States Fight Against Payments to Federal Government To Help Fund Medicare Prescription Drug Benefit
Many states are "openly resisting" a requirement that they pay billions of dollars annually to the federal government to help finance the new Medicare prescription drug benefit, the New York Times reports. According to the 2003 Medicare law, states must make monthly payments to the Treasury Department to defray the cost of Medicare providing drug benefits to beneficiaries considered dually eligible for Medicare and Medicaid.
Beginning Jan. 1, 2006, Medicare will provide drug coverage to such individuals, who previously were covered through state Medicaid programs. Although the Bush administration says the payment requirement is explicit in the 2003 law, Texas Gov. Rick Perry (R), who is "leading the charge against the requirement," said CMS' interpretation of the requirement is inaccurate and that he objects to the idea in principle, the Times reports.
Perry, in a letter to governors and in a veto message accompanying a $444 million appropriation for the state's contribution for the next two years, wrote, "For the first time, state governments would be expected to directly finance federal Medicare benefits with state tax dollars. In effect, states will be billed on a monthly basis for the cost of federal services." Perry added that calculating the state's contribution, also known as a "clawback" payment, is "inherently unfair" because the formula was based on per capita spending in 2003 for state residents who are dual eligibles.
In New Hampshire, the state budget specifies that "no payments shall be made to the federal Medicare program, unless a court has determined that the provisions" of the 2003 law "are constitutional." Money for the Medicare requirement will instead be deposited in the state's rainy day fund. State Senate Majority Leader Robert Clegg (R) said, "We are not going to pay. ... We don't think it's constitutional for the federal government to commandeer our revenue. The federal government can print its own money. We can't." Many states have concluded that they will lose money under the law because they must give back most of the savings and costs will be added through new administrative positions, the Times reports.
However, the Bush administration maintains the states will save money because the federal government will be paying nearly all the drug costs for dual eligibles and most drug costs for retired state employees. Gary Karr, a CMS spokesperson, said, "That's the intent of the law, to save states money as Medicare picks up the cost of prescription drugs for those on Medicare and Medicaid. States cannot withhold their payments simply because they'd like a larger windfall" (Pear, New York Times, 7/4).
The following summarizes other news coverage on Medicare.
- Appeals process: HHS on Friday took control of the Medicare appeals process for individuals whose requests for coverage or reimbursement have been denied, the Pittsburgh Post-Gazette reports (Pittsburgh Post-Gazette, 7/2). HHS said it will work to provide more timely hearings. However, advocates for the elderly say the process, which relies on video conferences, is too impersonal, making it easier for appeals to be rejected (Washington Times, 7/2).
- Benzodiazepines coverage: Lawmakers on Friday said they will seek to add a category of drugs called benzodiazepines, used to treat anxiety and some other conditions, to the Medicare drug benefit, which currently will exclude coverage of such medicines, the Orlando Sentinel reports (Orlando Sentinel, 7/2).