[Senate Hearing 108-751]
[From the U.S. Government Publishing Office]
S. Hrg. 108-751
MEDICARE DISCOUNT DRUG CARD: MEASURING THE SAVINGS
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FORUM
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
SEPTEMBER 23, 2004
__________
Serial No. 108-44
Printed for the use of the Special Committee on Aging
U.S. GOVERNMENT PRINTING OFFICE
97-603 PDF WASHINGTON : 2005
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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
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Page
Opening Statement of Senator Larry E. Craig...................... 1
Panel of Witnesses
Mark McClellan, director, Centers for Medicare and Medicaid
Serivces....................................................... 2
Jim Firman, president, National Council on the Aging, chair,
Access to Benefits Coalition................................... 12
Sharman Stephens, director, Planning and Policy Analysis, Office
of Research and Development Information, Centers for Medicare
and Medicaid Services.......................................... 14
Mary Grealy, president, Health Leadership Council................ 33
Robert Helms, resident scholar and director of Health Policy
Studies, American Enterprise Institute......................... 42
Julie James, principal, Health Policy Alternatives............... 97
Appendix
Study submitted by the Lewin Group............................... 169
(iii)
FORUM: MEDICARE DISCOUNT DRUG CARDS: MEASURING THE SAVINGS
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THURSDAY, SEPTEMBER 23, 2004
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The forum commenced, pursuant to notice, at 2:39 p.m., in
room SD-628, Dirksen Senate Office Building.
OPENING STATEMENT OF SENATOR LARRY CRAIG, CHAIRMAN
The Chairman. Well, ladies and gentlemen, thank you for
your patience. Traffic--well, those of you who traffic Capitol
Hill understand the congestion and the frustration today, and
then, we had the prime minister of the provisional government
of Iraq on the Hill, and that has created another traffic
problem. But most are assembled, and the rest are on the way.
So why do we not get started?
Let me say good afternoon to all of you and welcome you to
what I think is a very valuable forum. The drug discount cards
and measuring the savings of those cards; of course, this forum
is one of several that the Special Committee on Aging here in
the Senate has hosted.
We have convened today's forum to take a hard look at the
facts, facts about the new Medicare prescription drug card
program and the real savings it offers to America's seniors. It
is no secret that there has been some skeptical chatter about
the program, but the facts, I am pleased to say, speak louder
than the words. First, Medicare administrator Dr. Mark
McClellan is with us. He is here to announce fresh Medicare
data showing clearly that the drug card program continues to
provide seniors very significant savings and that these savings
are solid and improving.
But let us not just take Dr. McClellan's word for it. Also
joining us are representatives of three major independent
studies conducted so far on the drug card program, all of which
confirm the serious savings available under the program. As
anyone familiar with the world of health care policy would
agree, the organizations affiliated with these studies are
among the most respected in the field, namely, the Kaiser
Family Foundation, the Lewin Group, the American Enterprise
Institute, the Health Care Leadership Council and the Health
Policy Alternatives. Needless to say, when expert groups as
diverse as these all come out in general agreement, I think it
is safe to say that we are on to something or at least
certainly on the right track.
I am also pleased that today's discussion also coincides
with this week's announcement that Medicare will soon launch a
new program to vastly accelerate enrollment of lower-income
seniors, those who are eligible for the additional $600 in cash
assistance this year, and another 600 next year. Now, this
program is not perfect, and yes, there is some confusion. But
this is normal. I am sorry to say in a new program. How many of
you have always wanted to rush out and buy a brand new car
first one off the line? Most do not. Most much prefer that the
marketplace work with it for a year. But in this reality, that
does not work. Getting people enrolled and working to get
people enrolled refines the program and develops the program.
Finally, I believe it is also important to look ahead.
Today's drug card program is just the beginning, a stepping
stone, if you will, toward implementation of the full
prescription drug benefit less than 2 years away. I hope our
panelists can comment on the lessons that we can learn today as
we prepare for the tomorrow of 2006 and beyond.
Unfortunately, neither my schedule or Dr. McClellan's
schedule will permit us to stay for the balance of today's
discussions. However, it is a pleasure to welcome all of you on
our panel to be with us today, and we look forward to your
contribution.
The Chairman. Now, let me introduce the director of CMS,
Dr. Mark McClellan. Mark.
STATEMENT OF MARK MCCLELLAN, DIRECTOR, CENTERS FOR MEDICARE AND
MEDICAID SERVICES.
Dr. McClellan. Thank you. Mr. Chairman, I appreciate it. It
is a real pleasure to be here with all of you this afternoon to
discuss the savings that are available right now to Medicare
beneficiaries through the Medicare prescription drug discount
card and the transitional assistance program that goes along
with it.
I especially want to thank this Committee, the Aging
Committee, for its hard work on the Medicare Modernization Act,
the law that made this immediate help for lower-income
beneficiaries with financial help and discounts plus discounts
for all beneficiaries possible and which we are working as hard
as possible to bring the most savings to as many beneficiaries
as we can right now, and that is what I want to talk about.
I expect that the moderator was held up in traffic going
from the same event that I was. This morning, Jim Firman and I
made some joint announcements about further steps that we are
taking particularly focused on getting low-income beneficiaries
to start saving. There are literally thousands of dollars in
savings that they can get right now, and I am very pleased with
Jim's work as the chairman of the Access to Benefits Coalition,
which is a broad, nonpartisan group of organizations that have
one goal in mind, which is to get the most help possible to as
many Medicare beneficiaries as possible with their drug costs,
and a key part of doing that is getting them informed about the
facts of the Medicare drug discount card and getting them
enrolled, and I am going to get back to that point in a minute,
but Jim has been very busy today.
I also want to thank the CMS staff that has worked very
hard over the last few months not only to implement this drug
card program on schedule but to continue to work to refine it,
to improve it, to help it to be even more effective in
providing discounts and getting assistance to more Medicare
beneficiaries.
Well, it has been more than 3 months now, over 3 months
ago, that Medicare beneficiaries began getting discounts on
their prescription drugs through the drug card program as an
important first step toward comprehensive drug coverage in
Medicare, coverage that is way overdue. The voluntary drug card
program is providing immediate relief now to seniors and people
with disabilities who are covered under Medicare.
The discount cards have already enrolled and reduced
prescription drug costs for over 4.4 million Medicare
beneficiaries. That number is growing at about 10,000 new
enrollees a day, and to put this in perspective, this is the
fastest takeoff of any recent Federal health program, any
recent voluntary program. There are now savings, for the first
time, through Medicare. Medicare is bringing savings on
prescription drugs to beneficiaries who do not have drug
coverage. At CMS, we are pleased this afternoon to release a
new set of studies on drug card savings based on our latest
research. That research finds that seniors can save even more
than it looked like they were saving in our earlier studies: 12
to 21 percent now on sets of brand name drugs, in comparison to
the national retail average prices paid for by all Americans.
I want to be clear about this 12 to 21 percent number. That
is in comparison to the average prices paid by all Americans,
that includes most Americans who have long had drug coverage,
and so, are able to get big discounts on their drug prices
through the public insurance programs they are in like Medicaid
or VA or the private insurance programs they are in. Medicare
beneficiaries are now below average, significantly below
average, 12 to 21 percent below average, when they use the drug
cards.
You will hear more about the new CMS studies from Sharman
Stephens on our staff, who has done a tremendous job for a long
time at CMS and has been an integral part of making sure we are
analyzing the drug card program as effectively as possible to
help it work as effectively as possible. But no matter what
methodology is used here, the savings of 12 to 21 percent on
brand name drugs, the much larger savings on generic drugs,
savings in comparison to retail prices that are offered, the
findings are similar.
This goes as well for findings on Internet purchases of
drugs. The drug cards are offering significantly lower prices,
as much as 30 percent lower in some cases, on drugs compared to
reputable Internet sites like Drugstore.com and Costco.com. In
fact, Drugstore.com is now partnering with a number of Medicare
drug discount cards to offer even lower prices to Medicare
beneficiaries online through Drugstore.com.
So the price reductions are substantial. They are also
present when you look at retail prices, where the usual retail
prices for cash-paying customers can be significantly higher
than the discounted prices that most people with insurance are
able to obtain, and those comparisons show savings of typically
20 percent or more according to some of the other recent
studies that you will hear about from the panel members.
It is very encouraging to us to see the consistent showing
of significant savings on prescription drugs at local
pharmacies, even larger savings on mail order drugs and very
large savings on generic drugs available through this program.
We have also set up some new ways to save, including an
announcement last week. When you go to our Website, or when you
call us at 1-800-Medicare, you can not only get information
about how much you can exactly save on your prescription drugs
that you are taking now, but if there are generic versions of
the drugs available, we will tell you about them and tell you
how much you can save on them, and again, generic savings can
be on the order of 40, 50, 60 percent or more, and if there are
drugs that work in a similar way to the drug you are taking for
a cholesterol lowering drug or a drug for stomach acid or a
nonsedating drug for your allergies, we will tell you about
those alternatives as well to focus a discussion with your
doctor where it can be most useful.
It is very hard to go into your physician, just ask about,
gosh, how can I get savings on my prescriptions. It is much
easier if you have got a piece of paper in front of you or the
notes from your conversation with one of our customer service
representatives saying that if you switch from Zocor to
Mevacor, Lipitor, you could save $10, $20, $30 a month. That is
an additional way to save that we are making possible in order
to encourage more competition among prescription drugs to get
the costs down.
So with these new studies that we are updating today, we
are seeing clear and consistent savings that have persisted
over the whole period of our analysis. I should highlight as
well that the comparisons I mentioned, the 12 to 21 percent or
more, is in comparison to the average prices that Americans
paid in the first quarter of this year, so even going back 6
months plus to a time since when there have been some reports
about list price increases for drugs, we are still seeing
actually a little bit larger savings than in the past.
Our analyses now also extend to breadth of coverage. You
know, there were a lot of concerns when this program started
that there might be some bait and switch, and we said, ``That
we were going to be vigilant in watching out for that by
keeping an eye on what is happening with prices.'' I just told
you about some of the main features of our studies as well as
some of the other studies that have been done.
But we are also looking at the drugs that have been
covered. People were worried that some drugs that they were
taking now might not end up continuing to get coverage on their
drug card. Now, we are making available on our Website and when
you call us at 1-800-Medicare some specific information on how
broad the discounts are on each of the drug cards.
So with respect to that, I am pleased to tell you that all
of the cards cover almost all of the top drugs used by seniors
in this country. Many of the cards cover 100 out of the top 100
prescription drugs, and all of them cover at least 97 out of
the top 100. That has been persistent over this program for the
whole time it has been in existence.
We looked further at how well the cards do in covering all
of the prescription medicines that are out there, all of the
drugs marketed in the United States, and you can get this
information when you go to our Website or call us at 1-800-
Medicare, and the vast majority of cards are covering, all of
the cards are covering most of the drugs that are marketed in
the United States, and most of the cards are covering 70, 80
percent or more of all prescription drugs in the U.S. A number
of cards are over 90 percent of all of the prescription drugs
marketed in the United States, so very broad coverage on the
cards as well.
Now, as important as these real and persistent and broad
savings are on the drug cards to all seniors and people with
disabilities who are struggling with drug costs because they do
not have good coverage, the drug card especially means a lot to
people with limited means and no drug coverage. That is because
it adds in $600 in assistance right on the card this year; it
works very similarly to a debit card. When you use the card to
fill your prescription, the cash that you have on the card will
be taken off right then. You do not need to come up with the
money yourself, and then, there is $600 more in assistance next
year as well.
On top of that, after the $600 is used up, Medicare cards
have worked with drug manufacturers to provide additional
wraparound discounts on more than 200 brand name medications,
including many of the top drugs, so 6 out of the top 10
prescriptions in the elderly are covered by these wraparound
programs now, generally on multiple cards. The way the
wraparounds work is after you use up that $600 credit, you get
an extra large discount on your prescription.
You can typically get the prescription for close to if not
only the cost of the dispensing fee. That is $15 or less for a
prescription that might cost $80, $90, $100 otherwise. So if
you add that all together, the discounts, the credit, the
wraparound, this is thousands of dollars in help available
right now with drug costs for the beneficiaries who need it the
most. They do not have to choose anymore between paying for
their drugs and paying for other basic necessities.
Because we know every dollar counts, the cards are free for
low-income beneficiaries. This is why we at CMS have been
trying to do as much outreach as possible to make sure lower-
income beneficiaries especially are informed about the benefits
of these cards, and that is why I am particularly pleased with
the announcements that we have been able to undertake recently
with the Access to Benefits Coalition; Jim, who was program
stuck in the same traffic I was coming over from the National
Press Club today, has been doing some tremendous work with more
than 90 national organizations in the Access to Benefits
Coalition that have a very simple nonpartisan goal, and that is
to get the most help to lower-income beneficiaries with their
drug costs as quickly as possible. Again, the drug card, the
$600 annual credits, and the wraparound discounts are a key
part of that effort, and I hope that Jim will have a chance to
talk a little bit about some of the new steps that ABC is
taking to make that happen.
This is very important, because the savings offered by the
drug card are only available to people who are enrolled, and
that is why we are working harder than ever to ensure that
seniors, their families, care givers, all of them, have the
information they need to make informed decisions to select a
card that can give them a lot of help right now.
If you are on Medicare, and you are struggling with drug
costs, you should know that signing up is as simple as calling
1-800-Medicare with just a few pieces of information: your ZIP
Code, your drugs and dosages that are found on the prescription
bottles, and if you think you might qualify for the $600 credit
and all of the wraparound assistance, your annual income.
We have staffed up at 1-800-Medicare. We have got over
3,000 trained customer service representatives who can walk you
through the card choices. We will focus in on just a limited
number of choices. We tend to talk about the top five, but if
people want to hear about fewer than that or more than that, we
can do that as well. The call to get all the information you
need to find out about how to save takes less than 15 minutes.
If you are interested, you can get a personalized brochure to
take a closer look at the cards on paper before deciding which
one to enroll in, but if you are ready to sign up when you
call, our customer service representatives can tell you exactly
what you need to do to enroll in a drug card over the phone.
Just today, with help from the Access to Benefits
Coalition, we announced some new steps to make this even
easier. We are incorporating information on all of the
wraparound programs into the guidance that we give people when
they call us up or when they visit our Website, and we are also
making it easier to enroll in the transitional assistance over
the phone or online as well.
It is not just us. Again, thanks to the work of the Access
to Benefits Coalition, there is now another Website that people
can use to get quick information and recommendations and help
in getting signed up, getting enrolled and actually starting to
get savings right now.
To ensure that seniors have all of the information that
they need and that all seniors are educated about how they can
start saving right away, we are engaging in more partnerships
like this one with the Access to Benefits Coalition. We are
partnering with community-based organizations, with States
through their State health insurance assistance plans, with
other Federal agencies to reach out to beneficiaries to make
sure they get the facts about the discount cards and to make
sure that they start saving.
Again, this is very important: no senior today should be
choosing between drugs and other basic necessities. There is a
lot of real help available right now, and we are working
ourselves and with our many partners to get this help available
as quickly and as easily as possible.
Now, I mentioned that we have got about 4.5 million people
enrolled in the card program now. We are well over the 50
percent mark on enrollment, on expected enrollment, but I think
we can do a lot better. That is why I think the step that we
announced yesterday is so important, to add nearly 2 million
lower income Americans to this program through automatic
enrollment process.
These are lower income beneficiaries who are in limited
Medicaid benefit programs that do not provide drug coverage.
They are going to be getting a drug card in the mail next
month. When they get the card, they can start using it
beginning in November to get the $600 credit. All they have to
do is make one phone call and answer two questions. They can
call us up at 1-800-Medicare. They can call the 800 number for
the card sponsor. Just let us know that they do not have any
other prescription drug coverage now and let us know that their
income level is still below the level that gets them to qualify
for the program. We think that is generally going to be the
case, because we are targeting this automatic enrollment to
beneficiaries who are already enrolled in Medicare savings
programs, these limited Medicaid benefit programs, and then,
they can start using the card right away.
So we are going to not only get these letters out in the
next couple of weeks but with all of our partners around the
country to make sure beneficiaries get the facts and know that
they can get literally thousands of dollars in savings right
away if they just start using this card. We hope, through this
process as well, to reach many other lower-income beneficiaries
who can get thousands of dollars in help right now as well.
The drug cards are an important step. They are providing
real savings for beneficiaries right now, with millions more to
come. They are also an important bridge to the new Medicare
prescription drug benefit that will go into effect in January
2006. We expect that the experience from this card program is
going to help get more discount card sponsors converted into
drug benefit providers; it will also help the drug benefit
plans do a better job of providing the best service, and it is
certainly going to help us do the best job possible of
informing people, working with public-private partnerships to
help make sure they get the most benefits possible and to
provide the most support and the most effective support we can
to Medicare beneficiaries.
Through this process, beneficiaries are going to continue
to get discounts on their drugs. With the drug benefit, the
expectation is that the price, even lower negotiated prices may
be possible. As both CBO and CMS have said in the independent
analysis that is underlying our proposed regulations on the
drug benefit, we think that the competitive approach to price
negotiation that we are following is going to give the best
possible prices, prices that are as good if not better than the
Government could negotiate directly as well as more options in
terms of making sure that people have access to the
prescription drugs they need, not a one size fits all
formulary.
So we are on the way to doing that, and we are going to use
this experience to make sure that we get as many people
enrolled as possible to take advantage of both of the benefits.
I want to thank all of you again, especially the Chairman, for
his leadership, and thank you all for the opportunity to talk
today about the substantial savings that are available through
the discount drug card program as we are taking an important
step toward full prescription drug benefits in Medicare.
This has been too long in coming. We are working very
quickly and as extensively as we can with outside partners to
get as much help as possible to our beneficiaries, and even
more is coming in the months ahead.
Thank you all very much. [Applause.]
[The prepared statement of Dr. McClellan follows:]
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The Chairman. Well, Mark, thank you very much.
Folks, do the math. Our targeted group is about 7.3
million. We are at 4.4 million now. The program that Jim and
Mark have just announced today will add about 1.8 or 2 million
in a 3-month period of time and more. That is pretty good
business, and we applaud you for it and appreciate it.
I do appreciate, Mark, you joining us and sharing those
numbers today. It is important that we keep track of this
program as it goes along, get the real numbers and understand
them and the kind of cooperative effort that is well underway.
You and your staff, I think, deserve a great deal of credit for
handling a huge task of implementing this new Medicare program
in the way that you have.
It is probably not much of an exaggeration to say that
drafting the original bill was a picnic compared to the
implementation of the details, and I will tell you how we
struggled in the picnic trying to get a bill that we felt would
work and would respond to the needs of our seniors.
I guess I can understand, Mark, why you get the award
indispensable person from the Alliance for Aging Research that
you got this past week. That is greatly appreciated, I am sure.
Next, we will turn the proceedings over to Jim Firman. Jim
has arrived, after having been, I understand, caught in a
motorcade. He will be the moderator of the panel. Jim, as you
now know, is president of the National Council on the Aging as
well as leader of the recently founded Access to Benefits
Coalition. Jim's ABC Coalition has successfully brought
together dozens of organizations across the country and is
doing tremendous work in reaching out to seniors and helping
them gain access to the benefits of the new Medicare law.
So, Jim, we thank you very much for being here on what we
now understand has been a busy day for you. We look forward to
your moderating and introducing the panelists. Panelists all,
thank you very much for being with us this afternoon and
sharing your information and the research work you have done.
Thank you.
STATEMENT OF JIM FIRMAN, PRESIDENT, NATIONAL COUNCIL ON THE
AGING, CHAIR, ACCESS TO BENEFITS COALITION
Mr. Firman. Thank you very much. Thank you, Senator Craig,
Dr. McClellan. [Pause.]
Thank you very much. My name is Jim Firman. I have the
pleasure of chairing the Access to Benefits Coalition, which is
a coalition of more than 90 national, nonprofit organizations
and 52 State and regional coalitions, all who have come
together for only one purpose: to make sure that low-income
Medicare beneficiaries can get the best possible coverage and
savings for prescription drugs.
We are nonpartisan. We are only about finding people and
helping them get the coverage they need, whether it is State
programs, Medicare cards, the best possible Medicare cards,
company patient assistance programs, veterans' benefits,
Medicaid. We do not care. We want to find the best combination
to work for people.
We are delighted to be here today, because we have been
working closely with Administrator McClellan to find ways to
get as many people as possible into the benefits. We are very
pleased to be able to be part of the announcement yesterday
that CMS is going to auto-enroll 1.8 million low-income people
in the benefit. That is a great step forward. Today, we were
announcing the new tools for consumers, a new Website called
Accesstobenefits.org put together by the coalition, designed to
help people quickly and easily figure out the best combination
of programs and then enroll in those benefits.
It takes a somewhat different approach than Medicare.gov,
but they are both wonderful Websites full of wonderful
information, and we encourage people to use both of those or
either of them, whatever works. You will find sometimes, we
approach a little differently, but pretty much, we come to the
same kinds of answers, that there are more benefits out there
than people realize, and the need is for people to sign up for
them now.
But as we have done our research, and we have done
extensive research in focus groups and talking to older people,
what we find is that many older people and people with
disabilities on Medicare, particularly those with lower incomes
are skeptical. They have heard a lot of things. They are not
sure how significant the savings really are. They do not know
whether they will qualify for them, even though we are looking
at people who in many cases we know are eligible. They do not
think that they will be able to access those benefits.
That is why today is so important, because I am delighted
to have the opportunity to chair this panel, where we can get
some of the facts, and we can find out what is really going on,
what are the savings, how many of them, because this is very
important, I think, for consumers to understand, for the public
to understand as well.
So let us get on to the real substance of this panel, and
let us hear from the folks who have done the research and who
can tell us their findings. Our first presenter--the way this
is going to work is we are going to hear four presentations,
about 5 minutes each, and then, we are going to open it up into
a discussion and ask questions. I am going to ask some
questions. You on the floor will have an opportunity to write
down and to pass questions up as well. But the goal is to help
educate all of us as to what is really going on in terms of
costs and prices.
So the first speaker will be Sharman Stephens, who is the
director of planning and policy analysis in the Office of
Research and Development Information at the Center for Medicare
and Medicaid Services at HHS. She has been there since 1996,
and before that, she was with the Office of the Assistant
Secretary for Planning and Evaluation at HHS. She is a graduate
of the Duke University School of Nursing and had received her
master's in public health from the University of North
Carolina.
STATEMENT OF SHARMAN STEPHENS, DIRECTOR, PLANNING AND POLICY
ANALYSIS, OFFICE OF RESEARCH AND DEVELOPMENT INFORMATION,
CENTER FOR MEDICARE AND MEDICAID SERVICES
Ms. Stephens. Thank you.
Good afternoon. I want to thank you for inviting me to
discuss the analyses we have conducted regarding the level of
savings available to Medicare beneficiaries enrolling in
Medicare-approved drug discount cards. My remarks this
afternoon will focus on a series of CMS studies that have
examined the level of savings available to Medicare
beneficiaries through these cards.
We have examined prices offered by the Medicare approved
cards from a variety of angles. In the initial weeks of program
implementation, we found that overall, and as we are showing on
that first chart over there, for non-low-income beneficiaries,
absent the $600 in transitional assistance, savings of 11 to 18
percent were possible over national average retail pharmacy
prices for the illustrative baskets of commonly used drugs we
examined.
We reexamined the prices posted on the Medicare comparison
Website last week for the same sets of commonly used drugs
examined previously. As shown on the chart, we found that
savings are now ranging from almost 12 percent to over 21
percent for the baskets of drugs we examined. As Dr. McClellan
pointed out, our point of comparison in these analyses is to
national average retail prices, which include both the higher
prices paid by people without insurance, normally, we call them
the cash-paying customer, and the lower prices paid by people
with private and public insurance, and most people, actually,
have coverage. But as a result, we would actually expect that
beneficiaries' savings would be larger for those who are
currently paying cash prices at retail pharmacies.
As you can see, on the right side of the chart, because of
the annual $600 in transitional assistance, the savings for
low-income beneficiaries are even greater. Using data from last
week and estimating for the 4-month period from September to
December of 2004, we found that when the discounts and the $600
in transitional assistance are considered, low-income
beneficiaries during this period can save from nearly 44 to 92
percent, compared to national average retail prices.
These savings can be substantially greater for some
beneficiaries when the special very low pricing arrangements on
over 200 drugs now being offered by several brand name
pharmaceutical manufacturers, in coordination with the Medicare
discount card programs, are considered. Forty-six out of these
200 drugs are actually among the top 200 drugs used by the 65
and over population.
It is also important to note, and I am going to be moving
over to the next chart here, that generic drugs offer all
beneficiaries a chance to save even more on their drug costs.
As shown in the second chart, in a June study on generic drugs,
we found that those who can switch to generic drugs can save 46
to 92 percent over the cost of brand-name drugs we examined. We
also found that those beneficiaries already taking generic
drugs could save 37 to 65 percent over national average retail
pharmacy prices by enrolling in a Medicare-approved discount
drug card.
As a quick update, based on prices posted last week, we saw
commonly used generic drugs with savings of 45 to almost 75
percent. That is shown on the right side of the second chart.
Because some beneficiaries may choose to get their
prescriptions through mail order, we have also examined the
mail order market. Our analyses found that Medicare-approved
drug card prices for mail order consistently beat the prices
offered by popular mail order pharmacies. For example, using 10
commonly used drugs, we found that the best Medicare-approved
drug cards had prices on these drugs ranging from 5 to 33
percent lower than drugstore.com and 11 to 34 percent lower
than Costco.com.
On the third chart, the top red line is Costco.com, the
second line, which is blue, is Drugstore.com, and the bottom
line in green is Medicare. This third chart illustrates the
savings in dollars for a few commonly used drugs, in this case,
Celebrex, Prevacid, Norvasc, and Zocor.
Often, the retail pharmacy prices of the Medicare cards,
are actually higher than mail order, but we were finding that
the Medicare cards with the best prices beat mail order prices
many, many times for these popular Internet service pharmacies.
Our research has also examined the prices from the
perspective of medicines used to treat common health conditions
such as diabetes, hypertension, heart disease, and
osteoporosis, that are common in the Medicare population.
Again, updating a prior study, using prices posted on the Web
last week, we found that beneficiaries with nine common chronic
conditions can save anywhere from about 10 to 75 percent over
national average retail pharmacy prices for drugs often used to
treat these ailments. The higher percentage savings being
associated on a percent terms on the generic drugs, but we were
also finding discounts of more than 20 percent on brand name
drugs.
Our final chart shows dollar savings for four common
conditions. For example, for beneficiaries using medications to
treat high cholesterol, we are seeing savings per monthly
prescription of $14 to $42. Even at the fifth card down the
list, we saw per prescription savings of $10 to $42 per
prescription.
We have also recently examined drug card program coverage
of the top 100 drugs, and Dr. McClellan made reference to this.
It is comprehensive coverage, and the coverage has been stable
between when the program started in June and September.
As you can see, our analyses show that the discount drug
cards offer substantial, reliable savings to Medicare
beneficiaries and particularly those low-income beneficiaries
who are eligible for the annual $600 in transitional assistance
and the special manufacturer wraparound programs.
I want to thank you for the opportunity to participate in
today's forum, and I would be happy to answer any questions
about our analyses.
[The prepared statement of Ms. Stephens follows:]
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Mr. Firman. Thank you. I am sure we are going to have
questions, but we are going to hold all of the questions until
we hear from the four presenters.
Our next presenter is Mary Grealy, the president of the
Health Leadership Council, which is a coalition of chief
executives of the nation's leading health care companies. Prior
to her tenure at HLC, she served as the chief Washington
counsel of the American Hospital Association, and prior to
that, she was the chief operating officer and executive council
of the Federation of American Health Systems.
Ms. Grealy has a bachelor's degree from Michigan State and
a law degree from Duquesne University. Welcome.
STATEMENT OF MARY GREALY, PRESIDENT, HEALTH LEADERSHIP COUNCIL
Ms. Grealy. Thank you, Jim.
First of all, I would like to thank Chairman Craig on
behalf of the members of the HealthCare Leadership Council for
the opportunity to participate in what is a very timely as well
as very important forum. This Committee is to be commended for
taking action to help Medicare beneficiaries better understand
how the Medicare drug discount card program can affect both
their health and their finances.
I have submitted a statement for the record today, but I
would like to say a few words this afternoon about the study
commissioned by the HealthCare Leadership Council. As Jim said,
the HLC is a coalition of chief executives of many of America's
leading health care companies and organizations, representing
all different sectors of health care.
Our guiding mission at the Health Care Leadership Council
is accessible, affordable high quality health care for all
Americans. Pursuing that goal, we sponsored a study to
determine if the Medicare drug discount card program is indeed
making prescription drugs more accessible and more affordable
for Medicare beneficiaries. We commissioned a highly respected
firm, the Lewin Group, to answer a simple yet critical
question: would an average Medicare beneficiary, an individual
who did not already have some kind of prescription drug
coverage, see significant savings by enrolling in the Medicare
discount card program?
This is a question that needed to be answered. The discount
card program has been the subject of endless political warfare
and inflammatory, often misleading rhetoric. We believe that
for the sake of seniors and others who are on limited incomes
and need help with their prescription purchases, it is time for
us to replace rhetoric with indisputable facts.
We asked the Lewin Group to take a look at the impact of
the drug discount card, the $600 low-income credit as well as
manufacturer assistance programs on the 150 prescription drugs
that are most frequently used by senior citizens. We have
provided you with that study in its entirety, but allow me to
highlight just a few of the key findings. As noted in Figure
11, on the first chart here, Lewin found the Medicare
beneficiaries who enrolled in the drug discount card program
and began using their cards on July 1 of this year will save an
average of $1,247 or 35.5 percent between that date and the end
of 2005, when the program ends to make way for the full
Medicare prescription drug benefit.
Those Medicare beneficiaries who have incomes below the 135
percent of poverty level and qualify for the annual low-income
credit will save an average of $1,548 over that same 18-month
period. On individual prescriptions, the best discount cards
nationally will save beneficiaries about 20 percent or an
average of almost $10 per prescription, and more than half of
the drug discount cards deliver savings of over 17 percent per
prescription.
To let you know, by the way, that we found very little
variation in the discounted prices between and among geographic
regions or between urban and rural areas. The best available
price for any medication is generally offered consistently
across all markets, and that is unusual for the Medicare
program.
Let me touch for a moment on the savings that are being
experienced by low-income beneficiaries as well as those that
are taking multiple drug regimens for the treatment of chronic
diseases. The Lewin findings in this area are striking. Low-
income beneficiaries save money not only through the drug
discount card; but also through the $600 annual transitional
assistance credit. Additionally, a large number of drug
manufacturers are offering special assistance to transitional
assistance program participants. If a qualifying beneficiary
uses up his or her $600 transitional assistance before the end
of the year, these manufacturers will make their drugs
available at either minimal cost or at no cost at all.
The study shows us an example of how these multiple sources
of assistance will help a low-income beneficiary with a chronic
condition. We have outlined this in the other chart that is out
there, and that is Figure 5A.
For a senior that is afflicted with diabetes and
hyperlipidemia or high cholesterol, the average retail spending
on the most frequently used drugs for those conditions is
$3,337. Now, a beneficiary using the drug discount card alone
will save $878. Now, if they use the card and the $600 low-
income credit, they will save $1,478. A beneficiary using the
card, the low-income credit and manufacturer assistance program
for those drugs will save $2,198, or 66 percent off the average
retail price.
We are very pleased to present this comprehensive study on
the drug discount card, and we encourage everyone to share
these findings with your colleagues and for Members of Congress
to share it with their constituents. We will be disseminating
this information as well through a new coalition called
Medicare Today. Medicare Today is made up of over 100
organizations representing seniors, health care providers,
consumers and employers, and is dedicated to helping
beneficiaries take full advantage of the new programs passed by
this Congress, and we certainly look forward to working with
Jim Firman and the ABC Coalition and others in the many months
ahead.
It is regrettable that there are seniors who have been
dissuaded by the political controversy from enrolling in a
program that can make a significant difference in their daily
lives. It is our hope that by placing this information in the
public domain that we can encourage beneficiaries, particularly
those on low or fixed incomes, to take advantage of this
program and begin saving substantial money on their
medications.
For seniors that have not enrolled, every day that goes by
represents money that they are leaving on the table, and that
money cannot be recouped. So we want to make sure that that
does not happen.
Again, we look forward to working with all of the panelists
and making sure that we get this information out there to those
that can use it. Thank you.
[The prepared statement of Ms. Grealy follows:]
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Mr. Firman. Thank you, Mary.
Our next presenter is Robert Helms, who is the resident
scholar and director of health policy studies at the American
Enterprise Institute. He has been there for about 11 years, if
I do my math right. Prior to that, he was the executive
director of the American Pharmaceutical Institute, and before
that, he was assistant secretary for planning and evaluation in
the Department of Health and Human Services from 1984 to 1989.
Dr. Helms has a Ph.D. and an M.A. in economics from the
University of California and his bachelor's degree from Auburn
University.
STATEMENT OF ROBERT HELMS, RESIDENT SCHOLAR AND DIRECTOR OF
HEALTH POLICY STUDIES, AMERICAN ENTERPRISE INSTITUTE
Mr. Helms. Thank you, Jim.
I would like to thank the Committee for the invitation. I
am happy to present this study. It is in your packets and also
on the AEI Website. This study was done by Joe Antos and Ximena
Pinell back in June, and it was published by AEI in June.
I am also going to report on some of the updates that we
have done since then. It is a straightforward study, somewhat
similar to the others. I might say that compared to these other
studies, we do not have as many numbers as the other people,
but we certainly have the best looking publication.
With the advice of some physicians, we assigned the most
commonly used drugs to these hypothetical patients on Medicare.
We think we have a good sample.
We then looked up the prices of these drugs in the retail
market, and in the mail order market, as listed on the CMS
Website as of June 1. Since then, we have updated these prices
on a number of different locations.
As figure 2 shows, like the other studies, that for a 7-
month supply--we are looking at from June through the end of
2004, if people go in without any coverage and without any kind
of discount card, they would pay full retail prices, would
spend $2,073. The Medicare retail price, using the card, they
would spend only $495. The savings, which are almost $1,600,
come from, primarily, $600 for the subsidy for the people who
are eligible for this, $575 of discounts from the Medicare
program and then $403 from the special manufacturer savings.
So, for the neediest seniors, those who are below the
poverty thresholds $12,570 for individuals, $16,862, for
couples, and without drug coverage these are substantial
savings. But as you see in Figure 3, they can save even more;
it is consistent with the other studies. This shows our
evidence from several different--the estimated retail at $2,073
on the left, the 7-month supply; if you went and got it from
CVS mail order, AARP retail, the Costco mail order, the AARP
mail order, but also, that the lowest of those, the AARP mail
order, would be $1,500 for the period of time, and for the
Medicare retail, it would go down to $495. But if you were
willing to go to mail order with the Medicare discount card,
you could get that down to $388, a savings of 81 percent for
this senior.
Now, this is not to say that everybody wants to go to the
trouble of going to mail order or Canada. For a lot of people,
the price is not the only thing they value. The convenience of
going to their local pharmacist and dealing with somebody they
know is very valuable for many people. So it is not the only
thing that people have in mind.
Figure 4 shows the savings that people could get who are
not eligible for the $600 subsidy who are just the higher-
income beneficiaries. Here, you can see that compared to $2,073
that they would have to pay with full retail price, and the
best they could presently get, well, for AARP retail would be
$1,787, and the AARP mail order would be down to $1,664. But
with the Medicare card, they could get this down to $1,575 at
retail level, but if they were willing to go to the Medicare
mail order, they could get it down to $1,322.
Now, as you can see in the last bullet, we did some updates
of this as of last Tuesday, 2 days ago, and the best prices
there for the Medicare retail go to $1,552, a slight decline,
and for the Medicare mail order, it goes down from $1,322 down
to $1,264. So, rather than prices are going up, our best
indications are that there are probably small declines in
prices. This is consistent with what you would expect in a
competitive market in what is going on here, because our
perception is that people are using this program, the cards to
get ready for part D, which starts in 2006, so they have very
strong commercial incentives to get more people on their card
and keep them there.
Now, Figure 5 just looks at, identifies the top five drugs.
We use the Families USA selection of those drugs, and in the
next table, Figure 6, here, you have the price, the range of
savings for the price differences for the individuals who are
the comparison for an individual pharmacy; in other words, the
individual walking into a retail pharmacy without a card versus
what they could get at the same pharmacy with the card.
We have made this comparison in more places than we have
listed here. Our conclusion is that the savings that are
available through the Medicare discount card program are
similar throughout the country, and the range of savings
presented in this chart represent discounts off full retail
prices. They range from 8 to 36 percent.
Summing up, the Medicare prescription drug discount card
program is a very good deal for most seniors. We find savings
as high as 36 percent off the full retail prices and
consistently around 30 percent around the country. The low
income seniors can save considerably more by taking advantage
of the $600 subsidies throughout the rest of this year and $600
throughout 2005. They can save 50 to 75 percent by having the
card compared to not having it.
Since the program started on June 1, there is no evidence
of card sponsors dropping drugs from their formularies or
raising their drug prices once seniors are enrolled. In fact,
as I said before, we have seen some evidence that the prices
seem to be declining even since June. We have also found is
that most cards offer nearly equivalent savings to seniors. In
Boise, ID, for example, 31 of 33 available card plans price a
top-selling set of drugs within 10 percent of the absolute best
deal.
That shows us that while it is important to shop around,
people should not worry too much about getting the absolute
best card; just get a card and you will get most of the
savings.
The bottom line? Most seniors can get substantial savings
by signing up for one of the discount cards. They can get most
of these savings at the local pharmacy if they do not want to
deal with mail order, or if they do not want to deal with going
to some foreign source of drugs. Almost all of the savings can
be obtained from all the cards, so it is more important to get
a card than it is to worry about getting the best card.
Let me add, as an economist who has been studying this
pharmaceutical industry for years, my view is that a lot of
things are changing about the economics of this industry. The
price transparency that we are going to get in Medicare is
going to have a larger effect than just the Medicare market. I
think it is going to speed up the rate of change that the
market is imposing on this industry now.
So, thank you.
[The prepared statement of Mr. Helms follows:]
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Mr. Firman. Thank you very much.
Our fourth presenter is Julie James, who is a principal in
the Washington, DC, consulting firm of Health Policy
Alternatives. She joined the firm in 1998 with more than 25
years' experience in health services research, planning and
policy. Before joining HPA, she was chief health policy analyst
for the Senate Committee on Finance, where she oversaw policy
issues, including Medicare and Medicaid.
Thank you. Welcome.
STATEMENT OF JULIE JAMES, PRINCIPAL, HEALTH POLICY ALTERNATIVES
Ms. James. Thanks, Jim.
I guess the advantage of being last is that I just have to
say ditto. Our study, the results are just totally consistent
with the other studies that were presented today, with one
exception. Thank you, Bob. I just did not even realize it until
you spoke that we did have one different finding, so it gives
me something to talk about.
The Kaiser Family Foundation asked our firm last spring to
take a look at the discount card program and its implementation
and a little broader than just what the savings are on the
various drugs. We were also looking at what kinds of cards were
out there, who was sponsoring them, what their enrollment fees
were and the whole education and enrollment process and
documenting what was happening as it was being implemented.
We have written that, and you all have a copy of the study,
so I am not going to go into very much detail there. I would
like to say that we did find, as many of you know, that there
was kind of a rocky start. It was difficult to get information
to the extent that we started tracking prices the first 2 weeks
the prices went up on the Website, and we just had to disregard
that information, because it was just so unstable.
But we did enter into constant communication with CMS, and
they encouraged us every time we found a glitch to let them
know about it, and they went to great effort to try to fix
those, and I think everything is working much more smoothly
now. There is no question that there is information overload
when you have that many cards, that many drugs, that many
pharmacies. I mean, there is just this unreal amount of
information that you can sort through, and I think that the
changes they have made in terms of how you now get the
information are very helpful to beneficiaries to try to help
them sort out and make their choice.
I am just going to make a couple of points, because
basically, as I said, ``While the numbers are not exactly the
same, we all had a little bit different methodology; we all
used a little bit different sources; we chose different sets of
drugs, although there is a lot of overlap in terms of those
that are most commonly prescribed, so we all came at it a
little differently, but we all ended up with very, very similar
results.''
Starting out, though, in terms of the type of card
sponsors, we found that across the nation, an average
beneficiary, and let me say that our study focuses on the
average beneficiary who would not be eligible for transitional
assistance, because we knew other people were looking at that
and the impact of the $600. We were looking at the beneficiary
who did not have coverage but would not be eligible for the
transitional assistance, and we did not look at those who would
have the exclusive cards that were being sponsored by the
Medicare Advantage plans.
So we were really coming at this in a more narrow way.
Anyway, we found that there was a good mix in terms of the
sponsors of the cards. The average beneficiary had about 40
cards to choose from, a combination of the national cards and
regional cards that would be available to them. We did find in
looking underneath the cards that some of them were exactly the
same. They had the same list of drugs; they had the same
prices; the only thing that was different was a name and
perhaps some of the sponsors, and I am sure there are various
reasons for that.
But in effect, the real choice, I guess, was a little bit
less than the actual number of cards that would be presented to
you. In some cases, for example, we found one card--there were
two cards, but one of them was only for transitional assistance
people, and one of them was for everybody else. Otherwise, the
cards were exactly the same, so there was a little bit of
overlap.
Just about half of the cards were sponsored by entities
that call themselves pharmacy benefit managers or PBMs. The
other half, though, was an interesting mix. You had some of the
chain drug stores, the retail drug stores that got together and
sponsored cards; you have some managed care plans that were
sponsoring cards. There was a mix, and there is a chart in the
study that outlines what that mix is. So I think it is not just
the PBMs out there, but you have got a mix of people coming at
it from different ways. For example, because of that mix and
where they are coming from, some of these cards would offer
mail order, and others do not. Most do, but there are actually
some that do not.
Now, in terms of the savings, we concur that we did find
that there were savings. The savings that we found, the numbers
are a little bit different, because what we used as our point
of comparison was a Website that is put out by the attorney
general in Maryland for retail prices in Maryland. It is very
difficult to find something that you can use as a baseline, and
we found this, and that is what we used. I suspect that the
prices that are on that Website are a little bit higher than
the average retail prices that CMS is using, and that is why
our percentage savings are a little bit greater.
We chose a basket of 10 drugs, and we chose seven cards to
look at, because it was kind of a difficult process. We had to
go through the Website like everybody else to gather this
information. We did not have a master data base that was easy
to manipulate.
We found overall savings of 19 to 24 percent at the retail
level and 27 to 32 percent in mail order for that basket of 10
drugs. However, for any one drug that was in that basket, we
found a rate of 8 to 61 percent savings at retail and 23 to 89
percent savings for mail order. Now, 89 percent savings is
pretty mindboggling. When you look at those percentages that
are so high, those are usually generic products, and that would
be for example a retail $10 generic product that then goes down
to $1.10. That is the right math, right? I am trying to think
of 89.
So at the lower end of the scale would be your brand
products. Obviously, these drugs cost more, and your savings
percentagewise are going to be less. The generics, which are
often under $10, are where you get those huge percentage
savings.
We also compared prices to Costco and Drugstore.com and
found that in all cases, Costco was higher, Costco mail order.
Drugstore.com was very competitive, and actually, their prices
fell right in the middle between the highest card and the
lowest card. But what we do not know is what Drugstore.com's
prices were before the program started, so we do not know to
what extent they were actually competing and lowering prices at
that point.
We found, and this is where we differ, I think, from what
Bob reported, that the choice of card does make a very
significant difference. We had four prototype beneficiaries and
assigned a different mix of drugs to each of them. Then, we
looked to see what the impact is, because obviously, you have
to look at your total aggregate savings for the basket of drugs
that you take. We had one prototype individual taking four
drugs and found that the difference between the highest card
and the lowest card--and we looked at all the cards in this
case, not just our seven that we were tracking otherwise, and
we found that he would pay, our fictitious Mr. Miller, would
pay more than twice as much if he chose the highest price card
over the lowest price card, and the difference would be between
$112 a month versus $235 a month.
Now, for the other three individuals we tested, the
difference was not that dramatic, but it was still significant.
I think the lowest difference was the difference between $234
and $278. So again, that is a pretty significant difference for
that particular basket of drugs. So we found that shopping
around and looking at the cards does make a difference.
Finally, we also found--we were interested to see what was
happening with prices over time, and we found that they were
really pretty stable. There were some changes in the beginning.
As I said, ``We dropped the first 2 weeks of data, because a
lot of those were simply data errors, data entry errors, data
reporting errors.'' They were not price changes. Some of them
were probably price changes, but overall, when we tracked some
of these drugs over time, we found that they were pretty
stable.
So I guess with that, I will wind up, and we can take
questions.
[The prepared statement of Ms. James follows:]
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Mr. Firman. Good. Thank you.
Now, we are going to open this up a little bit, and I was
writing down questions for all of you, so I am going to ask a
couple of the first questions, but I would just like to think
of this as having a conversation over the dinner table, and at
least in my family, we all interrupt each other, so, when we
are talking, so you do not need to wait for me to follow on the
next person. If it gets out of hand, I will step in.
But I will actually, for the first couple of questions,
they will come from me, because one of the things that the
field of health services research, and I guess this is what
this is, of an order, is seeing whether when one has multiple
studies and whether they produce consistent results. We have
heard a lot of numbers here, and I really want to see to the
extent to which results were and were not consistent.
So I have two questions I want to ask each of you. I just
want to go down the row so that we can see the similarities and
the differences in the answers. The first question is, for a
non-low income--this is for a middle class person who does not
qualify for transitional assistance, who buys their drugs at
the drug store, which is what most people want to do, and they
do not want to go somewhere else, what were the average savings
in your study for a person who uses the card? Do you guys need
a little moment to do your calculations here?
Ms. James. OK; I think I just----
Mr. Firman. OK; I just want to hear one, two, three, four,
so we can all synthesize this and see whether we have the same
numbers. The savings?
Ms. James. The retail?
Mr. Firman. Retail.
Ms. James [continuing]. The number that we had was 19 to 24
percent.
Mr. Firman. Nineteen to 24 percent.
Bob.
Mr. Helms. Well, I need a calculator, but it went from
$2,073, which is the full retail, for the Medicare retail down
to $495, and we did calculate that it was down--the mail order
was $388.
Mr. Firman. Let me interrupt you. OK; you are going to go
back and do your calculation only because----
Ms. James. I think it is apples and oranges, though.
Mr. Firman. OK; We have got 19 to 22 percent; is that what
I heard, Mary?
Ms. James. Nineteen to 24.
Mr. Firman. I am sorry; Julie.
Yes, Mary?
Ms. Grealy. All right; I will just give you the simple
national average, 20 percent.
Mr. Firman. OK; 20 percent.
Sharman.
Ms. Stephens. I am probably going to make your life
difficult, but one of the things, and I have sort of----
Mr. Firman. OK.
Ms. Stephens [continuing]. I have looked actually across
all the studies, and how you think about this and one of the
reasons you see the numbers, you see and why you are getting
different numbers.
Mr. Firman. We will get into why they are different later.
But what is the number?
Ms. Stephens. Well, what you saw in ours for retail,
dealing with predominantly brand name drugs, is that we are
running between 12 and 21 percent. Then, if you go to generics,
you see a slightly different picture.
Mr. Firman. OK.
Ms. Stephens. If you look at individual drugs versus
baskets----
Mr. Firman. Right, so people have a mix of drugs. So we
have heard 12 and 21, 19 and 22.
Ms. Grealy. Twenty.
Mr. Firman. Twenty.
OK; so----
Six to 25; good, OK. Well, that is--we are seeing some
consistency, and they are all savings, and they are all--OK,
now, a little harder one, for low-income Medicare
beneficiaries, again, I know I am making you do things that
health services researchers do not do, but think of more of a
lay person like me. I am in this situation. A low-income
beneficiary, average range of savings.
Ms. James. We did not look at that.
Mr. Firman. OK. You are safe on that one, yes.
Ms. James. For the $600 people, we did not look at that.
Mr. Firman. OK; Sharman?
Ms. Stephens. OK; go ahead.
Ms. Grealy. No, I was just going to say, ours is up on the
chart if you look, and I am trying to do the percent: 47.3
percent.
Mr. Firman. OK; for----
Ms. Stephens. For low-income----
Mr. Firman. Low-income.
Ms. Stephens [continuing]. Beneficiaries.
Mr. Firman. We understand it is going to vary by the
medications they take and different situations.
Ms. Stephens. Because we look at this in baskets, we come
up with a range. So, we had anywhere from about 44 to 91
percent. Now, it also depends on what period of time with which
you are working.
Mr. Firman. So 44, in the forties, but a very substantial
savings in both cases.
Mr. Helms. Almost 80 percent.
Mr. Firman. Almost 80 percent. So we are kind of hearing 40
to 80 percent or so for low-income beneficiaries. Thank you.
That is helpful, and the fact that different people with
different approaches or different all sorts of qualifications,
I know each one of you would rather give me a bunch of
footnotes on that answer. I really do appreciate that.
A second question that I have, and this is people, as I
said, most people in our experience, and we have been talking
to lots of beneficiaries, you can tell them all these things
about savings and what they do, but the bottom line is what is
going on at my drug store? I only want to buy medications at my
drug store. So my question is to get these savings, are people
going to have to--by and large, can people get them at their
drug stores, or are they going to have to go somewhere else to
get the savings that we are talking about?
Ms. James. Well, Jim, I think that----
Mr. Firman. It is easy to ask the questions. You guys have
got to figure out how to answer them.
Ms. James. Well, I do think that one of the most helpful
things to help you sort through all of the information on the
Website, and Sharman can speak to this better than I can, but
you can look by pharmacy. So if that is your starting point, if
you want a particular pharmacy, you can start there and look at
the cards and only compare the cards that accept that pharmacy.
Now, we found that many of the cards have very, very
extensive networks, 50,000 pharmacies, participating.
Mr. Firman. That is part of the question. These are pretty
broad networks in the number of----
Ms. Grealy. Jim, we only looked at retail pharmacy. We did
not do the mail order. So those savings percentages and numbers
are just for that.
Ms. Stephens. I will say an unequivocal yes.
Mr. Firman. OK; good for you.
Ms. Stephens. I can tell you, when we do these studies, I
am pulling from the Website. My staff will confess to many
early mornings getting up for the pull on Mondays. When we are
doing this, we are doing it with ZIP Codes, and we are doing it
with a local radius. So, these savings are in your locality, in
your neighborhood, and as Julie said, ``The Website has just
recently been enhanced to make it even easier to look for your
pharmacy, because we know it matters.''
Mr. Firman. Good.
Mr. Helms. Can I, Sharman, do you have any evidence that
there are any pharmacies out there that just refuse to
participate?
Ms. Stephens. I have not looked at it, where I have taken a
census of the pharmacies and seen if we do not have something,
but we have quite extensive----
Mr. Firman. I can tell you what we have heard through that.
We have heard some concerns and some of the particularly
independent, smaller, independent pharmacies have found it in
some cases in rural areas, there have been some problems with
pharmacists just having small shops, having difficulty with
some of the arrangements. So at least, there have been some
cases of people having some difficulty.
Mr. Helms. But I think in our surveys, we have not found
one.
Mr. Firman. Well, there are consumers calling us who have.
Ms. James. Actually, I have a family member in an assisted
living facility, and I called the pharmacy to see who they were
participating with, and they were not interested in
participating with anything. So I do think in that case, that
there are some cases----
Mr. Helms. It is very rare, I think.
Mr. Firman. Yes, but, OK----
Ms. Stephens. But the networks, I mean, when we look at the
network files, they are pretty extensive.
Mr. Firman. So the savings are real, and you can probably
get it, some good savings at your drug store.
Ms. Grealy. Widely available.
Mr. Firman. Widely available; good.
OK; another question that I had, and it relates to this. We
have heard this thing about wraparounds and with the extra
savings that come from that, and actually, I have some data. I
would like to share--that we released earlier today. We did an
analysis of about 20,000 people who had gone to our Website
accesstobenefits in May and June, and we found that of the
people eligible for transitional assistance, 83 percent of them
were taking at least one of those wraparound drugs, medicines
with the extra saving, and 50 percent were taking two or more
wraparound drugs.
So our sense was that these wraparound savings in total
were actually much more significant than $600, certainly, for
people taking that, and I was just wondering whether, in the
analyses that you had, whether you had some consistent types of
findings of the power or the potential savings from these
wraparounds.
Ms. James. Well, I will just say that you can find out
which of the cards are participating with--and I think when you
are talking about wraparound, you are talking about the
pharmaceutical companies that are offering additional
assistance like flat fees for their products if you qualify.
There are a number of the companies that are doing that, and
you can find out which of them are associated with the various
cards.
I know of at least one instance with one pharmaceutical
company that actually changed and broadened its policy in order
to be out there and reach more people.
Ms. Stephens. I will do a plug for the Website. One of the
really new enhancements for the Website is that we are now
calculating the savings, so that information is available to
beneficiaries. It was quite extensive work to work with the
card sponsors and the manufacturers to make sure we understood
the arrangements so we could do the calculations. But now if
you go to the website for the beneficiaries who are low-income
and transitional assistance eligible, the website is
calculating savings.
So for people who have been using the Website, there are
some new features there.
Mr. Firman. I want to say that is a really great
enhancement to the site, and we, on our Website, also have a
lot of emphasis on wraparounds because of the same reasons.
They really do, I think, are something that our experience is
consumers do not really know much about but----
Ms. Grealy. Jim, I was going to say, and not just for the
Medicare population, but these are programs that have been out
there, these patient assistance programs by the manufacturers
that have not been well publicized. I think what is great about
this program is it is not only bringing publicity to it just
for this population but for other low-income populations as
well, and I think also, the manufacturers have really enhanced
the programs and made them much more accessible and easier to
use.
Mr. Firman. Well, you know, you made another important
point. I do not believe in any of the studies that I heard, you
were looking at the effect of company patient assistance
programs which are different than the wraparound programs or
the State pharmacy programs or the impact. Our analysis has
shown that if people are eligible for transitional assistance,
80 percent of those people are eligible also either for patient
assistance programs or State programs.
Even if you look at people who are not eligible for TA but
under 200 percent of poverty, about two-thirds of them are
eligible for patient assistance programs, so that there are
other savings beyond what you have talked about from some of
these other benefits.
The next question I have--it is fun. I get to ask a couple,
and then you have to----
Ms. Grealy. We have to think of one for you.
Mr. Firman. I know. As you can tell, these are not scripted
questions. I do not even know what I am going to ask, much less
you guys.
One of the questions I have is that I remember maybe 2
years ago, before all of the Medicare laws came in, I saw
several studies which showed that the prices within a
community, from drugstore to drugstore, could vary by as much
as 200 percent. You could be paying $100 for a drug in one
store, and three blocks away, you could be paying $200, but
there was no way to know about that.
I personally think that is one of the most amazing things
about this whole price compare is now that you can look at
numbers. So, my question is now that you guys have looked at
the numbers, are the same variations still there? If I went
onto Medicare.gov, and I put in a drug and the highest to the
lowest, would I still find one being two times as expensive, or
has the band of prices from the highest to the lowest narrowed
to any significant extent?
Ms. Stephens. I do not know that we have looked at that.
Are you asking from a pharmacy perspective or from a card
perspective?
Mr. Firman. From a price perspective; in other words, if I
were--pharmacy A, and 2 years ago, pharmacy A could have been
charging $200 for a drug, and pharmacy B could be charging $100
for the same drug, and that was not uncommon. The question is
now, if I went and looked at, because of the necessity or the
price compare, which has made prices transparent, is the range
still there the same way? If I went onto Medicare.gov and
entered in a drug, and I said, ``You know, from highest to
lowest,'' would I likely to see one being twice as expensive,
or is it more like a 20 percent difference?
Ms. Stephens. I think in the Lewin study, you see this
finding. I think Bob mentioned it as well. We do not see across
the cards large variation in pricing. So, I think some of that
is the feature of the program. So whether in pharmacies that
are in a cash market phenomenon, the variation in pharmacy is
changing, although it could be, I do not know. But within the
card program for a given card sponsor, if you go across the
country, which I think you all see, we did not see much
difference for a given card sponsor.
Now, between card sponsors, there are pricing differences.
Mr. Firman. But are they 100 or so, or are they much
smaller?
Ms. Stephens. They narrowed over time.
Mr. Firman. OK.
Ms. Stephens. They have narrowed.
Mr. Firman. There was competition. So, in other words, if
you--at one level, drugs are a commodity. Celebrex is Celebrex
is Celebrex, and if I went from one gas station to another, I
would never see one for $1.98 and one for $4. You just would
not see that kind of variation. Do we think that this price
compare and transparency is having that kind of effect on
medication?
Ms. Grealy. I think absolutely. I think as Sharman said, in
our study, you can see that there is little geographic
variation within a card. I think that is remarkable for the
Medicare program, when you look at the variety of reimbursement
levels and how disparate that is across different geographical
markets, but this whole idea of the transparency, I think as
Bob said, it is really going to drive the market competition
and lower prices for everyone.
Mr. Helms. Yes, we will have to wait for some definitive
studies of this, but there have been a number of studies of
local markets that found just what you are talking about, that
there is a lot of dispersion, surprisingly, in the retail
prices.
Mr. Firman. Now or in the past?
Mr. Helms. In the past. In local areas. But my point is the
fact that you have got a place now that people can easily go
look up the price and see what Medicare is charging, even if
they are not eligible for Medicare, they can go shop around,
and they have a reason to shop some more to find if the can get
a better price.
With the publicity you are getting now from the Internet
and about Canadian prices, it sends a signal to consumers that
it will probably pay to search. But the other thing is that the
retail market has been affected by a big growth in insurance
coverage. That has taken away the incentives for the big
majority of people who have a plan that covers prescriptions.
There is not much reward for them for shopping around.
Ms. James. Yes, but I do think it is important to know that
the Medicare card prices are not the retail prices that they
quote when you walk into the pharmacy, and so, there is no way
to know right now anyway; I do not think anybody is looking at
that. Although if you look at, for example, the data base that
we used that Maryland puts out, those are the prices that the
pharmacists will quote you if you walk in that have nothing to
do with the Medicare discount card.
One of the things I wanted to point out that we did find
was that prices in the urban areas were higher than in the
rural pharmacies in Maryland. The discount card prices,
however, are the same. So that actually meant that if you lived
in the urban area, you were getting a bigger savings, because
your retail prices are higher there.
Mr. Helms. We found some of the same kind of urban-rural
differences in Idaho recently.
Ms. Grealy. But I think Bob also made a very important
point. Whenever we are talking about prices and prescription
drugs, that many people have health insurance coverage that
covers their prescription drug benefit. That means that in many
instances, they have someone already negotiating lower prices
on their behalf, and that is why you probably have fewer people
who are out there doing that retail pharmacy by retail pharmacy
comparison. Now, Medicare beneficiaries will have people
negotiating on their behalf as well.
Mr. Firman. So let me ask you a question here: if you are
eligible for the transitional assistance, the card is free, and
you are going to get $600, so that is kind of a no-brainer. If
you are not eligible for the transitional assistance, you may
have to pay $10, $15, up to $30 a year. Are there very many
people who will not save at least the price of a card somewhere
or----
Mr. Helms. Well, hypothetically, if someone paid $30 and
never had a prescription filled, they would be out $30.
Mr. Firman. Does anybody know what percentage of
beneficiaries do not take any drugs?
Ms. Stephens. Very few.
Mr. Firman. Very few; OK.
Ms. Stephens. Very few. Most of them do use a prescription.
In 2002 about 91 percent of beneficiaries filled at least one
prescription. Most Medicare beneficiaries do use a prescription
drug. You do have beneficiaries who, as I think Bob is
indicating, who may not have drug costs. I can tell you when we
were working on the impact analysis, you assume that the people
who are going to sign up kind of do the math a little bit and
that beneficiaries who are going to sign up have somewhat
higher drug costs so that they get a return for making the
investment.
Mr. Helms. Almost--I do not know the dispersion, but there
are free cards. You do not have to pay $30.
Ms. Stephens. Yes, there are some cards with zero
enrollment fee.
Ms. James. In our study, we show what the fees are, and
there are five national cards and seven regional cards that
have no fee, and there is actually one card, one sponsor that
has two cards, and one of them has a little higher fee, but you
get a better price, and the other one is for people who do not
use very many drugs, and so, the fee is lower, but the drug
price is, like, 10 percent higher, which I thought was an
interesting wrinkle.
Ms. Stephens. Actually, if I can make a plug for the
Website again, people have been terrific about giving us ideas
to make the Website better including the folks who have been
doing studies and, working with it. We really, appreciate all
of the input that folks have been giving us. But again, one of
the new enhancements for the Website is now, as it is
calculating, it is factoring in the enrollment fee into the
savings that are being calculated. So it is trying to help
beneficiaries with that judgment.
So that is another thing that has happened with the
Website. It is now factoring in the enrollment fee.
Mr. Firman. Good; thank you.
I have a question that something you said earlier, because
the CMS Website is very good, and it is really designed, as I
understand, to help you get the very best card, figure out what
the best card is for the best savings. But, Bob, you said
something earlier. You said--and maybe I heard you wrong, you
said get a card; do not worry about getting the very best card.
Get a card. What did you mean by that? I want to know----
Mr. Helms. I mean, Julie disagrees from their findings, but
I think what we were saying is that most of them are clustered
toward the bottom. I mean, you can shop around and look at all
of them, but most of them are going to be within 10 percent of
the lowest price.
Mr. Firman. So you are saying on the retail price side,
there----
Mr. Helms. No, I am talking about on the Medicare prices
available with each card. There is not much difference from
picking one card versus another.
Mr. Firman. Would people agree with that, disagree with
that?
Mr. Helms. Julie found some exceptions.
Ms. Grealy. I think Julie found----
Ms. James. Yes, we found that that was not true, that, in
fact, actually--I would say, however, that if you are eligible
for transitional assistance----
Mr. Firman. We will get to that in a second.
Ms. James [continuing]. That would hold. But if you are
not, then, we did find just for a hypothetical individual
buying four drugs that they could find--one of us found they
would pay twice as much if they chose the highest card over the
lowest. Now, that does not mean that some of the cards are not
somewhere close together around the middle, but between the
highest and the lowest, there was a significant----
Mr. Firman. Did you do them about the same time? Was your
study earlier, maybe, do you think?
Ms. James. I think it was about the same time.
Mr. Firman. About the same time, OK.
Mr. Helms. We did ours around the first of June.
Ms. James. No, the data were for June.
Mr. Firman. So it is the same time period.
Ms. James. I think it was the same. I think it is just this
whole idea of highest and lowest.
Mr. Helms. We think they are clustered toward the bottom
end.
Mr. Firman. Now, let me push you on one thing, because I
agree with you up to a point, but I disagree with your point. I
want to see where the other--and this is where you were
beginning to go, Julie. That is true; it may not matter, you
are going to get the same retail prices for most of the--many
of the cards, but it probably does matter in picking cards in
terms of the wraparound, because the wraparound coverage is--no
card has all the wraparounds or different combinations of
wraparounds, and our experience, and this is one of the drivers
of the Accesstobenefits.org Website, is it agrees with you to
the extent that retail price part does not matter, but you want
to get the card with the most possible wraparounds, because
those wraparounds are going to save you 80, 90 percent off the
cost of the drug.
So I assume you meant other than the wraparound issue.
Mr. Helms. Right, people not getting the $600.
Ms. Grealy. But I think we also thought it was important,
and especially with the transitional assistance, you are going
to save money regardless and that you do have the opportunity
to change cards, you know, in November. So I think there was a
big push, do not delay too long trying to find the absolute
best card, but you can get some savings right away.
Mr. Firman. Certainly do not delay, particularly if you are
eligible for the transitional assistance, do not delay----
Ms. Grealy. A day.
Mr. Firman. Well, too long, because you lose the $600
credit if you do not sign up by then.
Julie, I think it was you or somebody raised it, the issue
of whether prices were stable or not, whether if I went on and
looked at a card, and it said my price for Zocor was going to
be $192, how likely is it--are the prices varying a lot, or is
it pretty much the prices I get, I can count on will be the
price when I have to go to the drug store a month or two later?
Ms. James. We found some variation but generally very
stable, and we have actually checked them just recently as
well. Again, there are some little blips, but mostly pretty
stable.
Mr. Helms. Again, the ones we checked seemed to be going
down a little bit.
Ms. James. We did not find that.
Mr. Firman. You did not find the same thing?
Ms. Stephens. Yes, I think the prices have been very
stable. I think you have also seen some decreases, and I think
you have seen a few increases. I think the Lewin study which
has a table that indicates very stable prices and then some
increases and quite a number of decreases. So I think some of
the phenomena that you see where I say first time I looked, we
were running 11 to 18 percent lower that national average
retail prices; now, it appears to be 12 to 21.
Mr. Firman. I had a question, but one--I am sorry, Mary, go
ahead.
Ms. Grealy. No, I was going to say, ``I think some of the
charges that we were hearing early on, one, that prices would
go up after people had gotten into the program or there would
be the so-called bait and switch, it just has not played out.''
So as you said, ``We just found a lot of stability in the
program.''
Mr. Firman. Just to ask in fairness, though, I understand
most of you did your studies on kind of average. You did not
use very high expensive drugs? Or did you? The reason I ask
there was a study for the Center for Medicare Advocacy and the
Multiple Sclerosis Society which talked about a medicine that I
think was costing, like, $2,000 or $3,000 a month which was not
in a lot of programs, and that was going up and down. So I just
want to first of all ask----
Ms. James. We did look at some very high-cost----
Mr. Firman. You did. That is great.
Ms. James [continuing]. Biotech products and found that
many of the cards did not cover them. They were not in our
sample basket of 10, but we just looked and checked on some,
and we did find out that there could be reasons for that. It
could require specialty pharmacy or whatever. But we did find
that a lot of cards did not have some of the very high-tech
drugs.
Ms. Grealy. We looked at the 150 most often used drugs by
seniors. We just thought that would be the most representative.
Mr. Firman. Sharman, your study, too?
Ms. Stephens. We were dealing with.
Mr. Firman. The average basket.
Ms. Stephens. The common.
Mr. Firman. I think it is just important as we are putting
this out for consumers to understand that if they are in a----
Mr. Helms. We did the same.
Mr. Firman [continuing]. OK, in those situations.
OK; well, how about--any of you have any questions of each
other?
Ms. Stephens. I do want to ask Julie one question: you
mentioned, and maybe I did not hear you correctly, that you
thought one card was transitional assistance only?
Ms. James. You know, it was the same sponsor, but it was,
like, card A versus card B, and when I checked them out and
called them, they told me that if you were transitional
assistance, you got put in card A, and if you were not, you got
put in card B. Otherwise, they were exactly the same.
Ms. Stephens. I wanted to talk a little more, because
basically, the cards are, you know, that they are to service
the entire Medicare population. We do see where some card
sponsors do choose to have different pricing for the lower
income population, where they are giving slightly better
pricing, but it is the same card. So I want to get a little bit
more information on that one.
Ms. James. Yes, I kind of wondered about it, too.
Ms. Stephens. No, it is not like different cards for the
transitional population. There may be different pricing within
a card but not a different card.
Mr. Helms. I have a question for Sharman, just curious.
Mr. Firman. Fire away.
Mr. Helms. You announced today that you are going to be
sending out the cards to the low-income people, and Mark, if I
heard him right, said that you are basing this off some
eligibility list or some sort. You must have the addresses of
people who are eligible for State Medicaid programs. How is it
decided which card they get?
Ms. Stephens. OK; let me talk about what we are calling
facilitated enrollment, which we announced today. We know about
the Medicare population that is in what we call the Medicare
Savings Programs, which is related to Medicaid, but these are
people who do not have the full Medicaid benefit.
Mr. Helms. 1.4 million?
Ms. Stephens. It is about 1.8 million.
Mr. Helms. OK.
Ms. Stephens. So nearly 2 million people. These are
Medicare beneficiaries who do not have full Medicaid benefits,
so they do not have prescription drugs, but in fact, the State
is helping to pay Medicare premiums and, in some cases,
Medicare cost sharing.
What we are doing is using the information that we have to
arrange for these beneficiaries to be enrolled. These are going
to be national card sponsors with which we have worked and we
will be--randomly assigning beneficiaries to the card sponsors
who have volunteered to help with this effort.
Information will go out to these beneficiaries, including
an enrollment package. As Dr. McClellan indicated, to activate
the $600, all they need to do is either call the sponsor or
call us and answer a couple of questions, and that will
activate the $600.
Mr. Helms. So when you mail them out, they actually get a
card.
Ms. Stephens. Yes, what we are hoping, to do is to reach
the beneficiaries thus far have not enrolled. These are
beneficiaries who we think are eligible for the annual $600 in
assistance, and we are very anxious to get to them so we can
get to them the $600 that they have this year, and then, there
is another $600 next year. Despite concerns over whether they
get the best card our view on this one is right now, these
people have not availed themselves. At a minimum, there is
$1,200 on the table to help them and that what we are hoping is
then, when they contact us they will be able to work with us.
They have the option to change the card but we are trying
to reach these people and get the word out as much as we
possibly can. We know from experience just with our mailers
that when we send the mailers to folks, we do see an enrollment
increase. My colleagues at the Website who are sitting here,
see an increase to the calls at 1-800-Medicare.
So, we really want to reach these nearly 2 million people.
I think the Access to Benefits Coalition has an objective, and
it really is going to take grassroots efforts and as much
outreach as we can possibly get, but the money is on the table.
We need to come get them to come in. We hope this will work.
Mr. Firman. I do want to say that this has been, we are
delighted that the announcement has been made, because this is
a group of people that especially if you look at the data base,
QMBY-SLMBYs and QI1s, and you then sort out the ones who have
already enrolled. This is people who you know are already
eligible for the benefit, and we think this is a very efficient
strategy, and we are going to do all we can to help encourage
these people, because as Sharman said, this is a no brainer:
take the $1,200. It may or may not be the card with the best
wraparounds, but they can figure that out later. Get the
$1,200.
But that leads me to another----
Ms. Stephens. Just so people know, we have had 19 cards
raise their hand; it is 17 sponsors, but 19 cards are going to
be participating in this.
Mr. Firman. So they will each get just under 100,000, if we
did the math right. Are those all national cards? Are some of
them local?
Ms. Stephens. This time around, they are all national
cards, just because of the complexity of doing the algorithms
to do the random assignment. In order to get this done and to
get it done so that we are in this window of this year, that is
what it took.
Mr. Firman. By the way, if people have questions, they
should give them to one of the staff people; write them down
and pass them up, and we will be happy to take any questions
and answer them.
The question I have is I think we all agree that it is a no
brainer for a person who is eligible for transitional
assistance to sign up for the benefit. Does everyone agree with
that? I assume that is a given. You get $1,200 in savings. You
may get wraparounds. The savings, you said, are between 40 and
80 percent for people. Yet, we know there are 7 million seniors
who are estimated eligible for the transitional assistance;
about 1.3 million had signed up before the auto enrollment
effort, which means that about 5.7 million so far on their own
have not signed up.
Why? What is anybody's sense of why?
Ms. Grealy. I think there are two reasons. One, there was a
tremendous amount of misinformation out there. This was a very
heated political debate, and again, I think a lot of
misinformation. That is why we think it is important that we
move past that. But I think more importantly, this often is a
population that is just plain hard to reach, and I compare your
effort, Jim, and our effort as I call it door-to-door sales. We
are literally having to go person by person to work with these
folks and to enroll them. They may not have access to the
Internet; they may not have access to a telephone.
So it really is going to take a tremendous effort to do
this outreach, and that is why I think this facilitated
enrollment is such a great idea.
Ms. James. Could I ask, Sharman, on that, what about people
who are in nursing homes? Would not some of them be those
people who have to have special packaging, et cetera, and the
cards may not address their needs or be able to?
Ms. Stephens. Well, one of the things, and people may not
be aware of this, there are actually cards that were developed
card sponsors to work with the nursing home population. The
pharmacies are working with the nursing homes. So, there are
actually specialized cards for long-term care facilities.
Specifically, we have card sponsors, and we are working
with the nursing home industry, and part of this is to get the
$600, because there is a group of people who have not spent
down to Medicaid who could use this to help pay for drugs.
Ms. James. There are also, though, individuals who are in
assisted living who need to have--what do they call it--special
packaging, and I know that not all of the card programs can
accommodate that kind of a need. So would the long-term care
cards be the ones for----
Ms. Stephens. Yes, they are who we are working with--now,
they are working with the nursing homes.
Ms. James. I am just wondering if there is a gap here, if
there is a group of individuals--I happen to have a family
member, you can tell--who fall in this category where
literally, I know that the pharmacies have told me no, I am
sorry, we do not do that. But it is not a nursing home, so I am
not sure the nursing home card works. So you might just think
about that.
Ms. Stephens. No, that is a good point. I need to check,
Julie.
Mr. Firman. So I guess the question is are you doing auto-
enrollment for the nursing home QMBY-SLMBYs, too? Or we do not
know?
Ms. Stephens. Is Lynn still here?
Mr. Firman. I was hoping to ask a question that somebody
did not know the answer to, but there are so many experts in
the room that I can tell I will never be able to do that. That
is great. Thank you for that answer.
Mr. Helms. Could I take a stab at your question?
Actually, I have to ask another question. Whoever came up
with the 7.5 million that potentially might be eligible for
this? The researcher in me says you have to look at the
distribution of the people's demand for drugs. In other words,
what is the utilization among that population? You are going to
have a minority of those people who are the big drug users, and
they are going to have a greater incentive to come sign up.
But you are probably going to have a majority of them who
do not consume a lot of drugs. I mean, if they do, it would be
a big advantage, but until that time, they do not have any
strong incentive to pay attention to the ads or do anything
about it.
Ms. Stephens. Maybe what I can do is help, since one of the
things I got to do was work on the impact analysis, where I
think some of these numbers are coming from.
Just as you said, Jim, we estimated in terms of eligible.
If we just look at income, you know, and lack of drug coverage,
for example, we estimated that 7.2 million beneficiaries were
eligible for the transitional assistance program. Then, our
actuaries, in looking at, I think, the phenomenon that Bob is
talking about, which is people's drug spending and also
experience in looking at what we call uptake, how many people
will actually go to enroll, we estimated that we thought about
4.7 million people would actually enroll in the transitional
assistance program.
We are currently at 1.1, so we have got some people we need
to go find and get enrolled.
Mr. Firman. I do want to note before you do that----
Ms. Stephens. But based on our actuaries' estimates----
Mr. Firman. Before you do that, we at the Access to
Benefits Coalition looked at that 4.7 estimate, and we said
that is not good enough. We want to do better. We set an
objective of 5.5. So we are working together. We have both got
a long way to go, but I wanted--if it is 4.7 or 5.5, it
underscores the importance of the automated, facilitate
enrollment initiative, because we will not get all 1.8 million,
but if we get most of those people, that is going to go a long
way to achieving our shared objectives here.
Ms. Grealy. But, Jim, I think if you were to take a look at
other Federal programs or even look at the QMBY-SLMBY and the
rates of enrollment of people who are qualified and yet not
enrolling; you look at the SCHIP program. So I commend you on
setting that goal, but I think if you even look at the
experience in other Federal programs that offer tremendous help
for low-income beneficiaries, sometimes, they are not
enrolling.
So that is why I think this facilitated enrollment is a
whole new approach, and it will be great to see how it works.
Ms. Stephens. No, I think that is right. I want to clarify
one thing: the letter that is going to be going out to the
QMBY/SLMBY population is going to say that if you are in a
long-term care facility or the other special card that we have
that relates to the American Indian population, who may be
using pharmacies that are on the reservations, that we say
please call us at 1-800-Medicare, and we are going to help get
you to the right card that is working with the appropriate
pharmacies.
But I still want to follow up on assisted living, because
more and more beneficiaries are living in assisted living.
Mr. Firman. You know, Mary's point about if you looked at
enrollment in other Federal programs, they do not always do
that well, do you have any more specific data, Sharman, on how
is the enrollment experience or targets compare to the takeup
on other Federal benefits?
Ms. Stephens. Well, the most recent experience is really
with the State Children's Health Insurance Program, the SCHIP
program. One year into the program, they were at about 55
percent of what the estimated enrollment was.
Ms. Grealy. That was not 50 percent of those eligible.
Ms. Stephens. Yes.
Ms. Grealy. That was just their target----
Ms. Stephens. Yes.
Ms. Grealy [continuing]. For that first year.
Ms. Stephens. We now are at about 60 in 3.5 months, for
this discount card program.
Mr. Firman. By the way, I do not know if there are any
questions, but I have not gotten them if they are coming up to
the front.
Ms. Stephens. I think the experience we are gaining now
with the discount card our partners, the local communities, and
the organizations that work with this population is actually
pretty important, because we have a bigger challenge facing us,
which is the drug benefit itself.
There, we are talking about, just a huge population to
educate and outreach to, and so, I think we can learn a lot
from this experience and be in a better position.
Mr. Firman. We could not agree with you more. That is why
the Access to Benefits Coalition was formed, to get the people
into the low-income Part D subsidies. In fact, we are going to
be doing a major benchmarking study of the best outreach
activities that go on between now and the end of the year, and
then, early next year, we are going to zero in and look at
them.
But I also want to go back to this question of Mary's point
of that yes, it is true that after all these years, maybe half
the people eligible for Medicaid, Food Stamps, or SSI do not
take them, and even though we know, we think they should,
because it is really good money, and they ought to do it, so
that says to us that--to Sharman's point that we have to do
things differently. We do the same things over and over again,
we are going to get the same result, which is also the
definition of insanity.
One of the things that we have come to the conclusion and
why we are so excited about the automated enrollment, if you
look at the history of public benefits outreach and say what
has happened, whether it is Medicaid, Food Stamps, the Pfizer
Share Card, the patient assistance program, the EPIC State
program, they have all approached things the same way: they
have said our challenge is to find the needles in the haystack.
We need to go out and find among all these people the few
people that are eligible.
So, literally, everybody repeats the same process over and
over again. We have concluded looking at this that this is
exactly the wrong way to approach things, and that is why we
get such abysmal results. The strategy is not look for the
needles in the haystack; it is look for the piles of needles.
Somebody has already found almost everybody that we are looking
for. CMS, you have found 1.8 million of them in one pile called
this program. The Pfizer Share Card has another pile. Together
RX has another pile. Every State pharmacy program is another
pile. Every home energy assistance program is another pile of
low income people.
What we need to start to realize is instead of spending the
same money and finding these people again and again and again
and again, say who has already found them, and how can we
figure out--and then, we can focus our efforts on marketing and
convincing them, because one of the things we found, we had a
project we are doing in the State of Pennsylvania where they
have this list of people who they know are eligible for a $500
property tax, just a check in the mail, and they call them up,
and they are also eligible for QMBY-SLMBY, you know, $800 a
year in savings, and we call these people up, and we say great
news, you are eligible for $500 and $1,200 in savings, and they
say, ``Oh, no, thank you. I do not want to do that.'' There are
some attitudinal barriers or other kinds.
So we go back to them and say let me explain this to you.
You know, this is $800 a year for 10 years. This is $8,000.
They say, ``Well, I am not sure,'' and they said, ``Well, do
you have grandchildren? Yes. Well, would you not rather have
$8,000 and give it to your grandkids?'' It sometimes takes a
lot of effort. The point is it is worth it if you know that a
person is eligible to go back to them again and again and
again.
So one of the learnings that we are urging everybody to do
is find the piles of needles that you already have and focus on
those efforts. We actually believe that is going to be one of
the strategies that can make a difference in this effort going
forward.
Are there any more questions from the audience?
Any questions from the panelists?
If not, I really want to thank everybody for coming here
today for all of the work you have done in these studies. It is
reassuring to see that people are approaching things
differently and reaching the same conclusions, and those
conclusions, to me, are pretty clear. If you are 1 of the 7
million people eligible for the transitional assistance, it is
an absolutely no-brainer that you should take these benefits,
and you are going to save 40 to 70 or 80 percent on your
medications.
If you are not eligible for the transitional assistance,
and you have drug costs that are significant at all, at least
$500 or $1,000 or more, chances are, which is the case for most
elderly people, you are going to be able to find discount cards
through Medicare.gov or elsewhere that are going to save you
significant 10, 20, at least, percent, which would more than
justify a fee, maybe, of $30.
So this is great. I hope we will have another one of these
in a year from now, and we can have more data on what has been
saved, and I thank the audience for participating and the
Senator for bringing us together in the first place and the
Committee.
Thank you very much, and this forum is adjourned.
[Applause.]
[Whereupon, at 4:28 p.m, the forum concluded.]
A P P E N D I X
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