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