HHS Secretary Says He Will Adhere To General Accounting Office Decision on Medicare Advertisement
HHS Secretary Tommy Thompson on Thursday said that he would withdraw a television advertisement for the new Medicare law (HR 1) in the event that the General Accounting Office determines that payment for ads would amount to an illegal use of federal funds, the Washington Post reports (Washington Post, 2/13). The ad is part of a larger $22 million promotional campaign, which also includes print and radio ads, to inform beneficiaries about reforms to Medicare and address some criticisms about the law. HHS will pay for the campaign with part of the $1 billion in federal funds allocated to implement reforms to the Medicare. At the request of some Democrats, the GAO has launched an investigation to determine whether the Bush administration developed the ad for "political purposes." Some Democrats maintain that the ad "misrepresents what the law does" to help Bush in his re-election campaign (California Healthline, 2/12). The 30-second TV ad -- titled "Same Medicare. More Benefits." -- will cost about $9.5 million and will air through March on network and cable television. Sen. Kent Conrad (D-N.D.) said to Thompson at a Senate Budget Committee hearing on Thursday that the ad "reads like a political spot." Thompson "defended the content of the ad" but added that he "would abide by the outcome" of the GAO investigation, according to the Post (Washington Post, 2/13).
Two more senators who voted in favor of the new Medicare law on Wednesday "joined the chorus of those agitating to reopen it this year" as they criticized the new cost estimate for the law released by the Bush administration last month, CongressDaily reports (Rovner, CongressDaily, 2/12). According to the White House Office of Management and Budget, the Medicare law will cost $534 billion over the next 10 years, $134 billion more than estimated by Congressional Budget Office. The fiscal year 2005 budget proposal President Bush released earlier this month cites the higher estimate (California Healthline, 2/11). At the Senate Budget Committee hearing, Conrad and Sen. Jeff Sessions (R-Ala.) said that the new estimate requires "immediate action," according to CongressDaily. Sessions, who called himself "very distressed" over the new estimate, said, "It is very important that we come back and look at this bill, perhaps as part of this year's budget process." He added that lawmakers could raise copayments that beneficiaries will have to make for prescription drugs under the Medicare law or make other revisions to reduce the cost of the legislation. Conrad also questioned Bush administration estimates that coverage for Medicare beneficiaries who enroll in private health plans will cost more than for those who remain in traditional, fee-for-service Medicare. Thompson attributed the higher estimate to a decision by Medicare conferees to reject the "administration's proposal to allow only the three plans with the lowest bids in each region to participate" in the new prescription drug benefit, CongressDaily reports. Conrad said that lawmakers should reconsider the decision (Rovner, CongressDaily, 2/12). In related news, Sen. Max Baucus (D-Mont.) on Thursday said he planned to introduce legislation that would require CMS actuaries to "share information with lawmakers," CongressDaily reports. According to Baucus, Medicare conferees could not obtain information about the cost of the legislation during negotiations because Bush administration officials would not allow the release of such information (CongressDaily, 2/12).
Officials for New Jersey-based Merck on Thursday announced that the company would provide medications at no cost to low-income Medicare beneficiaries who participate in the new prescription drug discount card program after they use their $600 annual subsidy from the federal government (Loyd, Philadelphia Inquirer, 3/13). Under the discount card program, Medicare beneficiaries with annual incomes less than $12,123 for an individual and $16,362 for a couple will receive a $600 annual subsidy to help cover their prescription drug costs (California Healthline, 2/10). Under the Merck program, which will continue until the full Medicare prescription drug benefit begins in 2006, Merck will reimburse discount card sponsors for company products, and the sponsors will reimburse pharmacies. The pharmacies may continue to charge Medicare beneficiaries a "modest" fee to dispense the medications, according to Margie McGlynn, president of U.S. human health for Merck (Philadelphia Inquirer, 2/13). Merck does not plan to offer a Medicare prescription drug discount card (Wall Street Journal, 2/13). Merck Chief Executive Raymond Gilmartin said, "Given the kind of medicines we have, which are chronic care drugs, the likelihood of exceeding the $600 cap is very high" (Bloomberg/Chicago Tribune, 2/13). Merck products include the anticholesterol medication Zocor and the arthritis treatment Vioxx. Robert Hayes, president of the Medicare Rights Center, said the Merck program is "a life-saving offer," but he raised concerns that number of beneficiaries who qualify for the program "will be far fewer" than estimated, the Inquirer reports. Pedro Rodriquez, executive director of the Pennsylvania-based Action Alliance of Senior Citizens, said, "This is the first drug company to do this for the Medicare card. I hope the rest of the drug companies will follow suit." He added that the group would ask physicians to prescribe more Merck medications because of the program (Philadelphia Inquirer, 2/13).
The Financial Accounting Standards Board on Wednesday in a "closely watched decision" said companies that provide prescription drug coverage for retirees "should follow the existing rules governing post-retirement benefit costs to account for the effects" of new Medicare subsidies, the Wall Street Journal reports (Wei, Wall Street Journal, 2/11). A provision in the new Medicare law, included to encourage employers to maintain prescription drug coverage for retirees, calls for the federal government in 2006 to begin to provide subsidies to companies to cover 28% of the cost of prescription drugs that exceed $250 for each retiree; the companies can receive as much as $1,330 per retiree each year (California Healthline, 2/3). Current accounting rules require companies to estimate the prescription drug coverage costs for retirees for which they will receive reimbursement from Medicare and other government programs to determine the future cost of such coverage. FASB last month decided to allow companies to decide whether they preferred to account for the new subsidies in their current financial statements or wait until the board established rules. Under the rules announced Wednesday, FASB said that companies should "book the amount of federal subsidy they expect to receive ... as a reduction of future benefit costs -- instead of as a stream of income from continuing operations," the Journal reports (Wall Street Journal, 2/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.