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Medicare Drug Program News
Fight Between Drug Plan Providers Investigated by
Medicare: Shows Why Seniors Get Frustrated
Senate committee debates safety of prescription drug
reimportation
 March 9, 2007 – A battle between two insurance
companies providing Medicare drug plans is being investigated by the
Centers for Medicare and Medicaid Services and serves as an example of
why many senior citizens are frustrated by the program. This year Humana
changed its Humana PDP Complete plan by discontinuing coverage of brand
name drugs for seniors in the doughnut hole. It also increased the
monthly premium to $80 per month. Now, another provider, Sierra Health
Services, says Humana has been urging their most costly customers to
switch to SierraRx Plus. This plan is new and does offer coverage in the
doughnut hole. Now, Sierra says it will close that plan at the end of
the year, according to KaiserNetwork.org yesterday.
CMS Investigates Allegations That Humana Encouraged
Its Highest-Cost Beneficiaries To Join Competing Medicare Prescription
Drug Plan
CMS
officials are investigating whether
Humana
inappropriately advised the highest-cost beneficiaries in its Medicare
prescription drug benefit plans to switch to plans provided by
Sierra Health
Services,
The Hill
reports. Sierra officials on Feb. 27 alleged such practices during a
conference call with investment analysts.
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Sierra President and CEO Anthony Marlon said that
an "extraordinary amount of drugs" were being used by some beneficiaries
enrolled in one of the company's new drug plans. The plan, called
SierraRx Plus, was introduced in January and provides full coverage of
brand-name and generic drugs during the Medicare drug benefit coverage
gap known as the "doughnut hole."
Marlon said, "We believed our level of adverse
selection was in part due to certain high-utilizing members being
referred to us by another PDP provider. We did not agree to these
referrals."
Marlon said the plan will be discontinued next
year. Sierra executives on Feb. 28 discussed the matter with CMS
officials.
Humana officials said beneficiaries were informed
about Sierra's new plan because the company was eliminating brand-name
doughnut hole coverage and increasing premiums to about $80 for its
Humana PDP Complete plan.
"Our goal was to make sure these people continued
to have access to prescription coverage," Humana Director of Media and
Public Relations Dick Brown said. He added that CMS had approved the
scripting that Humana representatives used in their calls to
beneficiaries.
Brown did not clarify whether the company contacted
each of the 400,000 beneficiaries enrolled in the Complete plan or only
those who had the highest drug costs.
Peter O'Neill, Sierra's vice president of public
and investor relations, said CMS has given Sierra executives a "clear
impression" that Humana's actions were not consistent with CMS-approved
referral practices.
Abby Block, director of CMS'
Center for
Beneficiary Choices, said, "We are working very closely with
Sierra in examining their claims experience so far." The Hill reports
that the dispute "highlights the difficulty of offering comprehensive
prescription drug coverage to the oldest, sickest and costliest Medicare
participants" (Young, The Hill, 3/8).
Senate Committee
Debates Legislation That Would Establish Safeguards for Prescription
Drug Reimportation
A
Senate Commerce,
Science and Transportation Subcommittee on Wednesday held a
hearing on legislation proposed by Sens. Byron Dorgan (D-N.D.) and
Olympia Snowe (R-Maine) that would allow consumers, pharmacies and drug
wholesalers to purchase
FDA-approved
drugs that are manufactured at FDA-inspected facilities in other
countries,
CQ HealthBeat
reports (Reichard, CQ HealthBeat, 3/7).
The bill, which also has been proposed in the House
by Reps. Rahm Emanuel (D-Ill.) and Jo Ann Emerson (R-Mo.), would
establish a regulatory framework for reimportation, including a
requirement that FDA regulate shipments of prescription drugs reimported
into the U.S. for commercial or personal use (Kaiser
Daily Health Policy Report, 1/11). The bill would allow drug
reimportation from 19 countries (AP/Wall Street Journal, 3/7).
The bill also would instruct FDA to inspect
Canadian drug exporters 12 times per year (Lopes,
Washington Times,
3/8). Dorgan cited a
Congressional
Budget Office estimate that the bill would generate $50
billion in direct savings over 10 years, including $6.1 billion in
savings for the federal government. Dorgan expressed confidence that the
bill -- which has 31 co-sponsors -- has enough support to win committee
approval, although neither a markup nor a floor time has been scheduled,
CQ HealthBeat reports (CQ HealthBeat, 3/7).
Dorgan said, "My goal is not to force Americans to
go to Canada to purchase their drugs but rather to create a little
competition in the market so that we can put real downward pressure on
domestic drug prices."
FDA, Rx Industry Opposed
Randall Lutter, acting deputy commissioner for policy at FDA, said
the agency lacks the resources to administer a "substantial" new
program. Lutter said, "We have no way of tracking the Web sites that
sell these unapproved drugs, and we can't stop the drugs at the border
with the resources we have" (Washington Times, 3/8).
Pharmaceutical
Research and Manufacturers of America President and CEO Billy
Tauzin said the legislation would increase drug counterfeiting and
result in patient deaths. "We'll rue the day we opened up that flood,
and the deaths will pile up," Tauzin said (Talbott, CongressDaily, 3/8).
Tauzin said, "There is no indication that
implementing importation would result in cost savings. The costs of
counterfeit-resistant technologies and industry and government testing
and inspections likely would run billions of dollars each year" (CQ
HealthBeat, 3/7).
CongressDaily reports that Dorgan "conceded
counterfeit drugs present a problem but pressed Lutter and Tauzin for
their analyses of the regulatory system his bill would establish."
Lutter said he had not read the bill and was unprepared to provide
"legislative assistance." Tauzin said he would send his analysis of the
proposal at a later date and would work with the panel on the bill
(CongressDaily, 3/8).
Sens. Baucus,
Grassley Ask FDA To Respond to Post-Approval Prescription Drug Tracking
Report
Senate Finance
Committee Chair Max Baucus (D-Mont.) and ranking member
Charles Grassley (R-Iowa) on March 1 sent a letter to
FDA
Commissioner Andrew von Eschenbach requesting that he respond by April 2
to an independent report that called the agency's system for tracking
post-approval prescription drugs "dysfunctional,"
CQ HealthBeat
reports (Itkowitz, CQ HealthBeat, 3/7).
The November 2006 report commissioned by the agency
and prepared by the
Breckenridge
Institute, a research and consulting firm, has not been
released publicly. According to the report, FDA regulators waste an
average of 45 minutes per day because of inefficiencies and problems
with the agency's Adverse Event Reporting System software.
The report states that the system is overwhelmed by
the more than 400,000 adverse event reports submitted each year. FDA
since 2003 has been working to upgrade the technology, but a new system
is not expected to be functioning until 2009 at the earliest, the report
states. The report says that had the agency moved forward with a plan to
use off-the-shelf software, it might have had a new system working in
2005 at a one-time cost of $4.5 million.
However, in June 2004, the agency's Office of
Information Technology advocated a system that could track adverse
events from all products regulated by the agency, including medical
devices. According to the report, FDA has wasted $25 million on efforts
to develop a new system (Kaiser
Daily Health Policy Report, 3/5).
In a statement, Baucus said that while he was "all
for agencies investing in advanced technology ... if they're going to
spend millions of dollars and stake Americans' health on that
technology, then it really ought to work." He added, "This report raises
some troubling questions about how wisely the FDA spends money and how
well they're protecting us." On Wednesday, an FDA spokesperson said the
agency had received the letter and would be responding "through official
channels" (CQ HealthBeat, 3/7).
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