Federal Government Will Pay States for Emergency Drug Benefit Costs
The federal government will reimburse California and other states for expenses they incur by covering the cost of prescription drugs for Medicare beneficiaries who have had difficulty obtaining medications under the new drug benefit, the Bush administration said on Tuesday, the New York Times reports (Pear, New York Times, 1/25).
As of Monday, California had spent more than $9.2 million to pay for more than 109,000 prescriptions, according to the Department of Health Services (Goldeen, Stockton Record, 1/25).
Gov. Arnold Schwarzenegger (R) said, "This is the right thing to do because Medicare is a federal program and it is the responsibility of the federal government not only to fix what is not working, but also to fully fund it" (Colliver, San Francisco Chronicle, 1/25).
Medi-Cal Director Stan Rosenstein will serve as the lead negotiator for all states seeking reimbursement from the federal government (Weaver Teichert, Sacramento Bee, 1/25).
At least 26 states are covering the cost of medications for beneficiaries dually eligible for Medicare and Medicaid who have been unable to obtain medications under the drug benefit, according to a survey released Jan. 18 by the National Association of State Medicaid Directors (California Healthline, 1/20).
CMS Administrator Mark McClellan on Tuesday reiterated a previously announced plan under which the federal government will work to ensure that insurers offering Medicare drug plans will reimburse states that have been covering the costs of drugs.
In addition, McClellan said, the federal government will reimburse states for administrative expenditures related to providing the drugs and for any difference between the amount the state paid for the drugs and the amount drug plans pay the states (San Francisco Chronicle, 1/25).
The administration is unsure how much the reimbursement program will cost. The program will continue until Feb. 15, by which point federal officials "assume that problems ... will be worked out," according to the New York Times (New York Times, 1/25).
McClellan said, "States that work with us to complete the transfer to (a Medicare drug plan) for their beneficiaries will be reimbursed." He added, "The states are not going to have to go out and work with each drug plan on their own" (San Francisco Chronicle, 1/25). McClellan said the drug plans would pay "the bulk of costs," with the federal government assisting states in collecting payments from insurers through a "reconciliation process" (New York Times, 1/25).
He added that the process of states receiving reimbursements "can start right away," saying, "We don't need legislation" (Schuler, CQ Today, 1/24).
HHS Secretary Mike Leavitt said the administration "will use the full array of administrative tools to ensure that the [drug] plans live up to the terms of their contract." He added, "Further, we would expect that poor performing plans would likely not be participating in upcoming years" (Boulton, Milwaukee Journal Sentinel, 1/24).
The reimbursement policy was announced as part of a seven-point plan outlined Tuesday by Leavitt and McClellan to address issues with the drug benefit (Alonso-Zaldivar, Los Angles Times, 1/25).
The plan calls for an increased number of customer service personnel at Medicare and at the drug plans, smoother transmission of patient information to the drug plans and a stronger surveillance system for monitoring drug plans' compliance with the drug benefit's rules.
Leavitt and McClellan said they are working to quickly address the issues and prevent further problems. They are scheduled to meet on Wednesday with members of the Senate Finance Committee to discuss the drug benefit (CQ Today, 1/24).
Sen. Frank Lautenberg (D-N.J.), co-sponsor of legislation that would require the federal government to reimburse states, said the policy announced Tuesday "is simply more red tape from the Bush administration" and "is no solution."
Lautenberg added, "If anything, today's announcement only makes the problems worse. ... Now the federal government wants the states to act as its bill collectors. The burden on the states keeps growing when the federal government should just do its job and pay back the states immediately" (Delli Santi, AP/Philadelphia Inquirer, 1/25).
Sen. Olympia Snowe (R-Maine) said, "I am pleased that we have assured that Maine and other states will be compensated for the costs, which they incurred providing -- without hesitation -- our most vulnerable citizens with access to their essential medications. I certainly hope that continued state payments won't be necessary much longer" (CQ Today, 1/24).
According to the New York Times, Snowe is a co-sponsor of the Lautenberg legislation.
Sen. Hillary Rodham Clinton (D-N.Y.) said the administration's announcement aims to prevent action by Congress on the issue. Clinton said the announcement is a sign administration officials "are feeling the heat, are finally recognizing the crisis they created in the design and implementation of the new drug benefit."
She added, "I am very skeptical that all the kinks in the new program will be worked out by Feb. 15" (New York Times, 1/25).
With many lawmakers concerned about potential problems occurring later in the year, Snowe has introduced a bill (S 2168) that would extend by six months the May 15 deadline for beneficiaries to enroll in the drug benefit without penalty. But Senate Finance Committee Chair Chuck Grassley (R-Iowa) said there is no need to extend the deadline, adding, "CMS can fix these problems using its authority under the law and can do it faster than if Congress comes in and changes the law" (CQ Today, 1/24).
The following summarizes reaction and actions by some states to the announcement.
- Florida: A "growing chorus of Democrats" are calling for the state to offer additional assistance to dual eligibles, according to the AP/Florida Times-Union. Jonathon Burns, spokesperson for state Health Care Secretary Alan Levine, said, "Stepping in to pay for copays is not going to address the underlying problem, and we're interested in a fix for the real problem" (Royse, AP/Florida Times-Union, 1/25).
- Georgia: Gov. Sonny Perdue (R) on Tuesday said the state is reserving $6.6 million to pay for prescriptions for dual eligibles, according to the Atlanta Journal-Constitution (Miller, Atlanta Journal-Constitution, 1/25). Shane Hix, spokesperson for Perdue, said the Georgia officials had been "concern[ed] initially about the state not being reimbursed by the federal government if it were to step in" (Corwin, Augusta Chronicle, 1/24).
- Maryland: The state House Health and Government Operations Committee held a hearing to address the drug benefit, with Democrats in the state Legislature calling for funding to hire additional caseworkers to help beneficiaries with the program. Paul Gurny, deputy secretary of the state Department of Health and Mental Hygiene, told the committee the state designated $2.2 million in December 2005 for dual eligibles to obtain advance refills and would not take additional action. Gurny said, "It may be [a problem] in other states, but it certainly isn't in Maryland" (Levine/Marimow, Washington Post, 1/25).
- New Hampshire: Gov. John Lynch (D) said the Feb. 15 deadline could pose problems. "New Hampshire citizens are still having problems getting their medications through Medicare," he said, adding, "The federal government should not set a deadline until it can prove that everyone who is eligible can actually get their prescriptions" (New York Times, 1/25).
- New Jersey: Officials "rejected" the administration's reimbursement plan, saying congressional action is needed to address problems with the drug benefit, the Newark Star-Ledger reports (Campbell, Newark Star-Ledger, 1/25). Gov. John Corzine (D) said New Jersey is spending $1.3 million daily to provide prescription drugs to beneficiaries (AP/Philadelphia Inquirer, 1/25). In total, the state has paid about $21.5 million to pay for 233,000 prescriptions, the Newark Star-Ledger reports. Corzine said the state set aside $20 million for the transition of the state's more than 140,000 dual eligibles from Medicaid to Medicare, but the state has "already eaten through that money" (Newark Star-Ledger, 1/25). Corzine said, "While I'm pleased that the administration has finally acknowledged the existence of this severe problem, the devil is in the details." He added, "I'm concerned that this is not a real solution to the problem and will, in fact, create more administrative and financial burdens for the state" (AP/Philadelphia Inquirer, 1/25).
In other drug benefit news, a coalition of nine organizations representing about 300 not-for-profit hospitals, health systems and community health centers sent a letter to 13 pharmaceutical companies urging them to continue programs that provide no-cost or reduced-cost prescription drugs to low-income individuals, CQ HealthBeat reports.
Several drug makers have indicated they plan to end the assistance programs because of concerns about an HHS Office of the Inspector General guidance advising companies about anti-inducement laws under the drug benefit.
The letter says that beneficiaries with annual incomes between 150% and 200% of the federal poverty level "will be responsible for the full cost-sharing responsibilities, and we fear many may simply be unable to afford Part D coverage" (Reichard, CQ HealthBeat, 1/24).
USA Today: USA Today on Wednesday examined how some health care advocates are expressing concern that few low-income Medicare beneficiaries have voluntarily enrolled in the drug benefit have been approved for a low-income subsidy, USA Today reports (Wolf, USA Today, 1/25).
Wall Street Journal: The Journal on Wednesday looked at how the drug benefit has created a "competitive scramble" among health insurers seeking to convince beneficiaries to enroll in their plans, the Wall Street Journal reports (Fuhrmans/Lueck , Wall Street Journal, 1/25).
Wall Street Journal: The Journal on Wednesday examined how the government and Medicare drug plans say "insufficient staffing" is a "key cause" of problems with the drug benefit (Fuhrmans/Lueck , Wall Street Journal, 1/25).