Senators To Introduce Bills To Reimburse States for Costs Related to Medicare Prescription Drug Benefit Problems
Two groups of senators have announced plans to introduce bills on Friday that would require the federal government to reimburse states that are covering the costs of drugs for Medicare beneficiaries who have had difficulty obtaining medications under the new Medicare drug benefit, CQ Today reports (Schuler, CQ Today, 1/19).
One bill -- sponsored by Sens. Norm Coleman (R-Minn.), Dianne Feinstein (D-Calif.), Frank Lautenberg (D-N.J.), Charles Schumer (D-N.Y.) and Olympia Snowe (R-Maine) -- would require the federal government to reimburse states for drug costs plus interest (Heil, CongressDaily, 1/19). The bill, which was outlined by Lautenberg at a Thursday news conference, is also supported by Sens. Mike DeWine (R-Ohio) and Robert Menendez (D-N.J.), the Newark Star-Ledger reports (Campbell, Newark Star-Ledger, 1/20).
Under the legislation, states would be reimbursed through a reduction in the amount owed to the federal government by each state under the "clawback" provision of the drug benefit (Snowbeck, Pittsburgh Post-Gazette, 1/20). Under the clawback provision, Medicare will assume the prescription drug costs for state residents dually eligible for Medicare and Medicaid, but states will have to pay the federal government as much as 90% of the estimated amount that they would have spent on Medicaid coverage for medications for dual eligibles; the rate will decrease to 75% over time (California Healthline, 10/18/05). The bill would reduce the clawback amount by the amount the state spent on ensuring access to medications for beneficiaries under the drug benefit (Pittsburgh Post-Gazette, 1/20).
According to a survey released Wednesday by the National Association of State Medicaid Directors, at least 26 states are covering the costs of medications for beneficiaries dually eligible for Medicare and Medicaid who have been unable to obtain medications under the drug benefit (California Healthline, 1/19).
A separate bill by Sens. John Rockefeller (D-W.Va.) and Hillary Rodham Clinton (D-N.Y.) would reimburse the states and Medicare beneficiaries who have paid out of pocket for medications because of problems with the drug benefit (CQ Today, 1/19). The bill also would reimburse pharmacies for costs incurred because of problems with the new benefit and require insurers to provide at least a one-month supply of medication to beneficiaries, the Wall Street Journal reports (Lueck, Wall Street Journal, 1/20).
Meanwhile, Reps. Jeb Bradley (R-N.H.) and Benjamin Cardin (D-Md.) plan to introduce legislation in the House that would reimburse states, CongressDaily reports (CongressDaily, 1/19). In addition, Sen. Debbie Stabenow (D-Mich.) said she plans to propose legislation that would establish a Medicare drug plan administered by CMS instead of private insurers, an approach she said would be "straightforward" (CQ Today, 1/19).
Snowe said, "States should not have to wait to be compensated by insurance companies for expenses incurred as a direct result of CMS' errors. The federal government should live up to its new responsibility and reimburse states for these costs" (Reichard, CQ HealthBeat , 1/19).
Lautenberg said, "Regardless of how we felt about the [2003 Medicare] bill, I think all senators can agree on one thing: The flaws in the start-up of this program are unacceptable" (Newark Star-Ledger, 1/20). He added, "It must be crystal clear that the federal government needs to repay these states that are bailing them out."
Rodham Clinton said the drug benefit is an "absolute first-class piece of evidence of how the Republicans are doing their business and not the business of the American people," adding that it will "lead to the deterioration of Medicare across the board" (CQ HealthBeat , 1/19).
CMS spokesperson Gary Karr said, "We're going to work with plans to make sure they'll pay claims." He said CMS does not "have the authority to simply reimburse out of Medicaid ... that doesn't mean states will have to go to the plans themselves" (Wall Street Journal, 1/20).
CMS issued a statement on Thursday saying, "We're working with the states and the plans because we all share the same concerns -- we want beneficiaries to get the prescription drug medications they need" (Newark Star-Ledger, 1/20).
Senate Finance Committee Chair Charles Grassley (R-Iowa) said in a statement, "It's too early to commit to any legislative options because it's unclear whether any legislation is needed. Let's focus on the administrative remedies now because they'll deliver help a lot faster than any legislation." Grassley continued, "States aren't responsible for these prescription drug costs," adding, "The plans are under contract to provide the coverage, and they're obligated to reimburse the states for the cost of prescriptions that should have been paid for under the drug benefit" (CQ Today, 1/19).
Karen Ignagni, president of America's Health Insurance Plans, said, "[W]e are committed to making the states whole up to our obligations," adding that reimbursement to the states by the drug plans would take "weeks" rather than "months" (CQ HealthBeat , 1/19).
David Parrella, vice chair of NASMD, said, "They've basically told us we're going to get reimbursed by the plans. But we have no contract with the plans, (the federal government) does. So, what's their incentive to be prompt and cooperative with us?" Parrella said reimbursements made by drug plans to some states might be over 10% less than the amount the states spent on ensuring access to medications for beneficiaries (Pittsburgh Post-Gazette, 1/20).
Robert Hayes, president of the Medicare Rights Center, said, "Any member of Congress, Democrat or Republican, who does not see this disaster will be in trouble" (Newark Star-Ledger, 1/20).
The following summarizes other coverage of Medicare issues.
CQ HealthBeat: CMS on Thursday said it will propose a regulation later this month that would freeze payments to long-term care hospitals for fiscal year 2007 at fiscal year 2006 levels. CMS said the proposal, which will be published in the Federal Register on Jan. 27, reflects large profit margins that the facilities are receiving from care for beneficiaries (CQ HealthBeat , 1/19).
CQ HealthBeat: A new study released on Thursday by the National Health Council finds that Medicare beneficiaries with one chronic medical condition can save about $400 annually under the Medicare drug benefit, while beneficiaries with at least four chronic conditions can save $1,774 annually. The study, which analyzes CMS data, does not include data on dual eligibles or beneficiaries with employer-sponsored drug coverage (CQ HealthBeat , 1/19).
Minneapolis Star Tribune: Fourth-quarter earnings for UnitedHealth Group -- which is providing Medicare drug coverage for 4.3 million beneficiaries -- increased 18% to $870 million, largely because of an "immensely positive" response to the Medicare drug benefit, Wiliam McGuire, UnitedHealth chair and CEO, said. The company expects total enrollment this year to reach as much as six million, contributing to total revenue of $5 billion, McGuire said (Phelps, Minneapolis Star Tribune, 1/20).
- Bergen Record: The Record on Friday examined a cap on physical therapy, speech therapy and occupational therapy services provided at free-standing practices that took effect on Jan. 1. According to the article, the budget-balancing act of 1997 imposed annual caps of $1,740 on physical, speech and occupational therapy. The caps have been delayed three times by Congress, but the most recent delay expired on Dec. 31, 2005. Rep. Frank Pallone (D-N.J.) has proposed legislation that would repeal the therapy caps (Washburn, Bergen Record, 1/20).
PBS' "NOW" on Friday is scheduled to include an interview with Judith Stein, founder and executive director of the Center for Medicare Advocacy, about the Medicare prescription drug benefit (Brancaccio, "NOW," PBS, 1/20). The complete transcript will be available online after the broadcast. Audio of the program in mp3 format and video of the program RealPlayer will be available online after the broadcast.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.