[Senate Hearing 108-727]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 108-727

                    HELPING THOSE WHO NEED IT MOST:
              LOW-INCOME SENIORS AND THE NEW MEDICARE LAW

=======================================================================

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JULY 19, 2004

                               __________

                           Serial No. 108-40

         Printed for the use of the Special Committee on Aging


                     U.S. GOVERNMENT PRINTING OFFICE
96-738 PDF                 WASHINGTON : 2004
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001



                       SPECIAL COMMITTEE ON AGING

                      LARRY CRAIG, Idaho, Chairman
RICHARD SHELBY, Alabama              JOHN B. BREAUX, Louisiana, Ranking 
SUSAN COLLINS, Maine                     Member
MIKE ENZI, Wyoming                   HARRY REID, Nevada
GORDON SMITH, Oregon                 HERB KOHL, Wisconsin
JAMES M. TALENT, Missouri            JAMES M. JEFFORDS, Vermont
PETER G. FITZGERALD, Illinois        RUSSELL D. FEINGOLD, Wisconsin
ORRIN G. HATCH, Utah                 RON WYDEN, Oregon
ELIZABETH DOLE, North Carolina       BLANCHE L. LINCOLN, Arkansas
TED STEVENS, Alaska                  EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania          THOMAS R. CARPER, Delaware
                                     DEBBIE STABENOW, Michigan
                      Lupe Wissel, Staff Director
             Michelle Easton, Ranking Member Staff Director

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Larry E. Craig......................     1
Opening Statement of Senator John Breaux.........................     2

                                Panel I

Mark McClellan, M.D., Ph.D., administrator, Centers for Medicare 
  and Medicaid Services..........................................     3

                                Panel II

Gail Wilensky, Ph.D., John M. Olin senior fellow, Project Hope, 
  former administrator, Health Care Financing Administration, 
  Bethesda, MD...................................................    44
Byron Thames, M.D., trustee, American Association of Retired 
  Persons, Orlando, FL...........................................    59
Jane Delgado, Ph.D., M.S., president and CEO, The National 
  Alliance for Hispanic Health; founding member, The Access to 
  Benefits Coalition, Washington, DC.............................    71
Patricia B. Nemore, attorney, Center for Medicare Advocacy, Inc., 
  Washington, DC.................................................    91

                                Appendix

Material submitted by Laura Summer and Lee Thompson, Center on an 
  Aging Society, Georgetown University Health Policy Institute...   121

                                 (iii)

  

 
HELPING THOSE WHO NEED IT MOST: LOW-INCOME SENIORS AND THE NEW MEDICARE 
                                  LAW

                              -----------



                         MONDAY, JULY 19, 2004

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2 p.m., in room 
SD-628, Dirksen Senate Office Building, Hon. Larry E. Craig 
(chairman of the committee) presiding.
    Present: Senators Craig, Breaux and Stabenow.

     OPENING STATEMENT OF SENATOR LARRY E. CRAIG, CHAIRMAN

    The Chairman. Good afternoon, everyone, and welcome to the 
Senate Special Committee on Aging. The new Medicare law enacted 
last fall represents the most substantial expansion and 
improvement in the program since its creation 39 years ago. Not 
surprisingly, debate about this new law was and remains quite 
spirited. However, there is one aspect of the new program about 
which few should disagree. It is this: the new Medicare law 
offers dramatic new assistance, billions of dollars of it, for 
seniors of modest and low income.
    Those seniors who are struggling the hardest to pay for 
their prescriptions are precisely the seniors whom this bill 
targets most generously and that is as it should be.
    We are here today to explore the specifics of what this 
legislation will mean for seniors in greatest economic need. 
Our discussion will begin with an updated look at how the new 
prescription drug card is doing and in particular ways in which 
CMS and its partners are working to bring the low income $600 
transitional assistance to as many seniors as possible.
    On this front, we will hear encouraging news from CMS 
Administrator Mark McClellan--Mark, welcome to the committee--
who we are pleased to have with us today. I understand, for 
example, that seniors are now signing up for the cards at a 
rate of 25,000 per day. Yes, that is right. Twenty-five 
thousand per day and also that the drug price savings continues 
to be impressive.
    CMS meanwhile continues to aggressively expand its outreach 
and enrollment efforts including improvement in the Price 
Compare web site and also through grant assistance to 
community-based organizations and to national coalitions. One 
of these, the Access to Benefits Coalition, will also be 
providing testimony today.
    Even more importantly, we will also hear testimony about 
the new law's full drug benefit schedule to begin in 2006, and 
the ways in which low-income seniors stand to benefit 
tremendously under the new assistance that is now just 17 
months away.
    Nearly half the new law's funding is targeted especially to 
low-income seniors and more than one in three seniors will 
qualify for assistance. For the vast majority of these seniors, 
this will mean zero premiums, zero deductibles and no gaps in 
coverage and copays of just a few dollars per prescription.
    It is difficult to imagine a stronger package. It is not to 
say this will be easy. This is a tremendously complex program, 
and it is being implemented on a very ambitious time table.
    Our witnesses today will offer guidance on such critical 
questions as how we can tailor our outreach efforts more 
effectively. Reaching as many qualified beneficiaries as 
possible should be a top goal.
    When debate over adding prescription drug benefits began 
several years ago, the guiding motivation was first and 
foremost to help those seniors who were struggling to make ends 
meet, to those seniors who were sometimes forced to choose 
between food and prescriptions. For those seniors in the 
greatest need, this new law is truly a godsend.
    We have a remarkably accomplished panel of witnesses today, 
but before I turn to our panel, let me turn to my ranking 
colleague and partner here, Senator John Breaux of the great 
state of Louisiana.

                STATEMENT OF SENATOR JOHN BREAUX

    Senator Breaux. Thank you very much, Mr. Chairman, and 
thank all of our witnesses who will be presenting testimony in 
what is an incredibly important subject for all of our nation's 
seniors. The Medicare legislation that Congress passed arguably 
was the most important change in Medicare since 1965 when we 
passed Medicare. It was very significant.
    People do not run to Canada for hospitalization. They do 
not seek off on bus trips to Canada to see doctors in Canada. 
Why? Because Medicare covers both hospital visits and Medicare 
covers doctor visits. When Medicare is completely fully 
implemented in the drug program, the necessity of seniors to go 
to Mexico or to Canada or to an internet to order drugs from 
who knows where will cease to exist because for the first time 
in the history of the program seniors will have an adequate 
guarantee of drugs available to them and their families at a 
price that is affordable just as Medicare covers adequately the 
cost of hospitalization and the cost of doctor visits.
    Getting from where we are today to where we want to be is 
not an easy task. Neither was it an easy task to implement 
Medicare back in 1965 when we created a national insurance 
program that covers hospitalization or later when the program 
was expanded to cover doctors as well.
    You do not do these things overnight. That is why the first 
part of the journey toward complete insurance coverage for 
pharmaceuticals was a stopoff, if you will, with a Medicare 
drug discount card. I said at the time we were working on the 
program that the thing that I feared the most was that we would 
give seniors too many choices. I am a big believer in people, 
particularly in the health care field, of having choices to 
choose the program or the plan, the hospital, the doctor, that 
is best for them.
    I said at that time it would be very confusing for a senior 
to walk into the local drugstore and pull out his wallet or her 
purse and have 10 or 12, 15 different discount cards trying to 
figure out which one is best for them.
    Truth is now there are over 70 discount cards. There are 
not 15; there are 70 to pick and choose from. So in the 
beginning of this program, it is not going to be easy, but the 
assistance that is offered is certainly worth the effort to try 
and ensure that you are, in fact, picking the best card for 
your needs. Or children who are helping their parents or 
grandchildren who are helping their parents or senior citizen 
centers and various parts of the country that are helping the 
senior pick the best card for them.
    Mr. McClellan and Medicare, to their credit, as I 
understand it now, there is a program where you can sort of 
dial in, give a list of the drugs that you are on, and the 
computer system will kick back to you which is one of the 
better cards for you to utilize.
    So this is a monumental and historic accomplishment. No 
accomplishments of that size and scope can be done without a 
few bumps in the road. So I am glad, Mr. Chairman, we are 
having a hearing today to see where those bumps are, how we are 
going to smooth them out, until we get to that point in time 
where prescription drugs are treated from an insurance 
standpoint just like hospitals and doctors are today. Thank 
you.
    The Chairman. John, thank you very much for that fine 
statement, and now we will search for the bumps in the road 
because I think your analysis of it is very apropos.
    Our first witness today is Dr. Mark McClellan, the new 
Administrator for the Centers for Medicare and Medicaid. As we 
all know, Dr. McClellan has what may well be the hardest job in 
Washington these days: overseeing implementation of the vast 
and complex new Medicare law. But if anyone is up to the task, 
I suspect you are, Mark. A former Commissioner of the Food and 
Drug Administration, Senior White House Health Advisor, 
professor and medical doctor, Dr. McClellan brings to this job 
an unprecedented array of experience. So we welcome you before 
the committee and are anxious to receive your testimony.
    Please proceed, Mark.

   STATEMENT OF MARK MCCLELLAN, M.D., PH.D., ADMINISTRATOR, 
   CENTERS FOR MEDICARE AND MEDICAID SERVICES, WASHINGTON, DC

    Dr. McClellan. Mr. Chairman, Senator Breaux, thank you for 
having me here this afternoon to discuss the new Medicare 
prescription drug benefit and thank you for your leadership in 
working together to bring overdue comprehensive drug coverage 
to the millions of low-income Medicare beneficiaries who too 
often have to struggle with paying for the cost of their drugs, 
on the one hand, and paying for their other basic necessities 
on the other.
    While Medicare beneficiaries can get relief from high drug 
prices and high costs, the comprehensive help available for 
low-income beneficiaries is especially important, as you all 
noted. We deeply appreciate the strong and constructive 
interest from so many people involved in policymaking and 
advocacy from so many perspectives in helping us implement the 
new law.
    The new prescription drug relief for beneficiaries of 
limited means is critically important to get out as soon as 
possible, and we look forward to further public discussion and 
comment after we publish our proposed rules on the drug benefit 
to help make sure we are providing these comprehensive benefits 
as effectively as possible to the most vulnerable seniors and 
people with disabilities and Medicare.
    While we are working to implement the new prescription drug 
benefit, we are also using the authority that Congress gave us 
to provide relief right now to beneficiaries who do not have 
good drug coverage through the Medicare prescription drug 
discount card. I am pleased to say that in a little over a 
month, as you mentioned, Mr. Chairman, approximately four 
million people have signed up for the program enrolling at a 
rate of about 25,000 every business day.
    This includes close to a million lower income beneficiaries 
who are receiving the $600 credit in transitional assistance 
and some additional discounts. These beneficiaries are all 
receiving substantial savings on the drugs they need with 
prices for brand name drugs about 11 to 18 percent lower than 
what Americans pay on average even with the discounts they get 
from private insurance and Medicaid programs and they are 
getting much larger savings on mail order and generic drugs.
    We are also pleased that seven major drug manufacturers are 
now offering large wraparound discounts for the low-income 
beneficiaries who use up their $600 credit.
    The many brand name drugs with wraparounds include six of 
the top ten in terms of beneficiary spendings: Zocor, Lipitor, 
Celebrex, Fosamax, Norvasc and Vioxx. Generally, these 
prescriptions will cost at most $5 to $15, even after the $600 
credit has been used. So this amounts to literally thousands of 
dollars of low-income assistance with drug costs available 
right now this year and again next year before the full drug 
benefit starts.
    In addition, the Office of Management and Budget has 
provided guidance to all Federal agencies that transitional 
assistance available to low-income beneficiaries does not 
affect eligibility or benefits for any other Federal program.
    Since the drug card program started just 6 months after the 
Medicare law was enacted, we continue to take steps to improve 
it, including new steps to make it easy to start getting real 
savings quickly on line at Medicare.gov and to make sure that 
when you call us at 1-800-MEDICARE anytime 24/7, you can 
quickly reach a trained customer service representative to get 
the personalized help you need and then find out about how to 
get real savings from the drug card, generally all done in well 
under 20 minutes.
    We have also started some unprecedented collaborations with 
state health insurance assistance programs and private advocacy 
groups such as the groups making up the Access to Benefits 
Coalition to educate beneficiaries about this important new 
help. This is all leading up, as you mentioned, Mr. Chairman, 
to the comprehensive benefits that will be available to low-
income beneficiaries who enroll in the new Medicare 
prescription drug program beginning in 2006.
    Although this voluntary benefit will be available to all of 
Medicare's 41 million beneficiaries, Congress specifically 
provided very generous help to those who need it the most, 
those with limited means or catastrophic costs.
    Of those beneficiaries expected to enroll in the drug 
benefit, three groups of low-income beneficiaries will receive 
premium and cost-sharing subsidies such that their drug costs 
will range from almost nothing to only a few hundred dollars 
depending on the type of assistance for which they qualify.
    The first group of approximately 6.4 million full benefit 
dual-eligible individuals will pay no premium or deductible and 
only have $1 to $3 copays for each prescription.
    The second group, an estimated three million individuals 
with incomes lower than about $12,600 for an individual and 
$16,900 for a couple who meet the assets test, will pay no 
premium or deductible and only a $2 to $5 copayment for each 
prescription.
    The third group of approximately 1.5 million Medicare 
beneficiaries with incomes of about $14,000 for an individual 
and $18,700 for a couple who meet the asset test will pay 
premiums based on a sliding scale, a $50 annual deductible and 
a 15-percent copayment on each prescription.
    Institutionalized persons who are full benefit dual-
eligibles are exempt from this cost sharing completely. When 
dual-eligible beneficiaries move from the Medicaid system to 
the new Medicare benefit, millions will no longer be subject to 
restrictions that many states have had to impose to limit costs 
but that may also limit quality of care such as restrictions on 
the number of prescriptions that can be filled each month or 
very strict formulary requirements.
    So that is better, more comprehensive coverage for millions 
of Medicare beneficiaries and new comprehensive coverage for 
millions more with limited means. All together about a third of 
beneficiaries and almost half of minority beneficiaries can get 
the security of paying only a few dollars for the prescription 
drugs that they need.
    We are moving ahead to use the new law to bring overdue 
relief to Medicare beneficiaries who are now struggling with 
the cost of prescription drugs. We look forward to continuing 
to work closely with you to provide more and more effective 
relief. Thank you for your time and I'm happy to answer any 
questions that you all may have.
    [The prepared statement of Dr. McClellan follows:]
    [GRAPHIC] [TIFF OMITTED] T6738.001
    
    [GRAPHIC] [TIFF OMITTED] T6738.002
    
    [GRAPHIC] [TIFF OMITTED] T6738.003
    
    [GRAPHIC] [TIFF OMITTED] T6738.004
    
    [GRAPHIC] [TIFF OMITTED] T6738.005
    
    [GRAPHIC] [TIFF OMITTED] T6738.006
    
    [GRAPHIC] [TIFF OMITTED] T6738.007
    
    [GRAPHIC] [TIFF OMITTED] T6738.008
    
    [GRAPHIC] [TIFF OMITTED] T6738.009
    
    [GRAPHIC] [TIFF OMITTED] T6738.010
    
    [GRAPHIC] [TIFF OMITTED] T6738.011
    
    [GRAPHIC] [TIFF OMITTED] T6738.012
    
    [GRAPHIC] [TIFF OMITTED] T6738.013
    
    [GRAPHIC] [TIFF OMITTED] T6738.014
    
    [GRAPHIC] [TIFF OMITTED] T6738.015
    
    [GRAPHIC] [TIFF OMITTED] T6738.016
    
    [GRAPHIC] [TIFF OMITTED] T6738.017
    
    [GRAPHIC] [TIFF OMITTED] T6738.018
    
    [GRAPHIC] [TIFF OMITTED] T6738.019
    
    [GRAPHIC] [TIFF OMITTED] T6738.020
    
    [GRAPHIC] [TIFF OMITTED] T6738.021
    
    [GRAPHIC] [TIFF OMITTED] T6738.022
    
    [GRAPHIC] [TIFF OMITTED] T6738.023
    
    [GRAPHIC] [TIFF OMITTED] T6738.024
    
    The Chairman. Mark, thank you very much for that testimony 
and opening comments. During debate on this bill, I think the 
biggest focus was on those seniors who did not otherwise have 
drug coverage and who just could not afford it themselves. Does 
the new low-income assistance in the 2006 benefit meet that 
need?
    Dr. McClellan. It does. As I mentioned before, there are 
over six million dual eligible beneficiaries who will be able 
to get access to a comprehensive benefit that must cover all 
classes of drugs, very broad formulary, very important and 
national and universal appeals rights, plus millions more who 
have limited means but who are not able to enroll in state 
programs now because the states have not been able to provide 
coverage for them.
    So all together it is about a third of Medicare 
beneficiaries, as you said, who are going to have access to a 
comprehensive benefit as part of this overall Medicare 
legislation.
    The Chairman. In that category, most of the qualifying low-
income seniors in 2006 will pay, so we now understand, zero 
premium, zero deductible and a few dollars per prescription. 
How does that compare to the kind of drug coverage the average 
non-senior is likely to find out in the private marketplace 
today? Is there a comparison?
    Dr. McClellan. Yes, very favorably. The drug coverage 
available to many people with limited means today has 
significant copayments. Usually the copays are lower for 
generic drugs than for brand name drugs, and the Medicare 
benefit has that same structure. But this is a more 
comprehensive benefit for people with limited means and these 
millions of beneficiaries do not have access to this kind of 
coverage in the private markets today and that is why it is so 
important to bring it into Medicare right now.
    The Chairman. Mark, weeks prior to the ability to enroll 
and then following that, there was a considerable amount of 
criticism as it relates to seniors just were not signing up. 
The figure I used in my opening comments and you have used it 
of 25,000 now signing up per day, when I first saw that figure 
I thought they must be thinking about 2,500. So talk to us 
about that. Has enrollment accelerated recently? What are the 
reasons for this?
    Dr. McClellan. Well, it is definitely continuing at a 
steady clip. We went back and looked at previous experience 
when the Federal Government tried to implement other major new 
benefit programs that offer very affordable coverage and help 
people with their health care costs substantially. In general, 
it takes some time. For example, in the CHIP program, the 
Children's Health Insurance Program, which now provides 
coverage to many millions of lower income children and their 
families, that program took more than a year to reach the 
million enrollees mark because of issues with states working 
with the Federal Government to set up access to the program and 
important issues about education and outreach, letting people 
know that these benefits are there and helping them through the 
decision process so they could sign up, so they could decide 
this was a really good deal for them and sign up for it.
    So it took a little time, but enrollment picked up, and 
these kinds of barriers to enrollment are present anytime a new 
Federal program starts, and we are working harder than ever to 
overcome them. So in this case, we tried to look back on that 
experience and learn from it. In addition to the steps that we 
are taking through our 800 number, through advertising, through 
mailings to beneficiaries, through mailings from the Social 
Security Administration, we form new partnerships with state 
health insurance assistance programs and recently we have been 
getting partnerships underway with many private organizations 
that are very good at doing outreach and education for low-
income beneficiaries.
    I think this is a win-win effort for us. It helps get 
people informed and enrolled in the Medicare prescription drug 
benefit program. It also is a good foundation for the education 
and outreach that we intend to do as part of the comprehensive 
low-income drug benefit that is coming next year. We have got a 
little bit more time to do that, but we want to take full 
advantage of all of that time.
    So with new partnerships, with proven effective approaches 
to doing outreach, I think the numbers are picking up, but you 
know no program works unless it delivers real benefits, and 
this program is delivering real savings when it comes to the 
prices that beneficiaries who get the drug card can pay when 
they go to their local pharmacy, and it is especially 
delivering benefits in terms of literally thousands of dollars 
in help this year and next year for the low-income 
beneficiaries who do not have drug coverage today.
    That is the ultimate thing that is driving the significant 
enrollment in this program, and that is why we are so pleased 
to have so many partners on the outside in this unprecedented 
effort to get millions of people signed up faster than ever for 
a new Federal benefit program.
    The Chairman. Back in March, CMS testified before this 
committee that you anticipated savings from the cards of 
between I think 10 to 15 percent on total spending and with 
about 25 percent on individual drugs. Your testimony today 
suggests that actual savings are in many cases proving better 
and that especially is true of I believe generics.
    Dr. McClellan. Yes.
    The Chairman. What are the reasons why the savings seem to 
be even better than expected and do you expect price savings to 
continue to go down as the program stabilizes?
    Dr. McClellan. Well, we are seeing significant new savings 
I think for two main reasons. One is that seniors are able to 
band together now more effectively and stick together long 
enough to get negotiated discounts on prices from drug 
manufacturers.
    So seniors are very good comparison shoppers now and many 
of them have been able to find through a pharmacy discount card 
or something like that some small sources of discounts at their 
local pharmacies. Well, this does better. It adds to that by 
getting them those negotiated discounts which are being passed 
on from the drug manufacturers.
    The other very important step is making the price 
information available. Now not every senior goes and looks at 
every piece of price information on the 60,000 drug products at 
the more than 50,000 pharmacies around the country, but the 
fact that that information is out there has created a new 
ability to comparison shop for drugs much like people in the 
past have done for many other products and services, their 
groceries, their vacations, their mortgages, you name it. We 
have seen over the past 2 months with this program that prices 
available come down, come down, especially for cards that were 
initially higher priced, but across the board, we have seen 
reductions, not increases in drug prices, prices for brand name 
drugs, over the first couple of months that our price 
comparison has been active. So it is a new way of comparison 
shopping coupled with a new ability for people to band together 
and get the big discounts.
    The Chairman. Great. That is good news. Let me turn to my 
colleague, Senator Breaux. John.
    Senator Breaux. Thank you, Mr. Chairman, and thank you, Dr. 
McClellan, for your testimony. We had authorized in the 
Medicare bill automatic enrolling for low-income Medicare 
beneficiaries, and you all were considering that approach. Can 
you bring us up to date on what you all have decided on on 
automatic enrollment?
    Dr. McClellan. Yeah, I sure can. Auto enrollment can be a 
good way of getting the enrollment numbers up quickly. It means 
that we do not have to do the retail process of going door to 
door, which we are doing right now with a lot of these outside 
organizations to get the numbers, to get people informed and 
get those who can benefit to enroll.
    We started an auto enrollment process with states that have 
pharmacy assistance plans and those auto enrollments have 
already resulted in more than 100,000 beneficiaries getting 
into this program and qualifying for the low-income assistance 
in a very straightforward way.
    We are also talking with states about using the same kinds 
of auto enrollment tools for other populations. Under the 
statute, however, states are allowed to do auto enrollment when 
they have got so-called authorized representative status for 
beneficiaries. That means they can act on behalf of the 
beneficiary for decisions like choosing to enroll in this 
program.
    It turns out that most states do not have the legislative 
authority to do that now, so we are working with those states 
on finding other ways to overcome any barriers to information, 
barriers to enrollment. A number of states, for example, have 
sent out pre-filled out applications that just require a 
beneficiary's signature and that has led to tens of thousands 
of more people signing up as well.
    But we are looking for every avenue that we can take under 
the statute to get people informed and enrolled in this 
program. I should add, too, that when it comes to the full drug 
benefit in 2006, there is an automatic enrollment authority 
that applies to all Medicaid beneficiaries, the full dual-
eligibles as well as those in the QL and SLMB and QMB programs, 
too, that we are going to be asking for comment on how we can 
use that as effectively as possible when it comes to the full 
benefit in 2006.
    Senator Breaux. So there is still apparently a large number 
of people who are eligible for the $600 person discount that 
are not taking advantage?
    Dr. McClellan. They are not yet enrolled. That is right. We 
are up to close to a million enrolled in that program, but we 
aim to get a lot higher than that, and that is why we are 
really focusing new efforts on working with states and working 
with these outside advocacy organizations that are very well 
connected to these beneficiary groups.
    Senator Breaux. Do you have an idea of how many that are 
eligible for the discount, a full discount, that are not 
getting it simply because they have not enrolled?
    Dr. McClellan. Well, the projections were that about 7.3 
million people would take advantage of the card program between 
now and when it ends at the end of 2005 and a little bit over 4 
million people out of that 7 million would be eligible for the 
low-income assistance as well. So we are definitely still 
trying to get those numbers up and to do it faster than other 
previous new Federal benefit programs have achieved in the 
past.
    Senator Breaux. About 25 percent ball park figure?
    Dr. McClellan. Right now in the first month, and I intend 
to keep doing all we can to really increase that number.
    Senator Breaux. Well, I would really urge you to do it. I 
mean this is the easiest thing to take advantage of that you 
can possibly imagine.
    Dr. McClellan. Yes.
    Senator Breaux. Here is $1,200 a year for prescription 
drugs for a couple that is lower-income that is there just for 
signing up, and they really need----
    Dr. McClellan. Right.
    Senator Breaux [continuing.] The maximum amount of 
encouragement to sign up for it because the program is three.
    Dr. McClellan. That is right.
    Senator Breaux. It is available. Tell me a little bit about 
the interaction between the Medicare discount card? How is 
working when you have the various companies coming in with 
their own discount card? Back to my example in the beginning of 
the little couple that comes to their local pharmacy with 10, 
12 different discount cards available to them. I mean tell me a 
little bit about how is it working with the interaction between 
the company discount cards and the Medicare card itself?
    Dr. McClellan. Well, there are two ways that that can work. 
There are now more than 100 manufacturer programs out there 
that have their own cards, that have their own enrollment 
process.
    Senator Breaux. These are the manufacturers?
    Dr. McClellan. These are manufacturer programs of one kind 
or another, and one of the things that we do to try to make it 
easier for people to find out about enrolling in those programs 
is give them the information they need to connect with those 
programs when they call us up at 1-800-MEDICARE, so when you 
call us, you hear not only about the drug card and the 
transitional assistance that we offer but also about state 
programs and manufacturer programs that can help out as well.
    What I think is really important though is the fact that 
many of the major drug manufacturers, seven so far, are now 
offering wraparound discounts on any card that meets some basic 
terms, basically just passing on the full value of the 
manufacturer discounts, and those prices for drugs even after 
you use up your $600 are now $5 to $15 for a drug that can 
retail price for more than $100. This includes drugs from 
Lilly, like Lipitor, drugs from Merck like Zocor, many other 
commonly used drugs. As I said, 6 out of the top 10 spending 
drugs for beneficiaries now and when you call us up or go to 
our web site, we will tell you about all of these specific 
drugs, the prices that you can get for them after you use your 
full $600 credit and all the cards that are offering this 
wraparound help. So as you said, it is literally thousands of 
dollars in new help right now that people can qualify for and 
they should be finding out about it and we want to get that 
help to them as quickly as possible.
    Senator Breaux. My last question, Mr. Chairman, is again 
when I made some opening comments, I talked about the fact that 
a person who is confused or not knowledgeable, if you will, 
about how this process works, if they call the 1-800-MEDICARE 
and can they give someone a list of the drugs that they happen 
to be taking, four or five, and their prescriptions and say 
here is what I am taking, can you tell me which card best would 
fit the needs that I have to meet each month?
    Dr. McClellan. That is exactly right. The easiest way to 
get connected to the help you need is to call us up and be 
ready with just a few pieces of information--your zip code, 
your income level if you think you may qualify for any of these 
kinds of assistance programs, and the drugs that you are on and 
the dosages that you can get usually from your pill bottles. We 
have recently made some improvements in the web site which are 
also being used by the customer service reps at our 1-800 
number to make it even easier to enter all the drug 
information, and no matter how obscure the prescription is, 
whether it is an oral medicine, or otherwise, so that can be as 
straightforward as possible.
    Senator Breaux. Give them that and what do you get back 
from Medicare?
    Dr. McClellan. You can get back several things. We can 
either tell you right then and there which cards look like they 
are going to be a great deal for you and what you would end up 
paying under those cards for your drugs so you can compare that 
to what you are paying now and make an informed decision about 
whether this is a good program for you. Or a lot of people like 
to see something in writing, so we will send them out a 
personalized brochure that is the Medicare drug card program 
for that specific beneficiary that gives them information on 
the top programs for their needs, and they can customize it to 
be just about one or two or three card programs. They can focus 
in on the pharmacies that they care most about or they can get 
a lot more information if they want.
    We have also listened to concerns that you and others have 
expressed about not having too many choices, not having too 
much information to sort through, so now when you go to our web 
site or call us up at 1-800-MEDICARE, we focus in first on the 
top five choices. So it is like a special five-card program 
just for you, but it is honed in on the five best choices for 
your needs. You do not have to look at any of the other 
programs at all.
    Senator Breaux. Thank you, Dr. McClellan.
    The Chairman. John, thank you. We have been joined by our 
colleague on the committee, Senator Stabenow. If you wish to 
make any opening comments and questions of Dr. McClellan, 
please proceed.
    Senator Stabenow. Thank you, Mr. Chairman, and I apologize 
for not being here in time to hear your testimony, and I may, 
in fact, be a little redundant, but I appreciate your time, Mr. 
Chairman.
    The Chairman. That is OK.
    Senator Stabenow. This is an extremely important subject 
and so I appreciate the fact that you are holding this and with 
my colleague as well, Senator Breaux.
    First, I would say Mr. McClellan, would you agree that this 
is a pretty complicated process for seniors to wade through?
    Dr. McClellan. Senator Stabenow, it is good to see you 
again, and we are, as we have just been discussing, trying to 
take all the steps that we can to make it as straightforward as 
possible. It does not have to be complicated. Seniors who call 
us can now generally get the information they need in well 
under 20 minutes to find out not just about which cards can 
help them save a lot of money, but how much they can save and 
what it exactly takes to start getting those savings. So we do 
not want it to be complicated. We want to do everything we can.
    We have tried to learn from comments, suggestions and so 
forth to make it as straightforward as possible to start 
getting help right now.
    Senator Stabenow. Well, of course, the best way to make it 
the least complicated would be to have one card and for 
Medicare to be able to negotiate a group discount to get the 
maximum discount possible, as the VA does. That is not what 
this law does. Instead we have multiple cards, and on the cards 
for a moment, would you not agree that it is a concern, I am 
wondering how you are going to handle when people sign up for 
an individual card based on the medicine that they need and 
with the help of your agency work through which card gives them 
the best coverage maybe for five medicines that they are on, 
but then what happens when they find out that the discount list 
can change every 7 days or the price can go up every 7 days?
    Do you have a plan for how you are going to address or have 
you already had calls from people who are locked into a card 
for a year and find that the five medicines that were covered 
are now maybe only three medicines that are covered?
    Dr. McClellan. Senator, it is very important to us that the 
benefits that beneficiaries expect to get under this program 
actually do come through. That is why we have been monitoring 
closely what has been happening to prices, what has been 
happening to drugs covered and monitoring closely all calls and 
complaints that we get and handling them promptly.
    On prices, it has been the case in this program from the 
beginning that they can only go up when costs go up, not for 
any reason, which is the case outside of Medicare today, and we 
have seen prices for brand name drugs actually come down on 
average since this program was started and we are going to 
continue to monitor that closely.
    In terms of drugs that are covered, we have had virtually 
no complaints. I do not know of any complaints about a 
particular drug that was listed as being on a formulary, not 
being there for a discount, and, in fact, in monitoring what 
the card sponsors have been doing over time, we have seen no 
cases, no significant cases, of drugs that were listed coming 
off.
    In talking with the card sponsors, many of them are saying 
that, well, you know, the only times that we think we might 
even think about changing some of the drugs that we cover are 
if a generic version is approved, in which case seniors get a 
lot more savings for it, or if the FDA changes the reasons that 
it thinks the drug should be used, in which case there would be 
a good medical reason for a change, but we are monitoring that 
closely and so far we have not seen any substantial complaints 
about either prices, because they have been coming down or 
drugs covered because they have been staying stable under this 
program.
    Senator Stabenow. Well, I think that is good news if, in 
fact, the drugs do not change once a senior signs up. Would you 
not agree that that would not be a very fair situation if 
somebody signed up for a card based on certain medicines being 
discounted and then found that that changed down the road? 
Would you not agree that that would not be, at a minimum it 
would not be fair, even though right now it may be legal under 
this?
    Dr. McClellan. That is right. That is why we made clear to 
the companies that we will be monitoring them for any kind of 
bait and switch activities and tracking customer complaints, 
which we are doing now, and we are also making sure that 
customers know about it, the cards that are doing the job of 
keeping prices down and offering a broad range of 
prescriptions, so that those cards are the ones that attract 
beneficiaries. That is why it is so important I think to get 
good information out about actual prices that people are paying 
and actual drugs that are being covered, so that people do not 
just have a discount card or they do not know what it means. 
That is the way that too many of the existing discount cards 
have operated before this program came along.
    Senator Stabenow. You speak about the prices having gone 
down since the program was instituted. Have you monitored or 
looked at the studies--AARP has done a study, Families USA and 
others--about the dramatic increases in prices before the 
discount cards came into being?
    Dr. McClellan. They are looking at a slightly different 
thing. They have been tracking before and during the list 
prices for brand name medicines. Seniors should never be paying 
anything close to the list price for brand name medicines with 
the programs out there thanks to us and thanks to other options 
that are available to them as well.
    We have looked at prices for brand name, commonly used 
brand name drugs going back as far as early 2003 and comparing 
to the discounts that we are seeing now, and again, we are 
seeing savings of 10 to 30 percent for commonly used brand name 
drugs even compared to the list prices, the list retail prices 
from way back before this program started in early 2003. But 
that is why I think it is so important for seniors to get into 
a card program like this, that they never have to pay anything 
close to retail prices again.
    Senator Stabenow. Well, this reminds me a little bit--some 
of the price increases I have seen reminds me a little bit, Mr. 
Chairman, of a store who ups their prices 30 percent and then 
puts a sign out and says 15 percent off. There is a lot of 
concern about that kind of thing happening since between the 
time the law was passed and the discount cards.
    But a couple of other questions, if I might, Mr. Chairman?
    The Chairman. Surely.
    Senator Stabenow. Regarding the assets test, we, and again 
I apologize if you spoke to this, and I did not hear your 
comments earlier.
    Dr. McClellan. No, go right ahead.
    Senator Stabenow. But when we look at the fact that for 
$6,000 for a low-income senior, they can be removed from what 
is really the maximum help. I mean we all agree that under this 
legislation, while I would certainly design the entire bill 
differently, do it differently, we I think all agree that for 
low-income seniors, there is the maximum amount of help, and we 
would want that to be for low-income seniors.
    I have to say as a caveat that it very much disturbs me in 
a state like Michigan where someone under Medicaid is going to 
go on to Medicare and actually pay a bigger copay than they did 
under Medicaid. But could you speak to the fact that right now 
we are looking at a calculation for a low-income senior and an 
assets test that basically says if you have $2,000, if you 
exceed $2,000 on household goods or personal effects, and that 
could be your wedding ring, that could be your furniture, if 
you exceed $1,500 on a life insurance policy, which my guess 
would be most people today if you have life insurance, it would 
be more than that, or funds set aside for burial expenses that 
would exceed $1,500, you disqualify as a low-income senior for 
the help, so that you have, maybe you have a small insurance 
policy, put aside a little bit so your children do not have to 
pay for your burial, you have a wedding ring, maybe you have a 
little bit of furniture, and this program does not help you? 
Does that make sense?
    Dr. McClellan. That would not make sense, and that is why I 
want to make sure we implement the asset test effectively. You 
know the point of this legislation, as you said, was among 
other things to target the best, the most comprehensive 
assistance, to the people that have the least ability to pay. 
While there are many seniors that have some ability to pay 
because they have got a lot of financial assets and other 
resources available, there are millions who do not, and that is 
why under our estimates, I think this is going to definitely be 
borne out in practice. A third of all Medicare beneficiaries 
are going to qualify for this comprehensive low-income help.
    Now we have got some work to do to make sure that we 
implement this asset test effectively, but I can tell you right 
now, even before we go through the full notice and comment and 
have discussions about what should count and what should not 
count, I am not going to be taking away benefits based on 
seniors keeping their wedding rings. That is not the way that 
this program I think was intended to operate and that is not 
the way it is going to operate. There may well be some other 
financial assets. You know if they have got tens of thousands 
of dollars in the bank, yeah, I think that that is--in an era 
when we are worried about not spending too much money in 
Federal Government programs--that might not be the best person 
to target all this comprehensive assistance to.
    But we are going to be very careful about doing this asset 
test in a way that is fair, in a way that focuses on seniors' 
true ability to pay, not because they have got a family 
heirloom or a wedding ring or some other special prized asset 
that should not be counting for purposes of these important 
benefits.
    Senator Stabenow. Well, you may make light of that, but the 
law does not say that. That is not what the law says.
    Dr. McClellan. Well, that is why it is very important for 
us to implement the law effectively. We have some discretion 
within the law on how we interpret things like what counts for 
an asset and what I think and what we will ask for comment 
about is that Congress intended for us to do a reasonable 
application of an asset test for people that are not truly of 
limited means just because they happen to have low-income in a 
particular year. They might be expected to contribute to some 
of the costs, you know, 25 percent of the costs of the premium 
just like higher-income beneficiaries would. But for 
beneficiaries who are truly low income but for a small life 
insurance policy or a wedding ring or something like that, that 
is who we really want to help.
    Senator Stabenow. But the law refers to categories and 
calculations regarding funeral plots and life insurance 
policies, and by definition, let us say someone gets to keep 
their wedding ring--thank goodness. You are saying and the law 
says that if you have $6,000 worth of assets, you do not 
qualify as a low-income senior. That is not very much; is it?
    Dr. McClellan. It is not very much, but it is much more, 
Senator, than millions of beneficiaries have today, millions of 
beneficiaries who are paying full cost for their drugs and who 
do not have any help right now from Medicare or anybody else 
with their drug costs, and that is what we are trying to 
change.
    Senator Stabenow. You are suggesting that when you are 
done, a third of those on Medicare will qualify under your 
definition of someone who has $6,000 or assets or less?
    Dr. McClellan. About a third of Medicare beneficiaries can 
get the additional assistance envisioned in this law, being 
able to get your drugs for as little as a few dollars for 
prescription or at most a few hundred dollars a year; that is 
right.
    Senator Stabenow. Well, we will be watching very closely on 
that, Mr. McClellan.
    Dr. McClellan. I will look forward to working with you on 
this. I know how important that assistance for people with 
limited means is to you. We are going to have a broad 
discussion of this when we put out our proposed regulations. We 
are working with the Social Security Administration, other 
experts, on thinking about what should and should not be 
counted in terms of coming up with a workable fair asset test 
and we are going to do that as effectively as we can under this 
law.
    Senator Stabenow. Well, just for the record, Mr. Chairman, 
I do not believe there is a way to come up with a $6,000 assets 
test that is really fair, no matter how good intentions are, 
how many good intentions there are. That amount is an extremely 
limited amount of money to say to seniors of this country in 
terms of giving them the help that they need.
    One other quick question. That is last week we read in the 
paper about another group of people I am very concerned about, 
and that is those who have private retiree coverage now. There 
are a lot of those folks in my state who worked their whole 
life, have retiree coverage, have given up pay raises and given 
up other kinds of bonuses to be able to get health care during 
their retirement years. Originally we saw numbers before this 
bill passed that about 2.7 million people were likely to use 
retiree coverage because of the way this is structured, and now 
we are hearing at least internally that there are numbers that 
say that that is more like 3.8 million people who will lose 
retiree coverage.
    This is just one of a series of reasons why I did not 
support the original Medicare bill because I believe in 
addition to not really giving the help to low-income seniors 
because of all the bureaucracy and the assets test and so on, I 
have a very deep concern and belief that the first rule should 
be do no harm.
    That if anybody is losing their retiree coverage as a 
result of this, we are doing them harm. I am wondering if you 
would respond? I understand you had put out a statement 
saying----
    Dr. McClellan. I did.
    Senator Stabenow [continuing.] Saying that those numbers 
were not accurate.
    Dr. McClellan. That is right.
    Senator Stabenow. It is difficult for us when we look at 
the budget numbers that were put out that were not accurate, 
and then different numbers come out after the bill passed, and 
we hear from the actuary that he was threatened with losing his 
job. So it is very difficult, and I certainly want to have 
confidence in the numbers that come out, but it is very 
difficult given the kinds of information and changing of 
numbers and so on that have gone on as it relates to this new 
law, but I wanted to give you an opportunity to speak to why 
this number evidently put together by someone within the 
department which is substantially higher, in fact 1.1 million 
more retirees that would lose private coverage, why you are 
indicating that that is not accurate?
    Dr. McClellan. Yeah. Senator Stabenow, let me reiterate 
very clearly that that that is not our policy and that what we 
are doing as a lead up to implementing this new retiree 
assistance effectively is considering a range of options, and 
we are going to put out for public comment a range of options 
about how best to increase the strength and the security of 
retiree benefits. I have talked to a lot of those seniors as 
well--I probably do not get as much of a chance to in Michigan 
as you do--and I know how worried they are about their 
benefits. They have seen the trends over the last decade of 
declines in coverage and less employer contributions and higher 
costs that they have to pay, if they get to continue their 
benefits at all. We intend to stop that.
    We intend to stop that decline. We intend to end up with a 
policy that not only preserves but increases the support for 
retiree coverage, that adds existing employer contributions to 
the new help from Medicare, over $70 billion in new assistance, 
for employer programs like GM, Ford and others in your state, 
and we are going to have a very public process.
    We are getting comment on this from Members of Congress 
like you, we are getting comment from retiree organizations, we 
are getting comments from the employers themselves about how we 
can use all the tools in this bill to get them the maximum 
additional help in continuing to provide strong effective 
retiree coverage. It includes coverage that people get through 
the retiree drug subsidy which is what was the particular 
subject of that New York Times article.
    It also includes new assistance that retirees can get by 
employers wrapping around the Medicare Part D benefit or 
offering an enhanced Part D benefit themselves, one that is a 
comprehensive benefit and that they will now be able to do for 
a much lower cost, than if they are footing the whole bill on 
their own.
    So all of those approaches are important ways of augmenting 
employer coverage, and we are going to have a full discussion 
of all the options for doing this with a single goal in mind of 
how do we get the most additional help to retirees for the 
least additional cost to the Federal Government.
    Senator Stabenow. Well, I am certainly hopeful that your 
statement that no one losing their private coverage as a result 
of this will, in fact, happen. Finally, are you going to 
support our re-importation bill?
    Dr. McClellan. Well, that is outside of my current 
jurisdiction, Senator. I am sure that we are going to keep 
working together as close as we can on finding all the safe and 
proven and effective ways of lowering drug costs for our 
seniors and I look forward to continuing to work with you on 
all of these ideas.
    Senator Stabenow. Thank you. Thank you, Mr. Chairman, for 
your patience.
    The Chairman. Thank you, Senator.
    Senator Breaux.
    Senator Breaux. I just have two follow-up points. I mean 
the fact about employer retirees losing their retiree coverage 
as a result of this bill, they were losing it way before 
anybody even thought about this.
    Dr. McClellan. They are losing coverage now. That is what 
we are trying to stop.
    Senator Breaux. My own father had his own dramatically 
reduced, and his company told all of their future retirees they 
would have zero coverage long before we even started thinking 
about this idea.
    Dr. McClellan. Yeah.
    Senator Breaux. Another point is the means test was not 
dreamt up in this Medicare bill. I mean we have means test for 
Social Security. We have means test for Medicaid. In fact, is 
it not true that the Medicaid means test is substantially more 
restrictive to be eligible for a full ticket for prescription 
drugs under Medicaid? The assets test is $2,000 for an 
individual, $3,000 for a couple, and it is not indexed?
    Dr. McClellan. That is right.
    Senator Breaux. This is $6,000 of an individual for a full 
ride, $9,000 for a couple, and in addition to that, is it not 
indexed as well?
    Dr. McClellan. That is right. As you said, the Medicaid 
tests are stricter in very many states. The Medicare act means 
test is based on an SSI test so it's very similar, same kind of 
indexing and so forth.
    Senator Breaux. So I mean is it not clear that the means 
test that we used in this Medicare bill for prescription drugs, 
in fact, is substantially more generous than the existing 
Medicaid means test and the SSI means test?
    Dr. McClellan. As is the coverage that will be provided 
under this bill for millions of Medicaid beneficiaries who 
currently face restrictive formularies and other limits on the 
numbers of prescriptions they can fill.
    Senator Breaux. I mean there was some argument for, I would 
say, Mr. Chairman, for no means test. But when you have a 
limited amount of money, which is $400 billion, we could have 
had no means test if we could have gotten, you know, $600 
billion. I got people complaining now because somebody scored 
it at 800 billion. I mean we could have spent a trillion 
dollars and covered everybody who is over 65 with free drugs, 
but we do not have the money to do it.
    The Chairman. Thank you for those questions. Let me ask one 
that deals, and I am pleased that we have looked at that assets 
test. I will submit for the record the conference agreement and 
how it applies. It doubled the SSI test and it excluded 
specifically certain items like the house, like the car for 
transportation, up to $2,000 worth of household goods. It does 
exclude the wedding ring and life insurance up to $1,500, and 
so I think there is a substantial increase in the general 
generous character of the test.
    Mark, both with respect to the drug card going on right now 
and with respect to the 2006 benefit, lower income seniors are 
often the most challenging to reach and you have talked about a 
variety of scenarios and groups you are involving. Answer this 
for us if you would, please. What are the reasons for this 
difficulty and what outreach strategies are best for reaching 
the low-income seniors and is your outreach effort being 
tailored for both rural populations and for specific minority 
populations?
    Dr. McClellan. It absolutely is. Just picking up on your 
point, I think that looking back over the history of programs, 
well-intentioned programs intended to help people with limited 
means who are really struggling to get by. Outreach, I think, 
is one of the most critical barriers and problems that often 
does not get the attention it deserves. That is why there have 
been previous Federal programs that can take many years to get 
up to even 50 percent of eligible enrollment. We are going to 
do better than that this time, and we are also going to take 
steps to increase enrollment in those other Federal programs by 
taking many unprecedented outreach steps.
    This includes steps that we have tried already and that 
have been proven to be effective, steps like mailings from the 
Social Security Administration and Medicare that are targeted 
with some simple facts that people can use to figure out how to 
start taking advantage of the new benefits, advertising, 
especially advertising targeted in communities that have a high 
preponderance of these lower income beneficiaries can help as 
well. Broadcast advertising in particular and not just English 
language. We are doing Spanish language and other advertising 
now as well.
    Working with private groups. Around the country, many of 
these individuals have connections in one way or another in 
their community, connections to faith-based organizations, 
connections to seniors organizations, connections to other 
types of ethnic organizations. All of those sources can be 
great opportunities for outreach and connection.
    For example, we have been working with the National 
Alliance for Hispanic Health, and they have just come up with a 
new instruction manual in Spanish on how to use the Medicare 
approved drug discount card and how to get thousands of 
dollars' worth of additional assistance beyond the discounts 
available for low-income beneficiaries.
    We cannot do this by ourselves, but because they have a 
tremendous amount of experience and connections with community 
groups that reach and deal with low-income beneficiaries on an 
on-going basis, we can talk to and connect with a lot more 
people. That is the philosophy behind the new grants that we 
are awarding. We just announced $4.6 million for community-
based organizations recently. That is the philosophy behind 
doubling our support for the state health insurance assistance 
plans, and also doing new grant programs for the Administration 
on Aging, the Indian Health Service, and other Federal agencies 
that also have good connections and good experience in 
outreach.
    All together, I think these efforts will not only help us 
boost enrollment from the people who can get the most out of 
these new programs for the drug benefit but will also end up 
increasing enrollment in many of these other Federal programs 
that for too often have fallen short of the maximum benefits 
that they can provide. So this is a huge outreach effort. We 
are looking at all of the approaches that can be proven 
effective. We are even working some with the USDA and some of 
their local agricultural offices which is a good connection 
point for people in rural communities.
    We are going to keep that up and redouble our efforts over 
the coming year for both the drug card transitional assistance 
which people can get and use right now and for the full drug 
benefit in 2006.
    The Chairman. Senator, yes.
    Senator Stabenow. Thank you, Mr. Chairman. I just have to 
comment more than a question and say I appreciate and fully 
believe that you are doing maximum outreach as it relates to 
all of this, but we would not need to spend all this money to 
do this and all this time if we had taken the approach of one 
Medicare card, allowing Medicare to negotiate maximum discounts 
for everyone, and then making that available to people so that 
this approach is the most complicated and the most costly way 
to go on this.
    I would also say if we allowed the pharmacist in my great 
state and around the country to negotiate and bring in 
prescription drugs, to do business with those in Canada, we 
could drop prices in half tomorrow, which is a bigger discount 
than any card we are going to come up with.
    Dr. McClellan. I know how strongly you feel about these 
issues, and I would just like to add on this point that by 
having multiple cards available, we can make sure that people 
get the formularies they want. It is true that there are some 
government programs out there that just have one set of 
benefits, but I am not sure that is going to deal effectively 
with all of our diverse beneficiaries. The VA formulary, for 
example, that gets mentioned a lot does not cover drugs like 
Vioxx and Lipitor and many of the other drugs that are commonly 
used by many millions of seniors. So what we are trying to do 
with our improvements in the card program is make it possible 
for you to hone right in on just the one or two or three 
programs that are best for your particular needs.
    So it is like having just one or a few choices, but they 
are choices that are actually going to match up with the kind 
of drug assistance that you get, and in terms of prices, this 
negotiation approach seems to be making a real difference. 
There was a Consumer's Union study recently that found that the 
prices available through the Medicare endorsed drug cards are 
lower than the prices in California for Medi-Cal drugs and, you 
know, Medi-Cal is a very big state government run program that 
negotiates lower prices for their beneficiaries. The Medicare 
cards are doing better than that program. So there are 
certainly more steps that we should think about doing, but I 
think there is a lot of help available right now that we need 
to connect up with seniors, and we will keep trying to make the 
program work even better.
    The Chairman. Mark, thank you very much. As Senator 
Stabenow said, and as John and I certainly also agree, we are 
going to keep a very close eye on you.
    Dr. McClellan. Well, thank you very much. I think this kind 
of dialog is extremely helpful for us in focusing our efforts 
effectively, and we definitely appreciate your support for 
getting real relief right now to people who have already been 
waiting too long with high drug prices. Thank you very much.
    The Chairman. Well, we know that you have a very difficult 
task in front of you with a very complicated bill, and we will 
always expect you to be on time and on schedule.
    Dr. McClellan. I will do my best.
    The Chairman. Thank you very much.
    Dr. McClellan. Thank you.
    The Chairman. Now let us ask our second panel to come 
forward, please. Thank you all very much. Our second panel 
today we will hear from Gail Wilensky, a former administrator 
of the Health Care Finance Administration. That is the old HCFA 
versus the new CMS. Currently the John M. Olin Senior Fellow at 
Project Hope, where she is one of the country's foremost 
authorities on Medicare, Medicaid and health care policy.
    Next, we will hear from Dr. Byron Thames.
    Dr. Thames. Thames.
    The Chairman. Thames. A family physician from Orlando, 
Florida, joining us today as a trustee of AARP, an 
organization, of course, whose support and counsel was critical 
to the enactment of the Medicare legislation we are discussing 
today.
    Next will be Dr. Jane Delgado.
    Ms. Delgado. Yes.
    The Chairman. Is president and CEO of the National Alliance 
for Hispanic Health and also a founding member of the new 
Access to Benefits Coalition that Dr. McClellan talked about, 
an organization dedicated to promoting outreach and enrollment 
of low-income seniors in the new Medicare drug program.
    Last, today Patricia Nemore, an attorney and Medicare 
expert, who is with the Washington Office for the Center of 
Medicare Advocacy, an organization focused on improving access 
to Medicare and quality health care. Well, we thank you all 
very much and, Gail, we will start with you.

STATEMENT OF GAIL WILENSKY, PH.D., JOHN M. OLIN SENIOR FELLOW, 
   PROJECT HOPE, FORMER ADMINISTRATOR, HEALTH CARE FINANCING 
                  ADMINISTRATION, BETHESDA, MD

    Ms. Wilensky. Thank you. Mr. Chairman, Senator Breaux, 
thank you for inviting me to testify. I would like to re-
enforce some of what has been said about how the new Medicare 
legislation will help the lowest income and the most vulnerable 
populations. I also want to stress the importance of allowing 
the full benefit to be implemented before introducing new 
legislative changes.
    As it is, it will take a Herculean effort to implement the 
major provisions of the legislation as it is now specified in 
law. I know. I have been there and I can now say it in a way 
that Mark McClellan cannot. The Medicare prescription drug card 
began enrolling beneficiaries in early May and started 
operations June 1, as you know.
    CMS estimates that about four million have enrolled, a 
really remarkable number given that it is only 2 months out. 
The card provides a way to get immediate assistance, especially 
for those who have no outpatient coverage which, of course, is 
not the majority of seniors, but even more important is the 
cash assistance that has been provided for those who are below 
135 percent of the poverty line, the $600 that they will have 
as well as no enrollment fee.
    CMS has found that low-income beneficiaries are saving 
substantial amounts of money--you have been hearing that 
already from Dr. McClellan--when you think about both the 
discount and the cash assistance. There is some very important 
provisions of the cash assistance which I hope will be 
considered as precedent for future policy changes.
    The first is that the entire $600 is available even though 
the program started June 1, but more importantly is the 
provision to be able to roll over unused dollars into next 
year. I keep hoping that the Congress will consider that for 
the provisions and flexible spending accounts rather than the 
current use it or lose it provision which only encourages 
employees to spend their money however they may at the end of 
the year.
    Cards and assistance that can be used by these low-income 
seniors are people who will also have access to state pharma 
programs or some of the special discounts that the 
manufacturers make available so that their help may even be 
greater than it now appears.
    The real benefit, of course, though, starts in January 
2006. A lot of attention has been given to the gap in coverage, 
the so-called ``donut hole.'' Although, as you well know, the 
fact is that 14 million low-income seniors will not have to 
face that gap in coverage provided that they also have low 
assets. People who are below the poverty line pay only a small 
copay up to the catastrophic coverage. Those who are 
institutionalized dual-eligibles pay nothing at all. People who 
are above 135 percent of the poverty line but below 150 pay 
slightly higher copayments, but relatively small amounts.
    Now, a lot of attention has been raised recently about what 
has been happening with the dual eligibles, those individuals 
who are eligible for Medicare and Medicaid. Of course they will 
not be impacted until January 2006, but there is something that 
is very ironic that is going on with some of the discussion.
    Before the legislation was passed, many individuals spoke 
as though they wanted to have Medicare supersede Medicaid 
because Medicare has not been typically regarded as a means 
tested or welfare-related program. Now, it is possible that 
there are some people with very severe disabilities who happen 
to live in very generous states that could find themselves 
somewhat worse off, but, in fact, the states will save money, 
not as much as they would have if there hadn't been the 
maintenance of effort provisions, but they will nonetheless 
save money. So it is hopeful that in the generous states, they 
will continue providing some extra coverage, but the fact is 
under the old dual-eligible Medicaid coverage of prescription 
drugs, because prescription drugs is an optional benefit, there 
was no guarantee as to what individuals would be covered for.
    This was not an entitlement. Many states had preferred drug 
lists, do have preferred drug lists under Medicaid and a number 
of states have a lot of restrictions in terms of the amount of 
drug coverage provided. None of that will now happen with the 
dual eligible. So that while there may be some issues for some 
of the most disabled individuals, I think that we ought to 
understand that dual eligibles in general will be much better 
off than they had been before.
    There is some important information in a recently released 
study that I see was outside the door by PriceWaterhouseCoopers 
that shows the substantial amount of help that will be going to 
people below 150 percent of the poverty line and below 135 
percent of the poverty line. They estimate that 98 percent of 
the spending by dual eligibles will be covered by this new 
bill. They furthermore estimate that 65 percent of the low-
income beneficiaries are expected to pay less than $250.
    Just a couple of comments about some lessons that we are 
already learning. The fact of the matter is reaching low-income 
populations has always been very difficult. We know that from 
the qualified Medicare beneficiary outreach attempts at QMB, 
the so-called SLMB, the selected low-income beneficiaries, from 
the Children's Health Insurance Program, and that this is not a 
new problem with regard to the prescription program attached to 
Medicare.
    The cash transition program will help. It will give CMS 
some time to figure out how to reach out to these low-income 
populations. As was discussed, automatic enrollment has been 
requested by some states and that this and other strategies 
will also be helpful in identifying low-income populations. 
Outreach is important. The state aging agencies can be helpful. 
The churches, the advocacy groups are all very important to be 
involved.
    The president's budget assumes 10.9 million people out of 
14.5 eligible will actually enroll in 2006. That is an 
extraordinary number. I do not know whether they will be able 
to reach it, but the fact that that is their expectation really 
is a very important focus point. They will need lots of help.
    Let me again end with my plea, do not fix problems 
legislatively before 2006 when the main benefit has been rolled 
out unless you do not care if the program starts on time.
    There will, of course, be clean-up legislation. There 
always is. We saw the Balanced Budget Refinement Act and the 
so-called Beneficiary Improvement Act following the Balanced 
Budget Act. CMS now has an enormous burden put on it. A new 
benefit using a new delivery system, a modified private health 
care plan, lots of changes to Part B drug coverage, lots of 
provider payment changes, and other areas not even related to 
Medicare.
    Congress has really helped by providing a billion dollars 
to CMS and $500 million to the Social Security system, 
something that I believe is unprecedented. It has been helpful 
that Mark McClellan was confirmed as quickly as he was, but 
there has been a lot of staff turnover and an enormous amount 
of work. Some of it was predictable because of the aging of the 
staff, but even so, when it happens, it is still very 
difficult.
    This means that if there is an attempt to try to change the 
legislation before January 2006, it is very unlikely that this 
important benefit will actually exist. Let it go as it is. 
There will be problems. Fix them legislatively, but after the 
fact if you care about what happens to these low-income 
seniors.
    Thank you.
    [The prepared statement of Ms. Wilensky follows:]

    [GRAPHIC] [TIFF OMITTED] T6738.025
    
    [GRAPHIC] [TIFF OMITTED] T6738.026
    
    [GRAPHIC] [TIFF OMITTED] T6738.027
    
    [GRAPHIC] [TIFF OMITTED] T6738.028
    
    [GRAPHIC] [TIFF OMITTED] T6738.029
    
    [GRAPHIC] [TIFF OMITTED] T6738.030
    
    [GRAPHIC] [TIFF OMITTED] T6738.031
    
    [GRAPHIC] [TIFF OMITTED] T6738.032
    
    [GRAPHIC] [TIFF OMITTED] T6738.033
    
    [GRAPHIC] [TIFF OMITTED] T6738.034
    
    [GRAPHIC] [TIFF OMITTED] T6738.035
    
    [GRAPHIC] [TIFF OMITTED] T6738.036
    
    The Chairman. Gail, thank you very much. Now, Dr. Thames.
    Dr. Thames. Thames, yes sir.
    The Chairman. Thames. Thank you very much.

STATEMENT OF BYRON THAMES, M.D., TRUSTEE, AMERICAN ASSOCIATION 
                OF RETIRED PERSONS, ORLANDO, FL

    Dr. Thames. Thank you very much, Mr. Chairman, Senator 
Breaux. We thank you for inviting AARP to discuss the new 
Medicare drug law and how it helps beneficiaries with limited 
incomes. These provisions offer meaningful assistance to over 
13 million people who need help the most in purchasing 
prescription drugs. They are among the most important features 
of this new law, and are the first critical steps toward 
providing comprehensive and affordable prescription drug 
coverage that all Medicare beneficiaries need and deserve.
    AARP is working to ensure that beneficiaries know about the 
new benefits and take advantage of the assistance. We are 
conducting extensive public outreach efforts that to date have 
reached roughly 300,000 of our members and their families. We 
have produced three booklets explaining the new law in plain 
language that the average reader can understand.
    AARP is also among the more than 80 groups participating in 
the Access to Benefits Coalition which is working to find and 
help those eligible for the extra assistance to understand and 
enroll in the programs. To meet this challenge, the Coalition 
is providing grants, education materials and technical 
assistance to coalitions of local groups that are forming 
across the country to help people take advantage of the 
assistance available to them.
    The rollout of the new limited income benefits is a massive 
undertaking and as with many new programs, lessons are learned 
along the way. Medicare officials are already taking advantage 
of these lessons to make improvements, such as establishing a 
standard application form that can be used to enroll 
individuals in any of the more than 70 different discount card 
options and allowing state pharmacy assistance programs to auto 
enroll their members in the drug card program.
    AARP believes we can and should make further improvements 
as we proceed. For example, people in Medicare savings programs 
also should be auto enrolled in the drug card program. These 
beneficiaries generally have incomes below 135 percent of the 
Federal poverty level and are among those who most need help 
with prescription drugs. Relying on outreach efforts alone 
virtually guarantees that many of these people will not get the 
$600 transitional assistance credit to which they are entitled.
    Auto enrollment is a proven method to ensure that they do 
gain access and we believe it can be done in a way that 
preserves choice and encourages market forces to help drive 
prices down. For the comprehensive drug program, the most 
important needed improvement to the low-income provision is 
elimination of the asset test. The asset test creates a welfare 
stigma and sends the wrong message because it penalizes 
individuals who have managed to modestly save for retirement. 
The asset test also involves complicated rules and massive 
amounts of documentation which may well dissuade people from 
applying for extra assistance.
    One of Medicare's greatest strengths is that it does not 
carry such a stigma. Medicare is a social insurance program. An 
asset test for the drug benefits begins to erode that great 
strength. With these and other improvements that can be made, 
the extra assistance provided for people with limited incomes 
in the new Medicare drug law establishes a foundation and model 
for providing comprehensive drug coverage to all Medicare 
beneficiaries.
    That is a goal that we all share. We greatly appreciate the 
efforts of the administration and Congress to reach out to 
those who are eligible for this extra assistance and to make 
refinements as the program is implemented.
    We look forward to continuing these efforts through full 
implementation of the new law in 2006 and beyond. Thank you.
    [The prepared statement of Dr. Thames follows:]

    [GRAPHIC] [TIFF OMITTED] T6738.037
    
    [GRAPHIC] [TIFF OMITTED] T6738.038
    
    [GRAPHIC] [TIFF OMITTED] T6738.039
    
    [GRAPHIC] [TIFF OMITTED] T6738.040
    
    [GRAPHIC] [TIFF OMITTED] T6738.041
    
    [GRAPHIC] [TIFF OMITTED] T6738.042
    
    [GRAPHIC] [TIFF OMITTED] T6738.043
    
    [GRAPHIC] [TIFF OMITTED] T6738.044
    
    [GRAPHIC] [TIFF OMITTED] T6738.045
    
    [GRAPHIC] [TIFF OMITTED] T6738.046
    
    The Chairman. Doctor, thank you very much. Now, let us turn 
to Dr. Jane Delgado.
    Doctor.

STATEMENT OF JANE DELGADO, PH.D., M.S., PRESIDENT AND CEO, THE 
  NATIONAL ALLIANCE FOR HISPANIC HEALTH, FOUNDING MEMBER, THE 
          ACCESS TO BENEFITS COALITION, WASHINGTON, DC

    Ms. Delgado. Good afternoon, Mr. Chairman, Senator Breaux. 
I am president and CEO of the National Alliance for Hispanic 
Health, founded in 1973, and today serving over 12 million 
persons. I am also a founding organizational member and on the 
five-person steering committee of the ABC Coalition. My summary 
statement is going to focus on four things: the importance of 
MMA to Hispanics; the ABC Coalition; what we are doing at the 
Alliance; and also some early feedback from communities which 
is helpful as we move forward.
    First of all the importance of MMA to Hispanics. Most 
people do not know this, but Hispanics live longer than non-
Hispanic whites. This is true for both Hispanic men and 
Hispanic women. So anything that has to do with older adults, 
we are keenly concerned with.
    We are very concerned about individualized care. Our recent 
report ``Genes, Culture and Medicines'' points out the 
differences among people in how they metabolize drugs. So 
individualized care, which is the wave of the future, with 
reference to pharmaceutical drugs is very important for us.
    The positive impact of MMA on healthy aging especially for 
low-income seniors. This is important to us as Hispanics.
    Now, the ABC Coalition. Many people have mentioned it and I 
would like to say that our goal is very simple: to enroll 5.5 
million beneficiaries by the end of 2005. Our members are very 
diverse. We are a group of senior organizations, disability 
organizations, faith-based, minority, provider, consumer and 
advocacy organizations, and we grow weekly.
    Now, our membership is over 82. ABC as an organization is 
about effective implementation of the new Medicare law to 
ensure that low-income beneficiaries make optimal use of 
available public and private benefits to pay for prescription 
drugs.
    I also want to say what ABC is not about. We are not about 
whether the MMA should or should not have been passed. We are 
not about how to reform it or whether we should. We are not 
about who should be elected president or to Congress. We are 
not about what we should do in other legislative positions. 
This is an organization people have agreed to be part of to 
enroll low-income seniors.
    Our steering committee is the National Council on Aging, 
Alzheimer's, ourselves, AARP and Easter Seals, and we work 
through our working groups.
    What we have successfully done has been based on the 
collective experience of all our members. One is to give grants 
to local organizations so they can actually enroll people. But 
the second thing is to give web-based tools to people so once 
they are at the point of trying to enroll people, they have the 
best information.
    We have heard, that low-income people do not have access to 
the web. We understand that. But the people who are providing 
the intermediary service of helping enroll people do. So we 
have web-based tools that can help people get the best 
information on what is happening with MMA and the prescription 
drug benefit.
    When we look at what we are doing at the Alliance, we are 
doing what we know best. We have established networks and 
funded 25 community-based organizations to actually enroll 
people, and in that we have to do some creative things--give 
people laptops, give them money so they could buy laptops so 
they could actually be part of the enrollment. We have produced 
videos. We have written and published a bilingual workbook. We 
have included the information on the Medicare transitional 
program on our help line.
    From the early feedback we get from communities is accurate 
and timely information is needed. People talk about confusion, 
but when there are more choices, and choice is a good thing, 
there is going to be some confusion. So we need to make sure 
that trusted providers of information are there to help people 
work through the process.
    This is an opportunity not just for the program, but also 
to talk to people about health. The outreach workers can go 
out, talk to people, do the kind of work which we want them to 
do, plus part of it is the MMA prescription benefit.
    We find that there is a continuing importance of being able 
to go to your local pharmacy. People have a relationship with 
that person. They need to continue that.
    The wraparound benefits are very important. If I were going 
to say what were the key things that are important about MMA, 
first of all, it is the single-most important opportunity to 
help lower income beneficiaries in the last 40 years. We think 
this is a key event for us. We want to make sure to support 
everything that we can to do it.
    Second, the low-income benefit will help even more people 
in 2005 and further in 2006. We are glad about this, but we 
also know in order to do this that Medicare really needs to 
have the legislative language so they can have the full 
authority to work directly with community-based organizations.
    Finally, we understand how very often a national campaign 
with counting the number of impressions in television and 
listening to radio is very important but, as we know, from 
every program in health education, knowledge is not enough. You 
need knowledge, attitudes, and behaviors. These community-based 
partners who are out there at the front lines are key to making 
this program a success.
    That is what ABC is about. That is what the Alliance is 
doing. That is what makes this important, and we are here to 
work with you to make sure that the new prescription and 
preventative care benefits ensure a population that has healthy 
aging.
    Thank you.
    [The prepared statement of Ms. Delgado follows:]

    [GRAPHIC] [TIFF OMITTED] T6738.047
    
    [GRAPHIC] [TIFF OMITTED] T6738.048
    
    [GRAPHIC] [TIFF OMITTED] T6738.049
    
    [GRAPHIC] [TIFF OMITTED] T6738.050
    
    [GRAPHIC] [TIFF OMITTED] T6738.051
    
    [GRAPHIC] [TIFF OMITTED] T6738.052
    
    [GRAPHIC] [TIFF OMITTED] T6738.053
    
    [GRAPHIC] [TIFF OMITTED] T6738.054
    
    [GRAPHIC] [TIFF OMITTED] T6738.055
    
    [GRAPHIC] [TIFF OMITTED] T6738.056
    
    [GRAPHIC] [TIFF OMITTED] T6738.057
    
    [GRAPHIC] [TIFF OMITTED] T6738.058
    
    [GRAPHIC] [TIFF OMITTED] T6738.059
    
    [GRAPHIC] [TIFF OMITTED] T6738.060
    
    [GRAPHIC] [TIFF OMITTED] T6738.061
    
    [GRAPHIC] [TIFF OMITTED] T6738.062
    
    [GRAPHIC] [TIFF OMITTED] T6738.063
    
    [GRAPHIC] [TIFF OMITTED] T6738.064
    
    The Chairman. Jane, thank you very much. Now let me get to 
the last of our panelists on panel two, Patricia Nemore.
    Patricia, welcome.

STATEMENT OF PATRICIA B. NEMORE, ATTORNEY, CENTER FOR MEDICARE 
                 ADVOCACY, INC., WASHINGTON, DC

    Ms. Nemore. Thank you, Senator Craig and Senator Breaux. 
Since I understood that the interest of the committee is 
largely in the implementation of the Medicare drug plan, the 
testimony that I have submitted for the record as well as my 
oral comments today focus on those areas where we at the Center 
for Medicare Advocacy believe the Secretary and the 
Administrator can act to improve the drug benefit. We have not 
addressed the many areas of the law that we believe do need to 
be improved, amended or repealed.
    We know that low-income Medicare beneficiaries have 
disproportionately complex health care needs and that their 
enrollment in assistance programs is hindered by a lack of 
information and by complicated and burdensome application and 
enrollment processes.
    The prescription drug program and the low-income subsidy 
are, as each of you have said today, and everyone who has 
testified before you, extremely complex and are likely to 
create a great deal of confusion. I cannot stress enough that 
these facts argue for the Secretary to exercise all discretion 
that he has under the law to simplify this program in every way 
possible to ensure that low-income beneficiaries can, in fact, 
get some prescription drug coverage.
    I would like to make five points.
    First, the Secretary must address the unique circumstances 
of dual eligibles. Dual eligibles will lose their Medicaid drug 
coverage in January 1, 2006. I differ with some comments I have 
heard about whether that is good or bad, but we do know that 
there will no longer be a Medicaid wraparound benefit for these 
individuals who have great health care needs.
    To assure that they have no gap in coverage, dual eligibles 
will have to choose a Part D plan between November 15 and 
December 31. They will need to be identified and provided clear 
information and one-on-one assistance in order to do so.
    States and state health insurance counseling programs, what 
we call the SHIPs, and community-based organizations can be 
enlisted to help dual-eligibles choose plans. Since the law 
authorizes the Secretary to automatically enroll dual eligibles 
in plans, if they do not do so themselves, any automatic 
enrollment must be followed up by information and assistance to 
help individuals know how to use their plan or how to choose a 
different plan if they wish.
    Second, the Secretary must act to simplify, streamline and 
create equity in the eligibility and enrollment processes for 
the low-income subsidies. A few ways that he could do this are 
to deem all Medicare savings programs' beneficiaries eligible 
for the low-income subsidy, eliminating the need for about a 
million people to apply and enroll to get the subsidy, to 
permit all the states that use more liberal methodologies in 
their Medicare savings program process to use those for the low 
income subsidy, and to require the Social Security 
Administration in those states that use more liberal 
methodologies to use those as well, so there would be equity 
among residents of a single state, and to require that the 
simple application form and process that the law requires the 
Secretary and the Commissioner of Social Security to create is 
available to all beneficiaries regardless of where they apply. 
We have heard a lot about the assets test. The assets test will 
create barriers for people, both because it will make people 
ineligible but also because it requires enormous documentation. 
The Secretary must minimize the documentation required.
    Third, the Secretary must require that clear detailed 
information is provided directly to beneficiaries of Part D 
plans, not merely that they be told about the availability of 
it, so that beneficiaries have information about a plan's 
formulary, the formulary design and structure, the structure of 
any tiered cost sharing and which drugs are included in each 
tier.
    Beneficiaries will need to be directly provided notice when 
plans add or remove drugs from their formularies or change 
their tiered copayment system. Such notice must include clear 
information about how the beneficiary can seek coverage of a 
drug removed from the formulary or the review of a change in 
the drug's copayment.
    Fourth, the Secretary must clarify the requirements for 
Part D plans' processes for determinations, reconsiderations 
and appeals to assure that beneficiaries have access to an 
expedited review process for the coverage of drugs that are not 
on the formulary, for drugs that have been removed from the 
formulary, and for changes in copayment requirements.
    Such clarification could include, as under Medicare 
Advantage, that the physician can seek expedited review.
    Fifth, the Secretary must increase substantially resources 
for outreach, information, counseling and assistance that will 
assure the availability of the one-on-one assistance that is 
going to be desperately needed by beneficiaries trying to 
navigate this extremely complex system that has been created.
    This should be done by funding the State Health Insurance 
Counseling Programs at $41 million per year which is one dollar 
per beneficiary, and providing resources for groups such as 
Jane's to do individualized community-based outreach and 
assistance.
    I thank you for the opportunity to testify here today and I 
am willing to answer any questions. Thank you, Senators.
    [The prepared statement of Ms. Nemore follows:]

    [GRAPHIC] [TIFF OMITTED] T6738.065
    
    [GRAPHIC] [TIFF OMITTED] T6738.066
    
    [GRAPHIC] [TIFF OMITTED] T6738.067
    
    [GRAPHIC] [TIFF OMITTED] T6738.068
    
    [GRAPHIC] [TIFF OMITTED] T6738.069
    
    [GRAPHIC] [TIFF OMITTED] T6738.070
    
    [GRAPHIC] [TIFF OMITTED] T6738.071
    
    [GRAPHIC] [TIFF OMITTED] T6738.072
    
    [GRAPHIC] [TIFF OMITTED] T6738.073
    
    [GRAPHIC] [TIFF OMITTED] T6738.074
    
    [GRAPHIC] [TIFF OMITTED] T6738.075
    
    [GRAPHIC] [TIFF OMITTED] T6738.076
    
    [GRAPHIC] [TIFF OMITTED] T6738.077
    
    [GRAPHIC] [TIFF OMITTED] T6738.078
    
    [GRAPHIC] [TIFF OMITTED] T6738.079
    
    [GRAPHIC] [TIFF OMITTED] T6738.080
    
    [GRAPHIC] [TIFF OMITTED] T6738.081
    
    The Chairman. Patricia, thank you very much, and to all of 
you again, thank you. My questions will be somewhat general in 
nature, so as one responds, and the other feels they can add to 
or need to take from, please feel free to do so as we proceed 
to do all of this.
    During debate on this bill, the biggest focus I think for 
all of us, both in Congress and in organizations like yours, 
was on those seniors who did not otherwise have drug coverage 
and who just could not afford it themselves.
    This is a fairly generic question, but does this law 
substantially when implemented, in your opinion, alleviate that 
underlying problem and the primary premise behind this 
legislation.
    Gail.
    Ms. Wilensky. It does a lot more than that because it is a 
much broader coverage bill, but it does focus an enormous 
amount of assistance on the low-income population which is 
where more of the individuals without drug coverage lay. So the 
answer is that it will cover some individuals who had drug 
coverage already with more extensive coverage, but it will do a 
very good job in covering those who are both without coverage 
and who were low income, particularly if it is as successful as 
the President's budget assumes it will be in terms of reaching 
out to these individuals.
    Again, our experience in past administrations and in other 
attempts to reach these low income populations, including but 
not limited to my own efforts as HCFA administrator, is 
difficult. It is difficult for all income-related programs that 
I am aware of inside and away from health care, and we should 
not fool ourselves about the difficulty, but some of the 
assistance activities that have been mentioned will be helpful 
in making information clear and available.
    The Chairman. Doctor.
    Dr. Thames. Senator, I would echo those statements. In the 
debate among the Board of Directors from AARP when this bill 
was being formed and the decision for us to support this, one 
of the early overriding factors in looking at what this bill 
was to do, was that it was going to help meet the needs of 
those who truly suffered the most particularly those with low 
income and those who had catastrophic drug bills, and those who 
have to make terrible decisions about what to spend their money 
on or whether to take the drugs in the appropriate doses or 
skip doses or skip days. We believe that this bill will help 
both those low income and those people with catastrophic drug 
costs.
    Ms. Delgado. I think this is a very important bill in terms 
of low-income people, not just because of what we discussed, 
but in fact it moves CMS from being just a payer to being 
involved in people's health and more of a public health agency 
because of some of the other parts of the bill such as, getting 
your ``Welcome to Medicare'' physical, getting your diabetes 
diagnosed early. This changes the whole flavor of what the 
agency is about, and for low-income seniors, it is a major step 
forward.
    The Chairman. Patricia.
    Ms. Nemore. Senator, we have provided coverage for low-
income people who did not have any coverage before and that 
will be tremendously important if the potential of the 
legislation is actually realized. The complexity of the 
eligibility process for the low-income subsidy is substantial; 
you have two different places that you might apply, there might 
be different rules that would be applied to you in those two 
different places, you would be subject to two different appeal 
systems. There is a lot of complexity in getting the subsidy, 
the low-income subsidy, and then on top of that we have the 
issue of choosing a plan and having the information you need to 
choose one plan over another and assure that that plan will be 
able, in fact, to meet your drug needs.
    So there is potential here to help low-income people who 
have no coverage. We have made it extremely difficult for them 
to do it, and for the dual eligibles, they will lose the 
wraparound. Whether or not the benefit is better or not better 
than what is in their state now, they will lose the wraparound 
benefit that is applicable to all other Medicare coverage for 
dual eligibles where Medicaid picks up, fills in the gaps of 
what Medicare does not pay, and that is not permitted under 
this law. So I think it is a mixed answer.
    The Chairman. OK. Patricia, you had mentioned and were 
suggesting some changes. At the same time, Gail has basically 
cautioned us in saying you better let CMS do its work before 
you start proposing changes and get it on the ground and get it 
running, and look at or you are going to be considerably 
further down the road before anybody receives benefits.
    Also, both of you have talked about dual wraparound, 
uniformity, benefits back to the states, I would like to have 
both of you discuss that a little bit, both the question of 
making changes now versus getting done what we have gotten 
done, if you will, get it on the ground and get it running, and 
also I watched this year, and the past several years, as states 
that became increasingly generous in their benefits in Medicaid 
having substantial withdrawal pains, if you will, because of a 
reduction in revenues based on the economy and shifts 
backwards.
    In other words, what was not an entitlement, it was simply 
added benefits pulled back, and the value of stabilizing that 
benefit, if you will, from a national standpoint, benefits to 
the states, and the understanding that I have, while some 
states may have been more generous, the value of a very small 
copay, if you will, or a very small payment on a prescription 
by a prescription basis to receive relatively uniformity in 
coverage.
    Discussion about both of those I think would be valuable to 
the committee in understanding it. Gail, let me start with you, 
we will go to you, Patricia, and see if we cannot gain from 
both of your knowledge in this area.
    Ms. Wilensky. In the late 1990's, states acted in ways that 
many of us would regard as positive but set themselves up for a 
lot of revenue obligations. They expanded the populations that 
they made Medicaid available to, they increased the benefits, 
and they increased the payments to providers, nothing that is 
bad in and of itself, but potentially much more costly than 
they had been exposed to.
    There was a sharp decline in revenue, as you know, for many 
states, and that has caused them to cut back, particularly in 
terms of payments to providers, sometimes to the benefits as 
well. It is unclear what will happen as the country is coming 
out of its recession in terms of state revenues. We know what 
is happening at the national level, but whether that translates 
immediately to the states is less clear.
    I say that because it is important to understand that while 
the Federal Government is not going to share in whether states 
choose to offer additional benefits to their dual-eligible 
populations or other populations, states are permitted with 
their own money, of course, to augment benefits in any way that 
they see fit, and they will save money, although primarily not 
early on in the legislation over what they would have been 
spending without the passage of the Medicare Modernization Act, 
about 15 percent of what they would have spent.
    The other 85 percent comes back to the Federal Government 
through the maintenance of effort sometimes called the claw 
back provision. So precisely what will happen to individuals in 
some of the states will depend on how both the state responds 
and how the pharmacy assistance programs that exist in many of 
the states and how the manufacturers' programs go on.
    But they will lose this wraparound largely, more than the 
majority, financed by the Federal Government in terms of adding 
on to what already has existed. So we will have to wait to see.
    Let me explain more carefully about why I feel so strongly 
about not modifying the legislation before the legislation has 
primarily rolled out which will mean the first or second 
quarter of 2006. People think that that means that CMS has 
until 2005, but they do not. If the information is going to be 
mailed out in October 2005, in order to get enrollment in 
November so that the benefit can start in January 2006, an 
enormous number of decisions have to be made by CMS and the 
Secretary. Rules have to be promulgated in time so that people 
can have comments come back and then respond to all of those. 
Many people in Congress do not understand the timeliness that 
that involves in order to have the decisions and then the rules 
put out and then the comments reacted to from those proposed 
rules.
    Both of you seem quite sympathetic with that problem, but 
let me give you some numbers to illustrate what happens if you 
come up with a very controversial regulation which could well 
happen at some point in implementing the Medicare Modernization 
Act.
    My two experiences with controversial regulations were the 
Clinical Lab Improvement Act, CLIA, which had 35 or 40,000 
comments only to be outdone by the proposed rule for the 
relative value scale which produced 100,000 comments led 
largely by the nation's physicians, but joined in by other 
groups as well.
    While the administrator does not have to respond to each 
comment specifically, all of the issues that are raised in 
comments need to be dealt with when the final decisions are 
made. That is why I feel so strongly that whatever errors are 
in this legislation and all of us would have written the 
legislation somewhat differently if we could have, I think it 
is important to allow the major parts of the legislation to 
roll out and then fix it.
    There will be clean-up legislation. There always is. I am 
sure it will be needed here, but the benefit is not going to 
happen if there is legislative change before the rollout.
    The Chairman. Patricia.
    Ms. Nemore. Senator, my organization did not support the 
Medicare Act of 2003 and I intentionally today, in preparing my 
comments, did not address the issue of changes in the law that 
we believe need to be made.
    The suggestions I made in my oral testimony, and there are 
more in the written testimony, are all suggestions that we 
believe can be done, that the Secretary and the Administrator 
have the authority to do under the law.
    The Chairman. Under the law. OK.
    Ms. Nemore. We believe because this is such a needy 
population and such a hard to reach population and the law is 
so complex, that it is essential that those decisions always be 
exercised to the advantage of the beneficiary and to streamline 
and simplify the process wherever possible.
    The Chairman. OK. That is fair.
    Ms. Nemore. So on the matter of the Medicaid issue, I would 
just like to make a couple of points. Medicaid does require 
that all medically necessary drugs be covered, be available in 
the state Medicaid program. That will not be true with any 
individual Part D plan. Part D plans can choose what to cover 
and what not to cover. It is true that states have limitations 
of one sort or another and many states do, but they need, they 
have to have an override process, so there is in virtually 
every state the opportunity to seek coverage of any medically 
necessary drug.
    But I think the real point is that there is no wraparound. 
It is not whether Medicaid was better than Medicare. In the 
dually eligible context--these are the neediest people we have 
in the entire population in terms of health care needs--there 
has always been the model that Medicare coverage is first and 
Medicaid fills in the gaps, and that has been a very important 
way for dual eligibles to get the complement of services they 
need because each program has its own gaps, and together they 
provide fairly substantial coverage.
    One other point on the Medicaid issue, Medicaid as Dr. 
Wilensky said, Medicaid is more generous or less generous 
depending on individual state budgets, but it is subject to the 
political process, and in the state of Connecticut where my 
program has its main office, Connecticut advocates and citizens 
were able to persuade the legislature to remove copayments this 
year, so they were able to exercise their advocacy in the 
political realm to shape the program to work best for 
beneficiaries.
    This will not be true with Part D. Each plan will create 
its own formulary, its own cost-sharing systems, and there will 
not be the opportunity for political advocacy toward any 
individual plan.
    But I think the issue of the wrap is really the most 
important thing for us to keep in mind, the wraparound benefit.
    Ms. Wilensky. Senator Craig, may I add one more comment?
    The Chairman. Surely.
    Ms. Wilensky. This is a very important issue and a number 
of points have been raised that I think are important 
particularly for this committee to understand. I do not 
disagree with some of the concerns raised outside of the 
prescription drug area in terms of the loss of a wraparound. 
But I think having Medicare and Medicaid as two separate 
programs was a bad way to have these extra benefits provided. 
The dual eligibles have long been regarded as not only being by 
far the most expensive population by virtue of their low-income 
and their medical needs, but not particularly well treated 
because these two programs did not integrate with themselves 
very well.
    To the extent that we think that the low-income assistance 
that is being provided to individuals on Medicare is not 
adequate for some of the Medicare low-income population because 
of their additional disabilities. It is important to augment 
the Medicare program and not have these two programs attempting 
to interact with each other. It has been an extremely expensive 
program that is not generally regarded as having functioned 
well. So while I appreciate that there may be some benefits 
that have fallen off, I think we will be far better off to try 
to augment them in a very selective basis for low income 
disabled Medicare beneficiaries than to think about the two 
programs lying on top of each other. That just is not a model 
we should try to replicate.
    The Chairman. I have taken way more than my time. Let me 
turn to my colleague, John Breaux.
    Senator Breaux. Thank you very much. Ms. Nemore, I had 
supported the Medicare-Medicaid wraparound. But we did not have 
the votes to do that, and, of course, for my state of 
Louisiana, being in a Medicare program which was a guarantee 
and an entitlement is far superior to being in a Louisiana 
Medicaid program where you never know what you are going to get 
from year to year.
    It is already a program that is severely limited. I think 
they can only get six prescriptions filled and that is it. They 
never know whether it is going to be there the next year or 
not. So the concept of putting it all under the Medicare 
program was what we ultimately came up with, and I think Ms. 
Wilensky's suggestion is we want to do more for seniors, we can 
increase it, which I am sure the pressure will be there to do.
    But there is nothing that prohibits states from using their 
own state money to continue to do a wraparound if the state is 
fortunate enough financially--maybe Connecticut would be one of 
those; Louisiana certainly is not--to be able to do it. If they 
think it is in their state's interest and they can afford it 
and it is a proper use of funds, the state is not prohibited 
either under the discount card or under the Part D when it 
comes into effect to provide additional assistance. Does that 
not address some of your concerns?
    Ms. Nemore. Senator, as you noted, your state of Louisiana 
would be hard-pressed to provide that kind of assistance 
because----
    Senator Breaux. No, no, they would not be hard-pressed. 
They would not do it, period. Hard-pressed is being generous. 
[Laughter.]
    Ms. Nemore. It, as many states in the country that have 
substantial need, has a very high Federal match for Medicaid, 
so for those States to undertake this with their state dollars 
is very difficult.
    Senator Breaux. I was on your side. I argued for it, but we 
just did not end up with it. Ms. Delgado, is your organization 
using all of these senior groups to help them and pointing 
seniors to senior centers and other type of organizations out 
there to help them educate the members? I mean this is a real 
tough problem. I think that if you are 65, and as I get closer 
to that number, I think I am going to be still smart and 
intelligent and can use my computer, but certainly my father's 
generation does not even have a computer. I mean he would not 
know how to turn it on and would not want to learn, and it is 
very difficult for them to find where the information is on 
these new programs.
    I really think that these senior organizations can be 
particularly helpful in providing that type of information to 
seniors. I mean is that part of what you are attempting to do?
    Ms. Delgado. Most definitely. But it is not just the senior 
groups. It is also the community health centers.
    Senator Breaux. Sure.
    Ms. Delgado. It is the Meals on Wheels people.
    Senator Breaux. Good.
    Ms. Delgado. It is everyone who may touch someone's life or 
the life of a child who may have a parent that they can 
influence or help through the process. So really through ABC 
and through our own organization the Alliance, it is reaching 
out to people in whatever ways we can to get them the best 
information.
    I have to tell you that one of our earliest concerns was 
that people were concerned about the program because they kept 
being told it is confusing and complicated.
    Senator Breaux. There were some who were intentionally 
arguing that point vociferously.
    Ms. Delgado. Of course, but what we did is we took the 
people and told them, well, let us take a step back and see 
what you have to do, which is why we came out with a workbook 
for people to use, and once they worked through that workbook, 
they see, well, this is just listing all my medicines, this is 
knowing if my pharmacy accepts this card, this is calling this 
number, so it is making it simpler.
    You know government programs are not known for their 
simplicity. But at the same time, the access to the low-income 
senior that this provides for their medicine is stupendous.
    Senator Breaux. I like what Dr. McClellan said when he 
talked about the 1-800-MEDICARE number that seniors or anyone 
could on behalf of a senior dial up and say, ``Here is what I 
am taking, here are my five prescriptions or even more.'' Then 
say which card best fits what my needs are. Have you all ever 
taken a look at that? I mean is that something that is working, 
has the potential to work better, can you give me some kind of 
a feeling from the user's side?
    Ms. Delgado. Actually when the program first started, we 
had regular contact with CMS asking them to make things 
simpler, some of the Spanish language. At ABC, we have our own 
web site that we started. It gives a lot of information, also 
works seniors through it. We also give them access to another 
web site that really gets seniors involved in any senior 
program that they are eligible for. So it's really giving 
people tools. We have worked with CMS to get them to train 
local community-based groups on what they need to know and do.
    So, yes, it is working, but I have to say this is an--and I 
have been in Washington 25 years working with DHHS all this 
time--and the CMS staff are working with the community-based 
organizations, and that is a new relationship. Sure, it has its 
bumps, but I think they are moving in the right direction.
    Senator Breaux. Thank you. Dr. Thames, there is no means 
testing for the drug program.
    Dr. Thames. Correct, sir. You mean the assets?
    Senator Breaux. I mean means test, assets test. I mean you 
are eligible for the discount card. You are eligible after 2006 
for the Medicare insurance program that will cover prescription 
drugs whether you are making $25,000 of income or whether you 
are clipping coupons fortunately for $3 million a year. So 
there is no means test there.
    There is a means test for the first time for Part B for 
medical services. I guess that is what AARP is objecting to?
    Dr. Thames. Well, what we are concerned about is the 
Congressional Budget Office says that there will be 15.2 
million people who are below 150 percent of the poverty level 
in 2006. Of that number, 13.4 million of those people will be 
eligible for Part D. That 1.8 million of those people because 
they have assets will not be eligible under Part D. Is that 
incorrect?
    Ms. Nemore. For the low-income subsidy.
    Senator Breaux. I do not think that is correct.
    Ms. Nemore. Would not be eligible for the low-income 
subsidy.
    Senator Breaux. Oh, yeah, sure, for the low-income 
assistance, yeah.
    Dr. Thames. For the low-income.
    Senator Breaux. Are you objecting to----
    Dr. Thames. We feel that these people are low-income people 
and that it is wrong with their low incomes to deny them a 
needed subsidy because they have managed to put aside a small 
amount of savings for their retirement, which was what we were 
trying to encourage our people to do.
    Senator Breaux. OK. So AARP's objection is to the asset 
test?
    Dr. Thames. Yes, sir, the asset test. I am sorry if I did 
not make that clear.
    Senator Breaux. To become eligible for the subsidy?
    Dr. Thames. Yes, sir, that is our problem because we feel 
that it is wrong to penalize these people with very low incomes 
who have worked hard and put aside money that we encouraged 
them to do for their own retirement and then those assets, 
particularly at such a low level of assets, for them not to be 
eligible then for the low-income provisions.
    Senator Breaux. You would not argue against any asset test 
or would you?
    Dr. Thames. Well, we have said we are against the asset 
testing, but we have also said if we are going to have asset 
testing, we think the present levels are too low, Senator. That 
is in our own discussions.
    Senator Breaux. OK. Thank you, Doctor. Ms. Wilensky, I 
guess what you are saying, ``If it ain't broke, don't fix it 
yet''?
    Ms. Wilensky. Well, even if you think it is not working as 
well as you would like it, hold off, let it start, we will 
discover problems for sure, fix it after it starts.
    Senator Breaux. Yeah, I think that anything as monumental 
as this bill is to start trying to change it 2 months after it 
is implemented is something we do not have the capacity to do 
nor should we. Let us see how it is going to work, give it some 
time. Obviously, it was written by humans. It is not perfect, 
and as always, there will be opportunities to improve upon it, 
but do not try and do it before the ink is dry on the program. 
Let us get it set up. It is not completely implemented yet; we 
have made great progress. If you get four million people, I 
guess, Mr. Chairman, enrolled in the drug discount card after 
only a couple of months, that really is very significant, and I 
think it is going to improve, and it is going to get better 
with people like yourselves helping people to understand it.
    So I think all of you have been helpful and provided some 
good information and thoughts and we thank you for it. Thank 
you.
    The Chairman. John, thank you very much. This will be my 
last question of the panel. I think it goes without saying that 
assistance in paying for drug benefits helps low-income seniors 
economically. We do not really argue that. But what effect do 
you expect greater access to drugs to have to the health status 
of seniors in low-income populations, especially considering 
that serious health problems are often more prevalent among 
low-income seniors.
    Dr. Delgado, I am especially interested in hearing from you 
in regard to your experience with the health status and the 
needs, let us say, of the Hispanic community. We are interested 
in helping people stay healthy or get healthier, and we now 
know, of course, that prescription drugs is the same argument 
but in a different context that we made 30-plus years ago as it 
related to access to hospitals. Would you respond to that and 
then any of you who wish to do follow-up on your own comments 
in relation to health versus economics? We think clearly we are 
helping them economically. Are we helping them from a health 
status? Yes.
    Ms. Delgado. Let me just make three points. First, in terms 
of health, the fact that people will now be able to take their 
medicines, for example, for diabetes means they will not have 
to wait to go to the hospital to have an amputation, that they 
will be able to have better health.
    The second thing is that as part of the change in the mind-
set of CMS, the ``Welcome to Medicare'' physical starts talking 
about health promotion, disease prevention, very important for 
people's health because before people only went when they were 
sick to use their benefits. Now, there is an opportunity to say 
these are the things that you can do to prevent illness and to 
prevent the consequences of illness.
    The third thing is that people need to have access to the 
full range of medicines. We know, for example, that for 
Hispanics, for Mexicans in particular, there is data showing 
that the absorption rates of some medicines are three times the 
amount than it is for non-Hispanics, meaning people would take 
their medicines and become ill, and they would go to their 
doctor, I do not want my medicine, the doctor would say,``Oh, 
my patient is non-compliant'', but really it was not the right 
thing. By having a system that will cover both generics and 
brands, we let the physician and the patient decide which is 
the best medicine for that patient to live a better life.
    So it improves the economics, but the health of the person 
is critical. That means a person can stay home and live the 
kind of life that we want all our seniors to have.
    The Chairman. Patricia.
    Ms. Nemore. To the extent that the drug plans are able to 
actually, are covering the drugs that any individual needs, the 
low-income assistance provided by this legislation will allow 
people to not have to choose between taking medicine or buying 
food. That is often a choice that is made by people living on 
very limited incomes and this benefit can provide some relief 
for that. We are very concerned about the formulary rules and 
what can or cannot be covered. The plans have enormous 
discretion in designing their formularies and may, in fact, not 
cover a number of drugs. Even if a person found a plan that 
covered some of their drugs, it might not cover all of their 
drugs. So there may well be gaps that would still require 
people to be paying large amounts of money for their drug 
coverage.
    But to the extent that people do not have to choose between 
food and medicine, that would be a good thing.
    The Chairman. So you can conclude from this also that in 
the general sense, fully implemented, while you dislike certain 
portions of it and would have done it differently, it should in 
the end produce a healthier senior population?
    Ms. Nemore. If we have formularies that allow people to get 
access to the drugs they need, yes.
    The Chairman. OK. Dr. Thames.
    Dr. Thames. As a family physician who practiced for over 40 
years, I am very much impressed with a number of things about 
the bill, and I will just mention again the physical 
examination you can get, the fact that we are going to have 
chronic disease management, we are going to be able to discover 
disease sooner and treatment is going to be more cost-
effective. We are going to be able to keep more people out of 
the emergency rooms where costs go up, but we are also going to 
pay for comparable studies for efficacy of drugs, so we are 
going to decide in the same class of drugs which ones are the 
most cost-effective to do the same job, and that should make it 
a benefit, and poor people who have been unable to get the 
drugs that they need should be able to get not only the drug 
they need, but we are going to have scientific studies to 
determine what is the most cost-effective drug that they need 
for their diabetes or their cardiovascular disease.
    So I definitely feel that it would be very beneficial to 
those folks to identify their disease problems earlier and give 
them medications that keep them out of the emergency rooms and 
hospitals and begin to improve their life expectancy to come 
closer to what it is for more middle income Americans, where it 
is markedly below that now.
    Ms. Wilensky. Dr. Thames mentioned a number of points that 
is important for the aging community in particular to be 
mindful of, that in this bill, it is primarily a prescription 
drug bill. But there are a number of very important other 
provisions like the studies for chronic care, which is 
dominating the ill health of Americans, like the disease 
management focus, the important preventive health care benefits 
that were included, and that when you think about how 
anachronistic Medicare has been, up until the passage of this 
bill, focusing on inpatient drug coverage and physician and 
hospital, home care and nursing care, but excluding outpatient 
drug coverage, something that is hard to imagine any other type 
of insurance plan doing for the last 15 years, this bill really 
moves forward in terms of allowing people to have better health 
because they have fuller health care coverage and because we 
are pushing forward on trying to organize how that care can be 
provided for chronic care and disease management purposes.
    The Chairman. Well, as each one of you have said, you would 
have done it a bit differently. I think that is probably true 
of 100 senators and 435 House members. The reality is we did 
tackle a very large problem and try to resolve it.
    Now, of course, the detail of it being brought through 
regulation is critical and that is why we are here today, and 
that is why we will probably ask you or your colleagues to be 
back again and again as we watch in progress this effort taking 
shape. I do agree that I think we should be tremendously 
cautious as public policy people about suggesting changes 
before the fact.
    If it is clear within the context of the law, as Patricia 
has pointed out, maybe that is a nudging of CMS in the right 
direction or in a slightly different direction than they may be 
taking, but I think Congress will be cautious in that. We are 
very anxious to see it on the ground in a timely fashion so 
that seniors can begin to receive the benefits as was directed 
by this, as has been directed by this legislation.
    So we thank you for your presence today and your diligence. 
As I say, we will have you back again. I think it is important 
that we build a record, a record that CMS can look at knowing 
that we are watching them closely, as we move toward full 
implementation of what is in my opinion landmark legislation. 
We thank you all for your time here today. The committee will 
stand adjourned.
    [Whereupon, at 3:58 p.m., the committee was adjourned.]

                            A P P E N D I X

                              ----------                              


[GRAPHIC] [TIFF OMITTED] T6738.082

[GRAPHIC] [TIFF OMITTED] T6738.083

[GRAPHIC] [TIFF OMITTED] T6738.084

[GRAPHIC] [TIFF OMITTED] T6738.085

[GRAPHIC] [TIFF OMITTED] T6738.086

[GRAPHIC] [TIFF OMITTED] T6738.087

[GRAPHIC] [TIFF OMITTED] T6738.088

[GRAPHIC] [TIFF OMITTED] T6738.089

[GRAPHIC] [TIFF OMITTED] T6738.090

[GRAPHIC] [TIFF OMITTED] T6738.091

[GRAPHIC] [TIFF OMITTED] T6738.092

[GRAPHIC] [TIFF OMITTED] T6738.093

                                 
