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Medicare Drug Problems are Hot Topic at Senate Aging
Committee
Medicare drug program was the hot topic in
Washington yesterday
Feb. 3, 2006 It was a wild day for the Centers
for Medicare and Medicaid as Administrator Mark McClellan faced rough
questions in the Senate's Special Committee on Aging about the problems
in the prescription drug program. There were also efforts on the Senate
floor to extend the enrollment deadline (they failed) and Texas joined
other states suing to block CMS from billing states for the cost of
prescription drugs for dual eligibles. The controversy over-shadowed the
good news that the cost of the drug program appears to be less than
expected, according to the daily health care report by KaiserNet.org.
 Medicare | 10-Year Cost Projection for Medicare
Drug Benefit Drops From $737B to $678B, According to New CMS Report
[Feb 03, 2006]
The net cost to the federal government of the
Medicare prescription drug benefit in 2006 is projected to be $30.5
billion, 20% less than the government's previous estimate of $38.1
billion,
CMS Administrator Mark
McClellan said Thursday at a hearing of the
Senate Special Committee on Aging,
the
New York Times reports.
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The projected cost of the program from 2006 to 2015
is projected to be $678 billion, an 8% decrease from a previous estimate
of $737 billion, McClellan said (Pear, New York Times, 2/3).
In addition, McClellan said the average monthly
premium for beneficiaries now is estimated to be about $25 (Lueck, Wall
Street Journal, 2/3). In August, CMS estimated that the average monthly
beneficiary premium would be about $32.20 per month (Kaiser
Daily Health Policy Report, 8/10).
In addition, McClellan said paperwork would be
available Thursday for
states to apply to the federal
government for reimbursement for expenses they incurred by providing
medications to beneficiaries who are eligible for both Medicaid and
Medicare (Daniels,
Arkansas Democrat-Gazette,
2/3).
Remarks by McClellan
McClellan said the estimated costs have decreased because drug plans are
offering lower premiums than expected and because beneficiaries "are
choosing the plans that offer them the best deal" (Wall Street Journal,
2/3). McClellan also said "stronger-than-expected competition with lower
drugs costs" contributed to the reduced cost projections (Appleby/Wolf,
USA Today, 2/3).
He acknowledged problems with the start of the drug
benefit but added, "A change this big in a short period of time is bound
to have some problems" (Freking,
AP/Philadelphia Inquirer,
2/3). He continued, "We make no excuses for these problems. They are
important, they are ours to solve, and we are finding and fixing them"
(Lipman,
Cox/Albany Times Union, 2/3).
He added, "Simplification is absolutely the next
step in this process, now that we've got the benefit in place"
(Alonso-Zaldivar,
Los Angeles Times, 2/3).
McClellan continued, "We're going to see competition lead to more
simplicity. We do want to make it even easier" for beneficiaries to
enroll (Schuler, CQ HealthBeat, 2/2).
McClellan said the administration currently does
not support an extension of the May 15 enrollment deadline (Wall Street
Journal, 2/3). "We've not been focused on what would happen with the May
15 deadline," he said, adding, "The focus is now on addressing
February's issues" (Schuler, CQ Today, 2/2). However, he added, "There's
plenty of time to think about whether an extension may be necessary down
the road" (Wall Street Journal, 2/3).
Senators Question McClellan
Senate Aging Committee Chair Gordon Smith (R-Ore.) said the Bush
administration has not done enough to ensure a smooth transition from
Medicaid to Medicare of drug coverage for dual eligibles (New York
Times, 2/3).
Smith asked McClellan why CMS had not taken action
earlier, adding, "Many of these problems are problems we foresaw."
McClellan said that CMS had made adjustments before the benefit began
and that the agency is "watching very closely" for additional problems
(CQ HealthBeat, 2/2).
Sen. Blanche Lincoln (D-Ark.) said the "timing" for
ensuring drug plans reimburse states and pharmacies that have taken
action to pay for beneficiaries' medications is "incredibly important."
Lincoln asked McClellan, "Are you going to guarantee that in 30 days all
these people are going to be reimbursed?"
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Senate Aging
Committee Hears Witnesses on Medicare Drug Program |
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Feb. 3, 2006 - Sen. Gordon Smith
(R-OR), chairman of the Senate Special Committee on Aging,
opened a hearing yesterday on the Medicare drug program saying,
Our poorest citizens are the ones most affected by these
problems, said Smith.
We need to remedy this situation
quickly and take steps to prevent them in the future. Im going
to continue using my committees oversight powers to ensure the
interests of American seniors are protected.
The Aging Committee heard from a
broad range of witnesses including Dr. Mark McClellan,
Administrator of the Centers for Medicare Services (CMS) and
Timothy Murphy, Massachusetts Secretary of Health and Human
Services. In addition, the committee heard testimony from
representatives of drug plans, pharmacies, and individual
beneficiaries regarding their experiences with the Medicare
prescription drug benefit since the plan took effect.
For the text
of testimony before the committee
Click Here. |
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McClellan said, "The state is going to be
reimbursed."
Lincoln asked if CMS has "sufficient authority and
people on point." McClellan said, "At this point, we do" (Arkansas
Democrat-Gazette, 2/3).
Sen. Elizabeth Dole (R-N.C.) said many low-income
beneficiaries in North Carolina are having problems with the drug
benefit. "This is simply unacceptable and clearly not what was
intended," she said (Funk, Charlotte Observer, 2/3). Dole added, "It is
nearly impossible to avoid startup challenges, but ... now we must
identify those individuals who are vulnerable and make certain that
their needs are met" (Freking,
AP/San Francisco Chronicle,
2/3).
Sen. Ron Wyden (D-Ore.) said McClellan has done
"great damage to the cause of private-sector choice." Wyden, who voted
for the 2003 Medicare drug law, said, "I did not conceive that the
rollout of the new program would be bungled in this way" (New York
Times, 2/3).
More Comments
Sen. Hillary Rodham Clinton (D-N.Y.) said, "It is an absolute
embarrassment, outrage, deep heartbreaking disappointment to be in the
presence of people who are so distraught, confused, upset and feeling
abandoned."
She continued, "I, for one, think we should scrap
this and start over," adding that the drug benefit is "fatally flawed"
(Cox/Albany Times Union, 2/3).
In response, Sen. Rick Santorum (R-Pa.) said, "We
should not be so flippant in casting out babies with bath waters,"
adding, "With compromise, you don't get the optimal solution. But [the
drug benefit] was the best we could accomplish given the deep divisions
in Washington" (CQ HealthBeat, 2/2).
Meanwhile, Sen. Herb Kohl (D-Wis.) said it is
"ludicrous" to base multiyear cost projections on data from the first
month of the drug benefit. Rep. Henry Waxman (D-Calif.) said in a
statement that CMS officials "tell us that prices are amazingly low when
seniors can see with their own eyes that that isn't the case" (USA
Today, 2/3).
Amendments
Later on Thursday, the Senate failed to approve two measures related to
the drug benefit that were proposed as amendments to a tax package (S
2020).
One amendment, introduced by Sen. Bill Nelson
(D-Fla.), would have extended until Dec. 31 the deadline to enroll in
the drug benefit without paying a penalty. The amendment also would have
allowed beneficiaries to change plans once during the first year and
required the federal government to reimburse state, pharmacies and
beneficiaries for expenses incurred because of problems with the start
of the drug benefit (CQ Today, 2/2).
A majority of senators voted in favor of the
amendment, but the 52-45 vote was short of the 60 votes necessary to
pass under Senate rules for measures on budget and tax matters (Arkansas
Democrat-Gazette, 2/3). The second amendment, by
Senate Finance Committee Chair
Chuck Grassley (R-Iowa), would have stated that Congress should not act
to make changes to the drug benefit because the administration was
capable of addressing problems with the program and that a deadline
extension would not be necessary. Senators voted 42-54 on the amendment,
with ten Republicans voting against it.
Comments on Amendments
Grassley said, "In my opinion, rushing to fix things through legislation
could do more harm than good," adding that Nelson's amendment was
"completely unnecessary." Nelson said of his amendment, 'We're going to
take those seniors who are out of pocket, the pharmacies who are out of
pocket and the states who are out of pocket because of the federal
bungling. We are going to reimburse them" (CQ Today, 2/2).
Texas To Join Lawsuit
In other Medicare news, Texas officials on Thursday said that the state
will join California and other states in a planned lawsuit against the
federal government that seeks to block CMS from billing states for the
cost of prescription drugs for dual eligibles, the
Austin American-Statesman
reports (MacLaggan, Austin American-Statesman, 2/3).
California Attorney General Bill Lockyer on
Wednesday said that California, Kentucky, New Jersey, Missouri and Texas
plan to file a lawsuit later this month over the "clawback" provision of
the Medicare prescription 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 that they
would have spent on Medicaid coverage for medications for dual
eligibles; the rate will decrease to 75% over time.
However, the states that plan to file the lawsuit
allege the federal government is overbilling them because of flaws in
the formula used to calculate the payments (Kaiser
Daily Health Policy Report, 2/3).
On Thursday, Kathy Walt, a spokesperson for Texas
Gov. Rick Perry (R), said, "We clearly do plan to file suit, probably
later this month," adding, "This goes beyond cost. What's at the heart
of the issue is the unconstitutional commandeering of the state
treasury." Kentucky officials have said that the state also will join
the lawsuit (Austin American-Statesman, 2/3).
Pharmaceutical Company Profits
Knight Ridder/Newark Star-Ledger
on Friday examined how the Medicare prescription drug benefit "will give
pharmaceutical companies up to $2 billion in extra profits this year
because they are no longer required to pay rebates on drugs bought by
the government for the elderly poor." According to a June 2005 survey
conducted by Prudential Equity Group, the provision will most benefit
pharmaceutical companies that manufacture the antipsychotic medications
Seroquel, Lamictal and Zyprexa --
AstraZeneca,
GlaxoSmithKline and
Eli Lilly, respectively (Pugh,
Knight Ridder/Newark Star-Ledger, 2/3).
Broadcast Coverage
 APM's
"Marketplace"
on Thursday reported on the Medicare prescription drug benefit. The
segment includes comments from Robert Laszewski, political analyst and
health consultant for the insurance industry (Tong, "Marketplace," APM,
2/2). The complete segment is available
online in RealPlayer.
In
addition, PBS' "NewsHour
with Jim Lehrer" on Thursday reported on the benefit. The
segment includes comments from Mary Grealy, president of the
Healthcare Leadership Council,
and Ron Pollack, executive director of
Families USA (Suarez, "NewsHour
with Jim Lehrer," PBS, 2/2). The complete transcript is available
online. The complete segment
is available
online in RealPlayer.
"Reprinted with
permission from kaisernetwork.org (insert hyperlink to http://www.kaisernetwork.org).
You can view the entire
Kaiser Daily Health Policy Report, search the archives, and sign
up for email delivery at
www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser
Daily Health Policy Report is published for
kaisernetwork.org, a
free service of The Henry J. Kaiser Family Foundation. © 2006
Advisory Board Company and Kaiser Family Foundation. All rights
reserved.
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