condition. Last year, about 51 million benzodiazepine prescriptions were written in the United States.


Preventive Care. New Medicare members have had six months after they enroll to receive a fully-covered physical examination, but the new law extends that time to a full year after enrollment. Also, the cost of the initial physical will no longer be counted against a Medicare participant's annual deductible, which is currently $135. Also, beginning in 2009, Medicare will have more latitude in determining which preventive services to cover, rather than having to receive congressional approval, as has been the case. Observers say intensive weight-loss counseling to reduce obesity will be high on Medicare’s list.

In addition to these changes for patients, doctors will be on the hook for changes, too, as the new Medicare law encourages more doctors to write electronic prescriptions, rather than use traditional paper scripts. If they do, the doctors using the electronic prescription system will receive higher Medicare payments, and later, those who don’t convert to the process will actually see their payments drop. The idea is that electronic prescriptions are more efficient, less expensive to process and less susceptible to fraud.

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