States Ask SCOTUS To Hear ‘Clawback’ Provision Case
Five states on Friday requested permission to file a lawsuit against HHS in the U.S. Supreme Court, alleging they are being forced by the federal government to fund the Medicare prescription drug benefit in violation of the Constitution, the AP/Seattle Post-Intelligencer reports (Holland, AP/Seattle Post-Intelligencer, 3/4).
The suit challenges the so-called "clawback" provision of the drug benefit. Under the provision, Medicare will assume the prescription drug costs for dual eligibles, but states will have to pay the federal government as much as 90% of the estimated amount they would have spent on Medicaid coverage for medications for residents dually eligible for Medicare and Medicaid. The rate will decrease to 75% over time.
Attorney General Bill Lockyer (D) on Feb. 23 announced that California would withdraw from the lawsuit after the Bush Administration earlier in February announced a new calculation. California would have lost $130 million over two years under the original calculation, but the administration of Gov. Arnold Schwarzenegger (R) said the state will save $60 million under the new calculation (California Healthline, 2/24).
The request for permission to file the suit with the Supreme Court was filed by the attorneys general of Texas, Kentucky, Maine, Missouri and New Jersey. Attorneys general from Alaska, Arizona, Connecticut, Kansas, Mississippi, New Hampshire, Ohio, Oklahoma, South Carolina and Vermont submitted a supporting brief. State lawsuits against the federal government can be filed with a lower court or the Supreme Court, which can refuse to hear the case.
Texas Attorney General Greg Abbott (R), the lead attorney in the case, said in a statement, "The federal government has placed what amounts to a direct tax upon Texas and other states in violation of the U.S. Constitution."
Attorneys general for states filing the brief in support of the lawsuit wrote that the drug benefit "establishes a dangerous precedent that threatens" states' independence.
CMS spokesperson Gary Karr said states eventually will save money under the Medicare drug benefit, adding, "That's why very few states decided to join this lawsuit, despite requests for them to do so" (AP/Seattle Post-Intelligencer, 3/4).
At least 1.8 million Medicare beneficiaries have enrolled in AARP's Medicare prescription drug plan, making the 2003 Medicare law "more than just a legislative victory" for the group and "reviv[ing] charges of a conflict of interest between AARP's roles as a public policy advocate and a private business enterprise," the Los Angeles Times reports.
AARP, the "largest, most influential body in Washington representing seniors," endorsed the 2003 Medicare law during congressional debate over the creation of a Medicare drug benefit, the Times reports. AARP last year announced that it would provide prescription drug coverage to Medicare beneficiaries through United Health Group's MedicareRx plan.
Now, with enrollment in MedicareRx accounting for more than half of total enrollment in Medicare-related plans offered by UnitedHealth, AARP could collect "tens of millions of dollars" from its sponsorship of the plan, according to the Times.
AARP, which also offers other types of insurance, typically charges insurers annual fees of about 4% of premiums collected, the Times reports.
Larry Noble, executive director of the Center for Responsive Politics, said, "Usually, interest groups are lobbying for legislation that will financially assist their members. Here, you have a situation where a group is lobbying for legislation that they argue benefits their members, and as it turns out, it's also going to benefit them."
Rep. Pete Stark (D-Calif.), said AARP "can't have it both ways," adding, "You can't claim to be a disinterested advocate if you're peddling insurance to make a profit and pay your overhead."
AARP spokesperson Steve Hahn said, "Any money AARP makes will get plowed back into the services our members want" (Alonso-Zaldivar, Los Angeles Times, 3/4).
In related news, Karr on Friday "downplay[ed]" reports that many Medicare beneficiaries who have changed drug plans "are now actively enrolled in two plans simultaneously," CQ HealthBeat reports (Reichard, CQ HealthBeat, 3/3).
On Wednesday, the New York Times reported that "tens of thousands" of beneficiaries are actively enrolled in two plans, a problem that appears to primarily affect beneficiaries who qualify for a low-income subsidy. In a recent memo to insurers, the Bush administration said that government "processing systems have not always sent the enrollment and disenrollment information to the appropriate plans" when beneficiaries switch plans. As a result, "many (possibly all) of the beneficiaries who switched plans are active on enrollment files at multiple plans," the memo said.
In addition, some "[p]lans have paid claims for beneficiaries who are no longer enrolled in their plan," the memo said. The issue has raised concern that beneficiaries who are eligible for the subsidy mistakenly will be charged premiums or high copays (American Health Line, 3/1).
According to Karr, it is unclear how many beneficiaries are simultaneously enrolled in two plans, but the "vast majority" of beneficiaries who have switched plans will not experience problems by being enrolled in two plans. He added that beneficiaries are less likely to become inadvertently enrolled in two plans at the same time if they change plans early in the month (CQ HealthBeat, 3/3).