CMS Instructs Insurers on Supply Policy, Copay Caps Under Medicare Drug Benefit

CMS this weekend sent a directive to insurers that offer Medicare prescription drug benefit plans, instructing them that they are required to provide beneficiaries with a 30-day emergency supply of any drugs they were taking before the Medicare prescription drug benefit began Jan. 1, the New York Times reports. In addition, the directive says insurers "must take immediate steps" to ensure that no low-income beneficiary is charged more than $2 for a generic drug and $5 for a brand-name drug (Pear, New York Times, 1/16).

The directive states, "We must stress that delaying or denying the filling of initial prescriptions for new enrollees at point-of-sale ... is not consistent with the intent of CMS transition policy."

The directive also urges insurers to dedicate phone lines to pharmacists' calls about the drug benefit in order to reduce waits. Such phone lines "will reduce the wait times for beneficiaries and pharmacists in order to avoid any beneficiary leaving the pharmacy without prescriptions," the directive states (Dodge/Marta, Dallas Morning News, 1/16).

Jeff Flick, western regional administrator for CMS, said some pharmacists were unaware of the 30-day supply requirement. "The idea behind this is, we wanted to be sure that whatever they were taking in December, they can get in January," Flick said. He continued, "Once they have the first fill, now they have 30 days to talk it over with their doctor. The point is, everybody has time for this transition," adding that CMS held conference calls with pharmacists to advise them of the directive.

In addition, Flick said, "we gave guidance to all of the (drug) plans to please make sure all of the pharmacies that you contract with understand the first-fill commitment" (Girion, Los Angeles Times, 1/16).

CMS spokesperson Gary Karr said some beneficiaries who are dually eligible for Medicaid and Medicare might have encountered problems because of a glitch that removed some dual eligibles from the list of enrolled beneficiaries. Medicare officials sent an updated list of dual eligibles to insurers, he said, adding, "We are examining our systems to make sure there is not some hole where people are not getting picked up" (Dallas Morning News, 1/16).

Melissa Shannon, consumer health policy coordinator for Health Care for All, said, "I'm glad to see them take this step. I'm just not sure how much it will help" (Heldt Powell, Boston Herald, 1/17).

In related news, HHS Secretary Mike Leavitt said voluntary enrollment in the drug benefit increased by more than two million beneficiaries in the past month, the Wall Street Journal reports. In total, more than 23 million beneficiaries are enrolled in the drug benefit out of about 42 million who are eligible (Leuck, Wall Street Journal, 1/17).

By comparison, administration officials last month said about 21 million beneficiaries were enrolled in the program, about one million of whom had enrolled voluntarily (Freking, AP/Long Island Newsday, 1/16).

Leavitt said Medicare is covering more than one million prescriptions daily through the drug benefit. "What that tells me is the system is working for the vast majority of people," he said, adding, "There's a small group that is having trouble, and for that group is it a very serious problem." He said that officials expected a surge in enrollment after Jan. 1 but added that the increase of two million beneficiaries was "way beyond what we expected."

Leavitt said he continues to project total enrollment of 28 million to 30 million beneficiaries by May 15, when the enrollment period ends (Wall Street Journal, 1/17).

Meanwhile, many states have announced they will cover the costs of prescriptions for low-income beneficiaries "who would otherwise go without," the Washington Post reports (Connolly, Washington Post, 1/14). About 20 states -- including California, Minnesota, Ohio, Pennsylvania and every state in New England -- have announced such policies, according to the Times (New York Times, 1/16). Similar plans are in place in Arkansas, Illinois, New Jersey, North Dakota, South Dakota and Wisconsin (Washington Post, 1/14).

Minnesota Gov. Tim Pawlenty (R) said, "The new federal program is too complicated for many people to understand, and the implementation of the new program by the federal government has been awful" (New York Times, 1/16).

Shane Hix, spokesperson for Georgia Gov. Sonny Perdue (R), said, "The federal government didn't do an effective job communicating," but "[i]t's moving in the right direction now." Perdue does not plan to cover the cost of medications for low-income beneficiaries experiencing problems with the drug benefit, Hix said (Miller, Atlanta Journal-Constitution, 1/16).

In other Medicare drug benefit news, Charles Hallberg, president of MemberHealth -- which offers three national Medicare drug plans covering 700,000 beneficiaries -- sent a letter to pharmacists apologizing for problems with the program. Hallberg writes that pharmacists "have experienced unacceptable wait times for customer service because we were unable to keep up with the extraordinary call volume."

He continues, "We expected much more of ourselves, and certainly our performance in the first two weeks was a disappointment. For that, I want to personally apologize to each of you" (New York Times, 1/16).

Several pharmaceutical companies are ending assistance programs that provide reduced- or no-cost prescription drugs to low-income Medicare beneficiaries, the Wall Street Journal reports. The pharmaceutical companies -- which include Eli Lilly, Tap Pharmaceutical Products and the U.S. units of GlaxoSmithKline, AstraZeneca and Takeda Pharmaceutical -- say they are concerned that the assistance programs violate federal laws prohibiting companies from providing inducements to patients who receive government assistance to pay for medications.

Citing a recent guidance from the HHS Office of the Inspector General that advises them of the anti-inducement laws, the companies say they are concerned they will violate the regulations if they continue to maintain assistance programs now that beneficiaries can obtain prescription drug coverage through the Medicare drug benefit.

OIG says it did not rule the plans illegal and maintains that the companies are ending the programs on their own accord.

According to Verispan, a health care research company, at least one million beneficiaries who would have qualified for the assistance programs have incomes that exceed eligibility limits for obtaining government assistance with out-of-pocket costs under the drug benefit.

Earlier this week, the Pharmaceutical Research and Manufacturers of America issued a statement saying the OIG guidance makes "it more difficult for company assistance programs to help low-income Medicare beneficiaries within their current Patient Assistance Programs."

CMS Deputy Administrator Leslie Norwalk said no law prevents companies from providing assistance to beneficiaries who elect not to sign up for the drug benefit (Levitz/Armstrong, Wall Street Journal, 1/13).

Medicare's administrative costs amount to 5.2% of its claims costs when expenses are calculated through methods used by many private insurers, according to a study released Wednesday by the Council for Affordable Health Insurance, CQ HealthBeat reports. According to the study, Medicare's administrative costs typically are reported as about 2% of its claims cost.

Administrative costs for private insurers typically are 20% or higher, the report states. Medicare does not consider the cost of developing and implementing program policies, management costs, raising capital or processing claims, and pursuing fraudulent claims, according to the report (CQ HealthBeat, 1/11).

The complete report is available online. Note: You must have Adobe Reader to view the report.

The following summarizes newspaper features examining the drug benefit.

• "Nursing Homes Confront New Drug Plan's Hurdles": The New York Times examines the effects of the drug benefit at nursing homes and profiles health care providers and residents at Sarah Neuman Center for Healthcare and Rehabilitation in Mamaroneck, N.Y. According to the Times, 70% of the 1.4 million U.S. residents in nursing homes are dual eligibles, and the facilities are serving as "the first large-scale testing ground for the [drug benefit's] confounding new bureaucracy." At Sarah Neuman, which has 244 residents, staff members are "figuring out what happened" to coverage for 26 residents who were supposed to be enrolled in drug plans (Gross, New York Times, 1/15).
  


• "Medicare Situation Still Chaotic: With Some Drugstores Unaware of Emergency State Measures to Cover Medication Costs, Many Patients Are Turned Away for Lack of Money": The Los Angeles Times examines how "countless low-income [beneficiaries] have been turned away from druggists' counters or forced to come up with large sums of cash for crucial drugs." In California, many beneficiaries were unaware of the state's policy -- which was announced on Thursday -- to cover the costs of drugs for low-income beneficiaries who encountered problems paying for medications (Reitman/Hernandez, Los Angeles Times, 1/14).

Several broadcast programs reported on the Medicare prescription drug benefit:

• ABCNews' "World News Tonight": The segment includes comments from Hallberg; Leavitt; Pawlenty; California Gov. Arnold Schwarzenegger (R); pharmacists; and Medicare beneficiaries (Curley, "World News Tonight," ABCNews, 1/16). A related ABCNews story is available online.
  
  
• CBS' "Evening News": The segment includes comments from Leavitt and Pawlenty (Plante, "Evening News," CBS, 1/16). The complete segment is available online in RealPlayer.
  
  
• NBC's "Nightly News": The segment includes comments from Sen. Hillary Rodham Clinton (D-N.Y.); McClellan; Schwarzenegger; pharmacists; and Medicare beneficiaries (Lewis, "Nightly News," NBC, 1/13).
  
  
• NPR's "All Things Considered": The segment examines how Baltimore, Md., is implementing the benefit and includes comments from Stanton Ades, senior vice president for Neighborcare; Tamara Johnson, resident in preventive medicine at the University of Maryland; McClellan; Joshua Sharfstein, Baltimore city health commissioner; and pharmacists (Silberner, "All Things Considered," NPR, 1/13). The complete segment is available online in RealPlayer.
  
  
• NPR's "All Things Considered": NPR senior news analyst Daniel Schorr discusses the benefit (Schorr, "All Things Considered," NPR, 1/16). The complete segment is available online in RealPlayer.
  
  
• NPR's "Weekend Edition Saturday": The segment includes comments from Kimberly Belshe, secretary of health and human services for California; McClellan; Jude Walsh, Maine's pharmacy director; and pharmacists (Rovner, "Weekend Edition Saturday," NPR, 1/14). The complete segment is available online in RealPlayer.